As filed with the Securities and Exchange Commission on May 1, 2000
Investment Company Act file no. 811-4915
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------
FORM N-2
-------
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 41 [X]
-------
DUFF & PHELPS UTILITIES INCOME INC.
(Exact name of registrant as specified in charter)
-------
55 East Monroe Street
Chicago, Illinois 60603
(Address of principal executive offices)
Registrant's telephone number: 312/368-5510
Nathan I. Partain John R. Sagan
Duff & Phelps Utilities Income Inc. Mayer, Brown & Platt
55 East Monroe Street 190 South LaSalle Street
Chicago, Illinois 60603 Chicago, Illinois 60603
(Names and addresses of agents for service)
It is proposed that this filing will become effective:
[X] when declared effective pursuant to Section 8(c).
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
===============================================================================
<PAGE>
PART A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Outside Front Cover
Not applicable.
Item 2. Cover Pages; Other Offering Information
- ------ ---------------------------------------
Not applicable.
Item 3. Fee Table and Synopsis
- ------ ----------------------
1.
Shareholder Transaction Expenses
Sales Load (as a percentage of offering price).........................N/A
Dividend Reinvestment and Cash Purchase Plan Fees......................(1)
Annual Expenses (as a percentage of net assets attributable to common shares)
Management Fees...................................................... .76%
Interest Payments on Borrowed Funds.................................. .53%
Other Expenses....................................................... .37%
Total Annual Expenses...................................1.66%
- -------------------------------------------------------------------------------
Example (2) 1 year 2 years 5 years 10 years
- -------------------------------------------------------------------------------
You would pay the following expenses
on a $1,000 investment, assuming a
5% annual return: $17 $34 $90 $197
- -------------------------------------------------------------------------------
(1) Shareholders that reinvest dividends and/or capital gains
distributions will be charged only brokerage fees in the event
that shares are purchased in the open market. Investors investing
cash in addition to any cash dividends reinvested will be charged
$2.50 plus brokerage commissions. See Item 10.1(c).
(2) This Example should not be considered a representation of future
expenses, and actual expenses may be greater or lesser than those
shown.
<PAGE>
The purpose of the foregoing table is to assist an investor in
understanding the costs and expenses that an investor will bear directly or
indirectly, and the information contained therein is not necessarily
indicative of future performance. See Item 9.
2. Not applicable.
3. Not applicable.
Item 4. Financial Highlights
- ------ --------------------
Not applicable.
Item 5. Plan of Distribution
- ------- --------------------
Not applicable.
Item 6. Selling Shareholders
- ------- --------------------
Not applicable.
Item 7. Use of Proceeds
- ------- ---------------
Not applicable.
Item 8. General Description of the Registrant
- ------- -------------------------------------
1. General
-------
(a) The Registrant, Duff & Phelps Utilities Income Inc. (the
"Fund"), is a corporation organized under the laws of the State
of Maryland on November 26, 1986.
(b) The Fund is a diversified closed-end investment company.
2. Investment Objectives and Policies
Investment objectives
The Fund's primary investment objectives are current income and
long-term growth of income. Capital appreciation is a secondary objective.
The Fund seeks to achieve its investment objectives by investing primarily
in a diversified portfolio of equity and fixed income securities of
companies in the public utilities industry. Under normal conditions, more
than 65% of the Fund's total assets will be invested in securities of
public utility companies engaged in the production, transmission or
distribution of electric energy, gas or telephone services. The Fund's
investment objectives stated in the preceding sentence and its policy of
concentrating its investments in the utilities industry are fundamental
policies and may not be changed without the approval of the holders of a
"majority" (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) of the outstanding shares of the common stock and the
preferred stock voting together as one class.
<PAGE>
Fundamental investment restrictions
The following are fundamental investment restrictions of the Fund
that may be changed only with approval of the holders of a "majority" of
the outstanding shares of the common stock and the preferred stock voting
together as one class, which means the lesser of (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:
1. The Fund may not invest more than 25% of its total
assets (valued at the time of investment) in securities of
companies engaged principally in any one industry other than the
utilities industry, which includes companies engaged in the
production, transmission or distribution of electric energy or
gas or in telephone services, except that this restriction does
not apply to securities issued or guaranteed by the United States
Government or its agencies or instrumentalities.
2. The Fund may not:
(a) invest more than 5% of its total assets (valued
at the time of the investment) in the securities of any
one issuer, except that this restriction does not apply
to United States Government securities; or
(b) acquire more than 10% of the outstanding voting
securities of any one issuer (at the time of acquisition);
except that up to 25% of the Fund's total assets (at the time of
investment) may be invested without regard to the limitations set
forth in this restriction.
3. The Fund may borrow money on a secured or unsecured
basis for any purpose of the Fund in an aggregate amount not
exceeding 15% of the value of the Fund's total assets at the time
of any such borrowing (exclusive of all obligations on amounts
held as collateral for securities loaned to other persons to the
extent that such obligations are secured by assets of at least
equivalent value).
4. The Fund may not pledge, mortgage or hypothecate its
assets, except to secure indebtedness permitted by restriction 3
above. (The deposit in escrow of securities in connection with
the writing of put and call options, collateralized loans of
securities and collateral arrangements with respect to margin
requirements for futures transactions and with respect to
segregation of securities in connection with forward contracts
are not deemed to be pledges or hypothecations for this purpose.)
5. The Fund may make loans of securities to other persons
to the extent of not more than 33 1/3% of its total assets
(valued at the time of the making of loans), and may invest
without limitation in short-term obligations and publicly
distributed obligations.
6. The Fund may not underwrite the distribution of
securities of other issuers, although it may acquire securities
that, in the event of a resale, might be required to be
registered under the Securities Act of 1933, as amended, because
the Fund could be regarded as an underwriter as defined in that
act with respect to the resale.
<PAGE>
7. The Fund may not purchase or sell real estate or any
interest therein, except that the Fund may invest in securities
secured by real estate or interests therein, such as mortgage
pass- throughs, pay-throughs, collateralized mortgage
obligations, and securities issued by companies (including
partnerships and real estate investment trusts) that invest in
real estate or interests therein.
8. The Fund may acquire securities of other investment
companies to the extent (at the acquisition) of (i) not more than
3% of the outstanding voting stock of any one investment company,
(ii) not more than 5% of the assets of the Fund in any one
investment company and (iii) not more than 10% of the assets of
the Fund in all investment companies (exclusive in each case of
securities received as a dividend or as a result of a merger,
consolidation or other plan of reorganization).
9. The Fund may not invest for the purpose of exercising
control over or management of any company.
10. The Fund may not purchase securities on margin, or
make short sales of securities, except the use of short-term
credit necessary for the clearance of purchases and sales of
portfolio securities, but it may make margin deposits in
connection with transactions in options, futures and options on
futures.
11. The Fund may not purchase or sell commodities or
commodity contracts, except that it may enter into (i) stock
index futures transactions, interest rate futures transactions
and options on such future transactions and (ii) forward
contracts on foreign currencies to the extent permitted by
applicable law.
12. The Fund may not issue any security senior to its
common stock, except that the Fund may borrow money subject to
investment restriction 3 and except as permitted by the Fund's
charter.
If a percentage restriction set forth above is adhered to at the
time a transaction is effected, later changes in percentages resulting from
changes in value or in the number of outstanding securities of an issuer
will not be considered a violation.
Other Significant Investment Policies
Fixed Income Securities. The Fund purchases a fixed income
security only if, at time of purchase, it is (i) rated investment grade by
at least two of the following three nationally recognized statistical
rating organizations: Duff & Phelps Credit Rating Co. ("DCR"), Moody's
Investors Service, Inc. ("Moody's"), and Standard & Poor's, a division of
The McGraw-Hill Companies, Inc. ("S&P"), or (ii) determined by the Adviser
to be of investment grade and not rated below investment grade by any of
the aforementioned rating services. A fixed income security rated
investment grade has a rating of BBB- or better by DCR, Baa3 or better by
Moody's, or BBB- or better by S&P. In making its determination that a fixed
income security is investment grade, the Adviser will use the standards
used by a nationally recognized statistical rating organization.
Leverage. The Fund is authorized to borrow money in amounts of up
to 15% of the value of its total assets at the time of such borrowings.
However, for so long as the Fund's preferred stock is rated by
<PAGE>
S&P, the Fund will limit the aggregate amount of its borrowings to 10% of
the value of its total assets and will not incur any borrowings, unless
advised by S&P that such borrowings would not adversely affect S&P's
then-current rating of the preferred stock.
Lending of Portfolio Securities. In order to generate additional
income, the Fund may from time to time lend securities from its portfolio,
with a value not in excess of 33 1/3% of its total assets, to brokers,
dealers and financial institutions such as banks and trust companies for
which it will receive collateral in cash, United States Government
securities or an irrevocable letter of credit that will be maintained in an
amount equal to at least 100% of the current market value of the loaned
securities.
Rating Agency Guidelines. The Fund's preferred stock is currently
rated by Moody's, S&P and Fitch IBCA, Inc., nationally recognized
statistical rating organizations, which issue ratings for various
securities reflecting the perceived creditworthiness of those securities.
The Fund intends that, so long as shares of its preferred stock are
outstanding, the composition of its portfolio will reflect guidelines
established by the foregoing rating organizations in connection with the
Fund's receipt of the highest rating for its preferred stock from at least
two of such rating organizations.
Options and Futures Transactions. The Fund may seek to increase
its current return by writing covered options. In addition, through the
writing and purchase of options and the purchase and sale of futures
contracts and related options, the Fund may at times seek to hedge against
a decline in the value of securities owned by it or an increase in the
price of securities which it plans to purchase. However, for so long as
shares of the Fund's preferred stock are rated either by Moody's or S&P,
the Fund will not purchase or sell futures contracts or related options or
engage in other hedging transactions unless Moody's or S&P, as the case may
be, advises the Fund that such action or actions will not adversely affect
its then-current rating of the Fund's preferred stock.
Temporary Investments. For temporary defensive purposes, the Fund
may be invested primarily in money market securities. These securities
include securities issued or guaranteed by the United States Government and
its agencies and instrumentalities, commercial paper and certificates of
deposit.
Nonfundamental Restrictions. The Fund may not (i) invest in
securities subject to legal or contractual restrictions on resale, if, as a
result of such investment, more than 10% of the Fund's total assets would
be invested in such securities, or (ii) acquire 5% or more of the
outstanding voting securities of a public utility company.
Each of the policies and restrictions described above may be
changed by the Board of Directors without the approval of the Fund's
shareholders. If a percentage restriction set forth above is adhered to at
the time a transaction is effected, later changes in percentages resulting
from changes in value or in the number of outstanding securities of an
issuer will not be considered a violation.
3. Risk Factors
Leverage. As of December 31, 1999, the Fund has outstanding
indebtedness of $193,842,781 and five series of preferred stock with
an aggregate liquidation preference of $500 million. The dividend
rate on each series of preferred stock is reset every 49 days through
a remarketing procedure. As of April 7, 2000, the dividend rate on
the five series of preferred stock averaged 4.47% and the interest
rate on the Fund's outstanding indebtedness averaged 6.06%. The Fund
<PAGE>
must experience an annual return of 1.37% on its portfolio in
order to cover annual interest and dividend payments on the
Fund's outstanding indebtedness and preferred stock.
Leverage creates certain risks for holders of common stock,
including higher volatility of both the net asset value and
market value of the common stock. Fluctuations in dividend rates
on the preferred stock and interest rates on the Fund's
indebtedness will affect the dividend to holders of common stock.
Holders of the common stock receive all net income from the Fund
remaining after payment of dividends on the preferred stock and
interest on the Fund's indebtedness, and generally are entitled
to a pro rata share of net realized capital gains, if any.
Upon any liquidation of the Fund, the holders of shares of
preferred stock will be entitled to liquidating distributions
(equal to $100,000 per share of preferred stock plus any
accumulated and unpaid dividends thereon) and the holders of the
Fund's indebtedness will be entitled to receive repayment of
outstanding principal plus accumulated and unpaid interest
thereon before any distribution is made to holders of common
stock.
The leverage obtained through the issuance of the preferred stock
and from the Fund's presently outstanding indebtedness has
provided holders of common stock with a higher dividend than such
holders would have otherwise received. However, there can be no
assurance that the Fund will be able to continue to realize such
a higher net return on its investment portfolio. Changes in
certain factors could cause the relationship between the
dividends paid on the preferred stock and interest paid on the
Fund's indebtedness to increase relative to the dividend and
interest rates on the portfolio securities in which the Fund may
be invested. Under such conditions the benefit of leverage to
holders of common stock will be reduced and the Fund's leveraged
capital structure could result in a lower rate of return to
holders of common stock than if the Fund were not leveraged. The
Fund is required by the 1940 Act to maintain an asset coverage of
200% on outstanding preferred stock and 300% on outstanding
indebtedness. If the asset coverage declines below those levels
(as a result of market fluctuations or otherwise), the Fund may
be required to sell a portion of its investments at a time when
it may be disadvantageous to do so.
The following table illustrates the effects of leverage on a
return to common stockholders. The figures appearing in the table
are hypothetical and actual returns may be greater or less than
those appearing in the table.
- -------------------------------------------------------------------------------
Assumed return on portfolio
(net of expenses) -10.00% -5.00% 0.00% 5.00% 10.00%
- -------------------------------------------------------------------------------
Corresponding return to -15.38% -8.51% -1.64% 5.24% 12.11%
common stockholder
- -------------------------------------------------------------------------------
Investments in Securities of Foreign Issuers. While the Fund is
prohibited from investing 15% or more of its assets in securities
of foreign issuers, the Fund may be exposed to certain risks as a
result of foreign investments. Investing in securities of foreign
issuers involves certain considerations not typically associated
with investing in securities of U.S. companies, including (a)
controls on foreign investment and limitations on repatriation of
invested capital and on the Fund's ability to exchange local
currencies for U.S. dollars, (b) greater price volatility,
substantially less liquidity and significantly smaller market
capitalization of securities markets, (c) currency devaluations
and other currency exchange rate fluctuations, (d) more
substantial
<PAGE>
government involvement in the economy, (e) higher rates of
inflation, (f) less government supervision and regulation of the
securities markets and participants in those markets and (g)
political uncertainty and other considerations. The Fund will
treat investments in countries with repatriation restrictions as
illiquid for purposes of any applicable limitations under the
1940 Act; however, as a closed-end fund, the Fund is not
currently limited under that Act in the amount of illiquid
securities it may acquire. Because of the limited forward market
for the purchase of U.S. dollars in most foreign countries and
the limited circumstances in which the Fund expects to hedge
against declines in the value of foreign country currencies
generally, the Fund will be adversely affected by devaluations of
foreign country currencies against the U.S. dollar to the extent
the Fund is invested in securities denominated in currencies
experiencing a devaluation. The Fund's fundamental investment
policies permit the Fund to enter into currency hedging
transactions.
In addition, accounting, auditing and financial reporting
standards in foreign countries are different from U.S. standards.
As a result, certain material disclosures may not be made and
less information may be available to the Fund and other investors
than would be the case if the Fund's investments were restricted
to securities of U.S. issuers. Moreover, it may be more difficult
to obtain a judgment in a court outside the United States.
Interest and dividends paid on securities held by the Fund and
gains from the disposition of such securities may be subject to
withholding taxes imposed by foreign countries.
Anti-takeover Provisions. Certain provisions of the Fund's charter
may be regarded as "anti-takeover" provisions because they could have
the effect of limiting the ability of other entities or persons to
acquire control of the Fund. See Item 10.l(e).
Premium/Discount From Net Asset Value. Shares of closed-end
investment companies trade in the market above, at and below net
asset value. This characteristic of shares of closed-end
investment companies is a risk separate and distinct from the
risk that the Fund's net asset value will decline. Since
inception, the Fund's common stock has generally traded at a
premium to net asset value. For example, in the two-year period
ended December 31, 1999, as of the close of business of the New
York Stock Exchange on the last day in each week on which the New
York Stock Exchange was open (the date the Fund calculates its
net asset value per share), the Fund's shares were trading at a
premium to net asset value 94% of the time. The Fund usually does
not calculate its net asset value per share on any other day and
does not know whether the Fund's shares were trading at a premium
to net asset value on such days. The Fund is not able to predict
whether its shares will trade above, below or at net asset value
in the future.
4. Other Policies
None.
5. Share Price Data
The Fund's common stock has been listed on the New York Stock
Exchange since January 21, 1987 (trading symbol DNP). Since the
commencement of trading, the Fund's common stock has most frequently traded
at a premium to net asset value, but has periodically traded at a slight
discount. The following table shows the range of the market prices of the
Fund's common stock, net asset value of the
<PAGE>
<TABLE>
<CAPTION>
Fund's shares corresponding to such high and low prices and the premium to
net asset value presented by such high and low prices:
Market Premium (Discount)
Market Price Net Asset Value at to Net Asset Value at
------------ ------------------ ---------------------
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended Market Market Market Market
High Low High Low High Low
---- --- ---- --- ---- ---
2000 March 31 $ 9.3125 $ 8.3125 $ 8.85 $ 8.77 5.23% (5.22%)
1999 December 31 9.8750 8.2500 9.11 8.77 8.40% (5.93%)
September 30 10.7500 9.5000 9.82 8.95 9.47% 6.15%
June 30 11.0625 10.3750 9.98 9.47 10.85% 9.56%
March 31 11.2500 10.6250 10.24 9.70 9.86% 9.54%
1998 December 31 11.5000 10.6250 10.28 10.05 11.87% 5.72%
September 30 11.0625 10.0000 9.94 9.32 11.29% 7.30%
June 30 10.7500 9.8750 10.13 10.02 6.12% (1.45%)
March 31 10.7500 10.1250 9.79 9.91 9.81% 2.17%
</TABLE>
On April 7, 2000, the net asset value was $8.96, trading prices ranged
between $8.875 and $9.000 (representing a discount to net asset value of
0.95% and a premium to net asset value of 0.45%, respectively) and the
closing price was $9.000 (representing a premium to net asset value of
0.45%).
6. Business Development Companies
Not applicable.
Item 9. Management
1. General
(a) Board of Directors
The business and affairs of the Fund are managed
under the direction of the board of directors.
(b) Investment Adviser
The Fund's investment adviser (the "Adviser") is
Duff & Phelps Investment Management Co., 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. The
Adviser acts as adviser to two other closed-end investment
companies registered under the 1940 Act and as sub-adviser
to six open-end investment companies registered under the
1940 Act. 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
<PAGE>
Insurance Company. Prior to May 11, 1998, Phoenix Investment
Partners was known as Phoenix Duff & Phelps Corporation.
Phoenix Investment Partners, through its subsidiaries,
provides investment management, investment research,
financial consulting and investment banking services.
The Adviser is responsible for the management of
the Fund's investment portfolio, subject to the overall
control of the board of directors of the Fund.
Under the terms of an investment advisory agreement
between the Fund and the Adviser (the "Advisory Agreement"),
the Adviser receives from the Fund a quarterly fee at an
annual rate of .60% of the average weekly net asset value of
the Fund up to $1.5 billion and .50% of average weekly net
assets in excess of $1.5 billion. The net assets for each
weekly period are determined by averaging the net assets at
the end of a week with the net assets at the end of the
prior week. For purposes of the foregoing calculation,
"average weekly net assets" is 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 to the Fund of
commercial paper issued by the Fund.
Under the terms of a service agreement among the
Adviser, Phoenix Investment Partners, and the Fund (the
"Service Agreement"), Phoenix Investment Partners makes
available to the Adviser the services, on a part-time basis,
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, 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.
(c) Portfolio Management
The Fund's portfolio is managed by T. Brooks Beittel
and Nathan I. Partain. See Item 18 for a description of the
position and business experience of Messrs. Beittel and Partain.
Mr. Beittel has been responsible for the management of the fixed
income investments in the Fund's portfolio since April 1994.
Mr. Partain has been responsible for the management of the
equity investments in the Fund's portfolio since January 1998.
(d) Administrator
The Fund's administrator (the "Administrator") is
J.J.B. Hilliard, W.L. Lyons, Inc., Hilliard Lyons Center,
Louisville, Kentucky 40202. The Administrator is a
wholly-owned subsidiary of PNC Bank Corp. Under the terms of
an administration agreement (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, the Administrator
receives from the Fund a quarterly fee at annual rates of
.25% of the Fund's average weekly net assets up to $100
million, .20% of the Fund's average weekly net assets
<PAGE>
from $100 million to $1.0 billion and .10% of average weekly
net assets over $1.0 billion. For purposes of the foregoing
calculation, "average weekly net assets" is 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
to the Fund of commercial paper issued by the Fund.
(e) Custodian
The Fund's custodian is The Bank of New York,
Church Street Station, Post Office Box 11258, New York, New
York 10286. The transfer agent and dividend disbursing agent
for the Fund's common and preferred stock is The Bank of New
York, Church Street Station, P.O. Box 11258, New York, New
York 10286.
(f) Expenses
The Fund is responsible for all expenses not paid
by the Adviser or the Administrator, including brokerage
fees.
(g) Affiliated Brokerage
The Fund has paid, and in the future may pay, broker
commissions to the Administrator. See Item 21.2.
2. Non-resident Managers.
---------------------
Not applicable.
3. Control Persons.
---------------
The Fund does not consider that any person
"controls" the Fund within the meaning of this item. For
information concerning the Fund's officers and directors,
see Item 18. No person is known by the Fund to own of record
or beneficially five percent or more of any class of the
Fund's outstanding equity securities.
Item 10. Capital Stock, Long-Term Debt, and Other Securities
- ------- ---------------------------------------------------
1. Capital Stock.
-------------
(a) Common Stock. Holders of common stock, $.001 par value,
of the Fund are entitled to dividends when and as declared
by the Board of Directors, to one vote per share in the
election of Directors (with no right of cumulation), and to
equal rights per share in the event of liquidation. They
have no preemptive rights. There are no redemption,
conversion or sinking fund provisions. The shares are not
liable to further calls or to assessment by the Fund.
(b) Preferred Stock. Holders of preferred stock, $.001
par value, of the Fund are entitled to receive dividends before
the holders of the common stock and are entitled to receive the
liquidation value of their shares ($100,000 per share) before
any distributions are
<PAGE>
made to the holders of the common stock, in the event the
Fund is ever liquidated. Each share of preferred stock is
entitled to one vote per share. The holders of the preferred
stock have the right to elect two directors of the Fund at
all times and to elect a majority of the directors if at any
time dividends on the preferred stock are unpaid for two
years. In addition to any approval by the holders of the
shares of the Fund that might otherwise be required, the
approval of the holders of a majority of the outstanding
shares of the preferred stock, voting separately as a class,
will be required under the 1940 Act to adopt any plan of
reorganization that would adversely affect the holders of
preferred stock and to approve, among other things, changes
in the Fund's sub-classification as a closed-end investment
company, changes in its investment objectives or changes in
its fundamental investment restrictions.
Subject to certain restrictions, the Fund may, and under
certain circumstances is required to, redeem shares of its
preferred stock at a price of $100,000 per share, plus
accumulated but unpaid dividends. The shares of preferred
stock are not liable to further calls or to assessment by
the Fund. There are no preemptive rights or sinking fund or
conversion provisions. The Fund, may, however, upon the
occurrence of certain events, authorize the exchange of its
current preferred stock on a share-for-share basis for a
separate series of authorized but unissued preferred stock
having different dividend privileges.
(c) Dividend Reinvestment Plan. Under the Fund's dividend
reinvestment plan shareholders may elect to have all
dividends and capital gains distributions paid on their
common stock automatically reinvested by The Bank of New
York, as agent for shareholders, in additional shares of
common stock of the Fund. Registered shareholders may
participate in the plan. The plan permits a nominee, other
than a depository, to participate on behalf of those
beneficial owners for whom it is holding shares who elect to
participate. However, some nominees may not permit a
beneficial owner to participate without transferring the
shares into the owner's name. Shareholders who do not elect
to participate in the plan will receive all distributions in
cash paid by check mailed directly to the shareholder (or,
if the shareholder's shares are held in street or other
nominee name, then to such shareholder's nominee) by The
Bank of New York as dividend disbursing agent. Registered
shareholders may also elect to have cash dividends deposited
directly into their bank accounts.
When a dividend or distribution is reinvested under the
plan, the number of shares of common stock equivalent to the
cash dividend or distribution is determined as follows:
(i) If shares of the common stock are trading
at net asset value or at a premium above net asset
value at the valuation date, the Fund issues new
shares of common stock at the greater of net asset
value or 95% of the then current market price.
(ii) If shares of the common stock are
trading at a discount from net asset value at the
valuation date, The Bank of New York receives the
dividend or distribution in cash and uses it to
purchase shares of common stock in the open market,
on the New York Stock Exchange or elsewhere, for
the participants' accounts. Shares are allocated to
participants' accounts at the average price per
share, plus commissions, paid by The Bank of New
York for all shares purchased
<PAGE>
by it. If, before The Bank of New York has
completed its purchases, the market price exceeds
the net asset value of a share, the average
purchase price per share paid by The Bank of New
York may exceed the net asset value of the Fund's
shares, resulting in the acquisition of fewer
shares than if the dividend or distribution had
been paid in shares issued by the Fund.
The valuation date is the business day immediately preceding
the date of payment of the dividend or distribution. On that
date, the Administrator compares that day's net asset value
per share and the closing price per share on the New York
Stock Exchange and determines which of the two alternative
procedures described above will be followed.
The reinvestment shares are credited to the participant's
plan account in the Fund's stock records maintained by The
Bank of New York, including a fractional share to four
decimal places. The Bank of New York will send participants
written confirmation of all transactions in the
participant's plan account, including information
participants will need for tax records. Shares held in the
participant's plan account have full dividend and voting
rights. Dividends and distributions paid on shares held in
the participant's plan account will also be reinvested.
The cost of administering the plan is borne by the Fund.
There is no brokerage commission on Shares issued directly
by the Fund. However, participants do pay a pro rata share
of brokerage commissions incurred on any open market
purchases of shares by The Bank of New York.
The automatic reinvestment of dividends and distributions
does not relieve participants of any income taxes that may
be payable (or required to be withheld) on dividends or
distributions.
If the closing market price of shares of the Fund's common
stock should be equal to or greater than their net asset
value on the valuation date, the participants in the plan
would receive shares priced at the higher of net asset value
or 95% of the market price. Consequently they would receive
more shares at a lower per share price than if they had used
the cash distribution to purchase Fund shares on the payment
date in the market at the market price plus commission.
If the market price should be less than net asset value on
the valuation date, the cash distribution for the plan
participants would be used by The Bank of New York to
purchase the shares to be received by the participants,
which would be at a discount from net asset value unless the
market price should rise during the purchase period so that
the average price and commission exceeded net asset value as
of the payment date. Also, since the Fund does not redeem
its shares, the price on resale may be less or more than the
net asset value.
Plan participants may purchase additional shares of common
stock through the plan by delivering to The Bank of New York
a check for at least $100, but not more than $5,000, in any
month. The Bank of New York will use such funds to purchase
shares in the open market or in private transactions. The
purchase price of such shares may be more than or less than
net asset value per share. The Fund will not issue new
shares or supply treasury shares for such voluntary
additional share investment. Purchases will be made
commencing
<PAGE>
with the time of the first distribution payment following
the second business day after receipt of the funds for
additional purchases, and may be aggregated with purchases
of shares for reinvestment of the distribution. Shares will
be allocated to the accounts of participants purchasing
additional shares at the average price per share, plus a
service charge of $2.50 imposed by The Bank of New York and
a pro rata share of any brokerage commission (or equivalent
purchase costs) paid by The Bank of New York in connection
with such purchases. Funds sent to the bank for voluntary
additional share reinvestment may be recalled by the
participant by written notice received by The Bank of New
York not later than two business days before the next
dividend payment date. If for any reason a regular monthly
dividend is not paid by the Fund, funds for voluntary
additional share investment will be returned to the
participant, unless the participant specifically directs
that such funds continue to be held by The Bank of New York
for subsequent investment. Participants will not receive
interest on voluntary additional funds held by The Bank of
New York pending investment.
A shareholder may leave the plan at any time by written
notice to The Bank of New York. To be effective for any
given distribution, notice must be received by the Bank at
least seven business days before the record date for that
distribution. When a shareholder leaves the plan: (i) such
shareholder may request that The Bank of New York sell such
shareholder's shares held in such shareholder's plan account
and send such shareholder a check for the net proceeds
(including payment of the value of a fractional share,
valued at the closing price of the Fund's common stock on
the New York Stock Exchange on the date discontinuance is
effective) after deducting The Bank of New York's $5.00
charge and any brokerage commission (or equivalent sale
cost) or (ii) if no request is made, such shareholder will
receive a certificate for the number of full shares held in
such shareholder's plan account, along with a check for any
fractional share interest, valued at the closing price of
the Fund's common stock on the New York Stock Exchange on
the date discontinuance is effective. If and when it is
determined that the only balance remaining in a
shareholder's plan account is a fraction of a single share,
such shareholder's participation will be deemed to have
terminated, and The Bank of New York will send to such
shareholder a check for the value of such fractional share,
valued at the closing price of the Fund's common stock on
the New York Stock Exchange on the date discontinuance is
effective.
The Fund may change, suspend or terminate the plan at any
time upon mailing a notice to participants.
For more information regarding, and an authorization form
for, the dividend reinvestment plan, please contact The Bank
of New York at 1-877-381-2537.
(d) Capital Gains Distribution Reinvestment Plan. Unless
otherwise indicated by a holder of shares of common stock of
the Fund that does not participate in the Fund's dividend
reinvestment plan, all distributions in respect of capital
gains distributions on shares of common stock held by such
holder will be automatically invested by The Bank of New
York, as agent of the common shareholders participating in
the plan, in additional shares of common stock of the Fund.
Distributions in respect of capital gains distributions on
shares of common stock that participate in the Fund's
dividend reinvestment plan will be reinvested in accordance
with the terms of such plan.
<PAGE>
In any year in which the Fund declares a capital gains
distribution, the Fund after the declaration of such
dividend and prior to its payment, will provide to each
registered holder of Fund common stock that does not
participate in the Fund's dividend reinvestment plan a cash
election card. A registered shareholder may elect to receive
cash in lieu of shares in respect of a capital gains
distribution by signing the cash election card in the
name(s) of the registered shareholder(s), and mailing the
card to The Bank of New York.
If a holder's shares of common stock, or some of them, are
registered in the name of a broker or other nominee, and the
holder wishes to receive a capital gains distribution in
cash in lieu of shares of common stock, such shareholder
must exercise that election through its nominee (including
any depositor of shares held in a securities depository).
When a distribution is reinvested under the plan, the number
of reinvestment shares is determined as follows:
(i) If, at the time of valuation, the shares
are being traded in the securities markets at net
asset value or at a premium over net asset value,
the reinvestment shares are obtained by The Bank of
New York directly from the Fund, at a price equal
to the greater of net asset value or 95% of the
then current market price, without any brokerage
commissions (or equivalent purchase costs).
(ii) If, at the time of valuation, the shares
are being traded in the securities markets at a
discount from net asset value, The Bank of New York
receives the distribution in cash, and uses it to
purchase shares in the open market, including on
the New York Stock Exchange, or in private
purchases. Shares of common stock are allocated to
participants at the average price per share, plus
any brokerage commissions (or equivalent
transaction costs), paid by The Bank of New York
for all shares purchased by it in reinvestment of
the distribution(s) paid on a particular day.
The time of valuation is the close of trading on the New
York Stock Exchange on the most recent day preceding the
date of payment of the dividend or distribution on which
that exchange is open for trading. As of that time, J.J.B.
Hilliard, W.L. Lyons, Inc., the Fund's administrator,
compares the net asset value per share as of the time of the
close of trading on the New York Stock Exchange on that day
and the last reported sale price per share on the New York
Stock Exchange, and determines which of the alternative
procedures described above are to be followed.
If as of any day on which the last reported sale price of
the Fund's shares on the New York Stock Exchange is required
to be determined pursuant to this plan, no sales of the
shares are reported on that exchange, the mean of the bid
prices and of the asked prices on that exchange as of the
time of the close of trading on the exchange will be
substituted.
No certificates will be issued representing fractional
shares, nor will The Bank of New York purchase fractional
shares in the market. The Bank of New York will send to all
registered holders of common stock that do not participate
in the Fund's dividend reinvestment plan certificates for
all shares of common stock purchased or issued pursuant to
the capital gains distribution plan and cash in lieu of
fractional shares of common stock.
<PAGE>
The Fund may change, suspend or terminate the plan at any
time upon mailing a notice to participants.
(e) Anti-takeover provisions of charter and bylaws. The
Fund's charter includes provisions that could have the
effect of limiting the ability of other entities or persons
to acquire control of the Fund or to change the composition
of its Board of Directors and could have the effect of
depriving shareholders of an opportunity to sell their
shares at a premium over prevailing market prices by
discouraging a third party from seeking to obtain control of
the Fund. The Board of Directors is divided into three
classes, each having a term of three years. At each annual
meeting of shareholders, the term of one class will expire.
This provision could delay for up to two years the
replacement of a majority of the Board of Directors. A
Director may be removed from office only by vote of the
holders of at least 75% of the shares of preferred stock or
of common stock, as the case may be, entitled to be voted on
the matter.
The Fund's charter requires the favorable vote of the
holders of at least 75% of the shares of preferred stock and
common stock of the Fund entitled to be voted on the matter,
voting together as a single class, to approve, adopt or
authorize the following:
(i) a merger or consolidation of the Fund
with another corporation,
(ii) a sale of all or substantially all of
the Fund's assets (other than in the regular course of
the Fund's investment activities), or
(iii) a liquidation or dissolution of
the Fund, unless such action has been approved,
adopted or authorized by the affirmative vote of
two-thirds of the total number of directors fixed
in accordance with the bylaws, in which case the
affirmative vote of the holders of a majority of
the outstanding shares of preferred stock and
common stock entitled to be voted on the matter,
voting together as a single class, is required.
In addition, the holders of a majority of the outstanding
shares of the preferred stock, voting separately as a class,
would be required under the 1940 Act to adopt any plan of
reorganization that would adversely affect the holders of
the preferred stock.
Finally, conversion of the Fund to an open-end investment
company would require an amendment to the charter. Such an
amendment would require the favorable vote of the holders of
a majority of the shares of preferred stock and common stock
entitled to be voted on the matter voting separately by
class. At any time, the amendment would have to be declared
advisable by the Board of Directors prior to its submission
to shareholders. Shareholders of an open-end investment
company may require the company to redeem their shares of
common stock at any time (except in certain circumstances as
authorized by or under the 1940 Act) at their net asset
value, less such redemption charge, if any, as might be in
effect at the time of a redemption. In addition, conversion
to an open-end investment company would require redemption
of all outstanding shares of the preferred stock.
<PAGE>
The Board of Directors has determined that the 75% voting
requirements described above, which are greater than the
minimum requirements under Maryland law or the 1940 Act, are
in the best interests of shareholders generally. Reference
should be made to the charter on file with the Securities
and Exchange Commission (the "SEC") for the full text of
these provisions.
2. Long-Term Debt.
--------------
Not applicable.
3. General
Not applicable.
4. Taxes. The Fund intends to continue to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as it
has in each year since the inception of its operations, so as to
be relieved of Federal income tax on net investment income and
net capital gains distributed to shareholders.
Dividends paid by the Fund from its ordinary income and
distributions of the Fund's net realized short-term capital gains
are taxable to shareholders as ordinary income. Shareholders may
be proportionately liable for taxes on income and gains of the
Fund but shareholders not subject to tax on their income will not
be required to pay tax on amounts distributed to them. The Fund
will inform shareholders of the amount and nature of the income
or gains. Dividends from ordinary income may be eligible for the
dividends-received deduction available to corporate shareholders.
Under its Charter, the Fund is required to designate dividends
paid on its preferred stock as qualifying for the
dividends-received deduction to the extent such dividends do not
exceed the Fund's qualifying income. In the event the Fund is
required to allocate all of its qualifying income to dividends on
the preferred stock, dividends payable on the common stock will
not be eligible for the dividends-received deduction. Any
distributions attributable to the Fund's net realized long-term
capital gains are taxable to shareholders as long-term capital
gains, regardless of the holding period of shares of the Fund.
The Fund intends to distribute substantially all its net
investment income and net realized capital gains in the year
earned or realized. A dividend reinvestment plan is available to
all holders of common stock of the Fund. Under the dividend
reinvestment plan, all cash distributions to participating
shareholders are reinvested in additional shares of common stock.
See Item 10.1(c).
<PAGE>
5. Outstanding Securities
(4)
(3) Amount Outstanding
(2) Amount Held by at 3/31/2000 Exclusive
(1) Amount the Fund or for its of Amount Shown
Title of Class Authorized Account Under (3)
-------------- ------------ --------- ----------
Common, $.001
par value 250,000,000 -0- 209,285,787
Preferred, $.001
par value 100,000,000 -0- 5,000
6. Securities Ratings.
------------------
Not applicable.
Item 11. Defaults and Arrears on Senior Securities
- ------- -----------------------------------------
Not applicable.
Item 12. Legal Proceedings
There are no pending legal proceedings to which the Fund, any
subsidiary of the Fund, or the Adviser is a party.
Item 13. Table of Contents of the Statement of Additional Information
- ------- ------------------------------------------------------------
Not applicable.
PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 14. Cover Page
Not applicable.
Item 15. Table of Contents
Not applicable.
Item 16. General Information and History
During the past five years, the Fund has not engaged in any
business other than that of an investment company and has not been the
subject of any bankruptcy, receivership or similar proceedings,
<PAGE>
or any other material reorganization, readjustment or succession. The Fund's
name was changed from Duff & Phelps Selected Utilities Inc. on
November 1, 1990.
Item 17. Investment Objective and Policies
1. See Item 8.2.
2. See Item 8.2.
3. See Item 8.2.
4. The Fund's portfolio turnover rate was 213.57% in 1997,
251.19% in 1998 and 223.78% in 1999. The Fund's portfolio turnover
rate has been influenced by a number of factors: the Fund's proactive
response to changes in the telecommunications, gas and electric industries;
the Fund's shift away from investment in REITs in light of the downturn in
that sector; the additional funds available for investment due to the
increased leverage of the Fund; and changes in the Fund's international
portfolio designed to benefit from capital gain opportunities that were able
to be offset by available loss carryovers.
<TABLE>
<CAPTION>
Item 18. Management
1.
<S> <C> <C>
Name, Address and Age Position(s) Held Principal Occupation(s)
- --------------------- With the Fund During Past 5 Years
------------- --------------------
Claire V. Hansen (1)(2) Chairman, President, Senior Advisor to the Board of Directors,
55 East Monroe Street Chief Executive Officer Phoenix Investment Partners, Ltd. since
Chicago, Illinois 60603 and Director November 1995; Senior Advisor to the Board of
Age: 74 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
Wallace B. Behnke(3) Director Consulting engineer since July 1989; prior
323 Glen Eagle thereto, Vice Chairman, Commonwealth Edison
Kiawah Island, Company (public utility)
South Carolina 29455
Age: 74
Harry J. Bruce(3) Director Private investor; former Chairman and Chief
1630 Sheridan Road Executive Officer, Illinois Central Railroad Co.
Wilmette, Illinois 60091.
Age: 68
<PAGE>
Name, Address and Age Position(s) Held Principal Occupation(s)
- --------------------- With the Fund During Past 5 Years
----------------- -----------------------
Franklin A. Cole(2) Director Chairman, Croesus Corporation (private
54 West Hubbard Street management and investment company); former
Chicago, Illinois 60610. Chairman and Chief Executive Officer,
Age: 73 Amerifin Corporation (formerly named Walter
E. Heller International Corporation); director,
Aon Corporation and CNA Income Shares
Gordon B. Davidson Director Of Counsel, Wyatt, Tarrant & Combs (law firm)
Citizens Plaza since September 1995 (Chairman of the
Louisville, Kentucky 40202 Executive Committee prior thereto); retired
Age: 73 director, BellSouth Corp.; former Chairman of
the Board and director, Trans Financial
Advisers, Inc.
Francis E. Jeffries (1)(2) Director Retired Chairman, Phoenix Investment Partners,
8477 Bay Colony Drive Ltd. since December 1996 (Chairman,
Naples, Florida 34108 November 1995-May 1997); Chairman and
Age: 69 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
Nancy Lampton(4) Director Chairman and Chief Executive Officer,
3 Riverfront Plaza American Life and Accident Insurance
Louisville, Kentucky 40202 Company of Kentucky; director, Constellation
Age: 57 Energy Group, Inc.
Beryl W. Sprinkel(3)(4) Director Consulting economist since January 1989;
20140 St. Andrews Drive Chairman of the Council of Economic Advisers
Olympia Fields, Illinois 60461 under President Reagan (1985-1989); member of
Age: 76 President Reagan's cabinet (1987-1989); Under
Secretary of the Treasury for Monetary Affairs
(1981-1985)
<PAGE>
Name, Address and Age Position(s) Held Principal Occupation(s)
- --------------------- With the Fund During Past 5 Years
----------------- ------------------------
David J. Vitale(3) Director Retired bank executive since 1999; Vice
1 Bank One Plaza Chairman and Director, Bank One Corporation
Chicago, Illinois 60670 1998-1999; Vice Chairman and Director, First
Age: 53 Chicago NBD Corporation, and President, The
First National Bank of Chicago, 1995-1998;
Vice Chairman, First Chicago Corporation and
The First National Bank of Chicago 1993-1998
(Director 1992-1998, Executive Vice President
1986-1993); Director, Chicago Board Options
Exchange
T. Brooks Beittel Secretary, Treasurer Secretary, Treasurer and Senior Vice President
55 East Monroe Street and Senior Vice of the Fund since January 1995; Senior Vice
Chicago, Illinois 60603 President President, Duff & Phelps Investment
Age: 50 Management Co. since 1993 (Vice President
1987-1993)
Nathan I. Partain Executive Vice Executive Vice President of the Fund since
55 East Monroe Street President, April 1998 (Senior Vice President January 1997-
Chicago, Illinois 60603 Chief Investment April 1998); Chief Investment Officer of the
Age: 43 Officer and Fund since January 1998; Assistant Secretary of
Assistant Secretary the Fund since January 1997; 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
Michael Schatt Senior Vice President Senior Vice President of the Fund since April
55 East Monroe Street 1998 (Vice President January 1997-April 1998);
Chicago, Illinois 60603 Senior Vice President, Duff & Phelps
Age: 53 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
Joseph C. Curry, Jr. Vice President Vice President of the Fund since 1988; Senior
Hilliard Lyons Center Vice President, J.J.B. Hilliard, W.L. Lyons, Inc.
Louisville, Kentucky 40202 since 1994 (Vice President 1982-1994); Vice
Age: 55 President Hilliard Lyons Trust Company;
President, Hilliard-Lyons Government Fund,
Inc.; Treasurer and Secretary, Hilliard Lyons
Growth Fund, Inc.; Treasurer, Senbanc Fund
<PAGE>
Name, Address and Age Position(s) Held Principal Occupation(s)
- --------------------- With the Fund During Past 5 years
----------------- ------------------------
Dianna P. Wengler Assistant Secretary Assistant Secretary of the Fund since April
Hilliard Lyons Center 1988; Vice President, J.J.B. Hilliard, W.L.
Louisville, Kentucky 40202 Lyons, Inc. since 1990; Vice President,
Age: 39 Hilliard-Lyons Government Fund, Inc.;
Assistant Secretary, Hilliard Lyons Growth
Fund, Inc.
- -----------------------------------------------------------------
(1) Director who is an "interested person" of the Fund, as defined in the 1940 Act.
(2) Member of 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.
(4) Director elected by holders of preferred stock.
2. Included in Item 18.1.
3. Not applicable.
4. The Fund has not paid an amount in excess of $60,000 during
1999 to any director, officer, any affiliated person of the
Fund, any affiliated person of an affiliate or principal
underwriter of the Fund.
</TABLE>
<PAGE>
The following table shows the compensation paid by the Fund to
the Fund's current directors during 1999:
COMPENSATION TABLE (1)(2)
Aggregate
Compensation
from the
Name of Director Fund
- ---------------- -------------
Wallace B. Behnke.......................................... $28,500
Harry J. Bruce............................................. 24,500
Franklin A. Cole........................................... 28,500
Gordon B. Davidson......................................... 28,500
Claire V. Hansen........................................... 0
Francis E. Jeffries (2).................................... 26,500
Calvin J. Pedersen......................................... 0
Nancy Lampton.............................................. 24,500
Beryl W. Sprinkel.......................................... 26,500
David J. Vitale (3)........................................ 0
- --------------
(1) During 1999, 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 or the Administrator 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 affiliated with 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 1999, Mr. Jeffries received aggregate compensation of
$73,500 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.
(3) Mr. Vitale was elected a director of the Fund on April 25, 2000 and
consequently received no compensation from the Fund during 1999.
5. Codes of Ethics. Each of the Fund and the Adviser has adopted
an Amended and Restated Code of Ethics (collectively, the
"Codes") under Rule 17j-1 of the 1940 Act. The Codes impose
significant restrictions on the ability of personnel subject to
the Codes to engage in personal securities transactions. Among
other things, the Codes generally prohibit covered personnel
from knowingly buying or selling securities (except for mutual
funds, U.S. government securities and money market instruments)
that are being purchased, sold or considered for purchase or
sale by the Fund unless the proposed purchases are approved in
advance by the Adviser's compliance officer. The Codes also
contain certain reporting
<PAGE>
requirements and compliance procedures. The Codes can be
reviewed and copied at the Public Reference Room of the SEC
in Washington, D.C. Information on the operation of the
Public Reference Room may be obtained by calling the SEC at
1-202-942-8090. The Codes are also available at the EDGAR
Database on the SEC's Internet site at http://www.sec.gov.
Copies of the Codes may also be obtained, after paying a
duplicating fee, by electronic request at the following
E-mail address: [email protected], or by writing the SEC's
Public Reference Section, Washington, D.C. 20549-0102. The
SEC file number for documents filed by the Fund under the
1940 Act is 811-4915.
Item 19. Control Persons and Principal Holders of Securities
1. The Fund does not consider that any person "controls" the
Fund within the meaning of this item. For information
concerning the Fund's officers and directors, see Item 18.
2. No person is known by the Fund to own of record or
beneficially five percent or more of any class of the Fund's
outstanding equity securities.
3. As of December 31, 1999, the officers and directors of the
Fund owned in the aggregate 231,913 shares of Common Stock,
representing less than 1% of the Fund's outstanding Common
Stock.
Item 20. Investment Advisory and Other Services
1. The Adviser is a wholly-owned subsidiary of Phoenix Investment
Partners, which is an indirect, majority-owned subsidiary of
Phoenix Home Life Mutual Insurance Company. The Phoenix
Investment Partners organization has provided investment research
regarding public utility securities since its founding in 1932.
Phoenix Investment Partners is one of the nation's largest
independent investment research organizations, providing to
institutional investors equity and fixed-income investment
research. Through other subsidiaries it provides financial
consulting and investment banking services. See Item 18 for the
names and capacities of affiliated persons of the Fund who are
also affiliated persons of the Adviser.
For a discussion of the method of calculating the advisory fee
under the Advisory Agreement, see Item 9.1(b). The investment
advisory fees paid by the Fund totaled $14,839,366 in 1999,
$14,713,237 in 1998 and $12,730,134 in 1997.
2. See Item 9.1(b) for a discussion of the Service Agreement.
3. No fees, expenses or costs of the Fund were paid by persons
other than the Adviser or the Fund.
4. See Item 9.1 (d) for a discussion of the Administration
Agreement. The administrative fees paid by the Fund totaled
$3,717,873 in 1999, $3,692,647 in 1998 and $2,997,616 in
1997.
5. Not applicable.
6. See Item 9.1 (e).
<PAGE>
7. The Fund's independent public accountant is Arthur Andersen LLP.
8. Not applicable.
Item 21. Brokerage Allocation and Other Practices
1. The Adviser has discretion to select brokers and dealers to
execute portfolio transactions initiated by the Adviser. The Fund
paid brokerage commissions in the aggregate amount of $8,510,655,
$9,040,180 and $7,462,774 during 1999, 1998 and 1997,
respectively, not including the gross underwriting spread on
securities purchased in underwritten public offerings.
2. The Administrator received $0, $5,750 and $39,022 or
approximately 0%, 0.06% and 0.5% of total brokerage commissions
in 1999, 1998 and 1997, respectively, for effecting transactions
involving approximately 0.0%, 0.04% and 0.4% of the aggregate
dollar amount of transactions in which the Fund paid brokerage
commissions. The differences between the respective percentages
of brokerage commissions paid to the Administrator and the
corresponding percentages of aggregate dollar amount of
transactions in which the Fund paid brokerage commissions
resulted from the fact that the Fund generally pays a fixed
commission per share of common stock, regardless of the price
paid for a particular share.
3. In selecting brokers or dealers to execute portfolio
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 to
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. 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.
4. Neither the Fund nor the Adviser, during the last fiscal year,
pursuant to an agreement or understanding with a broker or
otherwise through an internal allocation procedure, directed the
Fund's brokerage transactions to a broker or brokers because of
research services.
5. The Fund has not acquired during its most recent fiscal year
securities of its regular brokers or dealers as defined in Rule
10b-1 under the 1940 Act, or their parents.
Item 22. Tax Status
The Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as it has in each year
since the inception of its operations, so as to be relieved of Federal
income tax on net investment income and net capital gains distributed to
shareholders.
<PAGE>
Dividends paid by the Fund from its ordinary income and
distributions of the Fund's net realized short-term capital gains are
taxable to shareholders as ordinary income. Dividends from ordinary income
may be eligible for the dividends-received deduction available to corporate
shareholders. Under its Charter, the Fund is required to designate
dividends paid on its preferred stock as qualifying for the
dividends-received deduction to the extent such dividends do not exceed the
Fund's qualifying income. In the event the Fund is required to allocate all
of its qualifying income to dividends on the preferred stock, dividends
payable on the common stock will not be eligible for the dividends-received
deduction. Any distributions attributable to the Fund's net realized
long-term capital gains are taxable to shareholders as long-term capital
gains, regardless of the holding period of shares of the Fund.
The Fund intends to distribute substantially all its net
investment income and net realized capital gains in the year earned or
realized. A dividend reinvestment plan is available to all holders of
common stock of the Fund. Under the dividend reinvestment plan, all cash
distributions to participating shareholders are reinvested in additional
shares of common stock. See Item 10.1(c).
As of December 31, 1999, the Fund had tax capital loss carryforwards
of $121,837,107 which expire beginning on December 31, 2002.
Item 23. Financial Statements
The financial statements listed below are incorporated herein by
reference from the Fund's Annual Report to Shareholders for the year ended
December 31, 1999 as filed on Form N-30D with the Securities and Exchange
Commission on February 29, 2000 (no. 811-4915). All other portions of the
Annual Report to Shareholders are not incorporated herein by reference and
are not part of the Registration Statement. A copy of the Annual Report to
Shareholders may be obtained without charge by writing to the Fund at its
address at 55 East Monroe Street, Chicago, Illinois 60603 or by calling the
Administrator toll-free at 888-878-7845.
- Report of independent public accountants
- Schedule of Investments at December 31, 1999
- Balance Sheet at December 31, 1999
- Statement of Operations for the year ended December 31, 1999
- Statement of Changes in Net Assets for the years ended
December 31, 1999 and 1998
- Statement of Cash Flows for the year ended December 31, 1999
- Notes to Financial Statements
- Financial Highlights - Selected Per Share Data and Ratios
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
1. Financial Statements
In Part B:
Report of independent public accountants
Schedule of Investments at December 31, 1999
Balance Sheet at December 31, 1999
Statement of Operations for the year ended
December 31, 1999
Statement of Changes in Net Assets for the years ended
December 31, 1999 and 1998
Statement of Cash Flows for the year ended
December 31, 1999
Notes to Financial Statements
Financial Highlights - Selected Per Share Data and
Ratios
In Part C:
None
2. Exhibits
a.1 Articles of Incorporation (Incorporated by reference
from post-effective amendment no. 38 to Registrant's
registration statement under the Investment Company Act
of 1940 on Form N-2, no. 811-4915)
a.2 Amendment to Articles of Incorporation (Incorporated by
reference from post-effective amendment no. 38 to
Registrant's registration statement on Form N-2, no.
811-4915)
a.3 Second Amendment to Articles of Incorporation
(Incorporated by reference from post-effective
amendment no. 38 to Registrant's registration statement
on Form N-2, no. 811-4915)
a.4 Form of Articles Supplementary creating Remarketed
Preferred Stock, Series A, B, C, D and E
(Incorporated by reference from post-effective
amendment no. 38 to Registrant's registration
statement on Form N-2, no. 811-4915)
<PAGE>
a.5 Form of Articles Supplementary creating Remarketed
Preferred Stock, Series I (Incorporated by reference
from post-effective amendment no. 38 to Registrant's
registration statement on Form N-2, no. 811-4915)
a.6 Third Amendment to Articles of Incorporation
(Incorporated by reference from post-effective
amendment no. 38 to Registrant's registration statement
on Form N-2, no. 811-4915)
a.7 Fourth Amendment to Articles of Incorporation
(Incorporated by reference from post-effective
amendment no. 38 to Registrant's registration statement
on Form N-2, no. 811-4915)
a.8 Fifth Amendment to Articles of Incorporation
(Incorporated by reference from post-effective
amendment no. 38 to Registrant's registration statement
on Form N-2, no. 811-4915)
b. Bylaws (as amended through July 29, 1998) (Incorporated
by reference from post-effective amendment no. 40 to
Registrant's registration statement on Form N-2, no.
811-4915)
c. None
d.1 Specimen common stock certificate (Incorporated by
reference from Registrant's registration statement on
Form N-2, no. 33-10421)
d.2 Form of certificate of Remarketed Preferred Stock,
Series A (Incorporated by reference from pre-effective
amendment no. 2 to Registrant's registration statement
on Form N-2, no. 33-22933)
d.3 Form of certificate of Remarketed Preferred Stock,
Series B (Incorporated by reference from pre-effective
amendment no. 1 to Registrant's registration statement
on Form N-2, no. 33-24101)
d.4 Form of certificate of Remarketed Preferred Stock,
Series C (Incorporated by reference from pre-effective
amendment no. 1 to Registrant's registration statement
on Form N-2, no. 33-24100)
d.5 Form of certificate of Remarketed Preferred Stock,
Series D (Incorporated by reference from pre-effective
amendment no. 1 to Registrant's registration statement
on Form N-2, no. 33-24102)
d.6 Form of certificate of Remarketed Preferred Stock,
Series E (Incorporated by reference from pre-effective
amendment no. 1 to Registrant's registration statement
on Form N-2, no. 33-24099)
d.7 Form of certificate of Remarketed Preferred Stock,
Series I (Incorporated by reference from pre-effective
amendment no. 2 to Registrant's registration statement
on Form N-2, no. 33-22933)
<PAGE>
e. None
f. None
g.1 Investment Advisory Agreement (Incorporated by
reference from post-effective amendment no. 39 to
Registrant's registration statment under the Investment
Company Act of 1940 on Form N-2, no. 811-4915)
g.2 Service Agreement (Incorporated by reference from
post-effective amendment no. 39 to Registrant's
registration statement under the Investment Company
Act of 1940 on Form N-2, no. 811-4915)
g.3 Administration Agreement (Incorporated by reference
from post-effective amendment no. 39 to Registrant's
registration statement under the Investment Company
Act of 1940 on Form N-2, no. 811-4915)
h. Not applicable
i. Not applicable
j. Custodian agreement (Incorporated by reference from
Registrant's registration statement on Form N-2, no.
33-10421)
k.1 Loan agreement (Incorporated by reference from
Registrant's registration statement on Form N-2, no.
33-10421)
k.2 Amendment dated November 15, 1988 to Loan Agreement
(Incorporated by reference from post-effective
amendment no. 1 to Registrant's registration statement
on Form N-2, no. 33-20433)
k.3 Form of Remarketing Agreement (Incorporated by
reference from pre-effective amendment no. 3 to
Registrant's registration statement on Form N-2, no.
33-22933)
k.4 Form of Paying Agent Agreement (Incorporated by
reference from pre-effective amendment no. 3 to
Registrant's registration statement on Form N-2, no.
33-22933)
l. Not applicable
m. Not applicable
n. Not applicable
o. Not applicable
p. Subscription Agreement for initial capital
(Incorporated by reference from Registrant's
registration statement on Form N-2, no. 33-10421)
q. Not applicable
r.1 Amended and Restated Code of Ethics of Registrant
r.2 Code of Ethics of Duff & Phelps Investment Management
Co. (investment adviser to Registrant)
<PAGE>
s. Financial Data Schedule
Item 25. Marketing Arrangements
Not applicable.
Item 26. Other Expenses of Issuance and Distribution
- ------- -------------------------------------------
Not applicable.
Item 27. Persons Controlled by or Under Common Control
- ------- ---------------------------------------------
The Fund does not consider that it is controlled, directly or
indirectly, by any person. The information on Item 20 is incorporated by
reference.
Item 28. Number of Holders of Securities
Number of
Record Holders
Title of Class March 31, 2000
-------------- --------------
Common Stock, $.001 par value 32,383
Preferred Stock, $.001 par value 1
Item 29. Indemnification
Section 2-418 of the General Corporation Law of Maryland
authorizes the indemnification of directors and officers of Maryland
corporations under specified circumstances.
Article Ninth of the Articles of Incorporation (exhibit 1.1 to
the Registrant's registration statement no. 33-10421, which is incorporated
by reference) provides that the Registrant shall indemnify its directors
and officers under specified circumstances; the provision contains the
exclusion required by section 17(h) of the Investment Company Act of 1940.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "1933 Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person in connection with the
securities being registered), the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.
Registrant, its directors and officers, its Adviser and persons
affiliated with them are insured under a policy of insurance maintained by
Registrant and its Adviser, within the limits and subject to the
<PAGE>
limitations of the policy, against certain expenses in connection with the
defense of actions, suits or proceedings and certain liabilities that might
be imposed as a result of such actions, suits or proceedings, to which they
are parties by reason of being or having been such directors or officers.
The policy expressly excludes coverage for any director or officer whose
personal dishonesty, fraudulent breach of trust, lack of good faith, or
intention to deceive or defraud has been finally adjudicated or may be
established or who willfully fails to act prudently.
Item 30. Business and Other Connections of Investment Adviser
- ------- ----------------------------------------------------
Neither Duff & Phelps Investment Management Co., nor any of its
directors or executive officers, has at any time during the past two years
been engaged in any other business, profession, vocation or employment of a
substantial nature either for its or his own account or in the capacity of
director, officer, employee, partner or trustee, except as indicated in
this Registration Statement.
Item 31. Location of Accounts and Records
All accounts, books and other documents required to be maintained
by Section 31 (a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are maintained at the offices of the Fund (55 East
Monroe Street, Chicago, Illinois 60603), the Adviser, the Administrator and
the Fund's custodian and transfer agents. See Items 9.1(b), 9.1(d) and
9.1(e) for the addresses of the Adviser, the Administrator and the Funds
custodian and transfer agents.
Item 32. Management Services
- ------- -------------------
Not applicable.
Item 33. Undertakings
- ------- ------------
Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of
1940, the Registrant has duly caused this amendment to its registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, and State of Illinois, on May 1, 2000.
DUFF & PHELPS UTILITIES INCOME INC.
By /s/ Nathan I. Partain
--------------------------------------
Nathan I. Partain
Executive Vice President, Chief Investment
Officer and Assistant Secretary
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
- ------- ------------------------------------------- --------------
r.1 Amended and Restated Code of Ethics of Registrant
r.2 Amended and Restated Code of Ethics of Duff &
Phelps Investment Management Co. (investment
adviser to Registrant)
s. Financial Data Schedule
Exhibit r.1
DUFF & PHELPS UTILITIES INCOME INC.
-----------------------------------
AMENDED AND RESTATED CODE OF ETHICS
-----------------------------------
I. Applicability
This Amended and Restated Code of Ethics (the "Code"), adopted by
the Board of Directors of Duff & Phelps Utilities Income Inc. (the "Fund")
pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended
(the "Act"), establishes rules of conduct for "Covered Persons" or "Access
Persons" (each as defined in this Code) of the Fund. For purposes of this
Code, "Covered Person" or "Access Person" shall mean the following persons:
(A) any employee of the Fund or any company in a control
relationship to the Fund who, in connection with his regular
functions or duties, makes, or participates in decisions or
obtains information, regarding the purchase or sale of securities
by the Fund (an "Advisory Person");
(B) any director or officer of the Fund; and
(C) any natural person in a control relationship to the
Fund who obtains information concerning recommendations made to
the Fund with regard to the purchase or sale of a security.
For purposes of this Article I, a person does not become a Covered
Person solely by reason of (i) normally assisting in the preparation of
public reports or receiving public reports, but not receiving information
about current recommendations or trading; or (ii) a single instance of
obtaining knowledge of current recommendations or trading activity, or
infrequently and inadvertently obtaining such knowledge.
II. Statement of General Principles
The general fiduciary principles that govern the personal trading
activities of a Covered Person are as follows:
(A) the duty at all times to place the interests of
the shareholders of the Fund first;
-1-
<PAGE>
(B) the requirement that all personal securities
transactions be conducted in a manner which does not interfere
with the Fund's portfolio transactions so as to avoid any actual
or potential conflict of interest or any abuse of an individual's
position of trust and responsibility; and
(C) the fundamental standard that Covered Persons should
not take inappropriate or unfair advantage of their relationship
with the Fund.
Covered Persons must adhere to these general principles as well as
comply with the Code's specific provisions.
III. Prohibitions
(A) No Covered Person shall purchase or sell, directly or
indirectly, any security in which he has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership
(as defined in Attachment A hereto) and which he knows at the time
of such purchase or sale:
(1) is being considered for purchase or sale by
the Fund; or
(2) is being purchased or sold by the Fund.
No Advisory Person shall purchase or sell a security
within at least 15 calendar days before and after the Fund
purchases or sells such security. No Advisory Person shall profit
in the purchase and sale or sale and purchase, of the same (or
equivalent) securities of an issuer within 60 calendar days if the
Fund purchases or sells the same (or equivalent) securities of
such issuer during such 60-day period. Any profit realized on such
short-term trades shall be disgorged.
For purposes of Article III(A)(1), a security is "being
considered for purchase or sale" when a recommendation to purchase
or sell a security has been made and communicated and, with
respect to the person making the recommendation, when such person
receives information that would lead such person in his or her
normal course of business to consider making such a
recommendation.
(B) No Covered Person shall recommend any securities
transaction by the Fund without having disclosed his interest, if
any, in such securities or the issuer of the securities, including
without limitation:
-2-
<PAGE>
(1) such person's direct or indirect beneficial
ownership of any securities of such issuer;
(2) any contemplated transaction by such person
in such securities;
(3) any position with such issuer or its
affiliates; and
(4) any present or proposed business
relationship between such issuer or its affiliates and
such person or any party in which such person has a
significant interest.
(C) No Covered Person shall, directly or indirectly in
connection with the purchase or sale of any securities held or to
be acquired by the Fund:
(1) employ any device, scheme or artifice to
defraud the Fund; or
(2) make to the Fund any untrue statement of a
material fact or omit to state to the Fund a material
fact necessary in order to make the statements made, in
light of the circumstances under which they are made, not
misleading; or
(3) engage in any act, practice or course of
business which operates or would operate as a fraud or
deceit upon the Fund.
(D) No Covered Person shall:
(1) purchase, directly or indirectly, or by
reason of such transaction acquire, any direct or
indirect beneficial ownership (as defined in Attachment A
hereto) of any securities of an issuer of the type in
which the Fund typically invests in an initial public
offering or a private placement transaction, without
prior approval in accordance with this Code; or
(2) accept any gift or other thing of more than
de minimus value from any person or entity that does
business with or on behalf of the Fund.
For purposes of this Code, the term "security" shall have the
meaning set forth in Section 2(a)(36) of the Act, provided that the term
"security" shall not include securities issued by the Government of the
United States, short term securities which are "government securities" as
defined in Section 2(a)(16) of the Act, bankers' acceptances, bank
certificates of deposit,
-3-
<PAGE>
commercial paper, shares of registered open-end investment companies and
such other money market instruments as designated by the Board of Directors
of the Fund.
IV. Exempt Transactions
The prohibitions described in paragraph (A) of Article III shall
not apply to:
(A) purchases or sales effected in any account over which
the Covered Person has (i) no direct or indirect influence or
control or (ii) given discretionary investment authority to an
independent third party;
(B) purchases or sales of securities of an issuer of
the type in which the Fund does not typically invest;
(C) purchases or sales that are non-volitional on the
part of the Covered Person;
(D) purchases that are part of an automatic dividend
reinvestment plan;
(E) purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from the issuer, and sales
of such rights so acquired;
(F) any securities transaction, or series of related
transactions, other than transactions by or on behalf of an
Advisory Person, involving 3,000 shares or less in the aggregate,
if the issuer has a market capitalization (outstanding shares
multiplied by the current price per share) greater than $300
million; or
(G) purchases or sales for which the Covered Person has
received prior approval from the Compliance Officer of Duff &
Phelps Investment Management Company (the "DPIM Compliance
Officer") in accordance with this Code.
V. Prior Approval for Non-Exempt Transactions
A Covered Person shall not be required to obtain prior approval
for any personal securities transaction that is exempt by Article IV
hereof. In all other instances, upon written request from a Covered Person
as provided in Article V(C) below, the DPIM Compliance Officer shall have
the sole discretion to pre-approve a personal securities transaction, and
thereby exempt such transaction from the restrictions of this Code, without
being required to specify any reason for such determination. The
-4-
<PAGE>
DPIM Compliance Officer shall make such determination in accordance with
the following:
(A) Prior approval shall be granted only if a purchase or
sale of securities is consistent with the purposes of this Code
and Section 17(j) of the Act. To illustrate, a purchase or sale
shall be considered consistent with those purposes if such
purchase or sale is only remotely potentially harmful to the Fund
because such purchase or sale would be unlikely to affect a highly
institutional market, or because such purchase or sale is clearly
not related economically to the securities held, purchased or sold
by the Fund.
(B) Prior approval shall take into account, among other
factors:
(1) whether the investment opportunity should be
reserved for the Fund and its shareholders and whether
the opportunity is being offered to the Covered Person by
virtue of the Covered Person's position with the Fund;
(2) whether the amount or nature of the
transaction or person making it is likely to affect the
price or market for the security;
(3) whether the Covered Person making the
proposed purchase or sale is likely to benefit from
purchases or sales being made or being considered by the
Fund;
(4) whether the security proposed to be purchased
or sold is one that would qualify for purchase or sale
by the Fund; and
(5) whether the transaction is non-volitional on
the part of the individual, such as receipt of a stock
dividend or a sinking fund call.
(C) To obtain prior approval, Covered Persons must submit
in writing a completed and executed Request for Permission to
Engage in Personal Transaction (a form of which is appended hereto
as Attachment B), which shall set forth the details of the
proposed transaction. Approval of the transaction as described on
such form shall be evidenced by the signature of the DPIM
Compliance Officer thereon. A copy of all prior approval forms,
with all required signatures, shall be retained by the DPIM
Compliance Officer.
-5-
<PAGE>
If approval is given to the Covered Person in accordance with this
Code to engage in a securities transaction, the Covered Person is under an
affirmative obligation to disclose that position if such Covered Person
plays a material role in the Fund's subsequent investment decision
regarding the same issuer. In such circumstances, a review of the Fund's
investment decision to purchase securities of the issuer by investment
personnel with no personal interest in the issuer shall be conducted.
Approval granted to the Covered Person in accordance with this
Code is only effective for seven days from the date of such approval. If
the trade is not made within seven days, a new clearance must be obtained.
VI. Reporting
(A) Every Covered Person must submit a report (a form of
which is appended as Attachment C) to the DIPM Compliance Officer
not later than 10 days after each calendar quarter containing the
information set forth below about each transaction, if any, by
which the Covered Person acquires any beneficial ownership of a
security; provided, however, that:
(1) a Covered Person shall not be required to
include in such report any transaction effected for any
account over which such person (i) does not have any
direct or indirect influence or control or (ii) has given
discretionary authority to an independent third party;
and
(2) any person who is a Covered Person with
respect to the Fund by virtue of being a director, but
who is not an "interested person" (as defined in the Act)
with respect to the Fund, shall be required to report a
transaction only if such person, at the time of that
transaction, knew, or in the ordinary course of
fulfilling his official duties as a director of the Fund
should have known, that during the 15-day period
immediately preceding or after the date of the
transaction by such person, the security such person
purchased or sold is or was purchased, or sold by the
Fund or was being considered for purchase or sale by the
Fund.
(B) A report must contain the following information:
(1) the date of the transaction, the title and the
number of shares, and the principal amount of each
security involved;
-6-
<PAGE>
(2) the nature of the transaction (i.e.,
purchase, sale or other acquisition or disposition);
(3) the price at which the transaction was
effected; and
(4) the name of the broker, dealer or bank with
or through whom the transaction was effected.
Any report submitted to comply with the requirements of this
Article VI may contain a statement that the report shall not be construed
as an admission by the person making such report that he has any direct or
indirect beneficial ownership in the security to which the report relates.
A Covered Person will be deemed to have complied with the
requirements of this Article VI by (i) causing to be sent to the DPIM
Compliance Officer duplicate monthly brokerage statements on all
transactions required to be reported hereunder, or (ii) providing to the
DPIM Compliance Officer the requisite information on all transactions
required to be reported hereunder through a transaction monitoring system,
which may or may not be automated, each in a manner acceptable to the DPIM
Compliance Officer. All Advisory Persons shall have duplicate monthly
brokerage statements sent directly to the DPIM compliance officer.
VII. Administration and Procedural Matters
The DPIM Compliance Officer shall:
(A) furnish a copy of this Code to each Covered
Person;
(B) notify each Covered Person of his or her
obligation to file reports as provided by this Code;
(C) report to the Board of Directors the facts contained
in any reports filed with the DPIM Compliance Officer pursuant to
this Code when any such report indicates that a Covered Person
purchased or sold a security held or to be acquired by the Fund;
(D) supervise the implementation of this Code by the
Adviser and the enforcement of the terms hereof by the
Adviser;
(E) determine whether any particular securities
transaction should be exempted pursuant to the provisions of this
Code;
-7-
<PAGE>
(F) issue either personally or with the assistance of
counsel as may be appropriate, any interpretation of this Code
which may appear consistent with the objectives of Rule 17j-1 and
this Code;
(G) conduct such inspections or investigations as shall
reasonably be required to detect and report any apparent
violations of this Code to the Board of Directors of the Fund or
any Committee appointed by them to deal with such information; and
(H) maintain and cause to be maintained in an easily
accessible place, the following records:
(1) a copy of any Code adopted pursuant to Rule
17j-1 which has been in effect during the past five (5)
years;
(2) a record of any violation of any such Code and
of any action taken as a result of such violation;
(3) a copy of each report made by the DPIM
Compliance Officer during the past five (5) years;
(4) a list of all persons who are, or within the
past five (5) years have been, required to make reports
pursuant to Rule 17j-1 and this Code with an appropriate
description of their title or employment.
(I) report to the Board of Directors, no later than April
30 of each year, the number of reports filed with the DPIM
Compliance Officer pursuant to this Code during the preceding
calendar year, the failure during the preceding calendar year by
any Covered Person to file a report pursuant to this Code when
such a report should have been filed, the number of such reports
filed during the preceding calendar year that indicated that a
Covered Person purchased or sold a security held or to be acquired
by the Fund and such other matters as the Board of Directors may
request.
VIII. Sanctions
Upon discovering that a Covered Person has not complied with the
requirements of this Code, the Board of Directors of the Fund may impose on
such Covered Person whatever sanctions the Board deems appropriate,
including, among other things, a letter of censure, suspension or
termination of such Covered Person's position with the Fund and/or
restitution of an amount equal to the difference between the price paid or
received by the Fund and the more advantageous price paid or received by
such Covered Person.
The Board of Directors, in their discretion, may impose any
of the sanctions set forth in this Article VIII for any
-8-
<PAGE>
violations of the requirements of this Code, including but not limited to,
the filing by any Covered Person of any false, incomplete or untimely
reports contemplated by Article VI of the Code.
IX. Confidentiality
All information obtained from any Covered Person hereunder shall
be kept in strict confidence, except that reports of securities
transactions hereunder will be made available to the Securities and
Exchange Commission or any other regulatory or self-regulatory organization
only to the extent required by law or regulation.
X. Other Laws, Rules and Statements of Policy
Nothing contained in this Code shall be interpreted as relieving
any Covered Person from acting in accordance with the provision of any
applicable law, rule or regulation or any other statement of policy or
procedure governing the conduct of such person adopted by the Fund.
XI. Further Information
If any person has any question with regard to the applicability of
the provisions of this Code generally or with regard to any securities
transaction or transactions, he or she should consult the DPIM Compliance
Officer.
XII. Certification By Covered Persons
All Covered Persons of the Fund must submit a certificate (a form
of which is appended as Attachment D) that they have read and understand
this Code and recognize that as a Covered Person they are subject to the
terms of this Code. All Covered Persons of the Fund shall agree to certify
on an annual basis that they have complied with the requirements of this
Code and that they have disclosed or reported all personal securities
transactions required to be disclosed or reported pursuant to the
requirements of this Code.
Dated: January 29, 1998.
-9-
<PAGE>
Attachment A
------------
The term "beneficial ownership" as used in the attached Code of
Ethics (the "Code") is to be interpreted by reference to Rule 16a-1 under
the Securities Exchange Act of 1934, as amended (the "Rule"), except that
the determination of direct or indirect beneficial ownership for purposes
of the Code must be made with respect to all securities that a Covered
Person has or acquires. Under the Rule, a person is generally deemed to
have beneficial ownership of securities if: (1) the person, directly or
indirectly, through any contract, arrangement, understanding, relationship
or otherwise, has or shares (a) voting power, which includes the power to
vote, or to direct the voting of, the securities and/or (b) investment
power, which includes the power to dispose of, or to direct the disposition
of, the securities; and (2) the person, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or
shares a direct or indirect pecuniary interest in the securities. A person
is deemed to have voting and/or investment power with respect to securities
within the meaning of the Rule if the person has the right to acquire
beneficial ownership of the security within 60 days, including any right to
acquire the security; through the exercise of any option, warrant or right;
through the conversion of a security; pursuant to the power to revoke a
trust, discretionary account or similar arrangement; or pursuant to the
automatic termination of a trust, discretionary account or similar
arrangement.
The term "pecuniary interest" in particular securities is
generally defined in the Rule to mean the opportunity, directly or
indirectly, to profit or share in any profit derived from a transaction in
the securities. A person is deemed to have an "indirect pecuniary interest"
within the meaning of the Rule in any securities held by members of the
person's immediate family sharing the same household, the term "immediate
family" including any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father- in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, as well as adoptive
relationships. Under the Rule, an indirect pecuniary interest also
includes, among other things: a general partner's proportionate interest in
the portfolio securities held by a general or limited partnership; a
person's right to dividends that is separated or separable from the
underlying securities; a person's interest in certain trusts; and a
person's right to acquire equity securities through the exercise or
conversion of any derivative security, whether or not presently
exercisable, the term "derivative security" being generally defined as any
option, warrant, convertible security, stock appreciation right or similar
right with an exercise or conversion privilege at a price related to an
equity security, or similar securities with, or value derived from, the
value of an equity security. For purposes of the Rule, a person who is a
shareholder of a corporation or similar entity is not deemed to have a
pecuniary interest in portfolio securities held by the corporation or
entity, so long as the shareholder is not a controlling shareholder of the
corporation or the entity and does not have or share investment control
over the corporation's or the entity's portfolio.
A-1
<PAGE>
Attachment B
DUFF & PHELPS UTILITIES INCOME INC.
REQUEST FOR PERMISSION TO
ENGAGE IN PERSONAL TRANSACTION
To Compliance Officer, Duff & Phelps Investment Management Company:
On each of the dates proposed below, I hereby request permission
to effect a transaction in securities as indicated below on behalf of
myself, my family (spouse, minor children or adults living in my
household), trusts of which I am trustee or other account in which I have a
beneficial ownership interest or legal title, and which are required to be
pre-approved pursuant to the Second Amended and Restated Code of Ethics
adopted by Duff & Phelps Utilities Income Inc. pursuant to Rule 17j-1 under
the Investment Company Act of 1940, as amended.
(Use approximate dates and amounts of proposed transactions.)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Nature of
Proposed Transaction
Name of Date of No. of Shares or Dollar Amount (Purchase, Sale, Broker/Dealer or
Security Transaction Principal Amount of Transaction Other) Bank Price
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Name:__________________________________
Position
with Fund:_____________________________
Date:_________________________________ Signature:_____________________________
Permission Granted [ ] Permission Denied [ ]
Date:_________________________________ Signature:_____________________________
DPIM Compliance Officer
</TABLE>
<PAGE>
Attachment C
DUFF & PHELPS UTILITIES INCOME INC.
QUARTERLY REPORT OF SECURITIES TRANSACTIONS
To Compliance Officer, Duff & Phelps Investment Management Company:
On the dates indicated, the following transactions, if any, were
effected in securities of which I, my family (spouse, minor children or
adults living in my household) or trusts of which I am trustee,
participated or acquired, direct or indirect "beneficial ownership," and
which are required to be reported pursuant to the Second Amended and
Restated Code of Ethics (the "Code") adopted by Duff & Phelps Utilities
Income Inc. pursuant to Rule 17j-1 under the Investment Company Act of
1940, as amended (the "Act"). If no such transactions were effected, I have
so indicated by typing or printing "NONE."
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
No. of Nature of
Date of Shares or Dollar Transaction Broker/
Name of Trans- Principal Amount of (Purchase, Dealer
Security Action Amount Transaction Sale, Other) Price or Bank
- -------- ------ --------- ----------- ------------ ----- -------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
This report (i) excludes transactions with respect to which I had no direct
or indirect influence or control, (ii) any other transactions not required
to be reported under the Code, and (iii) is not an admission that I have or
had any direct or indirect beneficial ownership in the securities listed
above.
Date: ______________ Signature:___________________________
Print Name:__________________________
Position with
Fund:________________________________
<PAGE>
Attachment D
FORM OF CERTIFICATION OF COVERED PERSONS
Duff & Phelps Investment Management Company
55 East Monroe Street
Chicago, Illinois 60603
Attention: Compliance Officer
Gentlemen:
[Covered Person] hereby certifies that:
I have read and understand the Code of Ethics of Duff & Phelps
Utilities Income Inc. and recognize that I am subject thereto. I hereby
agree to certify on an annual basis that I have complied with the
requirements of the Code of Ethics and I have disclosed or reported all
personal securities transactions required to be disclosed or reported
pursuant to the requirements of the Code of Ethics of Duff & Phelps
Utilities Income Inc.
IN WITNESS WHEREOF, the undersigned has caused this Certification
to be executed and delivered as of the date hereof.
[COVERED PERSON]
By:________________________
Name:
Title:
Dated: ________________________
Exhibit r.2
DUFF & PHELPS INVESTMENT MANAGEMENT CO.
---------------------------------------
AMENDED AND RESTATED CODE OF ETHICS
-----------------------------------
1. Statement of Ethical Principles
When Adviser Access Persons covered by the terms of this Code of
Ethics engage in personal securities transactions, they must
adhere to the following general principles as well as to the
Code's specific provisions:
A. At all times, the interests of Adviser Clients must be
paramount;
B. Personal transactions must be conducted consistent with
this Code of Ethics in a manner that avoids any actual or
potential conflict of interest; and
C. No inappropriate advantage should be taken of any position
of trust and responsibility.
2. Definitions
A. "Access Person" means any director, officer, general
partner, Portfolio Manager or Advisory Person of the
Adviser or (i) any temporary or permanent employee of the
Adviser or of any company in a control relationship to
the Adviser, who, in connection with his regular
functions or duties, makes, participates in or obtains
information regarding the purchase or sale of a security
by the Adviser for the Client, or whose functions relate
to the making of any recommendations with respect to such
purchases or sales; and (ii) any natural person in a
control relationship to the Adviser who obtains
information concerning recommendations made to the Client
with regard to the purchase or sale of a security. For
purposes of Section 4, "Access Person" shall not include
Advisory Persons nor Portfolio Managers. The Adviser's
Compliance Officer shall maintain a list of the Adviser's
Access Persons.
B. "Adviser" means Duff & Phelps Investment Management Co.
C. "Advisory Person" means any Portfolio Manager or other
investment person, such as an analyst or trader, who
provides information and advice to a Portfolio Manager or
assists in the execution of the investment decisions. For
purposes of Section 4, "Advisory Person" shall not
include Portfolio Managers.
1
<PAGE>
D. A security is "being considered for purchase or sale"
when a recommendation to purchase or sell a security has
been made and communicated and, with respect to the
Advisory Person making the recommendation, when such
person seriously considers making such a recommendation.
E. "Beneficial ownership" shall be interpreted in the
same manner as it would be in determining whether a
person is subject to the provisions of Section 16 of the
Securities Exchange Act of 1934 and the rules and
regulations thereunder, except that the determination of
direct or indirect beneficial ownership shall apply to
all securities which an Access Person has or acquires.
F. Client means each and every investment company, or
series thereof, or other account managed by the Adviser,
individually and collectively.
G. "Control" shall have the same meaning as that set forth
in Section 2(a)(9) of the Investment Company Act, as amended.
H. "Initial Public Offering" means a public sale of an issue
not previously offered to the public.
I. "Managed Fund" shall mean those Clients, individually and
collectively, for whom the Portfolio Manager makes buy and
sell decisions.
J. "Portfolio Manager" means the person entrusted to make
the buy and sell decisions for a Client.
K. "Private Placement" shall have the same meaning as that
set forth in Section 4(2) of the Securities Exchange Act.
L. "Purchase or sale of a security" includes inter alia,
the writing of an option or the purchase or sale of a
security that is exchangeable for or convertible into, a
security that is held or to be acquired for a Client.
M. "Security" shall have the meaning set forth in Section
2(a)(36) of the Investment Company Act, as amended,
except that it shall not include securities issued by the
Government of the United States, bankers' acceptances,
bank certificates of deposit, commercial paper and shares
of registered open-end investment companies.
3. Exempted Transactions
The prohibitions of Section 4 of this Code shall not apply to:
2
<PAGE>
A. Purchases or sales effected in any account over which the
Access Person has no direct or indirect influence or control
in the reasonable estimation of the Compliance Officer.
B. Purchases or sales of securities (1) not eligible for
purchase or sale by the Client; or (2) specified from
time to time by the Directors, subject to such rules, if
any, as the Directors shall specify.
C. Purchases or sales which are non-volitional on the part
of either the Access Person or the Client.
D. Purchases of shares necessary to establish an automatic
dividend reinvestment plan or pursuant to an automatic
dividend reinvestment plan, and subsequent sales of such
securities.
E. Purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from
such issuer, and sales of such rights so acquired.
4. Prohibited Activities
A. IPO Rule: No Advisory Person or Portfolio Manager may
purchase securities in an Initial Public Offering, except
with the prior approval of the Compliance Officer of the
Adviser.
B. Private Placement Rule: No Advisory Person or
Portfolio Manager may purchase securities in a Private
Placement unless such purchase has been approved by the
Compliance Officer of the Adviser. Any such approved
purchase should be disclosed to the Client if that
issuer's securities are being considered for purchase or
sale by the Client. Such consideration for purchase or
sale shall be conducted by a person other than the
interested Advisory Person.
C. Preclearance Rule: No Access Person, Advisory Person nor
Portfolio Manager may purchase or sell a security unless such
purchase or sale has been precleared by the Compliance Officer
of the Adviser. Preclearance shall be valid through the
business day next following the day preclearance is given.
Exceptions: The following securities transactions are exempt
from the pre-clearance requirement:
1. Purchases or sales of up to 1,000 shares of
securities of issuers ranked within the top 200
of the Standard & Poor's 500 Composite Stock
Index (S&P 500) (the "Large Cap List") at the
time of purchase or sale. The Compliance
3
<PAGE>
Officer of the Adviser shall distribute an
updated list of such securities quarterly.
2. Purchase orders sent directly to the issuer via
mail (other than in connection with a Private
Placement) or sales of such securities which are
redeemed directly by the issuer via mail.
Note: The Compliance Officer of the Adviser may deny
approval of any transaction requiring preclearance under
this Preclearance Rule, even if nominally permitted under
this Code of Ethics, if he/she reasonably believes that
denying preclearance is necessary for the protection of
the Adviser. Any such denial may be appealed to the
Adviser's Counsel. The decision of Counsel shall be
final.
D. Open Order Rule: No Access Person, Advisory Person or
Portfolio Manager may purchase or sell, directly or
indirectly, any security in which he has, or by reason of
such transaction acquires, any direct or indirect beneficial
ownership, when the Client has a pending "buy" or "sell" order
for that security of the same type (i.e. buy or sell) as the
proposed personal trade, until the Client's order is executed
or withdrawn.
Exceptions: The following securities transactions are exempt
from the Open Order Rule:
1. Purchases or sales of securities of securities
on the current Large Cap List at the time of the
transaction.
2. Purchases or sales approved by the Compliance
Officer of the Adviser in his/her discretion.
Any profits realized on a personal trade in violation of this
Section 4D must be disgorged.
E. Blackout Rule: If a Portfolio Manager's Managed Fund
holds a security that is the subject of a proposed personal
trade by that Portfolio Manager, such personal trade may be
permitted only as follows:
1. If the proposed personal trade is on
the same side as the last Managed Fund
transaction in that security, the
personal trade cannot occur within two
days of such Managed Fund transaction
(i.e. neither at T nor T + 1 calendar
day).
2. If the proposed personal trade is on
the opposite side of the last Managed Fund
transaction in that security, the personal
trade cannot occur unless (a) it is more
4
<PAGE>
than two days after the Managed Fund
transaction (i.e. T + 2 calendar days
or later) and (b) the Preclearance
Request, if required for such personal
transaction (i.e. it is not eligible
for the Large Cap List exception to the
Preclearance Rule) sets forth, to the
reasonable satisfaction of the
Compliance Officer, an explanation of
the reasons the Managed Fund is not
effecting a similar transaction.
Transactions permitted under the Blackout Rule must also
satisfy the Holding Period Rule, the Open Order Rule, and
the Preclearance Rule if and to the extent the
transaction is not covered by exceptions to those rules.
Any profits realized by a Portfolio Manager on a personal
trade in violation of this Section 4E must be disgorged.
F. Holding Period Rule: Each Security, other than those
described in Section 3B. (securities (1) not eligible for
purchase or sale by the Client; or (2) specified from
time to time by the Directors, subject to such rules, if
any, as the Directors shall specify) must be held for a
period of not less than six (6) months, whether or not
the purchase of such Security was an exempt transaction
under any other provision of Section 4.
Any profits realized on trading in contravention of this
policy must be disgorged.
G. No Advisory Person shall accept any gift or other item
of more than de minimis value from any person or entity
that does business with or on behalf of the Client or the
Adviser.
H. No Advisory Person shall serve on the board of
directors of a publicly traded company without prior
authorization by the President or the Compliance Officer
of the Adviser. If board service is authorized, such
Advisory Person shall have no role in making investment
decisions with respect to the publicly traded company.
5. Compliance Procedures
A. All Access Persons shall direct their brokers to
supply, at the same time that they are sent to the Access
Person, a copy of the confirmation for each personal
securities trade and a copy of each periodic account
statement to the Adviser's Compliance Officer.
B. Every Access Person shall report to the Adviser the
information described in Section 5C of this Code with respect
to transactions in any security in which
5
<PAGE>
such Access Person has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership in
the security; provided, however, that an Access Person
shall not be required to make a report with respect to
transactions effected for any account over which such
person does not have any direct or indirect influence.
C. Every report required pursuant to Section 5B above
shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the
report relates was effected, and shall contain the
following information:
(i) The date of the transaction, the title and the
number of shares, and the principal amount of each
security involved;
(ii) The nature of the transaction (i.e., purchase,
sale, or any other type of acquisition or
disposition);
(iii) The price at which the transaction was
effected;
(iv) The name of the broker, dealer or bank with or
through whom the transaction was effected; and
(v) The date of approval of the transaction and
the person who approved it as required by Section 4B
or C above.
E. Each Access Person shall submit a report listing all
personal securities holdings to the Compliance Officer
upon the commencement of service and annually thereafter.
This annual report shall include a certification by the
Access Person that he or she has read and understood the
Code of Ethics and has complied with the Code's
requirements.
F. Any report made under this Section 5 may contain a
statement that the report shall not be construed as an
admission by the person making such report that he or she
has any direct or indirect beneficial ownership in the
security to which the report relates.
G. The Compliance Officer shall submit an annual report
to the Adviser's Board of Directors that summarizes the
current Code of Ethics procedures, identifies any
violations requiring significant remedial action, and
recommends appropriate changes to the Code, if any.
H. Any Access Person shall immediately report any potential
violation of this Code of which he or she becomes aware to
the Adviser's Compliance Officer.
6
<PAGE>
6. Sanctions
Upon discovering a violation of this Code, the Board of Directors
of the Adviser may impose such sanctions as it deems appropriate,
including inter alia, a letter of censure or suspension or
termination of employment, or suspension of personal trading
privileges for such period as it may deem appropriate.
7. Facility of Administration; Deemed Compliance.
Any Access Person hereunder who is also an Access Person of any
investment company advised by Adviser or an affiliate shall be
deemed to have complied with this Adviser Code of Ethics by
complying with the Code of Ethics adopted by the investment
company.
w/Code - DPIM
6/98
7
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000806628
<NAME> DUFF & PHELPS UTILITIES INCOME INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 2364071604
<INVESTMENTS-AT-VALUE> 2447872516
<RECEIVABLES> 22871662
<ASSETS-OTHER> 76264449
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2547008627
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 218880270
<TOTAL-LIABILITIES> 218880270
<SENIOR-EQUITY> 500000000
<PAID-IN-CAPITAL-COMMON> 1860724394
<SHARES-COMMON-STOCK> 208478761
<SHARES-COMMON-PRIOR> 205714255
<ACCUMULATED-NII-CURRENT> 3028096
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (119633230)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 83800619
<NET-ASSETS> 2328128357
<DIVIDEND-INCOME> 157461332
<INTEREST-INCOME> 57940878
<OTHER-INCOME> 1659829
<EXPENSES-NET> 32597671
<NET-INVESTMENT-INCOME> 184464368
<REALIZED-GAINS-CURRENT> (88191091)
<APPREC-INCREASE-CURRENT> (243399166)
<NET-CHANGE-FROM-OPS> (331590257)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 183604270
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 2764506
<NET-CHANGE-IN-ASSETS> (147125889)
<ACCUMULATED-NII-PRIOR> 2167997
<ACCUMULATED-GAINS-PRIOR> (43412477)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14839366
<INTEREST-EXPENSE> 10361867
<GROSS-EXPENSE> 32597671
<AVERAGE-NET-ASSETS> 2461468946
<PER-SHARE-NAV-BEGIN> 10.36
<PER-SHARE-NII> .89
<PER-SHARE-GAIN-APPREC> (1.59)
<PER-SHARE-DIVIDEND> .89
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.77
<EXPENSE-RATIO> 1.66
</TABLE>
