<PAGE>
Dear Fellow Shareholders:
Performance Review--In pursuit of its objective of current income, the Fund
declared twelve monthly 6.5 cent per share dividends during 1999, plus an
extra one cent per share in the final dividend of the year. This was the ninth
"extra" dividend in the last twelve years. The 6.5 cent per share monthly
rate, without compounding, would be 78 cents annualized or a 9.38% common
stock dividend yield based on the December 31, 1999, closing price of $8.3125
per share. That yield compares favorably with the 1999 year-end yield of 4.51%
on the Dow Jones Utility Index and the 4.04% yield on the S&P Utilities Index.
During 1999, most utility company securities suffered a decline in market
value. Utility securities are sensitive to changes in interest rates, and the
Federal Reserve raised interest rates during the year in June, August, and
November. The Federal Reserve was concerned that strong economic growth
fostered by large gains in consumer spending would create inflationary
imbalances in the economy. If domestic economic growth moderates as expected
during 2000, that could lead to lower interest rates and improved valuations
for utility company securities. Conversely, higher interest rates could
further depress the price of utility company securities.
The decline in market value of utility securities in 1999 was market wide. For
example, the S&P Utilities Index declined 8.9% and the Lehman Brothers Utility
Bond Index declined 3.5%, in each case on a total return basis. This was only
the second calendar year in the last eighteen years that the Lehman Brothers
Utility Bond Index has declined. On a total return basis, the Fund's net asset
value and market value declined 8.2% and 19.9%, respectively, during 1999.
Utility Bond Ratings--Good and Better in 1999--Virtually every sector of
corporate America is experiencing unprecedented change caused by technology
and globalization. These trends have increased competition among companies and
encouraged the overseers of regulated industries to move in the direction of
deregulation. Deregulation has already brought and will continue to bring
important changes to electric, gas, and telecommunications companies as they
move to more open and competitive systems. In the midst of these important
changes, the universe of utility bonds for your Fund to invest in is of high
quality and even improved in quality on average during 1999.
Duff & Phelps Credit Rating Co. (DCR) has identified three broad themes and
developments driving utility rating changes during the past year. The first is
that some electric companies changed their business plans, divesting
generating capacity by selling power plants to affiliates or third parties and
using the proceeds to reduce debt and enhance their credit profile. Second,
some utility companies enjoyed higher ratings because they improved their
existing finances and operations, cutting costs and increasing sales. These
improvements benefited from a supportive regulatory and legislative
environment. Third, some companies have decided to seek faster growth away
from the traditional utility businesses, or merge with or acquire other
utility companies to expand their business footprint. This strategy can
increase financial risk and has been the main source of credit rating
downgrades.
S&P reports that nearly 20% of utility companies experienced rating changes
during the year. Ratings on electric utility debt experienced a very positive
trend with upgrades outpacing downgrades by over three to one. In the gas and
pipeline sector upgrades ran at almost twice the pace of downgrades, and in
the telecommunications sector upgrades exceeded downgrades by 20%. Your Fund
managers will maintain a high quality bond segment and anticipate that the
credit fundamentals of the utility industries will remain solid.
<PAGE>
Electric Utilities--The year 1999 was one of transition for the electric
utility industry. Deregulation remained an important theme as 11 additional
states passed legislation, bringing the total to 23 that have completed
legislative initiatives. Deregulation has led to rate reductions and the
introduction of retail competition. By year-end 2000, many consumers in New
York, Boston, Philadelphia, Chicago, Los Angeles, and San Francisco will have
the ability to choose among electricity providers. Most importantly,
deregulation has freed electric utilities from the constraints of traditional
cost-based pricing by implementing incentive-based pricing structures. This
allows utility shareholders to share the financial benefits from cost
reductions and asset sales as opposed to passing on such benefits entirely to
customers.
Another result of deregulation is the accelerated pace of merger and
acquisition activity. Last year, there were 22 transactions announced that
involved major electric utilities. As more and more companies further refine
their strategies, we expect industry consolidation to continue.
During 1999, we also witnessed greater visibility of the investments that
electric companies are making outside of their traditional lines of business.
In recent years, several companies including Montana Power, DQE, Nstar, and
DTE Energy have made investments in telecommunications businesses, Internet-
related ventures, or distributive generation technologies. These non-
traditional investments have become the focus of investor attention. In early
January 2000, Bill Gates (Chairman of Microsoft) disclosed that he had
purchased 5% of the outstanding shares of Avista, a small Spokane-based
electric company that has made investments in telecommunication and Internet-
related ventures.
We believe that the electric industry has entered 2000 in its strongest
financial shape in many years for the following reasons: 1) regulatory
restructuring has been completed in several states; 2) performance based
regulatory formats providing the ability to retain benefits from cost
reductions and asset sales are in place; 3) the prospects for continued merger
and acquisition activity remain high; and 4) there is a potential for
meaningful gains stemming from investments in non-traditional businesses. As
the industry completes the transition to full competition, we will continue to
position your Fund's assets into those electric companies that we believe are
best prepared for the new industry structure.
Unregulated Growth and Industry Consolidation Fuel Natural Gas--1999 got off
to a rocky start with the second record warm winter in a row. While weather
and commodity prices rebounded by year-end, the real action was in the growth
of unregulated businesses and continued industry consolidation. Enron Corp.
led the industry in the development of energy convergence businesses--power
generation development, energy trading and marketing, and regulated energy
services--and the market rewarded it with the best performance in the gas
group. The second major area of unregulated growth was telecommunications and
broadband services. Williams Companies led in this area with the construction
and subsequent IPO of one of the major nationwide fiber network business. Many
other utilities are developing smaller, fiber optic-based businesses.
Industry consolidation continued as electric companies snapped up natural gas
local distribution companies (LDCs) in order to create larger, more efficient
delivery networks for both electricity and gas. Several small LDCs also
combined forces to lower cost and secure a niche for themselves. By year-end
21 gas companies had merged or were in the process of being acquired.
Despite the strong industry fundamentals and the merger activity, many gas
companies with solid core energy businesses are trading near historically low
levels. However, many of these companies have visible and
2
<PAGE>
increasing earnings and dividend growth prospects. As a result, we believe the
gas industry continues to represent a good investment opportunity for your
Fund.
Global Trends in Telecommunications for 2000--As we look to the remainder of
2000, we see five primary trends that will drive the telecommunications
industry on a global basis. They are: competition; broadband deployment;
wireless data; financial engineering; and consolidation.
Although local competition has been talked about for some time, the impact
thus far has been fairly muted. That seems to be changing. We believe that
local competition will begin to take hold this year, slowing growth in the
core telephone business of incumbent local phone companies around the world.
As a result, the deployment of broadband services for high speed Internet
access is extremely important for all the carriers. Expectations are quite
high for the rollout of high speed Internet access in 2000 and could be a
major differentiating factor among the telecommunications providers. The other
significant growth driver in this industry is wireless communications, in
particular, wireless data. Taking the Internet mobile has met with phenomenal
success in Japan and has created tremendous excitement among carriers in
Europe and the U.S. We expect wireless penetration to continue to increase on
a global basis, and as the technology advances, wireless data is projected to
become a major new source of revenue and growth.
In an attempt to highlight those growth opportunities hidden within a number
of carriers, more companies are considering financial engineering moves such
as issuing tracking stocks and/or IPOs. The biggest such move announced so far
has been by AT&T which plans to issue a tracking stock for its mobile
business. The European carriers have also been very prolific with their own
plans for IPOs of mobile and data operations. Having a separate currency
provided by a tracking stock or IPO will continue to feed the consolidation
trend. In addition, scale and scope are still important in this industry which
will drive companies to seek merger and acquisition partners in an effort to
position themselves to compete more effectively.
Given the above trends, we believe the investment outlook for the
telecommunications industry is strong. We expect underlying cash earnings
growth to exceed 15% as the robust demand for data and wireless more than
offsets the losses in the core business. However, it is important to keep in
mind that spending on new initiatives as well as mergers will result in
diluted reported earnings. Despite the excellent growth prospects, we are
seeing less sharing of this growth with shareholders through dividend
increases. As a matter of fact, only two of our domestic telecommunications
companies are expected to increase their dividend this year. We continue to
look at alternative investments (e.g. convertible securities) to enable the
Fund to continue benefiting from this dynamic growth industry without
sacrificing income.
From a valuation perspective, we believe the incumbent carriers in the U.S.
are currently more attractive than their international counterparts. However,
some near-term uncertainties associated with increased competition may hold
these stocks back in the first half of 2000. Nonetheless, we believe the
Fund's telecommunications holdings offer good upside potential over the long
run.
REITs Outlook--Investors' perceptions of tempered earnings growth rates,
weakening property markets, rising interest rates, the noise from too many
companies representing too little capital, and lingering doubts about the
pervasiveness of self-interest decision-making in this sector, contributed to
the continued flow of capital out of this group in 1999. However, careful
stock selection based on fundamental research provided attractive income
returns for the Fund.
3
<PAGE>
We continue to focus on the quality of management. Some management teams have
been caught like deer in the market's headlights. The teams that adapt, focus
on strong markets where they can deliver high internal earnings growth, build
a strong rapport with tenants, and demonstrate the ability to recycle capital
successfully make it across the due diligence road safely and into our
holdings.
We are witnessing the emergence of a number of themes that are positive for
equity REITs. The first is the discipline provided by the capital markets to
keep supply in balance with demand, particularly in markets where there are
limited barriers to entry, supporting the view of real estate as a stable core
industry with a low risk profile. The second major positive theme is a build-
up of earnings growth in markets where high barriers to entry or high market
share concentrations exist. In many of these cases, rents have increased
rapidly or even spiked. Our investment preference is for REITs with portfolios
concentrated in markets with high barriers to entry.
A third trend is the bifurcation of equity REITs into companies that embrace
the goal of providing shareholder value and companies that continue to operate
as if they were still private. The recycling of capital by smart REIT
management teams who sell assets where most of the upside has been achieved
and subsequently redeploy the capital into better investment opportunities is
the fourth trend. A growing use of the joint venture structure, which can help
REITs tap new capital sources, diversify, and increase fee income and returns,
while maintaining control of property management and development, is the fifth
trend.
Consolidation and privatization represent the sixth trend. Over the near term
we are likely to see the continuation of the migration of capital to REITs
with proven strategies to create shareholder value and to prosper in a capital
constrained environment. The result should be de facto consolidation with
investment in a smaller number of companies. Finally, with the recent passage
of the REIT Modernization Act by Congress, REITs will be able to establish
their own taxable subsidiaries and offer new products and services to tenants.
The themes outlined above reflect a sector that is maturing. Two years of
capital constraint have accelerated this process. As the majority of REITs
enter their fifth or sixth year as public companies, the schism between
dedicated, proactive management and naive management continues to widen. With
earnings growth of 7-8% projected for 2000 and sector yields averaging above
8%, these mature REITs could deliver double digit returns while enduring some
multiple contraction if interest rates continue to rise.
Board of Directors Meeting--At the regular January Board of Directors meeting,
the Board declared the following monthly dividends:
<TABLE>
<CAPTION>
Cents Per Share Record Date Payable Date
--------------- ----------- ------------
<S> <C> <C>
6.5 cents February 29 March 10
6.5 cents March 31 April 10
6.5 cents April 28 May 10
</TABLE>
Automatic Dividend Reinvestment Plan and Direct Deposit Service--The Fund has
a dividend reinvestment plan available to all registered shareholders. As long
as the market price of the common stock of the Fund exceeds or is equal to the
net asset value per share, new shares for the dividend reinvestment program
are issued at the greater of either 95% of the market price or the net asset
value. If the market price per share of common stock is below the net asset
value per share, shares are purchased in the open market at prevailing market
prices, plus any brokerage commissions paid by The Bank of New York for all
shares purchased by it in the reinvestment of the distribution and credited to
the accounts of plan participants.
4
<PAGE>
Those shareholders whose shares are held for them by a brokerage house or
nominee in "street-name" may not participate in the Fund's automatic dividend
reinvestment plan inasmuch as the Fund cannot communicate directly with those
shareholders since the Fund does not have their name and address. Thus for
those Fund shareholders in "street-name" desiring automatic dividend
reinvestment, we suggest you contact your broker or other nominee.
As an added service, the Fund now offers direct deposit service through
electronic funds transfer to all registered shareholders currently receiving a
monthly dividend check. Direct deposit provides automatic and immediate access
to your funds on the dividend payment date and eliminates the possibility of
mail delays and lost or stolen checks. This service is offered through The
Bank of New York. For more information and/or an authorization form on
automatic dividend reinvestment or direct deposit, please contact The Bank of
New York.
Visit us on the Web--You can obtain the most recent shareholder financial
report and dividend information at our web site http://www.duffutility.com.
We appreciate your interest in Duff & Phelps Utilities Income Inc., and we
will continue to do our best to be of service to you.
/s/Claire V. Hansen
Claire V. Hansen, CFA
Chairman, Chief Executive Officer
and President
5
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Duff & Phelps Utilities Income Inc.:
We have audited the accompanying balance sheet of Duff & Phelps Utilities
Income Inc. (the "Fund") (a Maryland corporation), including the schedule of
investments, as of December 31, 1999, and the related statements of operations
and cash flows for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence
with the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Duff
& Phelps Utilities Income Inc. as of December 31, 1999, the results of its
operations and its cash flows for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
Arthur Andersen LLP
Chicago, Illinois,
February 4, 2000
6
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
SCHEDULE OF INVESTMENTS
December 31, 1999
COMMON STOCKS--72.8%
<TABLE>
<CAPTION>
Market
Value
Shares Company (Note 1)
--------- ------- --------------
<C> <S> <C>
[_] ELECTRIC--30.0%
1,511,122 CMS Energy Corp. ................................... $ 47,128,117
1,465,000 DQE Incorporated.................................... 50,725,625
1,000,000 DTE Energy Co. ..................................... 31,375,000
1,300,000 Duke Energy Corp. .................................. 65,162,500
2,658,400 Edison International................................ 69,616,850
1,593,400 Endesa S.A. ........................................ 32,166,763
1,005,000 Entergy Corp. ...................................... 25,878,750
1,300,100 FPL Group Inc. ..................................... 55,660,531
215,000 National Grid Group PLC ADR......................... 8,134,482
770,000 National Grid Group PLC (United Kingdom)............ 5,837,384
686,500 National Power PLC ADR.............................. 14,759,750
2,256,600 NiSource Inc. ...................................... 40,336,725
1,318,600 NSTAR............................................... 53,403,300
1,120,000 Pinnacle West Capital Corp. ........................ 34,230,000
302,000 Powergen PLC ADR.................................... 9,550,750
1,800,000 Reliant Energy Inc. ................................ 41,175,000
850,000 Scottish & Southern Energy (United Kingdom)......... 6,773,264
200,000 Scottish & Southern Energy ADR...................... 15,907,560
800,000 Scottish Power PLC ADR.............................. 22,400,000
2,000,000 Unicom Corp. ....................................... 67,000,000
--------------
697,222,351
[_] GAS--13.1%
926,000 AGL Resources....................................... 15,742,000
825,600 Columbia Energy Group............................... 52,219,200
1,494,800 El Paso Energy Corp. ............................... 58,016,925
1,400,000 Enron Corp. ........................................ 62,125,000
400,000 National Fuel Gas Co. .............................. 18,600,000
594,700 NICOR Inc. ......................................... 19,327,750
2,050,000 Utilicorp United Inc. .............................. 39,846,875
1,300,000 Williams Companies Inc. ............................ 39,731,250
--------------
305,609,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
SCHEDULE OF INVESTMENTS--(Continued)
December 31, 1999
<TABLE>
<CAPTION>
Market
Value
Shares Company (Note 1)
--------- ------- --------------
<C> <S> <C>
[_] TELECOMMUNICATION--21.4%
600,000 Alltell Corp. ...................................... $ 49,612,500
1,619,000 Bell Atlantic Corp. ................................ 99,669,688
1,530,000 BellSouth Corp. .................................... 71,623,125
465,000 Cable and Wireless ADS.............................. 24,615,937
150,000 Royal PTT Nederland ADR............................. 14,418,750
1,837,230 SBC Communications Inc. ............................ 89,564,962
900,000 Tele-Danmark A/S ADR................................ 33,975,000
556,250 Telecom Corp. of New Zealand Interim ADR............ 21,415,625
568,400 Telstra Corp. ADR................................... 15,488,900
200,000 Telstra Corp. ADR PP................................ 3,437,500
625,000 U.S. West Inc. ..................................... 45,000,000
1,620,000 Vivendi ADR......................................... 29,113,506
--------------
497,935,493
[_] NON-UTILITY--8.3%
125,000 Alexandria Real Estate Equities Inc. ............... 3,976,562
250,000 Apartment Investment & Management Co. .............. 9,953,125
200,000 Avalon Bay Communities Inc. ........................ 6,862,500
409,000 Boston Properties Inc. ............................. 12,730,125
100,000 Bradley Real Estate Inc. ........................... 1,743,750
79,900 Camden Property Trust............................... 2,187,262
328,800 CBL & Associates Properties Inc. ................... 6,781,500
350,000 Centerpoint Properties Corporation.................. 12,556,250
120,000 Chelsea GCA Realty Inc. ............................ 3,570,000
225,000 Cornerstone Properties Inc. ........................ 3,290,625
400,000 Developers Diversified Realty Corp. ................ 5,150,000
221,500 Duke-Weeks Realty Corp. ............................ 4,319,250
300,000 Equity Residential Properties Trust................. 12,806,250
250,000 Essex Property Trust Inc. .......................... 8,500,000
278,100 First Industrial Realty Trust....................... 7,630,369
250,000 General Growth Properties, Inc. .................... 7,000,000
100,000 Golf Trust of America Inc. ......................... 1,693,750
49,000 Great Lakes REIT Inc. .............................. 704,375
200,000 Kimco Realty Corp. ................................. 6,775,000
215,000 Macerich Co. ....................................... 4,474,687
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
SCHEDULE OF INVESTMENTS--(Continued)
December 31, 1999
<TABLE>
<CAPTION>
Market
Value
Shares Company (Note 1)
--------- ------- --------------
<C> <S> <C>
145,000 Mack-Cali Realty Corp. ............................ $ 3,779,063
525,100 Reckson Associates Realty Corp. ................... 10,764,550
171,545 Reckson Associates Realty Corp. Class B............ 3,902,649
253,416 Reckson Service Industries Inc.*................... 15,806,823
252,200 Smith Charles E. Residential Realty Inc. .......... 8,921,575
256,100 Spieker Properties Inc. ........................... 9,331,644
139,000 United Dominion Realty Trust....................... 1,372,625
200,000 Urban Shopping Centers Inc. ....................... 5,425,000
22,250 Vornado Operating Inc.*............................ 133,500
370,000 Vornado Realty Trust............................... 12,025,000
--------------
194,167,809
--------------
Total Common Stocks (Cost--$1,565,067,107)......... 1,694,934,653
--------------
PREFERRED STOCKS--6.3%
[_] NON-UTILITY--1.5%
500,000 Cox Communications Inc. 7% 8/16/02................. $ 34,000,000
--------------
34,000,000
[_] UTILITY--4.8%
700,000 Duke Capital Financing Trust III 8 3/8% 8/31/29.... 17,106,250
223,500 EIX Trust II Series B 6.60% 10/29/29. ............. 5,531,625
550,000 MediaOne Group 7.00% 11/15/02...................... 26,400,000
500,000 NiSource Industries Inc. 7.75% 2/19/03............. 18,031,250
789,100 Texas Utilities Co. ............................... 34,424,488
450,900 Utilicorp United Inc. 9 3/4% 11/16/02.............. 10,201,612
--------------
111,695,225
--------------
Total Preferred Stocks (Cost--$147,863,378)........ 145,695,225
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
SCHEDULE OF INVESTMENTS--(Continued)
December 31, 1999
BONDS--23.1%
<TABLE>
<CAPTION>
Ratings
--------------------------
Standard Market
Duff & and Value
Par Value Company Phelps Moody's Poor's (Note 1)
----------- ------- --------- ------- -------- --------------
<C> <S> <C> <C> <C> <C>
[_] ELECTRIC--12.3%
$ 5,000,000 AES Ironwood Corp.
8.857%, due 11/30/25.... Not Rated Baa3 BBB- $ 4,747,295
24,920,000 Alabama Power Co.
9%, due 12/01/24........ AA- A1 A+ 25,871,770
3,950,000 Comed Financing II
8 1/2%, due 1/15/27..... Not Rated Baa3 BBB- 3,863,282
14,500,000 Commonwealth Edison Co.
9 3/4%, due 2/15/20..... A- Baa1 BBB+ 15,110,624
7,500,000 Commonwealth Edison Co.
9 7/8%, due 6/15/20..... A- Baa1 BBB+ 8,213,767
8,850,000 Commonwealth Edison Co.
8 5/8%, due 2/01/22..... A- Baa1 BBB+ 8,859,700
5,000,000 Commonwealth Edison Co.
8 3/8%, due 9/15/22..... A- Baa1 BBB+ 4,876,685
10,000,000 Commonwealth Edison Co.
8 3/8%, due 2/15/23..... A- Baa1 BBB+ 9,732,970
24,000,000 Dominion Resources
Capital Trust
7.83%, due 12/01/27..... Not Rated Baa1 BBB 21,118,008
5,000,000 Gulf States Utilities
8.94%, due 1/01/22...... BBB+ Baa3 BBB- 5,064,285
5,000,000 Illinois Power Co.
7 1/2%, due 7/15/25..... BBB+ Baa1 BBB 4,495,475
5,000,000 Louisiana Power & Light
Co.
8 3/4%, due 3/01/26..... BBB+ Baa2 BBB 4,958,755
15,000,000 New York State Electric
& Gas Corp.
9 7/8%, due 11/01/20.... Not Rated A3 A 15,926,265
4,000,000 New York State Electric
& Gas Corp.
8 7/8%, due 11/01/21.... Not Rated A3 A 3,957,224
27,580,000 Potomac Electric Power
Co.
9%, due 6/01/21......... A+ A1 A 28,107,743
10,000,000 Public Service Co. of
Colorado
8 3/4%, due 3/01/22..... A A3 A 10,137,170
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
SCHEDULE OF INVESTMENTS--(Continued)
December 31, 1999
<TABLE>
<CAPTION>
Ratings
--------------------------
Standard Market
Duff & and Value
Par Value Company Phelps Moody's Poor's (Note 1)
----------- ------- --------- ------- -------- --------------
<C> <S> <C> <C> <C> <C>
$22,750,000 Puget Capital Trust
8.231%, due 6/01/27..... Not Rated Baa2 BBB- $ 21,567,114
3,000,000 Rochester Gas & Electric
Corp.
9 3/8%, due 4/01/21..... A- A3 A- 3,132,234
13,000,000 Southern Co. Capital
Trust
8.14%, due 2/15/27...... Not Rated A3 BBB+ 12,140,128
29,830,000 Texas Utilities Electric
Co.
9 3/4%, due 5/01/21..... A- A3 BBB+ 31,954,194
10,000,000 Texas Utilities Electric
Co.
8 3/4%, due 11/01/23.... A- A3 BBB+ 10,107,500
12,000,000 UtiliCorp United Inc.
8%, due 3/01/23......... BBB Baa3 BBB 10,957,008
5,000,000 Virginia Electric &
Power Co.
8 5/8%, due 10/01/24.... A A2 A 5,000,355
17,700,000 Virginia Electric &
Power Co.
8 1/4%, due 3/01/25..... A A2 A 17,155,389
--------------
287,054,940
[_] GAS--2.4%
2,125,000 ANR Pipeline Co.
9 5/8%, due 11/01/21.... Not Rated Baa1 BBB+ 2,437,190
8,875,000 Enron Corp.
9.65%, due 5/15/01...... BBB+ Baa2 BBB+ 9,153,267
5,000,000 KN Energy Inc.
7 1/4%, due 3/01/28..... Not Rated Baa2 BBB- 4,520,940
10,000,000 Phillips Petroleum Co.
9.18%, due 9/15/21...... A- A3 A- 10,474,510
5,000,000 Southern California Gas
Co.
8 3/4%, due 10/01/21.... AA A1 AA- 5,101,085
6,488,000 Southern Union Co.
7.60%, due 2/01/24...... BBB+ Baa2 BBB+ 6,090,980
10,000,000 TE Products Pipeline Co.
7.51%, due 1/15/28...... Not Rated Baa2 BBB+ 9,019,630
9,000,000 Trans-Canada Pipeline
9 1/8%, due 4/20/06..... Not Rated A3 BBB 9,602,100
--------------
56,399,702
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
SCHEDULE OF INVESTMENTS--(Continued)
December 31, 1999
<TABLE>
<CAPTION>
Ratings
--------------------------
Standard Market
Duff & and Value
Par Value Company Phelps Moody's Poor's (Note 1)
----------- ------- --------- ------- -------- --------------
<C> <S> <C> <C> <C> <C>
[_] TELECOMMUNICATION--7.2%
$44,000,000 AT & T Corp.
8.35%, due 1/15/25...... AA- A1 AA- $ 44,477,488
35,428,000 GTE Corp.
9 3/8%, due 12/01/00.... A- Baa1 A 36,231,011
6,000,000 GTE Corp.
10 1/4%, due 11/01/20... A- Baa1 A 6,414,204
10,000,000 GTE California Inc.
8.07%, due 4/15/24...... AA A2 AA- 9,672,910
6,625,000 GTE Corp.
7.90%, due 2/01/27...... A- Baa1 A 6,379,696
11,995,000 Mountain States
Telephone
9 1/2%, due 5/01/00..... Not Rated A2 A+ 12,108,784
13,750,000 New England Telephone &
Telegraph
9%, due 8/01/31......... AA Aa2 AA 14,431,505
10,000,000 New York Telephone Co.
7 5/8%, due 2/01/23..... A A2 A+ 9,400,120
20,740,000 New York Telephone Co.
9 3/8%, due 7/15/31..... A A2 A+ 22,399,200
5,000,000 US West Communications
8 7/8%, due 6/01/31..... AA- A2 A+ 5,110,920
--------------
166,625,838
[_] NON-UTILITY--1.2%
8,000,000 Dayton Hudson Corp.
9 7/8%, due 7/01/20..... A- A3 A- 9,616,944
19,940,000 EOP Operating LP
7 1/2%, due 4/19/29..... BBB+ Baa1 BBB+ 17,502,714
--------------
27,119,658
--------------
Total Bonds (Cost--$572,415,572).................... 537,200,138
--------------
U.S. TREASURY OBLIGATIONS--3.0%
66,000,000 U.S. Treasury Bonds 11 3/4%, due 2/15/01............ 70,042,500
--------------
Total U.S. Treasury Obligations (Cost--
$78,725,547)........................................ 70,042,500
--------------
TOTAL INVESTMENTS (Cost -$2,364,071,604) (105.2%)... $2,447,872,516
==============
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the total net assets of the Fund.
*Non income producing security
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
BALANCE SHEET
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Common stocks (cost $1,565,067,107)........................... $1,694,934,653
Convertible preferred stocks (cost $147,863,378).............. 145,695,225
Bonds (cost $572,415,572)..................................... 537,200,138
U.S. Treasury obligations (cost $78,725,547).................. 70,042,500
Interest-bearing deposits with custodian....................... 76,233,818
Receivables:
Interest...................................................... 15,022,698
Dividends..................................................... 7,664,785
Securities lending income..................................... 184,179
Prepaid expenses............................................... 30,631
--------------
Total Assets................................................. $2,547,008,627
==============
LIABILITIES:
Due to Adviser (Note 2)........................................ $ 3,604,087
Due to Administrator (Note 2).................................. 909,859
Dividends payable on common stock.............................. 15,635,907
Dividends payable on remarketed preferred stock................ 1,317,259
Accrued expenses............................................... 3,570,377
Commercial paper outstanding (Note 6).......................... 193,842,781
--------------
Total Liabilities............................................ 218,880,270
--------------
CAPITAL:
Remarketed preferred stock ($.001 par value; 100,000,000 shares
authorized and 5,000 shares issued and outstanding,
liquidation preference $100,000 per share) (Note 5)........... 500,000,000
--------------
Common stock ($.001 par value; 250,000,000 shares authorized
and 208,478,761 shares issued and outstanding) (Note 4)....... 208,478
Paid-in surplus (Note 4)....................................... 1,860,724,394
Accumulated net realized loss on investments................... (119,633,230)
Undistributed net investment income............................ 3,028,096
Unrealized depreciation on foreign currency translation........ (293)
Net unrealized appreciation on investments..................... 83,800,912
--------------
Net assets applicable to common stock (equivalent to $8.77
per share based on 208,478,761 shares outstanding).......... 1,828,128,357
--------------
Total Capital (Net Assets)................................... 2,328,128,357
--------------
Total Liabilities and Capital................................ $2,547,008,627
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest....................................................... $ 57,940,878
Dividends (less withholding tax of $970,182)................... 157,461,332
Securities lending income...................................... 1,659,829
-------------
Total investment income....................................... 217,062,039
EXPENSES:
Commercial paper interest expense (Note 6 ).................... 10,361,867
Management fees (Note 2)....................................... 14,839,366
Administrative fees (Note 2)................................... 3,717,873
Transfer agent fees............................................ 553,500
Custodian fees................................................. 335,000
Remarketing agent fees......................................... 1,267,360
Shareholder reports............................................ 532,500
Legal and audit fees........................................... 173,500
Directors' fees (Note 2)....................................... 217,750
Other expenses................................................. 598,955
-------------
Total expenses................................................ 32,597,671
-------------
Net investment income......................................... 184,464,368
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments............................... (88,191,091)
Net change in unrealized appreciation on investments and
foreign currency translation.................................. (243,399,166)
-------------
Net loss on investments........................................ (331,590,257)
-------------
Net decrease in net assets resulting from operations........... ($147,125,889)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the year ended December
31,
------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income......................... $ 184,464,368 $ 180,201,052
Net realized gain (loss) on investments....... (88,191,091) 104,910,892
Net change in unrealized appreciation on
investments and foreign currency translation. (243,399,166) (11,148,041)
-------------- --------------
Net increase (decrease) in net assets
resulting from operations................... (147,125,889) 273,963,903
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income--preferred stock
(Note 5)..................................... (19,928,894) (20,869,678)
Net investment income--common stock (Note 3).. (163,675,376) (159,478,752)
-------------- --------------
Total distributions.......................... (183,604,270) (180,348,430)
FROM CAPITAL STOCK TRANSACTIONS (Note 4):
Shares issued to common stockholders from
dividend reinvestment........................ 27,167,046 28,041,305
-------------- --------------
Net increase in net assets derived from
capital share transactions................... 27,167,046 28,041,305
-------------- --------------
Total increase (decrease).................... (303,563,113) 121,656,778
TOTAL NET ASSETS:
Beginning of year............................. 2,631,691,470 2,510,034,692
-------------- --------------
End of year (including undistributed net
investment income of $3,028,096 and
$2,167,997 respectively)..................... $2,328,128,357 $2,631,691,470
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
STATEMENT OF CASH FLOWS
For the year ended December 31, 1999
<TABLE>
<S> <C> <C>
Cash Flows From (For):
OPERATING ACTIVITIES
Interest received........................... $ 58,609,562
Income dividends received................... 156,482,481
Securities lending income................... 1,621,702
Operating expenses paid (excluding
interest).................................. (22,530,471)
Interest paid on commercial paper........... (9,092,496)
---------------
Net cash provided by operating activities.................. $ 185,090,778
INVESTING ACTIVITIES
Purchase of investment securities........... (5,837,912,718)
Proceeds from sale/redemption of investment
securities................................. 5,773,781,237
Return of capital on investments............ 1,517,414
Long-term capital gains dividends received.. 912,113
---------------
Net cash used in investing activities...................... (61,701,954)
FINANCING ACTIVITIES
Dividends paid.............................. (181,117,226)
Proceeds from issuance of common stock under
dividend reinvestment plan................. 27,167,046
Change in net proceeds from issuance of
commercial paper........................... 22,840,684
---------------
Net cash used in financing activities...................... (131,109,496)
-------------
Net decrease in cash and cash equivalents.................... (7,720,672)
Cash and cash equivalents--beginning of year................. 83,954,490
-------------
Cash and cash equivalents--end of year....................... $ 76,233,818
=============
Reconciliation of net investment income to net cash provided
by operating activities:
Net investment income....................................... $ 184,464,368
Adjustments to reconcile net investment
income to net cash provided by operating
activities:
Decrease in interest receivable............ 668,684
Increase in dividends receivable........... (978,854)
Increase in accrued expenses............... 974,707
Increase in other receivable............... (38,127)
---------------
Total adjustments......................................... 626,410
-------------
Net cash provided by operating activities................... $ 185,090,778
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(1) SIGNIFICANT ACCOUNTING POLICIES:
Duff & Phelps Utilities Income Inc. (the "Fund") was incorporated under the
laws of the State of Maryland on November 26, 1986. The Fund commenced
operations on January 21, 1987, as a closed-end diversified management
investment company registered under the Investment Company Act of 1940. The
primary investment objectives of the Fund are current income and long-term
growth of income. Capital appreciation is a secondary objective.
The following are the significant accounting policies of the Fund:
(a) The market values for securities are determined as follows:
Securities traded on a national securities exchange or traded over-the-
counter and quoted on the NASDAQ System are valued at last sales prices.
Securities so traded for which there were no sales and other securities are
valued at the mean of the most recent bid-asked quotations. Bonds not
traded on a securities exchange nor quoted on the NASDAQ System are valued
at a fair value using a procedure determined in good faith by the Board of
Directors which includes the use of a pricing service. Each money market
instrument having a maturity of 60 days or less is valued on an amortized
cost basis, which approximates market value. Other assets and securities
are valued at a fair value, as determined in good faith by the Board of
Directors.
(b) Market values of investments denominated in foreign currencies are
converted into U.S. dollars using the mean of the bid and offer prices of
such currencies at the time of valuation. Purchases and sales of
investments and dividend income are translated into U.S. dollars using the
mean of the bid and offer prices of such currencies on the respective dates
of such transactions. The gains or losses on investments resulting from
changes in foreign exchange rates are included with net realized and
unrealized gain (loss) on investments.
(c) No provision is made for Federal income taxes since the Fund has
elected to be taxed as a "regulated investment company" and has made such
distributions to its shareholders deemed necessary to be relieved of all
Federal income taxes under provisions of current Federal tax law. The Fund
intends to utilize provisions of Federal income tax laws which allow a
realized capital loss to be carried forward for eight years following the
year of loss and offset such losses against any future realized gains. At
December 31, 1999, the Fund had tax capital loss carry forwards of
$121,837,107 which expire beginning on December 31, 2002.
In 1993, the Fund adopted the American Institute of Certified Public
Accountants' Statement of Position 93-2, "Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of
Capital Distributions by Investment Companies". In conformance with this
statement, the Fund changed the classification of distributions to
shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with federal income tax
regulations. As a result, the accumulated net realized loss and
undistributed net investment income captions on the balance sheet reflect
book/tax temporary differences. These differences are a result of the
deferral of wash sale losses, the accretion of market discount and the cash
basis recognition of preferred dividends for tax purposes.
(d) The accounts of the Fund are kept on the accrual basis of accounting.
Security transactions are recorded on the trade date. Realized gains or
losses from sales of securities are determined on the specific identified
cost basis. Dividend income is recognized on the ex-dividend date. Interest
income and expense are recognized on the accrual basis.
(e) The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.
17
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1999
(2) MANAGEMENT ARRANGEMENTS:
The Fund has engaged Duff & Phelps Investment Management Co. (the "Adviser")
to provide professional investment management services for the Fund and has
engaged J. J. B. Hilliard, W. L. Lyons, Inc. (the "Administrator") to provide
administrative and management services for the Fund. The Adviser receives a
quarterly fee at an annual rate of .60% of the average weekly net assets of
the Fund up to $1.5 billion and .50% of average weekly net assets in excess
thereof. The Administrator receives a quarterly fee at annual rates of .25% of
average weekly net assets up to $100 million, .20% of average weekly net
assets from $100 million to $1 billion, and .10% of average weekly net assets
over $1 billion. For purposes of the foregoing calculations, "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. Directors of the Fund not affiliated with the
Adviser receive a fee of $17,500 per year plus $1,000 per board or committee
meeting attended. Committee Chairmen receive an additional fee of $3,000 per
year. Transfer agent and custodian fees are paid to The Bank of New York.
(3) DIVIDENDS:
The Board of Directors has authorized the following distributions to common
stockholders from investment income in 1999:
<TABLE>
<CAPTION>
Record Payable Dividend Record Payable Dividend
Date Date Per Share Date Date Per Share
-------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
01-29-99 02-10-99 $.065 07-30-99 08-10-99 $.065
02-26-99 03-10-99 .065 08-31-99 09-10-99 .065
03-31-99 04-12-99 .065 09-30-99 10-12-99 .065
04-30-99 05-10-99 .065 10-29-99 11-10-99 .065
05-28-99 06-10-99 .065 11-30-99 12-10-99 .065
06-30-99 07-12-99 .065 12-31-99 01-10-00 .075
</TABLE>
(4) CAPITAL STOCK TRANSACTIONS:
The Fund may purchase shares of its own stock in open market or private
transactions, from time to time and in such amounts and at such prices (not
exceeding $100,000 plus accumulated and unpaid dividends in the case of the
Fund's remarketed preferred stock and less than net asset value in the case of
the Fund's common stock) as management may deem advisable. Since any such
purchases of the Fund's common stock would be made at prices below net asset
value, they would increase the net asset value per share of the remaining
shares of common stock outstanding. The Fund has not purchased any shares of
its common stock.
Transactions in common stock and paid-in surplus during 1998 and 1999 were
as follows:
<TABLE>
<CAPTION>
Shares Amount
----------- --------------
<S> <C> <C>
For the year ended December 31, 1998:
Beginning capitalization.......................... 202,936,881 $1,805,724,521
Dividend reinvestment............................. 2,777,374 28,041,305
----------- --------------
Total capitalization............................ 205,714,255 $1,833,765,826
=========== ==============
For the year ended December 31, 1999:
Beginning capitalization.......................... 205,714,255 $1,833,765,826
Dividend reinvestment............................. 2,764,506 27,167,046
----------- --------------
Total capitalization............................ 208,478,761 $1,860,932,872
=========== ==============
</TABLE>
18
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1999
(5) REMARKETED PREFERRED STOCK:
In 1988, the Fund issued 5,000 shares of Remarketed Preferred Stock ("RP")
in five series of 1,000 shares each at a public offering price of $100,000 per
share. The underwriting discount and other expenses incurred in connection
with the issuance of the RP were recorded as a reduction of paid-in surplus on
common stock. Dividends on the RP are cumulative at a rate which was initially
established for each series at its offering. Since the initial offering of
each series, the dividend rate on each series has been reset every 49 days by
a remarketing process. Dividend rates ranged from 3.550% to 5.049% during the
year ended December 31, 1999.
The RP is redeemable at the option of the Fund on any dividend payment date
at a redemption price equal to $100,000 per share, plus accumulated and unpaid
dividends. The Fund is required to maintain certain asset coverage with
respect to the RP, and the RP is subject to mandatory redemption if that asset
coverage is not maintained. Each series of RP is also subject to mandatory
redemption on a date certain as follows: Series A--November 28, 2012; Series
B--November 18, 2015; Series C--November 7, 2018; Series D--December 22, 2021;
and Series E--December 11, 2024.
In general, the holders of the RP and of the Common Stock have equal voting
rights of one vote per share, except that the holders of the RP, as a class,
vote to elect two members of the Board of Directors, and separate class votes
are required on certain matters that affect the respective interests of the RP
and the Common Stock. The RP has a liquidation preference of $100,000 per
share plus accumulated and unpaid dividends.
(6) COMMERCIAL PAPER:
The Board of Directors has authorized the Fund to issue up to $200,000,000
of Commercial Paper Notes (the "Notes") in minimum denominations of $100,000
with maturities up to 270 days. The Notes generally will be sold on a discount
basis, but may be sold on an interest-bearing basis. The Notes are not
redeemable by the Fund nor are they subject to voluntary prepayment prior to
maturity. The aggregate amount of Notes outstanding changes from time to time.
The Notes are unsecured, general obligations of the Fund. The Fund has entered
into a credit agreement to provide liquidity. The Fund is able to request
loans under the credit agreement of up to $100,000,000 at any one time,
subject to certain restrictions. Interest rates on the Notes ranged from 4.86%
to 6.05% during the year ended December 31, 1999. At December 31, 1999, the
Fund had Notes outstanding of $193,842,781.
(7) INVESTMENT TRANSACTIONS:
For the year ended December 31, 1999, purchases and sales of investment
securities (excluding short-term securities) were $5,830,837,813 and
$5,764,242,027, respectively. For federal income tax purposes, at December 31,
1999, the gross unrealized depreciation on investments was $178,531,007 and
gross unrealized appreciation was $260,627,337. The cost of investments for
financial reporting and Federal income tax purposes was $2,364,071,605 and
$2,365,776,185, respectively.
The Fund may lend portfolio securities to a broker/dealer. Loans are
required to be secured at all times by collateral at least equal to the market
value of securities loaned. The Fund receives a portion of the income earned
on the securities held as collateral and continues to earn income on the
loaned securities. Security loans are subject to the risk of failure by the
borrower to return the loaned securities in which case the Fund could incur a
loss. At December 31, 1999, the fund had loaned portfolio securities with a
market value of $337,888,994 to a broker/dealer and money market instruments
with a market value of $345,967,793 were held in the Fund's account at the
broker/dealer as collateral.
19
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
FINANCIAL HIGHLIGHTS--SELECTED PER SHARE DATA AND RATIOS
The table below provides information about income and capital changes for a
share of common stock outstanding throughout the years indicated:
<TABLE>
<CAPTION>
For the year ended December 31
-----------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year........ $ 10.36 $ 9.90 $ 8.44 $ 8.85 $ 7.23
---------- ---------- ---------- ---------- ----------
Net investment income.... 0.89 0.88 0.85 0.84 0.85
Net realized gain (loss)
and change in unrealized
appreciation/depreciation
on investments.......... (1.59) 0.46 1.46 (0.41) 1.62
---------- ---------- ---------- ---------- ----------
Total from investment
operations............... (0.70) 1.34 2.31 0.43 2.47
Dividends on preferred
stock from net
investment income....... (0.10) (0.10) (0.10) (0.10) (0.12)
Dividends on common stock
from net investment
income.................. (0.79) (0.78) (0.75) (0.74) (0.73)
---------- ---------- ---------- ---------- ----------
Total distributions...... (0.89) (0.88) (0.85) (0.84) (0.85)
Net asset value:
End of year............. $ 8.77 $ 10.36 $ 9.90 $ 8.44 $ 8.85
========== ========== ========== ========== ==========
Per share market value:
End of year............. $ 8.31 $ 11.25 $ 10.13 $ 8.63 $ 9.00
Ratio of expenses to
average net assets
attributable to common
shares.................. 1.66% 1.46% 1.45% 1.53% 1.62%
Total investment return.. (19.85%) 19.95% 27.69% 4.68% 24.77%
Ratio of net investment
income to average net
assets attributable to
common shares........... 9.40% 8.85% 9.87% 10.16% 10.65%
Portfolio turnover rate.. 223.78% 251.19% 213.57% 226.21% 188.28%
Net assets, end of year
(000s omitted)........... $2,328,128 $2,631,692 $2,510,035 $2,186,443 $2,239,331
</TABLE>
20
<PAGE>
Board of Directors
WALLACE B. BEHNKE
HARRY J. BRUCE
FRANKLIN A. COLE
GORDON B. DAVIDSON
CLAIRE V. HANSEN, CFA
FRANCIS E. JEFFRIES, CFA
NANCY LAMPTON
BERYL W. SPRINKEL
Officers
CLAIRE V. HANSEN, CFA
Chairman, President and
Chief Executive Officer
NATHAN I. PARTAIN, CFA
Executive Vice President and Chief Investment Officer
T. BROOKS BEITTEL, CFA
Senior Vice President, Secretary and Treasurer
MICHAEL SCHATT
Senior Vice President
JOSEPH C. CURRY, JR.
Vice President
DIANNA P. WENGLER
Assistant Secretary
Duff & Phelps
Utilities Income Inc.
Common stock listed on the New York Stock Exchange under the symbol DNP
55 East Monroe Street
Chicago, Illinois 60603
(312) 368-5510
Shareholder inquiries please contact
Transfer Agent
Dividend Disbursing
Agent and Custodian
The Bank of New York
Shareholder Relations
Church Street Station
P.O. Box 11258
New York, New York 10286-1258
(877) 381-2537
Investment Adviser
Duff & Phelps
Investment Management Co.
55 East Monroe Street
Chicago, Illinois 60603
Administrator
J.J.B. Hilliard, W.L. Lyons, Inc.
Hilliard Lyons Center
Louisville, Kentucky 40202
(888) 878-7845
Legal Counsel
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Independent Public Accountants
Arthur Andersen LLP
33 West Monroe Street
Chicago, Illinois 60603
<PAGE>
Duff & Phelps
Utilities Income Inc.
4th
Annual Report
December 31,
1999
