SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
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[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DNP SELECT INCOME FUND INC.
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(Name of Registrant as Specified In Its Charter)
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[LOGO]
DNP SELECT
INCOME FUND INC.
55 EAST MONROE STREET, CHICAGO, ILLINOIS 60603 (312) 368-5510
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS APRIL 20, 2004
The annual meeting of shareholders of DNP Select Income Fund Inc. will be
held at the Registry Resort, 475 Seagate Drive, Naples, Florida, on Tuesday,
April 20, 2004 at 9:00 a.m. to:
1. Elect two directors by the holders of the Fund's common stock and one
director by the holders of the Fund's preferred stock;
2. Transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on March 1, 2004 are
entitled to vote at the meeting.
For the Board of Directors,
/s/ T. Brooks Beittel
T. Brooks Beittel
Secretary
March 1, 2004
WE NEED YOUR PROXY VOTE IMMEDIATELY.
YOUR VOTE IS VITAL. THE MEETING OF SHAREHOLDERS WILL HAVE TO BE ADJOURNED
WITHOUT CONDUCTING ANY BUSINESS IF FEWER THAN A MAJORITY OF THE SHARES ELIGIBLE
TO VOTE ARE REPRESENTED. IN THAT EVENT, THE FUND WOULD CONTINUE TO SOLICIT
VOTES IN AN ATTEMPT TO OBTAIN A QUORUM. TO AVOID THE EXPENSE OF AND THE
POSSIBLE DELAY CREATED OF BY SUCH A SOLICITATION, PLEASE RETURN YOUR PROXY CARD
IMMEDIATELY. YOU AND ALL OTHER SHAREHOLDERS WILL BENEFIT FROM YOUR COOPERATION.
PROXY STATEMENT
The board of directors of DNP Select Income Fund Inc. (the "Fund") is
soliciting proxies from the shareholders for use at the annual meeting of
shareholders to be held on April 20, 2004 and at any adjournment of that
meeting. A proxy may be revoked at any time before it is voted, either by
voting in person at the meeting or by written notice to the Fund or delivery of
a later-dated proxy.
Shareholders of the Fund of record at the close of business on March 1, 2004
are entitled to notice of and to participate in the meeting. The Fund had
219,251,040 shares of common stock and 5,000 shares of remarketed preferred
stock outstanding on the record date. Each share of common stock outstanding on
the record date entitles the holder thereof to one vote for each director being
elected by the common stock (with no cumulative voting permitted) and to one
vote on each other matter. Each share of preferred stock outstanding on the
record date entitles the holder thereof to one vote for each director being
elected by the preferred stock (with no cumulative voting permitted) and to one
vote on each matter submitted for a vote of holders of preferred stock. A
plurality of votes cast at the meeting by the common stock as to the directors
representing the common stock is necessary to elect such directors. A plurality
of votes cast at the meeting by the preferred stock as to the director
representing the preferred stock is necessary to elect such director. On most
other matters, the affirmative vote of a majority of either (a) all of the
shares outstanding and entitled to be voted thereon or (b) just the shares
voted at the meeting, with the common stock and the preferred stock voting
together as a single class, is necessary for approval. An affirmative vote by
either a majority or two-thirds of the remarketed preferred stock (voting
separately as one class) or by a series thereof is also necessary to approve
certain matters adversely affecting the remarketed preferred stock or the
series. Abstentions are counted for purposes of determining whether a quorum is
present at the meeting but not for purposes of determining the number of votes
cast with respect to any voting matter. However, abstentions have the effect of
a "no" vote if the vote required is a majority of all the shares outstanding
and entitled to be voted. Any broker non-votes on a particular matter are
treated as abstentions with respect to that matter.
This proxy statement is first being mailed on or about March 1, 2004. The
Fund will bear the cost of the annual meeting and this proxy solicitation.
1. ELECTION OF DIRECTORS
The board of directors of the Fund is responsible for the overall management
and operations of the Fund. Directors are divided into three classes and are
elected to serve staggered three-year terms. At the meeting, holders of common
stock are entitled to elect two directors and holders of preferred stock are
entitled to elect one director, in each case to serve until the annual meeting
of shareholders in 2007 or until his or her successor is elected and qualified.
The persons named in the enclosed proxy intend to vote in favor of the election
of the persons named below (unless otherwise instructed). Each of the nominees
has consented to serve as a director of the Fund, if elected. In case any of
the nominees should become unavailable for election for any unforeseen reason,
the persons designated in the proxy will have the right to vote for a
substitute.
Franklin A. Cole and Gordon B. Davidson will be retiring as directors of the
Fund when their terms of office end at the annual meeting of shareholders on
April 20, 2004. Mr. Cole has served as a director of the Fund since 1989 and
has been chairman of the Fund's contracts committee since that committee was
created in 1991.
1
Mr. Davidson has served as a director of the Fund since 1989 and has been
chairman of the Fund's nominating/corporate governance committee since 1998.
The Fund expresses its deepest appreciation to Messrs. Cole and Davidson for
their many years of outstanding service to the Fund and wishes them well in
their retirement.
Set forth below are the names and certain biographical information about the
director nominees, the continuing directors and the officers of the Fund.
Except as indicated in the table, directors are elected by the holders of the
Fund's common stock. The officers are elected at the annual meeting of the
board of directors of the Fund. Except as indicated in footnote (7) to the
table, no director or director nominee oversees any other portfolios in the
fund complex to which the Fund belongs.
Name, Position with the Fund,
Address Length of Time Served Principal Occupation During Past 5 Years
and Age and Term of Office and Other Affiliations
----------------------------- --------------------------- -----------------------------------------------
Nominees--Independent Directors
Stewart E. Conner............ Nominee for a term expiring Attorney, Wyatt Tarrant & Combs LLP since
2800 PNC Plaza in 2007 1966 (Chairman, Executive Committee since
500 West Jefferson Street 2000, Managing Partner 1988-2000); Director,
Louisville, Kentucky 40207 Hilliard Lyons Growth Fund, Inc.
Age 62
Robert J. Genetski (3)(6).... Director since April 2001 President, Robert Genetski & Associates, Inc.
195 North Harbor Drive Nominee for a term expiring (economic and financial consulting firm) since
Chicago, Illinois 60601 in 2007 1991; Senior Managing Director, Chicago
Age 61 Capital, Inc. (financial services firm) 1995-
2001; former Senior Vice President and Chief
Economist, Harris Trust & Savings Bank;
author of several books; regular contributor to
the Nikkei Financial Daily
Francis E. Jeffries (2)(4)(7) Director since January 1987 Retired Chairman, Phoenix Investment
8477 Bay Colony Drive Nominee for a term expiring Partners, Ltd. since May 1997 (Chairman,
Naples, Florida 34108 in 2007 November 1995-May 1997); Chairman and
Age 73 Chief Executive Officer, Duff & Phelps
Corporation, June 1993-November 1995
(President and Chief Executive Officer,
January 1992-June 1993); Chairman of the
Board, Duff & Phelps Investment Management
Co. 1988-1993; Director, The Empire District
Electric Company
Continuing Directors--Interested Director
Claire V. Hansen (1)(2)...... Chairman and Director since Senior Advisor to the Board of Directors,
55 East Monroe Street January 1987 Phoenix Investment Partners, Ltd. since
Chicago, Illinois 60603 Current term expires 2005 November 1995; President and Chief Executive
Age 78 Officer, DNP Select Income Fund Inc. January
2000-February 2001; Senior Advisor to the
2
Name, Position with the Fund,
Address Length of Time Served Principal Occupation During Past 5 Years
and Age and Term of Office and Other Affiliations
----------------------------- --------------------------- ------------------------------------------------
Board of Directors, Duff & Phelps Corporation,
1988-November 1995 (Chairman of the Board,
1987-1988; Chairman of the Board and Chief
Executive Officer prior thereto); Chairman of
the Board, Duff & Phelps Investment
Management Co., 1985-1987
Continuing Directors--Independent Directors
Connie K. Duckworth (3)(5)... Director since April 2002 Partner, Eight Wings Enterprises (investor in
77 Stone Gate Lane Current term expires 2005 early-stage businesses) since December 2001;
Lake Forest, Illinois 60045 Advisory Director, Goldman, Sachs &
Age 49 Company, December 2000-December 2001
(Managing Director, December 1996-
December 2000, Partner 1990-1996, Chief
Operating Officer of Firmwide Diversity
Committee 1990-1995); Member, Circle
Financial Group LLC (private investment
company); Chair (2003), Policyowners'
Examining Committee, Northwestern Mutual
Life Insurance Company; Founder and
President, Arzu, Inc. (nonprofit corporation
created to raise awareness of Afghan women
through sale of homemade rugs)
Nancy Lampton (4)(5)(6)...... Director since October 1994 Chairman and Chief Executive Officer,
3 Riverfront Plaza Current term expires 2006 Hardscuffle Inc. (insurance holding company)
Louisville, Kentucky 40202 since January 2000; Chairman and Chief
Age 61 Executive Officer, American Life and Accident
Insurance Company of Kentucky since 1971;
Director, Constellation Energy Group, Inc.
(public utility holding company), Advisor,
Thorium Power Corporation (designer of non-
proliferative fuel for nuclear energy needs)
Christian H. Poindexter (3).. Director since May 2003 Retired Chairman and Chief Executive Officer,
1997 Annapolis Exchange Pkwy. Current term expires 2006 Constellation Energy Group, Inc. (public utility
Annapolis, Maryland 21401 holding company) (Executive Committee
Age 65 Chairman, July 2002-March 2003; Chairman
of the Board, April 1999-July 2002; Chief
Executive Officer, April 1999-October 2001;
President, April 1999-October 2000);
Chairman, Baltimore Gas and Electric
Company, January 1993-July 2002 (Chief
3
Name, Position with the Fund,
Address Length of Time Served Principal Occupation During Past 5 Years
and Age and Term of Office and Other Affiliations
-------------------------- -------------------------- ----------------------------------------------
Executive Officer, January 1993-July 2000;
President, March 1998-October 2000; Director,
1988-2003); Director, Mercantile Bankshares
Corporation (bank holding company); Director,
The Baltimore Life Insurance Company
Carl F. Pollard (3)....... Director since April 2002 Owner, Hermitage Farm L.L.C. (Thoroughbred
10500 W. U.S. Hwy 42 Current term expires 2005 breeding) since January 1995; Chairman,
Goshen, Kentucky 40026 Columbia Healthcare Corporation 1993-1994;
Age 65 Chairman and Chief Executive Officer, Galen
Health Care, Inc. March-August 1993;
President and Chief Operating Officer, Humana
Inc. 1991-1993 (previously Senior Executive
Vice President, Executive Vice President and
Chief Financial Officer); Chairman and
Director, Churchill Downs Incorporated;
Director, Breeders' Cup Limited
David J. Vitale (3)(5).... Director since April 2000 Chief Administrative Officer, Chicago Public
141 West Jackson Boulevard Current term expires 2006 Schools since April 2003; Private investor
Chicago, Illinois 60604 November 2002-April 2003; President and
Age 57 Chief Executive Officer, Board of Trade of the
City of Chicago, Inc., March 2001-November
2002; Retired executive 1999-2001; Vice
Chairman and Director, Bank One Corporation,
1998-1999; Vice Chairman and Director, First
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, Ariel Capital
Management, Inc., Ark Investment
Management and Wheels, Inc.
Officers of the Fund (other than the Chairman, for whom see above)
Nathan I. Partain......... President and Chief Executive Vice President, Duff & Phelps
55 East Monroe Street Executive Officer, since Investment Management Co. since January
Chicago, Illinois 60603 February 2001 (Executive 1997; Director of Utility Research, Phoenix
Age 47 Vice President, Chief Investment Partners, Ltd., 1989-1996 (Director
Investment Officer and of Equity Research, 1993-1996 and Director of
Assistant Secretary, April Fixed Income Research, 1993); Director, Otter
1998-February 2001; Senior Tail Corporation
4
Name, Position with the Fund,
Address Length of Time Served Principal Occupation During Past 5 Years
and Age and Term of Office and Other Affiliations
-------------------------- ---------------------------- -----------------------------------------------
Vice President, Chief
Investment Officer and
Assistant Secretary,
January-April 1998; Senior
Vice President and Assistant
Secretary, January 1997-
January 1998)
T. Brooks Beittel......... Secretary and Senior Vice Senior Vice President, Duff & Phelps
55 East Monroe Street President, since January Investment Management Co. since 1993 (Vice
Chicago, Illinois 60603 1995; Treasurer, January President 1987-1993)
Age 53 1995-September 2002
Michael Schatt............ Senior Vice President since Senior Vice President, Duff & Phelps
55 East Monroe Street April 1998 (Vice President, Investment Management Co. since January
Chicago, Illinois 60603 January 1997-April 1998) 1997; Managing Director, Phoenix Investment
Age 56 Partners, Ltd., 1994-1996
Joseph C. Curry, Jr....... Treasurer since September Senior Vice President, J.J.B. Hilliard, W.L.
Hilliard Lyons Center 2002; Vice President since Lyons, Inc. since 1994 (Vice President 1982-
Louisville, Kentucky 40202 April 1988 1994); Vice President Hilliard Lyons Trust
Age 59 Company; President, Hilliard-Lyons
Government Fund, Inc.; Vice President,
Treasurer and Secretary, Hilliard Lyons
Growth Fund, Inc.; Treasurer, Senbanc Fund
Dianna P. Wengler......... Assistant Secretary since Vice President, J.J.B. Hilliard, W.L. Lyons,
Hilliard Lyons Center April 1988 Inc. since 1990; Vice President, Hilliard-Lyons
Louisville, Kentucky 40202 Government Fund, Inc.; Assistant Secretary,
Age 43 Hilliard Lyons Growth Fund, Inc.
--------
(1)Mr. Hansen is deemed to be an "interested person" of the Fund (as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) because of
his positions with the Fund and with Phoenix Investment Partners, Ltd.
("Phoenix Investment Partners"), parent company of Duff & Phelps Investment
Management Co., the Fund's investment adviser (the "Adviser").
(2)Member of the executive committee of the board of directors, which has
authority, with certain exceptions, to exercise the powers of the board
between board meetings.
(3)Member of the audit committee of the board of directors, which makes
recommendations regarding the selection of the Fund's independent public
accountants and meets with representatives of the accountants to determine
the scope of and review the results of each audit.
(4)Member of the nominating/corporate governance committee of the board of
directors, which selects nominees for election as directors, recommends
individuals to be appointed by the board as Fund officers and members of
board committees and makes recommendations regarding other Fund governance
and board administration matters.
5
(5)Member of the contracts committee of the board of directors, which makes
recommendations regarding the Fund's contractual arrangements for investment
management and administrative services, including the terms and conditions
of such contracts.
(6)Elected by the holders of the Fund's preferred stock.
(7)Mr. Jeffries oversees 28 portfolios in the fund complex to which the Fund
belongs, which consists of all registered investment companies that have an
investment adviser that is an "affiliated person" (as defined in the 1940
Act) of the Adviser.
During 2003, the board of directors held six meetings, the executive
committee met once, the audit committee met twice, the nominating/corporate
governance committee met three times and the contracts committee met three
times. Each director attended at least 75% in the aggregate of the meetings of
the board and of the committees on which he or she served.
The following table provides certain information relating to the equity
securities beneficially owned by each director or director nominee as of March
1, 2004, (i) in the Fund and (ii) on an aggregate basis, in any registered
investment companies overseen or to be overseen by the director or nominee
within the same family of investment companies as the Fund.
Aggregate Dollar Range
of Equity Securities in
All Funds Overseen or
to be Overseen by
Director or Nominee in
Name of Dollar Range of Equity Securities Family of Investment
Director or Nominee in the Fund Companies
------------------- --------------------------------- -----------------------
Interested Director
Claire V. Hansen Over $100,000 Over $100,000
Independent Directors (and Nominees)
Stewart E. Conner $10,001 - $50,000 $10,001 - $50,000
Connie K. Duckworth Over $100,000 Over $100,000
Robert J. Genetski Over $100,000 Over $100,000
Francis E. Jeffries Over $100,000 Over $100,000
Nancy Lampton Over $100,000 Over $100,000
Christian H. Poindexter Over $100,000 Over $100,000
Carl F. Pollard Over $100,000 Over $100,000
David J. Vitale $10,001 - $50,000 $10,001 - $50,000
As of March 1, 2004, none of the foregoing directors or director nominees,
or their immediate family members, owned any securities of the Adviser or any
person (other than a registered investment company) directly or indirectly
controlling, controlled by or under common control with the Adviser.
6
The following table shows the compensation paid by the Fund to the Fund's
directors during 2003:
COMPENSATION TABLE(1)(2)
Aggregate
Compensation
from the
Name of Director Fund
----------------------- ------------
Interested Director
Claire V. Hansen....... $ 0
Independent Directors
Connie K. Duckworth.... 53,500
Robert J. Genetski..... 52,000
Francis E. Jeffries(2). 43,000
Nancy Lampton.......... 42,500
Christian H. Poindexter 25,305
Carl F. Pollard........ 38,000
David J. Vitale........ 57,000
--------
(1)Each director not affiliated with the Adviser receives an annual fee of
$25,000 (and an additional $5,000 if the director served as chairman of a
committee of the board of directors) plus an attendance fee of $2,000 for
each meeting of the board of directors and $1,500 for each meeting of a
committee of the board of directors attended in person or by telephone.
Directors and officers affiliated with the Adviser receive no compensation
from the Fund for their services as such. In addition to the amounts shown
in the table above, all directors and officers who are not interested
persons of the Fund, the Adviser or the Administrator (as defined below) 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 2003, Mr. Jeffries received aggregate compensation of $149,000 for
service as a director of the Fund and as a director or trustee of 27 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.
The board of directors, including all of the independent directors,
unanimously recommends a vote "FOR" the election of the three nominees for
director named above.
OTHER BUSINESS
Management is not aware of any other matters that will come before the
meeting. If any other business should come before the meeting, however, your
proxy, if signed and returned, will give discretionary authority to the persons
designated in it to vote according to their best judgment.
7
OTHER INFORMATION
The Adviser and Phoenix Investment Partners. Duff & Phelps Investment
Management Co. serves as the Fund's investment adviser under an investment
advisory agreement (the "Advisory Agreement") dated May 1, 1998. The Adviser is
a wholly-owned subsidiary of Phoenix Investment Partners, which is an indirect,
wholly-owned subsidiary of The Phoenix Companies, Inc. Prior to May 11, 1998,
Phoenix Investment Partners was known as Phoenix Duff & Phelps Corporation. The
address of the Adviser is 55 East Monroe Street, Chicago, Illinois 60603.
The Adviser (together with its predecessor) has been in the investment
advisory business for more than 60 years and, excluding the Fund, currently has
more than $2.6 billion in client accounts under discretionary management.
Under the terms of the Advisory Agreement, the Adviser furnishes continuing
investment supervision to the Fund and is responsible for the management of the
Fund's portfolio, subject to the overall control of the board of directors of
the Fund. Currently, the Adviser has ten professionals (i.e., research analysts
and portfolio managers), along with support staff, assigned to the operation of
the Fund. Eight of the ten professionals have the CFA (Chartered Financial
Analyst) designation and one is a CPA (Certified Public Accountant). The
Adviser furnishes, at its own expense, office space, equipment and personnel to
the Fund in connection with the performance of its investment management
responsibilities, and pays all other expenses incurred by it in connection with
managing the assets of the Fund not payable by the Fund's administrator
pursuant to the administration agreement. The Advisory Agreement also includes
the conditions under which the Fund may use any name derived from or similar to
"Duff & Phelps." For its services the Adviser receives from the Fund a
quarterly management fee, payable out of the Fund's assets, at an annual rate
of 0.60 of 1% of the average weekly net assets of the Fund up to $1.5 billion
and 0.50 of 1% of average weekly net assets in excess of $1.5 billion. For
purposes of calculating the management fee, the Fund's net assets are defined
as the sum of (i) the aggregate net asset value of the Fund's common stock,
(ii) the aggregate liquidation preference of the Fund's preferred stock and
(iii) the aggregate proceeds of commercial paper issued by the Fund. The
management fee paid by the Fund to the Adviser for 2003 was $13,069,523.
Except for the expenses borne by the Adviser and the Administrator (as
described below) pursuant to their respective agreements with the Fund, the
Fund pays all expenses incurred in its operations, including, among other
things, expenses for legal, accounting and auditing services, taxes, interest,
costs of printing and distributing shareholder reports, proxy materials,
prospectuses and stock certificates, charges of custodians, registrars,
transfer agents, dividend disbursing agents, dividend reinvestment plan agents
and remarketing agents, Securities and Exchange Commission fees, fees and
expenses of non-interested directors, insurance, brokerage costs, litigation
and other extraordinary or non-recurring expenses.
The Fund is also a party to a service agreement dated May 1, 1998 (the
"Service Agreement") with the Adviser and Phoenix Investment Partners. Under
the terms of the Service Agreement, Phoenix Investment Partners makes available
to the Adviser the services of its employees and various facilities to enable
the Adviser to perform certain of its obligations to the Fund. However, the
obligation of performance under the Advisory Agreement is solely that of the
Adviser, for which Phoenix Investment Partners assumes no responsibility,
except as described in the preceding sentence. The Adviser reimburses Phoenix
Investment Partners for any costs, direct or indirect, that are fairly
attributable to the services performed and the facilities provided by Phoenix
Investment Partners under the Service Agreement. The Fund does not pay any fees
pursuant to the Service Agreement.
8
The Advisory Agreement and the Service Agreement both provide that the
Adviser shall not be liable to the Fund or its shareholders for any loss
suffered as a consequence of any act or omission of the Adviser or Phoenix
Investment Partners, as the case may be, in connection with the respective
agreements except by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations under the Advisory Agreement.
At the annual meeting held on April 29, 1998, the Fund's shareholders
approved the Advisory Agreement for a two-year term beginning on May 1, 1998
and ending on April 30, 2000. At a meeting held on October 17, 1997, the Board
of Directors of the Fund, including all of the directors who were not
interested persons of the Fund or Phoenix Investment Partners in attendance at
the meeting voting separately as a class, approved the Service Agreement for a
two-year term beginning on May 1, 1998 and ending on April 30, 2000, contingent
on the above-referenced approval of the Advisory Agreement by the shareholders
of the Fund. Unless earlier terminated as described below, the Advisory
Agreement and the Service Agreement may be continued from year to year, if
approved annually (i) by a majority of the directors of the Fund who are not
interested persons of the Fund or the Adviser, in the case of the Advisory
Agreement, or Phoenix Investment Partners, in the case of the Service
Agreement, and (ii) by either the board of directors of the Fund or the holders
of a majority of the outstanding shares of the Fund as defined in the 1940 Act.
A majority of the outstanding shares of the Fund as defined in the 1940 Act
means the following vote of the common stock and the preferred stock voting
together as a single class: (i) 67% of the shares represented at a meeting at
which more than 50% of the outstanding shares are represented; or (ii) more
than 50% of the outstanding shares. At meetings held on January 26, 2000,
February 23, 2001, February 22, 2002, February 21, 2003 and February 20, 2004,
the Board of Directors of the Fund, including all of the directors of the Fund
who were not interested persons of the Fund or the Adviser, in the case of the
Advisory Agreement, or Phoenix Investment Partners, in the case of the Service
Agreement, in attendance at the meeting voting separately as a class, voted to
continue the Advisory Agreement and the Service Agreement for an additional
one-year term. Accordingly, the term of these agreements currently extends to
April 30, 2005.
The Advisory Agreement may be terminated without penalty on 60 days' written
notice by any party thereto or by a vote of the shareholders of the Fund and
would terminate automatically if it were assigned by any party. If the Advisory
Agreement were terminated, shareholder approval would be required to enter into
a new agreement. The Service Agreement may be terminated without penalty on 60
days' written notice by any party thereto and would terminate automatically if
it were assigned by any party unless a majority of the Fund's board of
directors, including a majority of the directors who are not interested persons
of the Fund or Phoenix Investment Partners, approves continuation of the
Service Agreement.
The Administrator. J.J.B. Hilliard, W.L. Lyons, Inc. serves as the Fund's
administrator (the "Administrator") under an administration agreement (the
"Administration Agreement") dated May 1, 1998. The Administrator (together with
its predecessors) has been engaged in the investment business as a securities
broker-dealer and investment adviser since 1854. It also serves as
administrator and investment adviser to Hilliard-Lyons Government Fund, Inc., a
money market mutual fund, and Hilliard Lyons Growth Fund, Inc., an open-end
mutual fund, and as investment adviser to Senbanc Fund, an open-end mutual
fund. The Administrator is a wholly-owned subsidiary of The PNC Financial
Services Group, Inc. Its principal address is Hilliard Lyons Center,
Louisville, Kentucky 40202.
Under the terms of the Administration Agreement, the Administrator provides
all management and administrative services required in connection with the
operation of the Fund not required to be provided by the
9
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
0.25 of 1% of the Fund's average weekly net assets up to $100 million, 0.20 of
1% of the Fund's average weekly net assets from $100 million to $1.0 billion,
0.10 of 1% of average weekly net assets in excess of $1.0 billion. For purposes
of calculating the administrative fee, the Fund's net assets are defined as the
sum of (i) the aggregate net asset value of the Fund's common stock, (ii) the
aggregate liquidation preference of the Fund's preferred stock and (iii) the
aggregate proceeds of commercial paper issued by the Fund. The total
administrative fee paid by the Fund to the Administrator for 2003 was
$3,363,980.
The Administration Agreement provides that the Administrator shall not be
liable to the Fund or its shareholders for any loss suffered as a consequence
of any act or omission of the Administrator in connection with the agreement
except by reason of its willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of reckless disregard of its
obligations under the agreement.
At a meeting held on October 17, 1997, the board of directors of the Fund,
including all of the directors who were not interested persons of the Fund or
the Administrator in attendance at the meeting voting separately as a class,
approved the Administration Agreement for a two-year term beginning on May 1,
1998 and ending on April 30, 2000, contingent on approval of the Advisory
Agreement by the shareholders of the Fund (which approval was granted at the
annual meeting held on April 29, 1998). Unless earlier terminated as described
below, the Administration Agreement may be continued from year to year, if
approved annually (i) by a majority of the directors of the Fund who are not
interested persons of the Fund or the Administrator and (ii) by either the
board of directors of the Fund or the holders of a majority of the outstanding
shares of the Fund as defined in the 1940 Act. The Administration Agreement may
be terminated without penalty on 60 days' written notice by any party thereto
or by a vote of the shareholders of the Fund. At meetings held on January 26,
2000, February 23, 2001, February 22, 2002, February 21, 2003 and February 20,
2004, the Board of Directors of the Fund, including all of the directors of the
Fund who were not interested persons of the Fund or the Administrator in
attendance at the meeting voting separately as a class, voted to continue the
Administration Agreement for an additional one-year term. Accordingly, the term
of this agreement currently extends to April 30, 2005.
Portfolio Transactions. The Adviser has discretion to select brokers and
dealers to execute portfolio transactions initiated by the Adviser and to
select the markets in which such transactions are to be executed. In executing
portfolio transactions and selecting brokers or dealers, the primary
responsibility of the Adviser is to seek the best combination of net price and
execution for the Fund. The Fund ordinarily purchases securities in the primary
markets, and in assessing the best net price and execution available to the
Fund, the Adviser considers all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any (for the specific transaction and on a
continuing basis).
In selecting brokers or dealers to execute particular transactions and in
evaluating the best net price and execution available, the Adviser is
authorized to consider "brokerage and research services" (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934 (the "1934
Act")), statistical quotations, specifically the quotations necessary to
determine the Fund's net asset value, and other information provided to the
Fund and/or the Adviser (or their affiliates). The Adviser is also authorized
to cause the Fund to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction which is
in excess of the amount of commission another broker or dealer would have
charged for
10
effecting that transaction. The Adviser must determine in good faith, however,
that such commission was reasonable in relation to the value of the brokerage
and research services provided, viewed in terms of that particular transaction
or in terms of all the accounts over which the Adviser exercises investment
discretion. The Adviser does not engage brokers whose commissions it believes
to be unreasonable in relation to services provided. It is possible that
certain of the services received by the Adviser attributable to a particular
transaction will benefit one or more other accounts for which investment
discretion is exercised by the Adviser.
The Advisory Agreement requires the Adviser to provide fair and equitable
treatment to the Fund in the selection of portfolio investments and the
allocation of investment opportunities between the Fund and the Adviser's other
investment management clients, but does not obligate the Adviser to give the
Fund exclusive or preferential treatment. It is likely that from time to time
the Adviser may make similar investment decisions for the Fund and its other
clients. In some cases, the simultaneous purchase or sale of the same security
by the Fund and another client of the Adviser could have a detrimental effect
on the price or volume of the security to be purchased or sold, as far as the
Fund is concerned. In other cases, coordination with transactions for other
clients and the ability to participate in volume transactions could benefit the
Fund.
Although the Fund purchases securities for investment income or capital
appreciation, or both, and not for short-term trading profits, it may dispose
of securities without regard to the time they have been held when such action
appears advisable to the Adviser.
During 2003, the Fund paid brokerage commissions aggregating $8,550,524 in
connection with its portfolio transactions, not including the gross
underwriting spread on securities purchased in underwritten public offerings or
the spread in over-the-counter transactions with firms acting as principal.
Shareholders. The following table shows shares of common stock of the Fund
as to which each director, each nominee for director, and all directors and
officers of the Fund as a group, had or shared power over voting or disposition
at March 1, 2004. The directors and officers of the Fund owned no shares of the
Fund's remarketed preferred stock. Shares are held with sole power over voting
and disposition except as noted. The shares of common stock held by each of the
persons listed below and by all directors and officers as a group represented
less than 1% of the outstanding common stock.
Shares of
common stock
------------
Stewart E. Conner.................................... 1,000
Connie K. Duckworth (1).............................. 10,000
Robert J. Genetski................................... 10,000
Claire V. Hansen (2)................................. 58,810
Francis E. Jeffries (2).............................. 37,688
Nancy Lampton (1)(2)................................. 56,631
Christian H. Poindexter (1).......................... 10,000
Carl F. Pollard...................................... 20,000
David J. Vitale...................................... 1,000
Directors and officers as a group (14 persons) (1)(2) 230,404
--------
(1)Ms. Duckworth, Ms. Lampton and Mr. Poindexter had shared power to vote
and/or dispose of 10,000, 50,500 and 10,000, respectively, of the shares
listed. The directors and officers had shared power to vote
11
and/or dispose of 83,480, in the aggregate, of the shares listed as owned by
the directors and officers as a group.
(2)Messrs. Hansen and Jeffries and Ms. Lampton disclaim beneficial ownership of
40,020, 9,205 and 51,200, respectively, of the shares listed. The directors
and officers disclaim beneficial ownership of 113,405, in the aggregate, of
the shares listed as owned by the directors and officers as a group.
At March 1, 2004, no person was known by the Fund to own beneficially 5% or
more of the outstanding shares of the Fund (as determined in accordance with
Rule 13d-3 under the 1934 Act).
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the 1934 Act requires the Fund's officers and directors, and persons who own
more than 10% of a registered class of the Fund's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange. Officers, directors and greater
than 10% shareholders are required by Securities and Exchange Commission
regulations to furnish the Fund with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of Section 16(a) forms furnished
to the Fund, or written representations that no Forms 5 were required, the Fund
believes that during 2003 all Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% beneficial owners were complied
with.
Report of the Audit Committee. The audit committee is composed of five
directors and acts under a written charter that was originally adopted by the
board of directors on April 25, 2000 and was most recently amended on February
20, 2004. A copy of the charter is attached as Exhibit A to this proxy
statement. Each of the members of the audit committee is independent as defined
in the listing standards of the New York Stock Exchange. In connection with the
audit of the Fund's 2003 audited financial statements, the audit committee: (1)
reviewed and discussed the Fund's 2003 audited financial statements with
management, (2) discussed with the independent public accountants the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as modified or supplemented, (3) received
and reviewed the written disclosures and the letter from the independent public
accountants required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as modified or supplemented,
and (4) discussed with the independent public accountants their independence
from the Fund and its management. Based on the foregoing reviews and
discussions, the audit committee recommended to the board of directors that the
Fund's audited financial statements be included in the Fund's Annual Report to
Shareholders for filing with the Securities and Exchange Commission.
The Audit Committee
David J. Vitale, Chairman
Connie K. Duckworth
Robert J. Genetski
Christian H. Poindexter
Carl F. Pollard
Independent Public Accountants. The 1940 Act requires that the Fund's
independent public accountants be selected by the vote, cast in person, of a
majority of the members of the board of directors who are not interested
persons of the Fund. In addition, the listing standards of the New York Stock
Exchange vest the audit committee, in its capacity as a committee of the board
of directors, with responsibility for the appointment,
12
compensation, retention and oversight of the work of the Fund's independent
public accountants. In accordance with the foregoing provisions, the firm of
Ernst & Young LLP ("Ernst & Young"), which has served as the Fund's independent
public accountants since June 12, 2002, has been selected as independent public
accountants of the Fund to perform the audit of the financial books and records
of the Fund for the year ending December 31, 2004. A representative of Ernst &
Young is expected to be present at the meeting of shareholders and will be
available to respond to appropriate questions and have an opportunity to make a
statement if the representative so desires.
Change in Auditors During 2002. On June 12, 2002, the board of directors,
acting upon the recommendation of its audit committee, voted to dismiss Arthur
Andersen LLP ("Andersen") as the Fund's independent public accountants for 2002
and to appoint Ernst & Young to replace Andersen. Andersen's report on the
financial statements of the Fund for each of the fiscal years ended December
31, 2000 and December 31, 2001 did not contain an adverse opinion or a
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles. During the fiscal years ended December
31, 2000 and December 31, 2001, and the interim period between December 31,
2001 and June 12, 2002, there were no disagreements between the Fund and
Andersen on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreement(s), if
not resolved to the satisfaction of Andersen, would have caused it to make
reference to the subject matter of the disagreement(s) in connection with its
reports. During the fiscal years ended December 31, 2000 and December 31, 2001,
and the interim period between December 31, 2001 and June 12, 2002, there were
no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K
promulgated by the Securities and Exchange Commission.
Audit and Non-Audit Fees. The following table sets forth the aggregate audit
and non-audit fees billed to the Fund for each of the last two fiscal years for
professional services rendered by the Fund's principal accountant.
Fiscal year ended Fiscal year ended
December 31, 2003 December 31, 2002
----------------- -----------------
Audit Fees (1).................. $ 58,000 $53,500
Audit-Related Fees (2) (6)...... 22,000 19,750
Tax Fees (3) (6)................ 123,000 10,000
All Other Fees (4) (6).......... 0 0
Aggregate Non-Audit Fees (5) (6) 145,000 29,750
--------
(1)Audit Fees are fees billed for professional services rendered by the Fund's
principal accountant for the audit of the Fund's annual financial statements
and for services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements.
(2)Audit-Related Fees are fees billed for assurance and related services by the
Fund's principal accountant that are reasonably related to the performance
of the audit of the Fund's financial statements and are not reported under
the caption "Audit Fees." In both years shown in the table, such services
consisted of performance of quarterly agreed-upon procedures relating to the
Fund's preferred stock and commercial paper.
(3)Tax Fees are fees billed for professional services rendered by the Fund's
principal accountant for tax compliance, tax advice and tax planning. In the
year ended December 31, 2002, such services consisted of preparation of the
Fund's annual federal and state income tax returns and excise tax returns.
In the year ended December 31, 2003, such services consisted of preparation
of the Fund's annual federal and state income tax returns and excise tax
returns (for a fee of $11,000) and two extraordinary items: assistance with
13
the preparation of the Fund's request for an IRS private letter ruling
regarding the tax treatment of the Fund's remarketed preferred stock (for a
fee of $50,000) and consulting work regarding the tax treatment of
contingent payment debt and trust preferred instruments (for a fee of
$62,000).
(4)All Other Fees are fees billed for products and services provided by the
Fund's principal accountant, other than the services reported under the
captions "Audit Fees," "Audit-Related Fees" and "Tax Fees."
(5)Aggregate Non-Audit Fees are fees billed by the Fund's accountant for
services rendered to the Fund, the Adviser and any entity controlling,
controlled by or under common control with the Adviser that provides ongoing
services to the Fund. During both years shown in the table, no portion of
such fees related to services rendered by the Fund's accountant to the
Adviser or to any entity controlling, controlled by or under common control
with the Adviser that provides ongoing services to the Fund.
(6)No portion of these fees was approved by the audit committee after the
beginning of the engagement pursuant to the waiver of the pre-approval
requirement for certain de minimis non-audit services described in Section
10A of the 1934 Act and applicable regulations.
Pre-Approval of Audit and Non-Audit Services. Each engagement of the Fund's
independent public accountants to render audit or non-audit services to the
Fund is either (i) pre-approved by the Fund's audit committee or the chairman
of the audit committee, to whom the committee has delegated the authority to
grant such preapprovals between scheduled meetings of the committee, or (ii)
entered into pursuant to pre-approval policies and procedures established by
the audit committee. A copy of the audit committee's pre-approval policies and
procedures is attached as Exhibit B to this proxy statement. The Fund's audit
committee is also required to pre-approve its accountant's engagements for
non-audit services rendered to the Adviser and any entity controlling,
controlled by or under common control with the Adviser that provides ongoing
services to the Fund, if the engagement relates directly to the operations and
financial reporting of the Fund. In deciding whether to grant pre-approval for
such non-audit services, the audit committee or the chairman of the audit
committee, as the case may be, considers whether the provision of such
non-audit services is compatible with maintaining the independence of the
Fund's accountants.
Nomination of Directors. The nominating/corporate governance committee is
composed of three directors and acts under a written charter that was adopted
by the board of directors on February 21, 2003. A copy of the charter is
available on the Fund's website at www.dnpselectincome.com. None of the members
of the nominating/corporate governance committee are "interested persons" of
the Fund as defined in section 2(a)(19) of the 1940 Act. In identifying
potential director nominees, the nominating/corporate governance committee
considers candidates recommended by one or more of the following sources: the
Fund's current directors, the Fund's officers, the Fund's shareholders and any
other source the committee deems appropriate. The committee may, but is not
required to, retain a third-party search firm at the Fund's expense to identify
potential candidates. Shareholders wishing to recommend candidates to the
nominating/corporate governance committee should submit such recommendations to
the Secretary of the Fund, who will forward the recommendations to the
committee for consideration. In evaluating potential director nominees,
including nominees recommended by shareholders, the nominating/corporate
governance committee considers such qualifications and skills as it deems
relevant but does not have any specific minimum qualifications that must be met
by a nominee. The committee considers, among other things:
. whether the candidate will qualify as a director who is not an "interested
person" of the Fund;
. the absence of any real or apparent conflict of interest that would
interfere with the candidate's ability to act in the best interests of the
Fund and its shareholders;
14
. the contribution that the candidate can make to the board of directors by
virtue of his or her education, business experience and financial
expertise;
. the interplay of the candidate's skills and experience with the skills and
experience of other board members;
. whether the candidate is willing to commit the time necessary to attend
meetings and fulfill the responsibilities of a director; and
. the candidate's personality traits, including integrity, independence,
leadership, sound business judgment and the ability to work effectively
with the other members of the board of directors.
With respect to the renomination of incumbent directors, past service to the
board is also considered. Mr. Conner was recommended to the committee by
several independent directors of the Fund.
Shareholder Communications with the Board of Directors. The board of
directors has adopted the following procedures for shareholders to send
communications to the board of directors. Shareholders may mail written
communications to the full board, to committees of the board or to specified
individual directors in care of the Secretary of the Fund, 55 East Monroe
Street, Suite 3600, Chicago, Illinois 60603. All shareholder communications
received by the Secretary will be forwarded promptly to the full board, the
relevant board committee or the specified individual directors, as applicable,
except that the Secretary may, in good faith, determine that a shareholder
communication should not be so forwarded if it does not reasonably relate to
the Fund or its operations, management, activities, policies, service
providers, board, officers, shareholders or other matters relating to an
investment in the Fund or is purely ministerial in nature. Each of the Fund's
directors is encouraged to attend the annual meeting of shareholders. Nine of
the Fund's eleven directors attended the May 13, 2003 annual meeting of
shareholders. Of the two directors who were absent, one was retiring as of the
date of the meeting and the other was excused for good cause.
Shareholder Proposals. Any shareholder proposal to be considered for
inclusion in the Fund's proxy statement and form of proxy for the 2005 annual
meeting of shareholders should be received by the Secretary of the Fund no
later than November 2, 2004. Under the circumstances described in, and upon
compliance with, Rule 14a-4(c) under the 1934 Act, the Fund may solicit proxies
in connection with the 2005 annual meeting which confer discretionary authority
to vote on any shareholder proposals of which the Secretary of the Fund does
not receive notice by January 16, 2005.
Solicitation of Proxies. Proxies will be solicited by mail. Proxies may be
solicited by Fund personnel personally or by telephone, telegraph or mail, but
such persons will not be specially compensated for such services. The Fund will
inquire of any record holder known to be a broker, dealer, bank or other
nominee as to whether other persons are the beneficial owners of shares held of
record by such persons. If so, the Fund will supply additional copies of
solicitation materials for forwarding to beneficial owners, and will make
reimbursement for reasonable out-of-pocket costs. In addition, the Fund may
hire a proxy solicitor to assist the Fund in the solicitation of proxies at a
fee of approximately $20,000, plus out-of-pocket expenses.
Annual and Semi-annual Reports. The Fund will provide without charge to any
shareholder who so requests, a copy of the Fund's annual report for the year
ended December 31, 2003 and the Fund's semi-annual report for the six months
ended June 30, 2003. Requests for copies of such reports should be directed to
the
15
Administrator at (888) 878-7845 (toll-free). Copies of such reports are also
available by accessing the Fund's web site at www.dnpselectincome.com.
General. A list of shareholders entitled to be present and vote at the
annual meeting will be available at the offices of the Fund, 55 East Monroe
Street, Chicago, Illinois 60603, for inspection by any shareholder during
regular business hours for ten days prior to the date of the meeting.
Failure of a quorum to be present at the annual meeting will necessitate
adjournment and will give rise to additional expense.
All shareholders are requested to sign, date and mail proxies promptly in
the return envelope provided.
March 1, 2004
16
EXHIBIT A
DNP SELECT INCOME FUND INC.
AUDIT COMMITTEE CHARTER
(as amended and restated on February 20, 2004)
Purpose
.. The Audit Committee has been established by the Board of Directors to
assist the Board's oversight of (1) the integrity of the Fund's financial
statements, (2) the Fund's compliance with legal and regulatory
requirements, (3) the qualifications, independence and performance of the
Fund's independent public accountants and (4) the performance by the Fund's
service providers of the Fund's internal audit function.
.. The Audit Committee, in its capacity as a committee of the Board of
Directors, shall be directly responsible for the appointment, compensation,
retention and oversight of the work of any independent public accounting
firm engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Fund.
.. The Audit Committee shall cause to be prepared and shall approve any
reports required by the rules of the Securities and Exchange Commission
("SEC") to be included in the Fund's annual proxy statement.
.. The function of the Audit Committee is oversight; it is not the duty of the
Committee to plan or conduct audits or to determine that the Fund's
financial statements and disclosures are complete and accurate and are in
accordance with generally accepted accounting principles and applicable
rules and regulations. These are the responsibilities of management and the
independent public accountants.
Composition
.. The Audit Committee shall consist of at least three directors, including a
chairman, appointed by the Board of Directors upon the recommendation of
the Nominating/Corporate Governance Committee. Audit Committee members may
be removed and replaced by the Board at any time.
.. Each member of the Audit Committee shall satisfy the independence and
financial literacy requirements of the applicable rules of the New York
Stock Exchange ("NYSE") and Section 10A of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules promulgated thereunder.
.. At least one member of the Audit Committee shall be a person who has been
determined by the Board of Directors to satisfy the definition of "audit
committee financial expert" set forth in Instruction 2(b) to Item 3 of Form
N-CSR promulgated by the SEC.
.. Members of the Audit Committee shall receive no compensation from the Fund
other than (i) reimbursement of expenses and (ii) fixed fees established by
the Board with respect to service on the Board and committees thereof and
attendance at Board and committee meetings.
.. Because of the Audit Committee's demanding role and responsibilities, and
the time commitment attendant to Committee membership, no Audit Committee
member may simultaneously serve on the audit committees of more than three
public companies unless the Board of Directors determines that such
simultaneous service will not impair the ability of such member to serve
effectively on the Audit Committee of the Fund.
17
.. Except as expressly provided in this Charter, the Bylaws of the Fund, the
Corporate Governance Guidelines of the Fund, the rules of the NYSE or any
applicable law or regulation, the Audit Committee shall establish its own
rules of procedure.
Responsibilities and Powers
.. To carry out its purposes, the Audit Committee shall have the following
responsibilities and powers:
General
.. Meet at least twice a year, or more frequently as circumstances may require.
.. Review and reassess the adequacy of this Charter at least annually and
recommend any proposed changes to the Board of Directors for approval.
.. Review annually the Audit Committee's own performance and report the
results of such review to the Board of Directors.
.. Meet regularly with representatives of the Fund's investment adviser,
administrator and independent public accountants in separate executive
sessions to review and discuss any issues arising from the administrator's
and independent public accountant's perspective relating to the accounting,
financial reporting and internal audit functions performed by the Fund and,
where applicable, by service providers on behalf of the Fund.
.. Review with the Fund's investment adviser, administrator and independent
public accountants the adequacy and effectiveness of the accounting and
financial controls of the Fund, and elicit any recommendations for the
improvement of such internal control procedures or particular areas where
new or more detailed controls or procedures are desirable or necessary.
.. Discuss with management the guidelines and policies that govern the process
by which management assesses and manages the Fund's major financial risk
exposures.
.. Establish general policies governing the release (to analysts, rating
agencies or the general public) of financial information or earnings
guidance regarding the Fund.
.. To the extent the Committee deems necessary or appropriate, request any
officer of the Fund, any employee or representative of the Fund's
administrator or investment adviser, or the Fund's outside counsel or
independent public accountants to attend any meeting of the Audit Committee
or to meet with any members of, or consultants to, the Committee.
.. Review with the Fund's outside counsel any legal matters that the counsel
believes may have a material impact on the Fund's accounting and financial
reporting policies or practices.
.. To the extent the Committee deems necessary or appropriate to carry out its
duties, engage independent counsel and other advisers.
.. To the extent the Committee deems necessary or appropriate, conduct or
authorize investigations into any matters within the scope of the
Committee's responsibilities.
.. Approve the establishment of procedures for the receipt, retention, and
treatment of complaints received by the Fund regarding accounting, internal
accounting controls, or auditing matters, and the confidential, anonymous
submission by employees of the Fund's administrator or investment adviser
of concerns regarding questionable accounting or auditing matters.
18
.. Perform such other oversight functions as are assigned by law or
regulation, NYSE rule, the Fund's Charter or Bylaws, or the Board of
Directors.
.. Determine the appropriate funding, to be provided by the Fund, for payment
of (i) compensation to any independent public accounting firm engaged for
the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the Fund, (ii) compensation to any
independent counsel or other advisers retained by the Committee and
(iii) ordinary administrative expenses of the Committee that are necessary
or appropriate in carrying out its duties.
Independent Audit
.. In its capacity as a committee of the Board of Directors, be directly
responsible for the appointment, compensation, retention and oversight of
the work of any independent public accounting firm engaged (including
resolution of disagreements between management and the auditor regarding
financial reporting) for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for the Fund,
i.e., each such independent public accounting firm shall report directly to
the Audit Committee.
.. Pre-approve the scope, fees and terms of all audit and non-audit services
provided by the Fund's independent public accountants, as required by the
provisions of Section 10A of the Exchange Act and the rules promulgated
thereunder.
.. To the extent the Committee deems necessary or appropriate, delegate to one
or more designated members of the Audit Committee the authority to grant
pre-approvals of audit and non-audit services, provided that the decisions
of any member(s) to whom authority is so delegated shall be presented to
the full Audit Committee at each of its scheduled meetings
.. Review the experience and qualifications of the lead partner of the
independent public accountant team.
.. Assure that the lead audit partner of the independent public accountants is
rotated at least every five years as required by Section 10A of the
Exchange Act.
.. Obtain and review a report from the independent public accountants at least
annually regarding (1) the accounting firm's internal quality-control
procedures, (2) any material issues raised by the most recent
quality-control review, or peer review, of the firm, or by any inquiry or
investigation by governmental or professional authorities within the
preceding five years respecting one or more independent audits carried out
by the firm, (3) any steps taken to deal with any such issues and (4) all
relationships between the independent public accountants and the Fund.
.. As frequently as deemed necessary, evaluate the qualifications and
performance of the independent public accounting firm, including
considering whether the accounting firm's quality controls are adequate,
and taking into account the opinions of management and the Fund's
administrator.
.. At least annually, evaluate the independence of the independent public
accounting firm, including whether the provision of non-audit services is
compatible with maintaining the accounting firm's independence.
.. Discuss with the independent public accountants any communications between
the Fund's audit team and the audit firm's national office respecting
auditing or accounting issues presented by the engagement.
.. Discuss with management and the independent public accountants any
accounting adjustments that were noted or proposed by the independent
public accountants but were passed (as immaterial or otherwise).
19
.. Review the reports of the independent public accountants mandated by
Section 10A of the Exchange Act and obtain from the independent public
accountants assurance that no illegal acts (as defined in Section 10A of
the Exchange Act) have been detected or have otherwise come to the
attention of such accountants in the course of the audit.
.. Establish policies regarding the hiring of employees or former employees of
the Fund's independent public accountants by the Fund's investment adviser
or administrator.
Financial Statement Review
.. Review and discuss with the Fund's management and independent public
accountants the Fund's annual audited financial statements, including the
matters required to be discussed pursuant to Statement of Auditing
Standards No. 61, and the Fund's semi-annual financial statements.
.. Review and discuss with the Board of Directors, management and the
independent public accountants, as applicable, (1) major issues regarding
accounting principles and financial statement presentations, including any
significant changes in the Fund's selection or application of accounting
principles, and major issues as to the adequacy of the Fund's internal
controls and any special audit steps adopted in light of material control
deficiencies; (2) analyses prepared by management and/or the independent
public accountants setting forth significant financial reporting issues and
judgments made in connection with the preparation of the financial
statements, including analyses of the effects of alternative GAAP methods
on the financial statements; (3) any material written communications
between the independent public accountants and the Fund, such as any
"management" or "internal control" letter or schedule of unadjusted
differences, and the Fund's response to such communications; (4) any
problems, difficulties or differences encountered in the course of the
audit work, including any disagreements with management or restrictions on
the scope of the independent public accountants' activities or on access to
requested information and management's response thereto; and (5) the effect
of regulatory and accounting initiatives on the financial statements of the
Fund.
.. Review and discuss with the independent public accountants the form of
opinion the auditors propose to render to the Fund's Board and shareholders
on the Fund's financial statements.
.. Make recommendations to the Board of Directors regarding inclusion of the
Fund's audited financial statements in the Fund's annual report to
shareholders.
.. Review disclosures made by the Fund's principal executive officer and
principal financial officer regarding compliance with their certification
obligations as required under the Sarbanes-Oxley Act of 2002 and the rules
promulgated thereunder, including the Fund's disclosure controls and
procedures and internal controls for financial reporting and evaluations
thereof.
Investment Company-Specific Functions
.. Assist the Board of Directors in fulfilling its good faith obligation under
Section 2(a)(41) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), to determine the fair value of securities in the
Fund's portfolio for which market quotations are not readily available by
reviewing, in consultation with the Fund's independent public accountants,
fair value pricing methodologies developed by the Fund's management and
recommending the same for adoption by the Board of Directors.
20
.. Ensure that the agreed-upon procedures for the production of quarterly
basic maintenance reports on the Fund's remarketed preferred stock and
commercial paper are carried out.
.. Ensure that any necessary tax qualification tests relating to the Fund's
regulated investment company status are performed.
Reporting Responsibilities
.. Keep regular minutes of Committee meetings and report the same to the Board
of Directors when required.
.. Report to the Board of Directors on the Committee's activities on a regular
basis and make such recommendations for action by the Board as it may deem
appropriate.
.. Cause to be prepared and approve any reports required by the rules of the
SEC to be included in the Fund's annual proxy statement.
21
EXHIBIT B
DNP SELECT INCOME FUND INC.
AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY
(as adopted on February 19, 2004)
I. Statement of Principles
Under the Sarbanes-Oxley Act of 2002 (the "Act"), the Audit Committee of the
Board of Directors is responsible for the appointment, compensation and
oversight of the work of the independent auditor. As part of this
responsibility, the Audit Committee is required to pre-approve the audit and
non-audit services performed by the independent auditor in order to assure that
they do not impair the auditor's independence from the Fund. To implement these
provisions of the Act, the Securities and Exchange Commission (the "SEC") has
issued rules specifying the types of services that an independent auditor may
not provide to its audit client, as well as the Audit Committee's
administration of the engagement of the independent auditor. Accordingly, the
Audit Committee has adopted, and the Board of Directors has ratified, the Audit
and Non-Audit Services Pre-Approval Policy (this "Policy"), which sets forth
the procedures and the conditions pursuant to which services proposed to be
performed by the independent auditor may be pre-approved.
The SEC's rules establish two different approaches to pre-approving
services, which the SEC considers to be equally valid. Proposed services
either: may be pre-approved without consideration of specific case-by-case
services by the Audit Committee ("general pre-approval"); or require the
specific pre-approval of the Audit Committee ("specific pre-approval"). The
Audit Committee believes that the combination of these two approaches in this
Policy will result in an effective and efficient procedure to pre-approve
services performed by the independent auditor. As set forth in this Policy,
unless a type of service has received general pre-approval, it will require
specific pre-approval by the Audit Committee if it is to be provided by the
independent auditor. Any proposed services exceeding pre-approved cost levels
or budgeted amounts will also require specific pre-approval by the Audit
Committee.
For both types of pre-approval, the Audit Committee will consider whether
such services are consistent with the SEC's rules on auditor independence. The
Audit Committee will also consider whether the independent auditor is best
positioned to provide the most effective and efficient service, for reasons
such as its familiarity with the Fund's business, people, culture, accounting
systems, risk profile and other factors, and whether the service might enhance
the Fund's ability to manage or control risk or improve audit quality. All such
factors will be considered as a whole, and no one factor should necessarily be
determinative.
Under the SEC's rules, the Audit Committee must pre-approve non-audit
services provided not only to the Fund but also to the Fund's investment
adviser and other affiliated entities that provide ongoing services to the Fund
if the independent accountant's services to those affiliated entities have a
direct impact on the Fund's operations or financial reporting.
The Audit Committee is also mindful of the relationship between fees for
audit and non-audit services in deciding whether to pre-approve any such
services and may determine, for each fiscal year, the appropriate ratio between
the total amount of fees for audit, audit-related and tax services (including
any audit-related or tax
22
service fees for affiliates that are subject to pre-approval) and the total
amount of fees for certain permissible non-audit services classified as "all
other" services (including any such services for affiliates that are subject to
pre-approval).
The appendices to this Policy describe the audit, audit-related, tax and
"all other" services that have the general pre-approval of the Audit Committee.
The term of any general pre-approval is 12 months from the date of
pre-approval, unless the Audit Committee considers a different period and
states otherwise. The Audit Committee will annually review and pre-approve the
services that may be provided by the independent auditor without obtaining
specific pre-approval from the Audit Committee. The Audit Committee will add or
subtract to the list of general pre-approved services from time to time, based
on subsequent determinations.
The purpose of this Policy is to set forth the procedures by which the Audit
Committee intends to fulfill its responsibilities. It does not delegate the
Audit Committee's responsibilities to pre-approve services performed by the
independent auditor to management.
The independent auditor has reviewed this Policy and believes that
implementation of this Policy will not adversely affect the auditor's
independence.
II. Delegation
As provided in the Act and the SEC's rules, the Audit Committee may delegate
either type of pre-approval authority to one or more of its members who are not
"interested persons" under the Investment Company Act of 1940. The member to
whom such authority is delegated must report, for informational purposes only,
any pre-approval decisions to the Audit Committee at its next scheduled
meeting. In accordance with the foregoing provisions, the Audit Committee has
delegated pre-approval to its Chairman, David J. Vitale.
III. Audit Services
The annual audit services engagement terms and fees will be subject to the
specific pre-approval of the Audit Committee. Audit services include the annual
financial statement audit and other procedures required to be performed by the
independent auditor to be able to form an opinion on the Fund's financial
statements. These other procedures include information systems and procedural
reviews and testing performed in order to understand and place reliance on the
systems of internal control, and consultations relating to the audit. The Audit
Committee will monitor the audit services engagement as necessary, but no less
than on a semiannual basis, and will also approve, if necessary, any changes in
terms, conditions and fees resulting from changes in audit scope, Fund
structure or other items.
In addition to the annual audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other audit
services, which are those services that only the independent auditor reasonably
can provide. Other audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.
The Audit Committee has pre-approved the audit services in Appendix A. All
other audit services not listed in Appendix A must be specifically pre-approved
by the Audit Committee.
23
IV. Audit-Related Services
Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of the Fund's
financial statements or that are traditionally performed by the independent
auditor. Because the Audit Committee believes that the provision of
audit-related services does not impair the independence of the auditor and is
consistent with the SEC's rules on auditor independence, the Audit Committee
may grant general pre-approval to audit-related services. Audit-related
services include, among others, accounting consultations related to accounting,
financial reporting or disclosure matters not classified as "audit services";
assistance with understanding and implementing new accounting and financial
reporting guidance from rulemaking authorities; agreed-upon or expanded audit
procedures related to accounting and/or billing records required to respond to
or comply with financial, accounting or regulatory reporting matters; and
assistance with internal control reporting requirements under form N-SAR.
The Audit Committee has pre-approved the audit-related services in Appendix
B. All other audit-related services not listed in Appendix B must be
specifically pre-approved by the Audit Committee.
V. Tax Services
The Audit Committee believes that the independent auditor can provide tax
services to the Fund such as tax compliance, tax planning and tax advice
without impairing the auditor's independence, and the SEC has stated that the
independent auditor may provide such services. Hence, the Audit Committee
believes it may grant general pre-approval to those tax services that have
historically been provided by the auditor, that the Audit Committee has
reviewed and believes would not impair the independence of the auditor, and
that are consistent with the SEC's rules on auditor independence. The Audit
Committee will not permit the retention of the independent auditor in
connection with a transaction initially recommended by the independent auditor,
the sole business purpose of which may be tax avoidance and the tax treatment
of which may not be supported in the Internal Revenue Code and related
regulations. The Audit Committee will consult with the Fund's Administrator or
outside counsel to determine that the tax planning and reporting positions are
consistent with this Policy.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved
the tax services in Appendix C. All tax services involving large and complex
transactions not listed in Appendix C must be specifically pre-approved by the
Audit Committee, including: tax services proposed to be provided by the
independent auditor to any executive officer or director of the Fund, in his or
her individual capacity, where such services are paid for by the Fund.
VI. All Other Services
The Audit Committee believes, based on the SEC's rules prohibiting the
independent auditor from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as all other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.
The Audit Committee has pre-approved the "all other" services in Appendix D.
Permissible "all other" services not listed in Appendix D must be specifically
pre-approved by the Audit Committee.
24
A list of the SEC's prohibited non-audit services is attached to this Policy
as Appendix E. The SEC's rules and relevant guidance should be consulted to
determine the precise definitions of these services and the applicability of
exceptions to certain of the prohibitions.
VII. Pre-Approval Fee Levels or Budgeted Amounts
Pre-approval fee levels or budgeted amounts for all services to be provided
by the independent auditor will be established annually by the Audit Committee.
(Note that separate amounts may be specified for services to the Fund and for
services to other affiliated entities that are subject to pre-approval.) Any
proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services. For each fiscal year, the Audit
Committee may determine the appropriate ratio between the total amount of fees
for audit, audit-related and tax services for the Fund (including any
audit-related or tax services fees for affiliates that are subject to
pre-approval), and the total amount of fees for services classified as "all
other" services (including any such services for affiliates that are subject to
pre-approval).
VIII. Procedures
All requests or applications for services to be provided by the independent
auditor that do not require specific approval by the Audit Committee will be
submitted to the Fund's Administrator and must include a detailed description
of the services to be rendered. The Administrator will determine whether such
services are included within the list of services that have received the
general pre-approval of the Audit Committee. The Audit Committee will be
informed on a timely basis of any such services rendered by the independent
auditor.
Requests or applications to provide services that require specific approval
by the Audit Committee will be submitted to the Audit Committee by both the
independent auditor and the Fund's Administrator, and must include a joint
statement as to whether, in their view, the request or application is
consistent with the SEC's rules on auditor independence.
The Audit Committee has designated the Fund's Administrator to monitor the
performance of all services provided by the independent auditor and to
determine whether such services are in compliance with this Policy. The
Administrator will report to the Audit Committee on a periodic basis on the
results of its monitoring. Both the Administrator and any member of management
will immediately report to the Chairman of the Audit Committee any breach of
this Policy that comes to their attention.
IX. Additional Requirements
The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the independent auditor
and to assure the auditor's independence from the Fund, such as reviewing a
formal written statement from the independent auditor delineating all
relationships between the independent auditor and the Fund, consistent with
Independence Standards Board Standard No. 1, and discussing with the
independent auditor its methods and procedures for ensuring independence.
25
Appendix A
Pre-Approved Audit Services for Fiscal Year 2004
Dated: February 19, 2004
Service Range of Fees*
The Fund Affiliates**
------------------------------------------------------------------------------------------------------
1.Services required under generally accepted auditing standards to perform $52,000 N/A
the audit of the annual financial statements of the Fund, including
performance of tax qualification tests relating to the Fund's regulated
investment company status and issuance of an internal control letter for the
Fund's Form N-SAR
------------------------------------------------------------------------------------------------------
2.Reading of the Fund's semi-annual financial statements *** N/A
------------------------------------------------------------------------------------------------------
3.Services associated with SEC registration statements, periodic reports and *** N/A
other documents filed with the SEC or other documents issued in
connection with securities offerings (e.g., comfort letters, consents), and
assistance in responding to SEC comment letters
------------------------------------------------------------------------------------------------------
4.Consultations by the Fund's management as to the accounting or disclosure *** N/A
treatment of transactions or events and/or the actual or potential impact of
final or proposed rules, standards or interpretations by the SEC, FASB, or
other regulatory or standard setting bodies (Note: Under SEC rules, some
consultations may be "audit-related" services rather than "audit" services)
------------------------------------------------------------------------------------------------------
--------
* In addition to the fees shown in the table, the Audit Committee has
pre-approved the reimbursement of the reasonable out-of-pocket expenses
incurred by the independent accountant in providing the pre-approved
services.
** These affiliates include the Fund's investment adviser (excluding
sub-advisers) and any entity controlling, controlled by or under common
control with the adviser that provides ongoing services to the Fund. The
Fund's Audit Committee must pre-approve non-audit services provided not only
to the Fund but also to the adviser and such other affiliated entities,
where such entities provide ongoing services to the Fund and the independent
accountant's services to such entities have a direct impact on the Fund's
operations or financial reporting.
***Fees for services designated with a (***) shall either be included in the
fee approved for item 1 of this Appendix A or may be separately charged,
provided that the aggregate separate charges for all services designated
with a (***) in Appendices A and B may not exceed 10% of the fee approved
for item 1 of this Appendix A.
26
Appendix B
Pre-Approved Audit-Related Services for Fiscal Year 2004
Dated: February 19, 2004
Service Range of Fees*
The Fund Affiliates**
-------------------------------------------------------------------------------------------------------
1.Issuance of quarterly agreed-upon procedures letters relating to the Fund's $23,000 N/A
commercial paper and remarketed preferred stock.
-------------------------------------------------------------------------------------------------------
2.Agreed-upon or expanded audit procedures related to accounting records *** N/A
required to respond to or comply with financial, accounting or regulatory
reporting matters
-------------------------------------------------------------------------------------------------------
3.Consultations by the Fund's management as to the accounting or disclosure *** N/A
treatment of transactions or events and/or the actual or potential impact of
final or proposed rules, standards or interpretations by the SEC, FASB, or
other regulatory or standard-setting bodies (Note: Under SEC rules, some
consultations may be "audit" services rather than "audit-related" services)
-------------------------------------------------------------------------------------------------------
4.General assistance with implementation of the requirements of SEC rules or *** N/A
listing standards promulgated pursuant to the Sarbanes-Oxley Act
-------------------------------------------------------------------------------------------------------
--------
* In addition to the fees shown in the table, the Audit Committee has
pre-approved the reimbursement of the reasonable out-of-pocket expenses
incurred by the independent accountant in providing the pre-approved
services.
** These affiliates include the Fund's investment adviser (excluding
sub-advisers) and any entity controlling, controlled by or under common
control with the adviser that provides ongoing services to the Fund. The
Fund's Audit Committee must pre-approve non-audit services provided not only
to the Fund but also to the adviser and such other affiliated entities,
where such entities provide ongoing services to the Fund and the independent
accountant's services to such entities have a direct impact on the Fund's
operations or financial reporting.
***Fees for services designated with a (***) shall either be included in the
fee approved for item 1 of Appendix A or may be separately charged, provided
that the aggregate separate charges for all services designated with a (***)
in Appendices A and B may not exceed 10% of the fee approved for item 1 of
Appendix A.
27
Appendix C
Pre-Approved Tax Services for Fiscal Year 2004
Dated: February 19, 2004
Service Range of Fees*
The Fund Affiliates**
-------------------------------------------------------------------------------------------------------
1.Preparation of federal and state tax returns, including excise tax returns, and $12,000 N/A
review of required distributions to avoid excise tax
-------------------------------------------------------------------------------------------------------
2.Consultations with the Fund's management as to the tax treatment of *** N/A
transactions or events
-------------------------------------------------------------------------------------------------------
3.Tax advice and assistance regarding statutory, regulatory or administrative *** N/A
developments
-------------------------------------------------------------------------------------------------------
--------
* In addition to the fees shown in the table, the Audit Committee has
pre-approved the reimbursement of the reasonable out-of-pocket expenses
incurred by the independent accountant in providing the pre-approved
services.
** These affiliates include the Fund's investment adviser (excluding
sub-advisers) and any entity controlling, controlled by or under common
control with the adviser that provides ongoing services to the Fund. The
Fund's Audit Committee must pre-approve non-audit services provided not only
to the Fund but also to the adviser and such other affiliated entities,
where such entities provide ongoing services to the Fund and the independent
accountant's services to such entities have a direct impact on the Fund's
operations or financial reporting.
***Fees for services designated with a (***) shall either be included in the
fee approved for item 1 of this Appendix C or may be separately charged,
provided that the aggregate separate charges for all services designated
with a (***) in this Appendix C may not exceed 10% of the fee approved for
item 1 of this Appendix C.
28
Appendix D
Pre-Approved "All Other" Services for Fiscal Year 2004
Dated: February 19, 2004
Service Range of Fees*
The Fund Affiliates**
-----------------------------
None
-----------------------------
--------
* In addition to the fees shown in the table, the Audit Committee has
pre-approved the reimbursement of the reasonable out-of-pocket expenses
incurred by the independent accountant in providing the pre-approved
services.
** These affiliates include the Fund's investment adviser (excluding
sub-advisers) and any entity controlling, controlled by or under common
control with the adviser that provides ongoing services to the Fund. The
Fund's Audit Committee must pre-approve non-audit services provided not only
to the Fund but also to the adviser and such other affiliated entities,
where such entities provide ongoing services to the Fund and the independent
accountant's services to such entities have a direct impact on the Fund's
operations or financial reporting.
29
Appendix E
Prohibited Non-Audit Services
. Bookkeeping or other services related to the accounting records or
financial statements of the audit client
. Financial information systems design and implementation
. Appraisal or valuation services, fairness opinions or
contribution-in-kind reports
. Actuarial services
. Internal audit outsourcing services
. Management functions
. Human resources
. Broker-dealer, investment adviser or investment banking services
. Legal services
. Expert services unrelated to the audit
30
DNP SELECT INCOME FUND INC.
PROXY SOLICITED BY MANAGEMENT FROM COMMON SHAREHOLDERS
FOR MEETING TO BE HELD ON APRIL 20, 2004
Nancy Lampton, Christian H. Poindexter and David J. Vitale or any of them,
each with full power of substitution, are authorized to vote all shares of
common stock of DNP Select Income Fund Inc. owned by the undersigned at the
meeting of shareholders to be held April 20, 2004, and at any adjournment of the
meeting. They shall vote in accordance with the instructions set forth on the
reverse side hereof.
If no specific instructions are provided, this proxy will be voted "FOR"
proposal 1 and in the discretion of the proxies upon such other business as may
properly come before the meeting.
(Continued and to be signed on other side.)
DNP SELECT INCOME FUND INC.
P.O. BOX 11435
NEW YORK, NY 10203-0435
Please Vote, Date, and
_____ Sign and Return Promptly _____ Votes must be indicated
in the Enclosed Envelope (x) in Black or Blue ink
Your Board of Directors unanimously recommends a vote "FOR" the following
proposal.
1. Election of directors:
FOR ALL____ WITHHOLD ____ *EXCEPTIONS ____
FOR ALL
Nominees: Stewart E. Conner and Francis E. Jeffries
(INSTRUCTIONS: To withhold authority to vote for any nominee, mark the
"Exceptions" box and write the name of that nominee in the space provided
below.)
*Exceptions ___________________________________________________________________
To change your address, please mark this box. ____
To include any comments, please mark this box. ____
IMPORTANT: Please sign
exactly as your name or
names appear on the
shareholder records of the
Fund. If you sign as agent
or in any other
representative capacity,
please state the capacity
in which you sign. Where
there is more than one
owner, each should sign.
Date: __________________________________
________________________________________
Share Owner sign here
________________________________________
Co-Owner sign here
DNP SELECT INCOME FUND INC.
PROXY SOLICITED BY MANAGEMENT FROM PREFERRED SHAREHOLDERS
FOR MEETING TO BE HELD ON APRIL 20, 2004
Nancy Lampton, Christian H. Poindexter and David J. Vitale or any of them,
each with full power of substitution, are authorized to vote all shares of
preferred stock of DNP Select Income Fund Inc. owned by the undersigned at the
meeting of shareholders to be held April 20, 2004, and at any adjournment of
the meeting. They shall vote in accordance with the instructions set forth
below.
Your Board of Directors unanimously recommends a vote "FOR" the following
proposal.
1. Election of director: Robert J. Genetski
FOR______ WITHHOLD______
If no specific instructions are provided, this proxy will be voted "FOR"
proposal 1 and in the discretion of the proxies upon such other business as may
properly come before the meeting.
(Continued and to be signed on other side.)
Dated , 2004 (please fill in, sign and date this proxy and mail it in the
envelope provided.)
----------------------------------
----------------------------------
(Signature(s) of
Shareholder(s))
IMPORTANT: Please sign
exactly as your name or names
appear on the shareholder
records of the Fund. If you
sign as agent or in any other
representative capacity,
please state the capacity in
which you sign. Where there
is more than one owner, each
should sign.