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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4915
-----------
DNP Select Income Fund Inc.
--------------------------------------------------
(Exact name of registrant as specified in charter)
55 East Monroe Street, Chicago, Illinois 60603
---------------------------------------------------
(Address of principal executive offices) (Zip code)
Nathan I. Partain John R. Sagan
DNP Select Income Fund Inc. Mayer, Brown, Rowe & Maw LLP
55 East Monroe Street 190 South LaSalle Street
Chicago, Illinois 60603 Chicago, Illinois 60603
(Name and address of agents for service)
Registrant's telephone number, including area code: (312) 368-5510
-------------------------
Date of fiscal year end: December 31
-------------------
Date of reporting period: June 30, 2003
------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. (S) 35
ITEM 1. REPORTS TO STOCKHOLDERS.
The Semi-Annual Report to Stockholders follows.
Dear Fellow Shareholders:
Performance Review: We are pleased to report that during the second quarter
of 2003 your Fund had a total return (market price change plus income) of
11.6%, boosting year-to-date total return to 14.2%. In comparison, the S&P
Utilities Index had a total return of 21.3% for the quarter and 17.5%
year-to-date. A composite of the S&P Utilities Index and the Lehman Utility
Bond Index, reflecting the stock and bond ratio of the Fund, had a total return
of 16.6% for the second quarter and 15.6% year-to-date.
During the second quarter of 2003, your Fund paid three monthly 6.5 cent
dividends. The 6.5 cent per share monthly rate, without compounding, would be
78 cents annualized, or a 7.18% common stock dividend yield based on the June
30, 2003 closing price of $10.87 per share. That yield compares favorably with
the quarter-end yields of 4.10% on the Dow Jones Utility Index and 4.16% on the
S&P Utilities Index.
The stock markets are off to a good start this year. The broad market and
the utility sector have advanced strongly, especially in the second quarter.
Within the utility sector, the stocks of highly leveraged and volatile
companies have performed best, while the stocks of more financially strong and
stable companies have lagged. Your Fund, in keeping with its primary investment
objectives of current income and long-term growth of income, maintains a
portfolio that is less aggressive than the hypothetical portfolio reflected in
the utility indexes. As a result, our year-to-date total return has lagged the
utility indexes to some extent. However, it is worth remembering that during
2002, when aggressive portfolios were faring more poorly, your Fund
outperformed the S&P Utilities Index by approximately 27%.
Tax Law Change: At the end of May, President Bush signed into law the Jobs
and Growth Tax Relief Reconciliation Act of 2003, lowering the income tax rates
on qualifying dividends and long-term capital gains to 15% for the top four
income tax brackets and to 5% for those in the 10% and 15% tax brackets. The
definition of qualifying dividends is still being clarified but, in general and
subject to a holding period requirement, stock dividends of U.S. corporations
and foreign corporations listed on U.S. exchanges qualify for the reduced tax
rate, with the exception of certain types of preferred stock and REITs. Mutual
funds will generally be able to pass through to their shareholders the same tax
treatment of qualifying dividends and long-term capital gains that would be
applicable to the funds themselves. However, your Fund's dividend stream
includes significant income from bonds, preferred stocks, and REITs, which may
not qualify for the reduced tax rate. The exact impact of the tax law change on
your Fund's dividend tax treatment depends on the assets held by the Fund
during the year and will not be known until January 2004 when the Fund issues
an IRS Form 1099 to each of its shareholders.
The Economic Outlook Has Brightened: The lower taxation of qualifying
dividends is just one aspect of the tax law changes. The tax reductions also
provide marriage penalty relief, an increase in the child tax credit, reduction
in some individual tax rates, and incentives for investment. While fairness in
tax structure was central to the debate, President Bush based his case for the
tax cuts on the need for fiscal stimulus to boost economic growth. The tax law
changes are the Administration's and Congress' response to a period of subdued
economic growth, stubbornly high unemployment and low job creation, and
moderate disinflation (a decline in the rate of inflation).
The Federal Reserve Board has also responded to the sub-par economic
environment by lowering the federal funds rate thirteen times since December
2000, most recently in June of this year, to levels not seen for 45 years.
Federal Reserve Chairman Alan Greenspan said in his recent semiannual testimony
to the House of Representatives Financial Services Committee that the Fed
intends to keep rates low for as long as needed to promote satisfactory
economic performance.
Because of the recent volatility in economic indicators, it is not clear
what would constitute satisfactory economic performance in the eyes of the Fed.
Over the last six quarters, the Fed has seen a quarter of 5.0% real growth
(first quarter 2002) only to be followed by a quarter of 1.3% growth, then a
quarter of 4.0% growth (third quarter 2002) followed by two quarters of below
1.5% growth, and most recently a 2.4% quarterly growth rate (second quarter
2003). It is possible that the Fed will wait to see two consecutive quarters of
strong growth before changing its accommodative policy.
It is widely anticipated that the combination of low interest rates and the
recently passed tax legislation will provide a lift to the economy. It has been
estimated that the tax changes will increase household cash flow by $35
billion, prompting a pickup in consumer spending. More importantly, it is hoped
that lower tax rates will enable businesses to become more productive--creating
jobs and increasing workers' incomes. In addition, low interest rates will
continue to encourage home refinancing, which gives homeowners an opportunity
to extract cash and/or lower their monthly payments. The resulting increase in
consumer liquidity is expected to boost consumer confidence, and continue to
benefit corporations by enabling them to borrow at lower interest rates and
with less risk premium.
It thus appears that the economic factors are in place for improved consumer
and business activity. If the economy improves, it is likely that the stock
markets will improve, and that the virtuous cycle of compounding gains will be
reestablished.
Back to Basics for the Electric and Natural Gas Groups: The first half of
2003 has been relatively uneventful for the utility sector compared to the
prior fifteen months. The latter part of 2001 and most of 2002 were a
tumultuous period for the utility sector, which was buffeted by a series of
developments inconsistent with the sector's reputation as safe and stable. A
confluence of events, including a dysfunctional California power market and
high natural gas prices, forced energy prices higher, while at the end of the
period a slow economy, an oversupply of generating capacity, and a contraction
in energy trading kept energy prices below break-even for many generating
facilities.
As a result, we have witnessed the bankruptcy, or near-bankruptcy, not only
of several of the more aggressive energy merchants, but also of a number of
traditional utilities. The rating agencies, due to heightened concerns about
the utility industry following the "Enron Debacle", have sharply increased
their scrutiny of utility companies. Many formerly high quality companies have
experienced credit downgrades, some to well below investment grade resulting in
a sharply higher corporate cost of capital, capital expenditure curtailment,
dividend reductions or eliminations, and liquidity crises. Unethical energy
trading practices, faulty electric and gas price reporting, and questionable
accounting practices have further tarnished the industry's reputation.
As 2002 progressed, management turnover proliferated, and replacement
management turned away from risky, high-growth endeavors and turned back to
basics--the core businesses of providing electricity and natural gas in the
most efficient manner possible. International business units, which served
mostly as capital drains and distractions for management, were closed or
divested. In addition, energy trading businesses not backed by physical assets
were abandoned or wound down. Companies shored up stressed balance sheets by
issuing new equity and selling "non-core" assets to reduce debt. Thus far in
2003, further progress has been made along these lines by most of the troubled
companies in the sector. Balance sheets appear to be healthier, and there
continue to be improvements in debt-to-capital ratios, as well as companies'
ability to service interest costs. We view 2003 as a transition year, with
continued progress towards restored financial health.
Investors have also embraced the back to basics concept, and many utility
stock values have been helped by the sector's return to favor. Gone are
expectations and pressure on utility managements to far exceed a low- to
mid-single
2
digit earnings growth rate. Investors now recognize that higher growth
rates--if achievable at all--require traditional regulated utility managements
to engage in risky, highly uncertain strategies with which they are mostly
unfamiliar. Investors have realized the value in the steady stream of cash
flows that come from a utility's core distribution business and the natural
hedge against risk of owned, rather than contracted or purchased, power
generation. Cash flows underpin a company's ability to fund capital
expenditures as well as dividends and, therefore, are an accurate and
meaningful sign of the operating and financial health of a utility.
Fortunately, DNP's strategy has emphasized just these types of
companies--stable and regulated distribution businesses with secure dividend
streams. We intend to continue with this investment strategy in the future.
Board of Director's Meeting: At the July Board of Directors' meeting, the
Board declared the following monthly dividends:
Cents Per Share Record Date Payable Date
--------------- ------------ ------------
6.5...... August 29 September 10
6.5...... September 30 October 10
6.5...... October 31 November 10
Automatic Dividend Reinvestment Plan and Direct Deposit Service--The Fund
has a dividend reinvestment plan available as a benefit to all registered
shareholders. As long as the market price of the common stock of the Fund
exceeds or is equal to the net asset value per share, new shares for the
dividend reinvestment program are issued at the greater of either 95% of the
market price or net asset value. If the market price per share of common stock
is below the net asset value per share, shares are purchased in the open market
at prevailing market prices, plus any brokerage commissions paid by The Bank of
New York.
Those shareholders whose shares are held for them by a brokerage house or
nominee in "street-name" may not participate in the Fund's automatic dividend
reinvestment plan. For such shareholders desiring automatic dividend
reinvestment, we suggest you contact your broker or other nominee.
As an added service, without cost to the shareholder, the Fund offers direct
deposit service through electronic funds transfer to all registered
shareholders currently receiving a monthly dividend check. This service is
offered through The Bank of New York. For more information and/or an
authorization form on automatic dividend reinvestment or direct deposit, please
contact The Bank of New York (1-877-381-2537 or http://stock.bankofny.com).
Visit us on the Web--You can obtain the most recent shareholder financial
report and dividend information at our web site, http://www.dnpselectincome.com.
We appreciate your interest in DNP Select Income Fund Inc., and we will
continue to do our best to be of service to you.
/s/ Claire V. Hansen
/s/ Nathan I. Partain
Claire V. Hansen, CFA
Nathan I. Partain, CFA
Chairman
President and Chief
Executive Officer
3
DNP SELECT INCOME FUND INC.
SCHEDULE OF INVESTMENTS
(UNAUDITED)
June 30, 2003
COMMON STOCKS--83.6%
Market
Value
Shares Company (Note 1)
--------- ------- ------------
[_] ELECTRIC--46.3%
1,000,000 Allete Inc................................. $ 26,550,000
1,001,000 Ameren Corp................................ 44,144,100
800,000 Cinergy Corp............................... 29,432,000
1,000,000 Consolidated Edison Inc.................... 43,280,000
796,000 Dominion Resources......................... 51,158,920
2,000,000 DQE Inc.................................... 30,140,000
1,000,000 DTE Energy Co.............................. 38,640,000
1,100,000 Energy East Corp........................... 22,836,000
1,000,000 Exelon Corp................................ 59,810,000
1,375,000 FirstEnergy Corp........................... 52,868,750
900,000 FPL Group Inc.............................. 60,165,000
1,080,000 Iberdrola S.A. (Spain)..................... 18,702,587
215,000 National Grid Group PLC ADR................ 7,333,650
770,000 National Grid Transco PLC (United Kingdom). 5,222,191
1,318,600 NSTAR...................................... 60,062,230
1,375,000 Progress Energy Inc........................ 60,362,500
1,000,000 Public Service Enterprise Group............ 42,250,000
850,000 Scottish & Southern Energy (United Kingdom) 8,738,305
100,000 Scottish & Southern Energy ADR............. 10,296,860
2,300,000 Southern Co................................ 71,668,000
1,500,000 Vectren Corp............................... 37,575,000
------------
781,236,093
[_] GAS--7.4%
926,000 AGL Resources.............................. 23,557,440
1,000,000 Keyspan Corp............................... 35,450,000
900,000 Peoples Energy Corp........................ 38,601,000
1,000,000 WGL Holdings Inc........................... 26,700,000
------------
124,308,440
The accompanying notes are an integral part of the financial statements.
4
DNP SELECT INCOME FUND INC.
SCHEDULE OF INVESTMENTS--(Continued)
(UNAUDITED)
June 30, 2003
Market
Value
Shares Company (Note 1)
--------- ------- ------------
[_] TELECOMMUNICATION--15.6%
1,000,000 Alltel Corp.......................... $ 48,220,000
1,730,000 BellSouth Corp....................... 46,069,900
1,637,230 SBC Communications Inc............... 41,831,226
411,000 Swisscom AG ADR...................... 11,647,740
856,250 Telecom Corp. of New Zealand Ltd. ADR 20,858,250
534,000 Telefonica S.A. ADR.................. 18,460,380
1,068,400 Telstra Corp. ADR.................... 15,865,740
1,519,000 Verizon Communications............... 59,924,550
------------
262,877,786
[_] NON-UTILITY--14.3%
177,450 Archstone Smith Trust................ 4,258,800
80,000 Arden Realty Inc..................... 2,076,000
309,400 Boston Properties Inc................ 13,551,720
109,200 Camden Property Trust................ 3,816,540
347,984 CBL & Associates Properties Inc...... 14,963,312
224,770 Centerpoint Properties Corp.......... 13,767,162
435,000 Chelsea GCA Realty Inc............... 17,534,850
100,000 Colonial Properties Trust............ 3,519,000
209,589 Corporate Office Properties Trust.... 3,548,342
410,605 Developers Diversified Realty Corp... 11,677,606
200,000 Duke Realty Corp..................... 5,510,000
186,550 Equity Office Properties Trust....... 5,038,715
191,100 Equity Residential Properties Trust.. 4,959,045
75,621 Essex Property Trust Inc............. 4,329,302
250,250 General Growth Properties, Inc....... 15,625,610
67,000 Health Care Property Investors Inc... 2,837,450
127,930 Health Care Realty Trust Inc......... 3,729,160
95,000 Hospitality Properties Trust......... 2,968,750
242,424 iStar Financial Inc.................. 8,848,476
250,250 The Macerich Co...................... 8,791,283
183,075 Maguire Properties Inc............... 3,524,194
273,000 Pan Pacific Retail Properties Inc.... 10,742,550
495,600 ProLogis Trust....................... 13,529,880
The accompanying notes are an integral part of the financial statements.
5
DNP SELECT INCOME FUND INC.
SCHEDULE OF INVESTMENTS--(Continued)
(UNAUDITED)
June 30, 2003
Market
Value
Shares Company (Note 1)
--------- ------- --------------
90,000 Realty Income Corp......................... $ 3,427,200
263,900 S.L. Green Realty Properties Inc........... 9,207,471
108,624 Shurgard Storage Centers Inc............... 3,593,282
352,170 Simon Property Group....................... 13,745,195
527,800 United Dominion Realty Trust............... 9,088,716
315,000 Vornado Realty Trust....................... 13,734,000
210,892 Weingarten Realty Investors................ 8,836,375
--------------
240,779,986
--------------
Total Common Stocks (Cost--$1,307,884,752). 1,409,202,305
--------------
PREFERRED STOCKS--17.1%
[_] UTILITY--17.1%
200,000 Alltel Corp. 7 3/4% due 5/17/05............ 9,950,000
750,000 Ameren Corp. 9 3/4% due 5/15/05............ 21,315,000
1,200,000 Centurytel Inc. 6 7/8% due 5/15/05......... 34,080,000
626,200 Cinergy Corp. 9 1/2% due 2/16/05........... 37,096,088
450,000 Dominion Resources Inc. 9 1/2% due 11/16/04 26,532,000
986,700 DTE Energy Co. 8 3/4% due 8/16/05.......... 25,940,343
550,000 Duke Energy Corp. 8 1/4% due 5/18/04....... 8,723,000
223,500 EIX Trust II Series B 8.60% due 10/29/29 ** 6,392,100
500,000 FPL Group Inc. 8 1/2% due 2/16/05.......... 29,815,000
412,000 Keyspan Corp. 8 3/4% due 5/16/05........... 21,815,400
775,000 Oneok Inc. 8 1/2% due 2/16/06.............. 21,839,500
500,000 Sempra Energy 8 1/2% due 5/17/05........... 13,720,000
17,100 Southern Union 5 3/4% due 8/16/05.......... 911,430
400,000 TXU Corp. 8 3/4% due 11/16/05.............. 13,240,000
500,000 TXU Corp. 8 1/8% due 5/16/06............... 17,270,000
--------------
Total Preferred Stocks (Cost--$282,187,804) 288,639,861
--------------
The accompanying notes are an integral part of the financial statements.
6
DNP SELECT INCOME FUND INC.
SCHEDULE OF INVESTMENTS--(Continued)
(UNAUDITED)
June 30, 2003
BONDS--40.7%
Ratings
--------------------------
Standard Market
and Value
Par Value Company Fitch Moody's Poor's (Note 1)
--------- ------- --------- ------- -------- ------------
[_] ELECTRIC--11.5%
$ 8,571,000 Cleveland Electric Illuminating
9%, due 7/01/23................. BBB Baa2 BBB $ 9,001,616
18,050,000 Comed Financing II
8 1/2%, due 1/15/27............. Not Rated Baa2 BBB 21,064,747
7,500,000 Commonwealth Edison Co.
9 7/8%, due 6/15/20............. A- A3 A- 8,724,585
6,000,000 Dayton Power and Light
8.15% due 1/15/26............... A A2 BBB 6,254,100
24,000,000 Dominion Resources Capital Trust
7.83%, due 12/01/27............. Not Rated Baa2 BBB- 26,900,712
5,000,000 Gulf States Utilities
8.94%, due 1/01/22.............. Not Rated Baa3 BBB- 5,206,935
5,000,000 Illinois Power Co.
7 1/2, due 7/15/25.............. CCC+ B3 B 4,650,000
13,725,000 Niagara Mohawk Power Corp.
8 7/8, due 5/15/07.............. Not Rated Baa3 A- 16,523,816
5,000,000 Progress Energy Inc
73/4%, due 3/1/31............... BBB- Baa2 BBB 6,028,350
9,000,000 PSEG Power
8 5/8%, due 4/15/31............. Not Rated Baa1 BBB 11,645,136
22,750,000 Puget Capital Trust
8.231%, due 6/01/27............. Not Rated Ba1 BB 22,709,505
13,000,000 Southern Co. Capital Trust
8.14%, due 2/15/27.............. Not Rated Baa1 BBB+ 14,969,552
9,000,000 Texas Utilities Corp.
7 7/8%, due 3/1/23.............. A- Baa1 BBB 9,413,550
10,000,000 Virginia Electric & Power Co.
8 5/8%, due 10/01/24............ Not Rated A2 A- 11,140,020
17,700,000 Virginia Electric & Power Co.
8 1/4%, due 3/01/25............. Not Rated A2 A- 19,910,358
------------
194,142,982
The accompanying notes are an integral part of the financial statements.
7
DNP SELECT INCOME FUND INC.
SCHEDULE OF INVESTMENTS--(Continued)
(UNAUDITED)
June 30, 2003
Ratings
--------------------------
Standard Market
and Value
Par Value Company Fitch Moody's Poor's (Note 1)
--------- ------- --------- ------- -------- ------------
[_] GAS--4.3%
$ 5,000,000 KN Energy Inc.
71/4%, due 3/01/28........... BBB Baa2 BBB $ 5,806,950
10,000,000 Northern Border Partners L.P.
8 7/8%, due 6/15/10.......... BBB+ Baa2 BBB+ 12,208,410
15,000,000 Panhandle Eastern
8 5/8%, due 4/15/25.......... BBB Baa3 BBB 16,755,150
6,488,000 Southern Union Co.
7.60%, due 2/01/24........... BBB Baa3 BBB 7,334,989
8,850,000 Southern Union Co.
81/4%, due 11/15/29.......... BBB Baa3 BBB 10,357,350
10,000,000 TE Products Pipeline Co.
7.51%, due 1/15/28........... Not Rated Baa3 BBB 10,497,760
9,000,000 Trans-Canada Pipeline
9 1/8%, due 4/20/06.......... Not Rated A3 BBB+ 10,366,650
------------
73,327,259
[_] TELECOMMUNICATION--8.6%
15,000,000 AT&T Corporation
8.35%, due 1/15/25........... BBB+ Baa2 BBB+ 16,023,495
10,000,000 BellSouth Capital Funding
7 7/8%, due 2/15/30.......... A+ A1 A+ 13,098,780
25,000,000 British Telecom PLC
8 7/8%, due 12/15/30......... A Baa1 A- 34,241,150
5,000,000 Centurytel Inc.
6 7/8%, due 1/15/28.......... Not Rated Baa2 BBB+ 5,723,805
10,000,000 Centurytel Inc.
8 3/8%, due 10/15/10......... Not Rated Baa2 BBB+ 12,639,760
10,000,000 France Telecom
7 3/4%, due 3/01/11.......... BBB- Baa3 BBB 12,607,560
13,250,000 GTE California Inc.
8.07%, due 4/15/24........... AA A1 A+ 14,317,738
17,625,000 GTE Corp.
7.90%, due 2/01/27........... A+ A3 A+ 20,083,176
5,000,000 GTE North Inc., Series C
7 5/8%, due 5/15/26.......... AA A1 A+ 5,476,080
4,314,000 Tritel PCS Inc.
10 3/8%, due 1/15/11......... BBB Baa2 BBB 5,295,435
5,000,000 Vodafone Group PLC
7 7/8%, due 2/15/30.......... A A2 A 6,465,870
------------
145,972,849
The accompanying notes are an integral part of the financial statements.
8
DNP SELECT INCOME FUND INC.
SCHEDULE OF INVESTMENTS--(Continued)
(UNAUDITED)
June 30, 2003
Ratings
----------------------
Standard Market
and Value
Par Value Company Fitch Moody's Poor's (Note 1)
--------- ------- ----- ------- -------- ------------
[_] NON-UTILITY--16.3%
#$15,000,000 American General Finance Corp.
1.46%, due 5/28/04............. A+ A1 A+ $ 15,000,000
# 25,000,000 Belford U.S. Capital Co. LLC
1.29%, due 6/18/04............. AAA NR AAA 25,012,600
# 25,000,000 CIT Group Inc.
2.03%, due 4/8/04.............. A A2 A 25,085,500
# 25,000,000 Daimler Chrysler NA Holdings
1.51%, due 8/21/03............. NR A3 BBB+ 25,001,000
8,000,000 Dayton Hudson Corp.
9 7/8%, due 7/01/20............ A A2 A+ 11,667,000
19,940,000 EOP Operating LP
71/2%, due 4/19/29............. BBB+ Baa1 BBB+ 23,039,015
# 25,000,000 General Electric Capital Corp.
1.58%, due 10/22/03............ NR Aaa AAA 25,009,700
# 25,000,000 General Motors Acceptance Corp.
1.59%, due 11/07/03............ BBB+ A3 BBB 24,964,000
# 25,000,000 Household Finance Corp.
1.63%, due 5/28/04............. A A1 A 25,086,400
# 25,000,000 Morgan Stanley Dean Witter
1.55%, due 5/18/04............. AA- Aa3 A+ 25,086,050
# 25,000,000 Northern Rock PLC
1.56%, due 7/22/03............. A+ NR A 25,002,350
# 25,000,000 Salomon Smith Barney Holdings
1.64%, due 5/07/04............. AA+ Aa1 AA- 25,045,200
------------
274,998,815
------------
Total Bonds (Cost--$645,545,252)...................... 688,441,905
------------
U.S. TREASURY OBLIGATION--0.1%
2,000,000 U.S. Treasury Bond
10 3/4%, due 8/15/05.................................. 2,393,360
------------
Total U.S. Treasury Obligation
(Cost--$2,172,756).................................... 2,393,360
------------
The accompanying notes are an integral part of the financial statements.
9
DNP SELECT INCOME FUND INC.
SCHEDULE OF INVESTMENTS--(Continued)
(UNAUDITED)
June 30, 2003
Market
Value
Par Value Company (Note 1)
--------- ------- ---------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--9.4%
$125,000,000 Federal Home Loan Mortgage Corp.
9%, due 2/26/04........................................................... $ 131,460,375
25,000,000 Federal Home Loan Mortgage Corp.
9%, due 11/15/13.......................................................... 27,515,925
---------------
Total U.S. Government Agency Obligations (Cost--$158,926,534)............. 158,976,300
---------------
MONEY MARKET INSTRUMENTS--15.4%
# 2,859,917 AIM STIC Liquid Assets Portfolio.......................................... 2,859,917
# 25,000,000 CCN Orchard Park LLC
1.435%, due 10/06/03...................................................... 25,000,000
# 19,193,000 Concord Minuteman Capital CP Series A
1.20%, due 7/01/03........................................................ 19,193,000
# 24,000,000 Deutsche Bank Securities Inc. Repurchase Agreement,
1.435%, dated 6/30/03, due 7/01/03, collateralized by $24,480,000 MSDWC
2001-NC4 M2 2.685% CMO due 1/25/32........................................ 24,000,000
40,000,000 General Electric Capital Corp.
1.25%, due 7/01/03........................................................ 40,000,000
# 19,039,025 Janus Institutional Cash Reserves Fund.................................... 19,039,025
# 100,000,000 Merrill Lynch, Pierce Fenner & Smith Repurchase Agreement, 1.455%, dated
6/30/03, due 7/01/03, collateralized by $5,907,432 EOP Operating LP 7% due
7/15/11; $6,661,750 Canadian National Railways 7.375% due 10/15/31;
$10,537,844 Time Warner Entertainment 8.375% due 7/15/33; $7,907,103
Sears Roebuck Acceptance 6.75% due 8/15/11; $5,450,876 Marathon Oil Corp.
5.375% due 6/01/07; $7,022,181 Federated Dept. Stores 8.5% due 6/01/10;
$6,514,236 Spieker Properties LP 7.35% due 12/01/17; $8,975,638 Kinder
Morgan Energy Partners 7.40% due 3/15/31; $5,809,700 Spieker Properties LP
7.25% due 5/01/09; $6,232,554 Spieker Properties LP 6.80% due 5/01/04;
$8,998,435 Spieker Properties LP 7.125% due 12/01/06; $7,330,706 Avalon
Bay Communities 6.80% due 7/15/06; $9,456,853 Prologis Trust 7.10% due
4/15/08; $7,620,874 AOL Time Warner Inc. 7.625% due 4/15/31; $5,906
Valassis Communications 1.08% 144A due 5/22/33............................ 100,000,000
# 7,205,745 NYLIM Institutional Prime Cash Fund....................................... 7,205,745
# 22,000,000 Regency Markets No. 1 LLC Fund Discount CP
1.07%, due 7/21/03........................................................ 22,000,000
---------------
Total Money Market Instruments (Amortized Cost--$259,279,361)............. 259,297,687
---------------
TOTAL INVESTMENTS (Cost--$2,655,996,459) (166.3%)....................................... $2,806,951,418
---------------
--------
** Dividends currently are deferred.
# This security was purchased with the cash proceeds from securities loans.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets applicable to common shares of the
Fund.
The accompanying notes are an integral part of the financial statements.
10
DNP SELECT INCOME FUND INC.
BALANCE SHEET
(UNAUDITED)
June 30, 2003
ASSETS:
Investments at market value:
Common stocks (cost $1,307,884,752)....................................................... $1,409,202,305
Preferred stocks cost ($282,187,804)...................................................... 288,639,861
Bonds (cost $645,545,252)................................................................. 688,441,905
U.S. Treasury obligation (cost $2,172,756)................................................ 2,393,360
U.S. government agency obligations (cost $158,926,534).................................... 158,976,300
Money market instruments (amortized cost $259,279,361).................................... 259,297,687
--------------
Total investments at value (cost--$2,655,996,459) including $445,950,507 of securities
loaned................................................................................ 2,806,951,418
Interest-bearing deposits with custodian................................................... 5,852,225
Receivables:
Securites sold............................................................................ 46,796,800
Interest.................................................................................. 9,922,713
Dividends................................................................................. 7,264,904
Securities lending income................................................................. 86,688
Securities lending broker rebates......................................................... 227,841
Prepaid expenses........................................................................... 177,808
--------------
Total Assets............................................................................ $2,877,280,397
==============
LIABILITIES:
Payable for securities purchased........................................................... 11,280,353
Due to Adviser (Note 2).................................................................... 3,263,073
Due to Administrator (Note 2).............................................................. 839,677
Dividends payable on common stock.......................................................... 14,137,525
Dividends payable on remarketed preferred stock............................................ 410,940
Accrued expenses........................................................................... 502,271
Commercial paper outstanding (Note 6)...................................................... 198,755,057
Payable upon return of securities on loan.................................................. 459,546,575
--------------
Total Liabilities....................................................................... $ 688,735,471
--------------
Remarketed preferred stock ($.001 par value; 100,000,000 shares authorized and 5,000 shares
issued and outstanding, liquidation preference $100,000 per share) (Note 5).............. 500,000,000
--------------
CAPITAL:
Common stock ($.001 par value; 250,000,000 shares authorized and 217,500,379 shares issued
and outstanding) (Note 4)................................................................ 217,500
Paid-in surplus (Note 4)................................................................... 1,948,726,347
Accumulated net realized loss on investments............................................... (407,628,925)
Distributions in excess of book net investment income...................................... (3,726,281)
Net unrealized appreciation (depreciation) on investments, foreign currency translation and
collateral held for securities on loan................................................... 150,956,285
Net assets applicable to common stock (equivalent to $7.76 per share based on 217,500,379
shares outstanding...................................................................... 1,688,544,926
--------------
Total Liabilities, Remarketed Preferred Stock and Capital............................... $2,877,280,397
==============
The accompanying notes are an integral part of the financial statements.
11
DNP SELECT INCOME FUND INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
For the six months ended June 30, 2003
INVESTMENT INCOME:
Interest................................................................................ $ 17,077,245
Dividends (less withholding tax of $277,782)............................................ 80,845,528
Securities lending income, net.......................................................... 514,310
------------
Total investment income............................................................... 98,437,083
EXPENSES:
Management fees (Note 2)................................................................ 6,381,810
Commercial paper interest expense (Note 6 )............................................. 1,518,694
Administrative fees (Note 2)............................................................ 1,648,356
Transfer agent fees..................................................................... 235,300
Custodian fees.......................................................................... 253,400
Remarketing agent fees.................................................................. 628,472
Shareholder reports..................................................................... 325,800
Professional fees....................................................................... 203,300
Directors' fees (Note 2)................................................................ 253,400
Other expenses.......................................................................... 590,379
------------
Total expenses........................................................................ 12,038,911
------------
Net investment income................................................................. 86,398,172
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on investments........................................................ (40,997,409)
Net change in unrealized appreciation (depreciation) on investments, collateral held for
securities on loan and foreign currency translation................................... 125,034,978
------------
Net realized and unrealized gain........................................................ 84,037,569
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
From net investment income.............................................................. (3,262,369)
------------
Net increase in net assets applicable to common shares resulting from operations........ $167,173,372
============
The accompanying notes are an integral part of the financial statements.
12
DNP SELECT INCOME FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
For the
six months For the year
ended ended
June 30, 2003 December 31,
(UNAUDITED) 2002
-------------- --------------
FROM OPERATIONS:
Net investment income..................................................... $ 86,398,172 $ 169,842,194
Net realized loss......................................................... (40,997,409) (299,216,873)
Net change in unrealized appreciation/(depreciation) on investments,
collateral held for securities on loan, and foreign currency translation 125,034,978 (87,406,287)
Distributions to preferred shareholders from net investment income........ (3,262,369) (8,213,811)
-------------- --------------
Net increase (decrease) in net assets applicable to common shares
resulting from operations............................................. 167,173,372 (224,994,777)
DISTRIBUTIONS TO COMMON STOCKHOLDERS FROM:
Net investment income--(Note 3)........................................... (84,610,969) (167,637,718)
-------------- --------------
Total distributions to common stockholders.............................. (84,610,969) (167,637,718)
FROM CAPITAL STOCK TRANSACTIONS (Note 4):
Shares issued to common stockholders from dividend reinvestment........... 13,012,090 25,906,297
-------------- --------------
Net increase in net assets derived from capital share transactions........ 13,012,090 25,906,297
-------------- --------------
Total increase (decrease)............................................... 95,574,493 (366,726,198)
TOTAL NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of period....................................................... 1,592,970,433 1,959,696,631
-------------- --------------
End of period (including distributions in excess of book net investment
income of $3,726,281, and $2,418,188, respectively)..................... $1,688,544,926 $1,592,970,433
============== ==============
The accompanying notes are an integral part of the financial statements.
13
DNP SELECT INCOME FUND INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
For the six months ended June 30, 2003
Cash Flows From (For):
OPERATING ACTIVITIES
Interest received....................................................... $ 18,308,025
Income dividends received............................................... 77,359,598
Securities lending income, net.......................................... 539,378
Operating expenses paid (excluding interest)............................ (10,825,785)
Interest paid on commercial paper....................................... (2,078,462)
---------------
Net cash provided by operating activities........................................... 83,302,754
INVESTING ACTIVITIES
Purchase of investment securities....................................... (2,911,810,513)
Proceeds from sale/redemption of investment securities.................. 2,897,456,481
Amortization of premiums and discounts on debt securities............... 5,695,476
---------------
Net cash used in investing activities............................................... (8,658,556)
FINANCING ACTIVITIES
Dividends paid.......................................................... (87,949,623)
Proceeds from issuance of common stock under dividend reinvestment
plan.................................................................. 13,012,090
Change in net proceeds from issuance of commercial paper................ 799,618
---------------
Net cash used in financing activities............................................... (74,137,915)
------------
Net increase in cash and cash equivalents................................................. 506,283
Cash and cash equivalents--beginning of period............................................ 5,345,942
------------
Cash and cash equivalents--end of period.................................................. $ 5,852,225
============
Reconciliation of net investment income to net cash provided by operating
activities:
Net investment income................................................................... $ 86,398,172
Adjustments to reconcile net investment income to net cash provided by
operating activities:
Decrease in interest receivable....................................... 1,230,780
Increase in dividends receivable...................................... (3,485,930)
Decrease in accrued expenses.......................................... (865,336)
Decrease in other receivable.......................................... 25,068
---------------
Total adjustments............................................................... 3,095,418
------------
Net cash provided by operating activities............................................... $ 83,302,754
============
The accompanying notes are an integral part of the financial statements.
14
DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 2003
(1) SIGNIFICANT ACCOUNTING POLICIES:
DNP SELECT INCOME FUND INC. (the "Fund", formerly Duff & Phelps Utilities
Income Inc.) was incorporated under the laws of the State of Maryland on
November 26, 1986. The Fund commenced operations on January 21, 1987, as a
closed-end diversified management investment company registered under the
Investment Company Act of 1940. The primary investment objectives of the Fund
are current income and long-term growth of income. Capital appreciation is a
secondary objective.
The following are the significant accounting policies of the Fund:
(a) The market values for securities are determined as follows: Equity
securities traded on a national securities exchange or traded
over-the-counter and quoted on the NASDAQ System are valued at last sales
prices. Fixed income securities and any other securities for which it is
determined that market prices are unavailable or inappropriate are valued at
a fair value using a procedure determined in good faith by the Board of
Directors which includes the use of a pricing service. Each money market
instrument having a maturity of 60 days or less is valued on an amortized
cost basis, which approximates market value.
(b) No provision is made for Federal income taxes since the Fund has
elected to be taxed as a "regulated investment company" and has made such
distributions to its shareholders deemed necessary to be relieved of all
Federal income taxes under provisions of current Federal tax law. The Fund
intends to utilize provisions of Federal income tax laws which allow a
realized capital loss to be carried forward for eight years following the
year of loss and offset such losses against any future realized gains. At
December 31, 2002, the Fund had tax capital loss carry forwards of
$199,205,932 which expire beginning on December 31, 2003. For the period
November 1, 2002 through December 31, 2002, the Fund incurred net realized
capital losses of $181,983,140. The Fund intends to treat these losses as
having occurred on January 1, 2003.
At December 31, 2002, on a tax basis, the Fund had undistributed net
investment income of $2,103,117; and based on a $2,792,953,260 tax cost of
investments, gross unrealized appreciation of $139,857,445 and unrealized
depreciation of $126,699,675. The difference between the book basis and tax
basis of distributable earnings are primarily a result of tax deferral of
wash sale losses, the accretion of market discount and amortization of
premiums.
(c) The accounts of the Fund are kept on the accrual basis of accounting.
Security transactions are recorded on the trade date. Realized gains or
losses from sales of securities are determined on the specific identified
cost basis. Dividend income is recognized on the ex-dividend date. Interest
income and expense are recognized on the accrual basis. Discounts and
premiums on securities are amortized over the lives of the respective
securities for book purposes. Discounts and premiums are not amortized for
tax purposes.
(d) The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.
(e) As required, effective January 1, 2002, the Fund has adopted the
classification requirement of EITF D-98, Classification and Measurement of
Redeemable Securities. EITF D-98 requires that preferred stock be presented
separately at liquidation preference on the balance sheet. Accordingly,
certain reclassifications have been made to the statement of operations,
statement of changes in net assets and financial highlights for all periods
presented. The adoption of EITF D-98 had no impact on the net asset value of
the common stock of the Fund.
15
DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(UNAUDITED)
June 30, 2003
(2) MANAGEMENT ARRANGEMENTS:
The Fund has engaged Duff & Phelps Investment Management Co. (the "Adviser")
to provide professional investment management services for the Fund and has
engaged J. J. B. Hilliard, W. L. Lyons, Inc. (the "Administrator") to provide
administrative and management services for the Fund. The Adviser receives a
quarterly fee at an annual rate of .60% of the average weekly net assets of the
Fund up to $1.5 billion and .50% of average weekly net assets in excess
thereof. The Administrator receives a quarterly fee at annual rates of .25% of
average weekly net assets up to $100 million, .20% of average weekly net assets
from $100 million to $1 billion, and .10% of average weekly net assets over $1
billion. For purposes of the foregoing calculations, "average weekly net
assets" is defined as the sum of (i) the aggregate net asset value of the
Fund's common stock (ii) the aggregate liquidation preference of the Fund's
preferred stock and (iii) the aggregate proceeds to the Fund of commercial
paper issued by the Fund. Directors of the Fund not affiliated with the Adviser
receive a fee of $25,000 per year plus $2,000 per board meeting, plus $1,500
per committee meeting attended. Committee Chairmen receive an additional fee of
$5,000 per year. Total fees paid to directors for the six months ended June 30,
2003 were $247,195. Transfer agent and custodian fees are paid to The Bank of
New York.
(3) DIVIDENDS:
The Board of Directors has authorized the following distributions to common
stockholders from investment income in 2003:
Record Payable Dividend Record Payable Dividend
Date Date Per Share Date Date Per Share
-------- -------- --------- -------- -------- ---------
01-31-03 02-10-03 $.065 04-30-03 05-12-03 $.065
02-28-03 03-10-03 .065 05-30-03 06-10-03 .065
03-31-03 04-10-03 .065 06-30-03 07-10-03 .065
The tax basis for all distributions was ordinary income.
(4) CAPITAL STOCK TRANSACTIONS:
The Fund may purchase shares of its own stock in open market or private
transactions, from time to time and in such amounts and at such prices (not
exceeding $100,000 plus accumulated and unpaid dividends in the case of the
Fund's remarketed preferred stock and less than net asset value in the case of
the Fund's common stock) as management may deem advisable. Since any such
purchases of the Fund's common stock would be made at prices below net asset
value, they would increase the net asset value per share of the remaining
shares of common stock outstanding. The Fund has not purchased any shares of
its common stock.
Transactions in common stock and paid-in surplus during 2002 and for the six
months ended June 30, 2003 were as follows:
Shares Amount
----------- --------------
For the year ended December 31, 2002:
Beginning capitalization............ 213,521,241 $1,910,025,460
Dividend reinvestment............... 2,648,274 25,906,297
----------- --------------
Total capitalization............ 216,169,515 $1,935,931,757
=========== ==============
For the six months ended June 30, 2003:
Beginning capitalization............ 216,169,515 $1,935,931,757
Dividend reinvestment............... 1,330,864 13,012,090
----------- --------------
Total capitalization............ 217,500,379 $1,948,943,847
=========== ==============
16
DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(UNAUDITED)
June 30, 2003
(5) REMARKETED PREFERRED STOCK:
In 1988, the Fund issued 5,000 shares of Remarketed Preferred Stock ("RP")
in five series of 1,000 shares each at a public offering price of $100,000 per
share. The underwriting discount and other expenses incurred in connection with
the issuance of the RP were recorded as a reduction of paid-in surplus on
common stock. Dividends on the RP are cumulative at a rate which was initially
established for each series at its offering. Since the initial offering of each
series, the dividend rate on each series has been reset every 49 days by a
remarketing process. Dividend rates ranged from 1.05% to 1.43% during the six
months ended June 30, 2003.
The RP is redeemable at the option of the Fund on any dividend payment date
at a redemption price equal to $100,000 per share, plus accumulated and unpaid
dividends. The Fund is required to maintain certain asset coverage with respect
to the RP, and the RP is subject to mandatory redemption if that asset coverage
is not maintained. Each series of RP is also subject to mandatory redemption on
a date certain as follows: Series A--November 28, 2012; Series B--November 18,
2015; Series C--November 7, 2018; Series D--December 22, 2021; and Series
E--December 11, 2024.
In general, the holders of the RP and of the Common Stock have equal voting
rights of one vote per share, except that the holders of the RP, as a class,
vote to elect two members of the Board of Directors, and separate class votes
are required on certain matters that affect the respective interests of the RP
and the Common Stock. The RP has a liquidation preference of $100,000 per share
plus accumulated and unpaid dividends.
(6) COMMERCIAL PAPER:
The Board of Directors has authorized the Fund to issue up to $200,000,000
of Commercial Paper Notes (the "Notes") in minimum denominations of $100,000
with maturities up to 270 days. The Notes generally will be sold on a discount
basis, but may be sold on an interest-bearing basis. The Notes are not
redeemable by the Fund nor are they subject to voluntary prepayment prior to
maturity. The aggregate amount of Notes outstanding changes from time to time.
The Notes are unsecured, general obligations of the Fund. The Fund has entered
into a credit agreement to provide liquidity. The Fund is able to request loans
under the credit agreement of up to $100,000,000 at any one time, subject to
certain restrictions. Interest rates on the Notes ranged from 1.23% to 1.40%
during the six months ended June 30, 2003. At June 30, 2003, the Fund had Notes
outstanding of $198,755,057.
(7) INVESTMENT TRANSACTIONS:
For the six months ended June 30, 2003, purchases and sales of investment
securities (excluding short-term securities) were $2,843,676,518 and
$2,829,268,803, respectively.
The Fund may lend portfolio securities to a broker/dealer. Loans are
required to be secured at all times by collateral at least equal to the market
value of securities loaned. The Fund receives a portion of the income earned on
the securities held as collateral and continues to earn income on the loaned
securities. Security loans are subject to the risk of failure by the borrower
to return the loaned securities in which case the Fund could incur a loss. At
June 30, 2003, the Fund had loaned portfolio securities with a market value of
$445,950,507 to a broker/dealer and received $459,546,575 of cash collateral.
This cash was invested in securities as shown in the Schedule of Investments.
17
DNP SELECT INCOME FUND INC.
FINANCIAL HIGHLIGHTS--SELECTED PER SHARE DATA AND RATIOS
The table below provides information about income and capital changes for a
share of common stock outstanding throughout the periods indicated:
For the six
months ended For the year ended December 31
June 30, 2003 ------------------------------------------------------------
(UNAUDITED) 2002 2001 2000 1999 1998
------------- ---------- ---------- ---------- ---------- ----------
Net asset value:
Beginning of period........ $ 7.37 $ 9.18 $ 10.51 $ 8.77 $ 10.36 $ 9.90
---------- ---------- ---------- ---------- ---------- ----------
Net investment income...... 0.40 0.79 0.77 0.88 0.89 0.88
Net realized gain (loss)
and change in
unrealized appreciation/
(depreciation) on
investments.............. 0.40 (1.78) (1.23) 1.76 (1.59) 0.46
Dividends on preferred
stock from net
investment income........ (0.02) (0.04) (0.08) (0.11) (0.10) (0.10)
Total from investment
operations applicable to
common shares............ 0.78 (1.03) (0.54) 2.53 (0.80) 1.24
Dividends on common
stock from net
investment income........ (0.39) (0.78) (0.79) (0.79) (0.79) (0.78)
Net asset value:
End of period.............. $ 7.76 $ 7.37 $ 9.18 $ 10.51 $ 8.77 $ 10.36
========== ========== ========== ========== ========== ==========
Per share market value:
End of period.............. $ 10.87 $ 9.90 $ 11.06 $ 10.50 $ 8.31 $ 11.25
Ratio of expenses to average
net assets applicable to
common stock.............. 1.53%* 1.44% 1.57% 1.79% 1.66% 1.46%
Ratio of net investment
income to average net
assets applicable to
common stock.............. 11.00%* 9.63% 8.63% 9.73% 9.40% 8.85%
Total investment return..... 14.21% (3.04%) 13.67% 37.37% (19.85%) 19.95%
Portfolio turnover rate..... 128.24% 197.27% 213.48% 229.70% 223.78% 251.19%
Net assets applicable to
common stock, end of
period (000s omitted)..... $1,583,655 $1,592,970 $1,959,697 $2,216,014 $1,828,128 $2,131,692
--------
* Annualized
18
Board of Directors
FRANKLIN A. COLE
GORDON B. DAVIDSON
CONNIE K. DUCKWORTH
ROBERT J. GENETSKI
CLAIRE V. HANSEN, CFA
FRANCIS E. JEFFRIES, CFA
NANCY LAMPTON
CHRISTIAN H. POINDEXTER
CARL F. POLLARD
DAVID J. VITALE
Officers
CLAIRE V. HANSEN, CFA
Chairman
NATHAN I. PARTAIN, CFA
President and Chief Executive Officer
T. BROOKS BEITTEL, CFA
Senior Vice President, and Secretary
MICHAEL SCHATT
Senior Vice President
JOSEPH C. CURRY, JR.
Vice President and Treasurer
DIANNA P. WENGLER
Assistant Secretary
DNP Select
Income Fund Inc.
Common stock listed on the New York Stock Exchange under the symbol DNP
55 East Monroe Street
Chicago, Illinois 60603
(312) 368-5510
Shareholder inquiries please contact
Transfer Agent
Dividend Disbursing
Agent and Custodian
The Bank of New York
Shareholder Relations
Church Street Station
P.O. Box 11258
New York, New York 10286-1258
(877) 381-2537
Investment Adviser
Duff & Phelps
Investment Management Co.
55 East Monroe Street
Chicago, Illinois 60603
Administrator
J.J.B. Hilliard, W.L. Lyons, Inc.
Hilliard Lyons Center
Louisville, Kentucky 40202
(888) 878-7845
Legal Counsel
Mayer, Brown, Rowe & Maw
190 South LaSalle Street
Chicago, Illinois 60603
Independent Auditors
Ernst & Young LLP
233 South Wacker Drive
Chicago, Illinois 60606
19
DNP Select
Income Fund Inc.
Semi-Annual Report
June 30, 2003
[LOGO]
ITEM 2. CODE OF ETHICS.
Not applicable to semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to semi-annual reports.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES
FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to semi-annual reports.
ITEM 8 [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Within the 90-day period prior to the filing of this report, the
registrant's management carried out an evaluation, with the
participation of the Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940). Based on their evaluation, the
Chief Executive Officer and Chief Financial Officer believe that
the registrant's disclosure controls and procedures are effective
to ensure that information required to be disclosed by the
registrant on Form N-CSR is recorded, processed, summarized and
reported within the time periods specified in Securities and
Exchange Commission rules and forms.
(b) There have been no changes in the registrant's internal control
over financial reporting during the registrant's most recent
fiscal half-year that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Not applicable to semi-annual reports.
(a)(2)
Exhibit 99.CERT Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
(b)
Exhibit 99.906CERT Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) DNP SELECT INCOME FUND INC.
By (Signature and Title) /s/ NATHAN I. PARTAIN
-----------------------------------------------------
Nathan I. Partain
President and Chief Executive Officer
Date August 22, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ NATHAN I. PARTAIN
------------------------------------------------------
Nathan I. Partain
President and Chief Executive Officer
Date August 22, 2003
By (Signature and Title) /s/ JOSEPH C. CURRY, JR.
------------------------------------------------------
Joseph C. Curry
Vice President and Treasurer
Date August 22, 2003