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 811-22533
Duff & Phelps Utility and Infrastructure Fund Inc.
(Exact name of registrant as specified in charter)
10 South Wacker Drive, Suite 1900
Chicago, Illinois 60606
(Address of principal executive offices) (Zip code)
Alan M. Meder Duff & Phelps Utility and Infrastructure Fund Inc. 10 South Wacker Drive, Suite 1900 Chicago, Illinois 60606 | Lawrence R. Hamilton, Esq. Mayer Brown LLP 71 South Wacker Drive Chicago, Illinois 60606 |
(Name and address of agent for service)
Registrant’s telephone number, including area code: 312-368-5510
Date of fiscal year end: October 31
Date of reporting period: October 31, 2023
Item 1. | Reports to Stockholders. |
(a) | The Report to Shareholders is attached herewith. |
Eric Elvekrog, CFA, CPA President and Chief Executive Officer | David Grumhaus Vice President and Chief Investment Officer |
Total Return1 For the period indicated through October 31, 2023 | ||||
One Year | Three Years (annualized) | Five Years (annualized) | Ten Years (annualized) | |
Duff & Phelps Utility and Infrastructure Fund Inc. | ||||
Market Value2 | -30.1% | 3.8% | 1.3% | 1.0% |
Net Asset Value3 | -9.2% | 4.1% | 1.7% | 0.9% |
Composite Index4 | -0.9% | 7.6% | 5.0% | 2.8% |
MSCI USA Utilities Index (net)4 | -8.7% | 0.8% | 4.3% | 6.6% |
Alerian US Midstream Energy Index4 | 11.2% | 38.7% | 10.7% | N/A |
FTSE All-World Telecommunications Index4 | 5.3% | -0.7% | 0.2% | 0.5% |
MSCI World Core Infrastructure Selected GICS® (net)4 | -1.1% | 3.1% | N/A | N/A |
MSCI World ex USA Utilities Index (net)4 | 13.1% | 0.9% | 4.6% | 2.8% |
1 | Past performance is not indicative of future results. Current performance may be lower or higher than performance in historical periods. |
2 | Total return on market value assumes a purchase of common stock at the closing market price of the last business day of the prior period and a sale at the closing market price on the last business day of each period shown in the table and assumes reinvestment of dividends at the actual reinvestment prices obtained under the terms of the Fund’s dividend reinvestment plan. Total return on market value does not reflect the deduction of taxes that a shareholder may pay on fund distributions or the sale of fund shares. In addition, when buying or selling stock, you would ordinarily pay brokerage expenses. Because brokerage expenses and taxes are not reflected in the above calculations, your total return net of brokerage and tax expense would be lower than the total return on market value shown in the table. Source: Administrator of the Fund. |
3 | Total return on NAV uses the same methodology as is described in note 2, but with use of NAV for beginning, ending and reinvestment values. Because the Fund’s expenses (ratios detailed on page 15 of this report) reduce the Fund’s NAV, they are already reflected in the Fund’s total return on NAV shown in the table. NAV represents the underlying value of the Fund’s net assets, but the market price per share may be higher or lower than the NAV. Source: Administrator of the Fund. |
4 | The Composite Index is a composite of the returns of the Alerian US Midstream Energy, MSCI USA Utilities (net), MSCI World ex USA Utilities (net), MSCI World Core Infrastructure Selected GICS (net), and FTSE All-World Telecommunications Indices, weighted monthly to reflect the stock sector allocation of the Fund based on beginning of month market values. The MSCI World Core Infrastructure Selected GICS Index (net) incepted on November 1, 2020, and thus does not have five- and ten-year return information. The Alerian US Midstream Energy Index was launched June 25, 2018 and therefore does not have ten-year return information. Prior to November 1, 2018, the Composite Index was a composite of the returns of the Alerian MLP, MSCI USA Utilities, MSCI World ex USA Utilities (net), and MSCI World Telecom Indices, weighted monthly to reflect the stock sector allocation of the Fund based on beginning of month market values. The November 1, 2018 change in the indices comprising the Composite Index was discussed in the 2018 Annual Report. The indices are calculated on a total return basis, net of foreign withholding taxes, with dividends reinvested. Indices are unmanaged; their returns do not reflect any fees, expenses, or sales charges; and they are not available for direct investment. Source: Index returns were obtained from MSCI and Morningstar Direct. |
Shares | Description | Value | ||
Common Stocks & MLP Interests—140.8% | ||||
■ Airport Services—1.5% | ||||
40,300 | Aena SME S.A. (Spain)(1) | $ 5,831,216 | ||
■ Electric, Gas and Water—81.3% | ||||
289,990 | Alliant Energy Corp. | 14,148,612 | ||
235,660 | Ameren Corp. (1) | 17,841,819 | ||
134,810 | American Electric Power Co., Inc. (1) | 10,183,547 | ||
1,415,225 | APA Group (Australia)(1) | 7,397,443 | ||
111,800 | Atmos Energy Corp. (1) | 12,036,388 | ||
674,000 | CenterPoint Energy, Inc. (1) | 18,117,120 | ||
297,000 | CMS Energy Corp. (1) | 16,138,980 | ||
206,000 | DTE Energy Co. (1) | 19,854,280 | ||
214,300 | Duke Energy Corp. (1) | 19,049,127 | ||
125,600 | Edison International (1) | 7,920,336 | ||
972,000 | EDP - Energias de Portugal S.A. (Portugal)(1) | 4,083,039 | ||
236,200 | Emera, Inc. (Canada) | 7,736,221 | ||
900,000 | Enel SpA (Italy) | 5,702,312 | ||
110,000 | Entergy Corp. (1) | 10,514,900 | ||
144,500 | Evergy, Inc. (1) | 7,100,730 | ||
445,000 | Iberdrola S.A. (Spain)(1) | 4,943,972 | ||
423,000 | NextEra Energy, Inc. (1) | 24,660,900 | ||
333,117 | OGE Energy Corp. (1) | 11,392,601 | ||
75,000 | Orsted AS (Denmark)(1) | 3,612,972 | ||
939,000 | PG&E Corp. (1)(2) | 15,305,700 | ||
530,235 | PPL Corp. (1) | 13,027,874 | ||
189,000 | Public Service Enterprise Group, Inc. (1) | 11,651,850 | ||
254,000 | RWE AG (Germany)(1) | 9,710,205 | ||
175,000 | Severn Trent plc (United Kingdom) | 5,649,412 | ||
196,300 | WEC Energy Group, Inc. (1) | 15,976,857 | ||
245,300 | Xcel Energy, Inc. (1) | 14,538,931 | ||
308,296,128 | ||||
■ Highways & Railtracks—4.9% | ||||
3,232,445 | Atlas Arteria Ltd. (Australia)(1) | 10,888,163 | ||
1,033,000 | Transurban Group (Australia)(1) | 7,745,451 | ||
18,633,614 |
Shares | Description | Value | ||
■ Integrated Telecommunication Services—1.1% | ||||
262,000 | AT&T, Inc. (1) | $ 4,034,800 | ||
■ Multi-Utilities—8.0% | ||||
426,000 | E.ON SE (Germany)(1) | 5,057,422 | ||
576,000 | NiSource, Inc. | 14,492,160 | ||
156,400 | Sempra (1) | 10,952,692 | ||
30,502,274 | ||||
■ Oil & Gas Storage, Transportation and Production—36.4% | ||||
127,000 | Cheniere Energy, Inc. (1) | 21,135,340 | ||
202,000 | DT Midstream, Inc. (1) | 10,901,940 | ||
1,546,185 | Energy Transfer LP (1) | 20,332,333 | ||
514,000 | EnLink Midstream LLC (1) | 6,317,060 | ||
754,000 | Enterprise Products Partners LP | 19,634,160 | ||
556,575 | MPLX LP (1) | 20,058,963 | ||
600,000 | Plains All American Pipeline LP | 9,090,000 | ||
207,000 | Targa Resources Corp. | 17,307,270 | ||
382,147 | Williams Cos., Inc. (The) (1) | 13,145,857 | ||
137,922,923 | ||||
■ Railroads—5.1% | ||||
49,770 | Canadian National Railway Co. (Canada) | 5,266,091 | ||
112,700 | Canadian Pacific Kansas City Ltd. (Canada) | 8,001,761 | ||
112,000 | CSX Corp. (1) | 3,343,200 | ||
14,000 | Norfolk Southern Corp. (1) | 2,671,060 | ||
19,282,112 |
Shares | Description | Value | ||
■ Telecom Tower REITs—2.5% | ||||
32,500 | American Tower Corp. (1) | $ 5,791,175 | ||
39,000 | Crown Castle, Inc. (1) | 3,626,220 | ||
9,417,395 | ||||
Total Common Stocks & MLP Interests (Cost $526,659,035) | 533,920,462 | |||
TOTAL INVESTMENTS—140.8% (Cost $526,659,035) | 533,920,462 | |||
Secured borrowings—(33.0)% | (125,000,000) | |||
Mandatory Redeemable Preferred Shares at liquidation value—(9.2)% | (35,000,000) | |||
Other assets less other liabilities—1.4% | 5,382,999 | |||
NET ASSETS APPLICABLE TO COMMON STOCK—100.0% | $ 379,303,461 |
(1) | All or a portion of securities is segregated as collateral for borrowings. The value of securities segregated as collateral is $328,754,703. |
(2) | Non-income producing. |
Level 1 | |
Common stocks & MLP interests | $533,920,462 |
Total investments | $533,920,462 |
Currency Abbreviations: | |
AUD | Australian Dollar |
CAD | Canadian Dollar |
DKK | Danish Krone |
EUR | Euro |
GBP | United Kingdom Pound Sterling |
USD | United States Dollar |
Assets: | |
Investments at value (cost $526,659,035) | $533,920,462 |
Cash | 4,548,689 |
Receivables: | |
Investment securities sold | 2,216,500 |
Dividends | 1,640,880 |
Tax reclaims | 591,693 |
Prepaid expenses | 34,989 |
Total assets | 542,953,213 |
Liabilities: | |
Due to custodian | 2,216,838 |
Secured borrowings (Note 9) | 125,000,000 |
Payables: | |
Investment advisory fees (Note 3) | 461,503 |
Administrative fees (Note 3) | 37,689 |
Interest on secured borrowings (Note 9) | 678,691 |
Interest on floating rate mandatory redeemable preferred shares (Note 8) | 229,249 |
Accrued expenses | 109,860 |
Floating rate mandatory redeemable preferred shares (liquidation preference $35,000,000, net of deferred offering costs of $84,078) (Note 8) | 34,915,922 |
Total liabilities | 163,649,752 |
NET ASSETS APPLICABLE TO COMMON STOCK | $379,303,461 |
CAPITAL: | |
Common stock ($0.001 par value; 596,000,000 shares authorized and 38,181,740 shares issued and outstanding) | $ 38,182 |
Additional paid-in capital | 406,020,764 |
Total distributable earnings (accumulated losses) | (26,755,485) |
Net assets applicable to common stock | $379,303,461 |
NET ASSET VALUE PER SHARE OF COMMON STOCK | $ 9.93 |
INVESTMENT INCOME: | |
Dividends (less foreign withholding tax of $502,327) | $ 26,100,159 |
Less return of capital distributions (Note 2) | (9,458,126) |
Total investment income | 16,642,033 |
EXPENSES: | |
Investment advisory fees (Note 3) | 6,232,558 |
Administrative fees (Note 3) | 443,742 |
Interest expense and fees on secured borrowings (Note 9) | 8,080,703 |
Interest expense and amortization of deferred offering costs on preferred shares (Note 8) | 2,749,025 |
Professional fees | 241,771 |
Reports to shareholders | 154,305 |
Directors’ fees (Note 3) | 74,206 |
Accounting agent fees | 59,460 |
Custodian fees | 13,375 |
Transfer agent fees | 11,240 |
Other expenses | 141,281 |
Total expenses | 18,201,666 |
Net investment income (loss) | (1,559,633) |
REALIZED AND UNREALIZED GAIN (LOSS): | |
Net realized gain (loss) on investments | (23,205,309) |
Net realized gain (loss) on foreign currency transactions | 18,753 |
Net realized gain (loss) on written options | 822,197 |
Net change in unrealized appreciation / depreciation on investments and foreign currency translation | (14,404,830) |
Net change in unrealized appreciation / depreciation on written options | (71,403) |
Net realized and unrealized gain (loss) | (36,840,592) |
NET DECREASE IN NET ASSETS APPLICABLE TO COMMON STOCK RESULTING FROM OPERATIONS | $(38,400,225) |
For the year ended October 31, 2023 | For the year ended October 31, 2022 | ||
OPERATIONS: | |||
Net investment income (loss) | $ (1,559,633) | $ 4,392,301 | |
Net realized gain (loss) | (22,364,359) | 19,381,434 | |
Net change in unrealized appreciation / depreciation | (14,476,233) | (36,400,820) | |
Net increase (decrease) in net assets applicable to common stock resulting from operations | (38,400,225) | (12,627,085) | |
DISTRIBUTIONS TO COMMON STOCKHOLDERS: | |||
Net investment income and capital gains | (974,704) | (4,541,413) | |
Return of capital | (47,099,302) | (48,709,802) | |
Decrease in net assets from distributions to common stockholders (Note 6) | (48,074,006) | (53,251,215) | |
From Capital Share Transactions | |||
Shares issued to common stockholders from dividend reinvestment (66,662 and 122,705 shares, respectively) | 849,879 | 1,654,019 | |
Increase in net assets from capital share transactions | 849,879 | 1,654,019 | |
Total increase (decrease) in net assets | (85,624,352) | (64,224,281) | |
TOTAL NET ASSETS APPLICABLE TO COMMON STOCK: | |||
Beginning of year | 464,927,813 | 529,152,094 | |
End of year | $379,303,461 | $464,927,813 |
INCREASE (DECREASE) IN CASH | |
Cash flows provided by (used in) operating activities: | |
Net increase (decrease) in net assets resulting from operations | $ (38,400,225) |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | |
Proceeds from sale of long-term investments | 261,084,005 |
(Increase) Decrease in investment securities sold receivable | (2,216,500) |
Purchases of long-term investments | (193,418,789) |
Net (purchases) or sales of money market mutual funds | 5,982,710 |
Net change in unrealized (appreciation)/depreciation on investments | 14,469,716 |
Net change in unrealized (appreciation)/depreciation on written options | 71,403 |
Net realized (gain)/loss on investments | 23,205,309 |
Net realized (gain)/loss on written options | (822,197) |
Return of capital distributions on investments | 9,458,126 |
Proceeds from litigation settlements | 85 |
Net proceeds from written options | 750,794 |
Amortization of deferred offering costs on mandatory redeemable preferred shares | 64,910 |
(Increase) Decrease in dividends receivable | (880,656) |
(Increase) Decrease in tax reclaims receivable | 52,215 |
(Increase) Decrease in prepaid expenses | (17,012) |
Increase (Decrease) in interest payable on secured borrowings | 87,183 |
Increase (Decrease) in interest payable on mandatory redeemable preferred shares | 33,162 |
Increase (Decrease) in affiliated expenses payable | (83,702) |
Increase (Decrease) in non-affiliated expenses payable | (2,550) |
Cash provided by (used in) operating activities | 79,417,987 |
Cash provided by (used in) financing activities: | |
Repayment of secured borrowings | (30,000,000) |
Redemption of mandatory redeemable preferred shares | (5,000,000) |
Cash distribution paid to shareholders | (47,224,127) |
Due to custodian | 2,216,838 |
Cash provided by (used in) financing activities | (80,007,289) |
Net increase (decrease) in cash and foreign currency | (589,302) |
Cash and foreign currency at beginning of period | 5,137,991 |
Cash at end of period | $ 4,548,689 |
Supplemental cash flow information: | |
Reinvestment of dividends and distributions | $ 849,879 |
Cash paid during the period for interest expense on secured borrowings | $ 7,965,604 |
Cash paid during the period for interest expense on floating rate mandatory redeemable preferred shares | $ 2,650,953 |
For the year ended October 31, | |||||||||
2023 | 2022 | 2021 | 2020 | 2019 | |||||
PER SHARE DATA: | |||||||||
Net asset value, beginning of period | $ 12.20 | $ 13.93 | $ 12.11 | $ 16.40 | $ 15.28 | ||||
Net investment income (loss) | (0.04) | 0.12 | 0.12 | 0.22 | 0.12 | ||||
Net realized and unrealized gain (loss) | (0.97) | (0.45) | 3.10 | (3.11) | 2.40 | ||||
Net increase (decrease) from investment operations applicable to common stock | (1.01) | (0.33) | 3.22 | (2.89) | 2.52 | ||||
Distributions on common stock: | |||||||||
Net investment income | (0.03) | (0.12) | — | (0.71) | — | ||||
Net realized gain | — | — | — | — | (0.56) | ||||
Return of capital | (1.23) | (1.28) | (1.40) | (0.69) | (0.84) | ||||
Total distributions | (1.26) | (1.40) | (1.40) | (1.40) | (1.40) | ||||
Net asset value, end of period | $ 9.93 | $ 12.20 | $ 13.93 | $ 12.11 | $ 16.40 | ||||
Market value, end of period | $ 8.27 | $ 13.26 | $ 14.26 | $ 10.20 | $ 15.53 | ||||
RATIOS TO AVERAGE NET ASSETS APPLICABLE TO COMMON STOCK: | |||||||||
Operating expenses | 4.12% | 2.51% | 2.27% | 2.82% | 3.20% | ||||
Operating expenses, without leverage | 1.66% | 1.62% | 1.62% | 1.67% | 1.62% | ||||
Net investment income (loss) | (0.35)% | 0.85% | 0.88% | 1.59% | 0.72% | ||||
SUPPLEMENTAL DATA: | |||||||||
Total return on market value(1) | (30.11)% | 3.04% | 55.26% | (25.95)% | 29.13% | ||||
Total return on net asset value(1) | (9.21)% | (2.67)% | 27.62% | (17.42)% | 17.01% | ||||
Portfolio turnover rate | 32% | 50% | 45% | 50% | 48% | ||||
Net assets applicable to common stock, end of period (000’s omitted) | $379,303 | $464,928 | $529,152 | $459,201 | $621,962 | ||||
Secured borrowing outstanding, end of period (000’s omitted) | $125,000 | $155,000 | $170,000 | $130,000 | $160,000 | ||||
Asset coverage on secured borrowings(2) | $ 4,314 | $ 4,258 | $ 4,348 | $ 5,148 | $ 5,512 | ||||
Mandatory redeemable preferred shares, end of period (000’s omitted)(3) | $ 35,000 | $ 40,000 | $ 40,000 | $ 80,000 | $100,000 | ||||
Asset coverage on mandatory redeemable preferred shares(4) | $ 84 | $ 85 | $ 88 | $ 80 | $ 85 | ||||
Asset coverage ratio on total leverage (secured borrowings and mandatory redeemable preferred shares), end of period(5) | 337% | 338% | 352% | 319% | 339% |
(1) | Total return on market value assumes a purchase of common stock at the closing market price of the last business day of the prior period and a sale at the closing market price on the last business day of each period shown in the table and assumes reinvestment of dividends at the actual reinvestment prices obtained under the terms of the Fund’s dividend reinvestment plan. Total return on market value does not reflect the deduction of taxes that a shareholder may pay on fund distributions or the sale of fund shares. In addition, when buying or selling stock, you would ordinarily pay brokerage expenses. Because brokerage expenses and taxes are not reflected in the above calculations, your total return net of brokerage and tax expense would be lower than the total return on market value shown in the table. Total return on net asset value uses the same methodology, but with the use of net asset value for beginning, ending and reinvestment values. |
(2) | Represents value of net assets applicable to common stock plus the secured borrowings and mandatory redeemable preferred shares (“preferred shares”) outstanding at period end divided by the secured borrowings outstanding at period end, calculated per $1,000 principal amount of borrowing. The rights of debt holders are senior to the rights of the holders of the Fund’s common and preferred shares. |
(3) | The Fund’s preferred shares are not publicly traded. |
(4) | Represents value of net assets applicable to common stock plus secured borrowings and preferred shares outstanding at period end divided by the secured borrowings and preferred shares outstanding at period end, calculated per $25 liquidation preference per share of preferred shares. |
(5) | Represents value of net assets applicable to common stock plus secured borrowings and preferred shares outstanding at period end divided by the secured borrowings and preferred shares outstanding at period end. |
Statement of Assets and Liabilities | Statement of Operations | ||
Assets: None | $— | Net realized gain (loss) on written options | $822,197 |
Liabilities: Written options at value | — | Net change in unrealized appreciation / depreciation on written options | (71,403) |
Net asset (liability) balance | $— | Total realized and unrealized gain (loss) | $750,794 |
Federal Tax Cost | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | ||||
Investments | $529,098,613 | $61,799,412 | $(56,977,563) | $4,821,849 |
Short-Term | Long-Term | |
$9,845,089 | $18,533,149 |
2023 | 2022 | ||
Distributions paid from: | |||
Ordinary Income | $ 974,704 | $ 4,541,413 | |
Return of Capital | 47,099,302 | 48,709,802 | |
Total distributions | $48,074,006 | $53,251,215 |
Other timing differences | $(31,547,516) |
Net unrealized appreciation | 4,792,031 |
$(26,755,485) |
Series | Shares Outstanding | Liquidation Preference | Quarterly Rate Reset | Rate | Weighted Daily Average Rate | Mandatory Redemption Date | ||||||
C | 1,400,000 | $35,000,000 | 3M Term SOFR + 2.21%* | 7.61% | 6.90% | 8/24/2025 |
December 15, 2023
Qualified Dividend Income % (for non-corporate shareholders) | Dividend Received Deduction % (for corporate shareholders) | Long-Term Capital Gain Distributions ($) | |||
100% | 100% | $0 |
Name and Age | Position(s) Held with Fund | Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director | Other Directorships Held by the Director During Past 5 Years | |||||
Independent Directors | ||||||||||
Donald C. Burke(1) Age: 63 | Director | Term expires 2024; Director since 2014 | Private investor since 2009; President and Chief Executive Officer, BlackRock U.S. Funds 2007–2009; Managing Director, BlackRock, Inc. 2006–2009; Managing Director, Merrill Lynch Investment Managers 1990–2006 | 104 | Director, Avista Corp. (energy company); Director, Duff & Phelps Utility and Corporate Bond Trust Inc. (“DUC”) 2014-2021; Trustee, Goldman Sachs Fund Complex 2010–2014; Director, BlackRock Luxembourg and Cayman Funds 2006–2010 |
Name and Age | Position(s) Held with Fund | Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director | Other Directorships Held by the Director During Past 5 Years | |||||
Mareilé B. Cusack Age: 65 | Director | Term expires 2026; Director since 2023 | General Counsel, Ariel Investments, LLC (registered investment adviser) 2008-January 2023 (Chief Privacy Officer 2019-January 2023, Senior Vice President 2012-January 2023, Anti-Money Laundering Officer 2010-January 2023 and Vice President 2007-2012); Vice President, Ariel Investment Trust (mutual fund complex) 2008-February 2023 (Anti-Money Laundering Officer 2010-February 2023, Secretary 2014-February 2023 and Assistant Secretary 2008-2014); Vice President, General Counsel, Secretary and Anti-Money Laundering Officer, Ariel Distributors, LLC (registered broker-dealer) 2008-January 2023; Vice President and General Counsel, Ariel Alternatives, LLC (registered investment adviser), Project Black Management Co. (relying adviser) and Ariel GP Holdco, management member to Project Black, LP (private fund) 2021-January 2023; Vice President and Associate General Counsel, Chicago Stock Exchange March-October 2007 (Chief Enforcement Counsel 2004-2007); Chief Legal Officer, Illinois Gaming Board 1995-2001; Branch Chief, Branch of Interpretations and Small Offering Issuers, Chicago Regional Office, U.S. Securities and Exchange Commission 1991-1995 (Staff Attorney, Enforcement Division 1988-1991) | 3 | ||||||
Philip R. McLoughlin Age: 77 | Director | Term expires 2025; Director since 2011 | Private investor since 2010 | 104 | Director, DUC 1996-2021; Chairman of the Board, Lazard World Trust Fund 2010-2019 (Director 1991-2019) |
Name and Age | Position(s) Held with Fund | Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director | Other Directorships Held by the Director During Past 5 Years | |||||
Geraldine M. McNamara Age: 72 | Director | Term expires 2026; Director since 2011 | Private investor since 2006; Managing Director, U.S. Trust Company of New York 1982–2006 | 104 | Director, DUC 2003-2021 | |||||
Eileen A. Moran Age: 69 | Director and Vice Chair of the Board | Term expires 2024; Director since 2011 | Private investor since 2011; President and Chief Executive Officer, PSEG Resources L.L.C.(investment company) 1990–2011 | 3 | Director, DUC 1996-2021 | |||||
David J. Vitale Age: 77 | Director and Chairman the Board | Term expires 2025; Director since 2011 | Chairman of the Board of DNP and DTF since 2009 and DPG since 2011; Advisor, Ariel Investments, LLC 2019-2021; President, Chicago Board of Education 2011-2015; Senior Advisor to the CEO, Chicago Public Schools 2007– 2008 (Chief Administrative Officer 2003– 2007); President and Chief Executive Officer, Board of Trade of the City of Chicago, Inc. 2001– 2002; 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) | 3 | Director, Ariel Alternatives, LLC; Director, United Airlines Holdings, Inc. (airline holding company) 2006-2022; Director, Ariel Investments, LLC 2001-2021; Director, Wheels, Inc. (automobile fleet management) 2001-2021; Director, DUC 2005-2021; Chairman, Urban Partnership Bank 2010-2019 |
Name, Address and Age | Position(s) Held with Fund and Length of Time Served | Principal Occupation(s) During Past 5 Years | ||
David D. Grumhaus, Jr. Duff & Phelps Investment Management Co. 10 SouthWacker Drive, Suite 1900 Chicago, IL 60606 Age: 57 | President and Chief Executive Officer since 2021 | President and Chief Investment Officer of the Adviser since 2021 (Co-Chief Investment Officer 2020; Senior Portfolio Management 2014-2020) | ||
W. Patrick Bradley Virtus Investment Partners, Inc. One Financial Plaza, Hartford, CT 06103 Age: 51 | Vice President and Assistant Treasurer since 2011 | Executive Vice President, Fund Services (since 2016), Senior Vice President, Fund Services (2010 to 2016) and various officer positions (since 2004), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; Director since 2023, Stone Harbor Investment Funds plc and Stone Harbor Global Funds plc; Director since 2019, Virtus Global Funds ICAV; Director since 2013, Virtus Global Funds, plc; various officer positions (since 2006) of various registered funds advised by subsidiaries of Virtus Investment Partners, Inc.; Member (since 2022), BNY Mellon Asset Servicing Client Advisory Board | ||
Eric J. Elvekrog, CFA, CPA Duff & Phelps Investment Management Co. 10 South Wacker Drive, Suite 1900 Chicago, IL 60606 Age: 58 | Vice President and Chief Investment Officer since July 2016 (Portfolio Manager2011-2016) | Senior Managing Director of the Adviser since 2015 (Vice President 2001-2014; Assistant Vice President 1996-2001; Analyst 1993-1996) | ||
Jennifer S. Fromm Virtus Investment Partners, Inc. One Financial Plaza Hartford, CT 06103 Age: 50 | Vice President and Secretary since 2020 | Vice President (since 2016) and Senior Counsel, Legal (since 2007) and various officer positions (since 2008), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; various officer positions (since 2008) of various registered funds advised by subsidiaries of Virtus Investment Partners, Inc. | ||
Kathleen L. Hegyi Duff & Phelps Investment Management Co. 10 South Wacker Drive, Suite 1900 Chicago, IL 60606 Age: 56 | Chief Compliance Officer since October 2022 | Managing Director, Chief Compliance Officer of the Adviser since August 2022; Senior Compliance Officer,William Blair & Company, L.L.C. 2010 - 2022 | ||
Alan M. Meder, CFA, CPA Duff & Phelps Investment Management Co. 10 South Wacker Drive, Suite 1900 Chicago, IL 60606 Age: 64 | Treasurer, Principal Financial and Accounting Officer and Assistant Secretary since 2011 | Chief Risk Officer of the Adviser since 2001 and Senior Managing Director since 2014 (Senior Vice President 1994-2014); Treasurer of Duff & Phelps Utility and Corporate Bond Trust Inc. 2000-2021 and Principal Financial and Accounting Officer and Assistant Secretary 2002-2021 |
Name, Address and Age | Position(s) Held with Fund and Length of Time Served | Principal Occupation(s) During Past 5 Years | ||
Daniel J. Petrisko, CFA Duff & Phelps Investment Management Co. 10 South Wacker Drive, Suite 1900 Chicago, IL 60606 Age: 63 | Executive Vice President since 2021 and Assistant Secretary since 2015 (Senior Vice President 2017-2021) | Executive Managing Director of the Adviser since 2017 (Senior Managing Director 2014-2017; Senior Vice President 1997-2014; Vice President 1995-1997); Chief Investment Officer of Duff & Phelps Utility and Corporate Bond Trust Inc. 2004-2021, Senior Vice President 2017-2021 and Assistant Secretary 2015-2021 (Vice President 2000-2016; Portfolio Manager 2002–2004) | ||
Nikita K. Thaker Virtus Investment Partners, Inc. One Financial Plaza, Hartford, CT 06103 Age: 45 | Vice President and Assistant Treasurer since 2018 | Vice President and Closed-End Fund Controller (since 2021), and various officer positions (since 2015-2021), Virtus Investment Partners, Inc. and/or certain of its subsidiaries since 2015; Vice President, Controller and Assistant Treasurer, Virtus Closed-End Funds (Assistant Treasurer 2017-2021) |
Chair
Vice Chair
President and Chief Executive Officer
Executive Vice President and Assistant Secretary
Vice President and Chief Investment Officer
Treasurer and Assistant Secretary
Chief Compliance Officer
Vice President and Secretary
Vice President and Assistant Treasurer
Vice President and Assistant Treasurer
and Infrastructure Fund Inc.
Stock Exchange under the symbol DPG
Fund Services at (866) 270-7598 or
Email at Duff@virtus.com
Duff & Phelps Investment Management Co.
10 South Wacker Drive, Suite 1900
Chicago, IL 60606
(312) 368-5510
Virtus Fund Services, LLC
One Financial Plaza
Hartford, CT 06103
Computershare
P.O. Box 43078
Providence, RI 02940-3078
The Bank of New York Mellon
Mayer Brown LLP
Ernst & Young LLP
Item 1. | Reports to Stockholders (cont.). |
(b) | Not applicable. |
Item 2. | Code of Ethics. |
As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer (the “Code of Ethics”). The registrant’s principal financial officer also performs the functions of principal accounting officer.
The text of the registrant’s Code of Ethics is posted on the registrant’s web site at www.dpimc.com/dpg. In the event that the registrant makes any amendment to or grants any waiver from the provisions of the Code of Ethics, the registrant intends to disclose such amendment or waiver on its web site within five business days.
Item 3. | Audit Committee Financial Expert. |
The registrant’s board of directors has determined that three members of its audit committee: Donald C. Burke, Philip R. McLoughlin and David J. Vitale, are audit committee financial experts and that each of them is “independent” for purposes of this Item.
Item 4. | Principal Accountant Fees and Services. |
The following table sets forth the aggregate audit and non-audit fees billed to the registrant for each of the last two fiscal years for professional services rendered by the registrant’s principal accountant, Ernst & Young LLP, an independent registered public accounting firm (the “Independent Auditor”).
Fiscal year ended October 31, 2023 | Fiscal year ended October 31, 2022 | |||||||
(a) Audit Fees (1) | $ | 57,780 | $ | 57,780 | ||||
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(b) Audit-Related Fees (2)(6) | $ | 0 | $ | 0 | ||||
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(c) Tax Fees (3)(6) | $ | 6,955 | $ | 6,955 | ||||
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(d) All Other Fees (4)(6) | $ | 0 | $ | 0 | ||||
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Aggregate Non-Audit Fees (5)(6) | $ | 6,955 | $ | 6,955 | ||||
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(1) | Audit Fees are fees billed for professional services rendered by the Independent Auditor for the audit of the registrant’s annual financial statements and for services that are normally provided by the Independent Auditor in connection with statutory and regulatory filings or engagements. |
(2) | Audit-Related Fees are fees billed for assurance and related services by the Independent Auditor that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under the caption “Audit Fees.” |
(3) | Tax Fees are fees billed for professional services rendered by the Independent Auditor for tax compliance, tax advice and tax planning. In both periods shown in the table, such services consisted of review of the registrant’s annual federal and excise tax returns and preparation and analysis of state income tax returns. |
(4) | All Other Fees are fees billed for products and services provided by the Independent Auditor, other than the services reported under the captions “Audit Fees,” “Audit-Related Fees” and “Tax Fees.” |
(5) | Aggregate Non-Audit Fees are non-audit fees billed by the Independent Auditor for services rendered to the registrant, the registrant’s investment adviser (the “Adviser”) and any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the registrant (collectively, the “Covered Entities”). During both periods shown in the table, no portion of such fees related to services rendered by the Independent Auditor to the Adviser or any other Covered Entity. |
(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 Securities Exchange Act of 1934 (the “Exchange Act”) and applicable regulations. |
The audit committee of the board of directors of the registrant (the “Audit Committee”), jointly with the audit committee of the board of directors of DNP Select Income Fund Inc. (“DNP”) and DTF Tax-Free Income 2028 Term Fund Inc. (“DTF”), has adopted a Joint Audit Committee Pre-Approval Policy to govern the provision by the Independent Auditor of the following services: (i) all engagements for audit and non-audit services to be provided by the Independent Auditor to the registrant and (ii) all engagements for non-audit services to be provided by the Independent Auditor to the Adviser or any other Covered Entity, if the engagement relates directly to the operations and financial reporting of the registrant. With respect to non-audit services rendered by the Independent Auditor to the Adviser or any other Covered Entity that were not required to be pre-approved by the Audit Committee because they do not relate directly to the operations and financial reporting of the registrant, the Audit Committee has nonetheless considered whether the provision of such services is compatible with maintaining the independence of the Independent Auditor.
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Set forth below is a copy of the Joint Audit Committee Pre-Approval Policy (omitting data in the appendices relating to DNP and DTF).
DNP SELECT INCOME FUND INC. (“DNP”)
DUFF & PHELPS UTILITY AND INFRASTRUCTURE FUND INC. (“DPG”)
DTF TAX-FREE INCOME 2028 TERM FUND INC. (“DTF”)
AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY
(as adopted on December 14, 2022)
I. | Statement of Principles |
Under the Sarbanes-Oxley Act of 2002 (the “Act”), the Audit Committee of the Board of Directors of each of DNP Select Income Fund Inc., Duff & Phelps Utility and Infrastructure Fund Inc. and DTF Tax-Free Income 2028 Term Fund Inc. (each a “Fund” and, collectively, the “Funds”)(1) 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 this 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.
(1) | This Joint Audit Committee Pre-Approval Policy has been adopted by the Audit Committee of each Fund. Solely for the sake of clarity and simplicity, this Joint Audit Committee Pre-Approval Policy has been drafted as if there is a single Fund, a single Audit Committee and a single Board. The terms “Audit Committee” and “Board” mean the Audit Committee and Board of each Fund, respectively, unless the context otherwise requires. The Audit Committee and the Board of each Fund, however, shall act separately and in the best interests of its respective Fund. |
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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 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 to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.
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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 independent directors. Any 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 authority to its chairman, since under the Audit Committee’s charter each member of the Audit Committee, including the chairman, is required to be an independent director.
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, the issuance of an internal control letter for the Fund’s Form N-CEN 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.
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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 (other than the issuance of the internal control letter to be filed with the Fund’s Form N-CEN, which is included in the audit services listed above).
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.
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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.
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.
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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 applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussing with the independent auditor its methods and procedures for ensuring independence.
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Appendix A
Pre-Approved Audit Services for Fiscal Year Ending in 2024
Dated: December 13, 2023
Service |
1. Services required under generally accepted auditing standards to perform 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-CEN.
2. Services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., comfort letters for closed-end fund offerings, consents), and assistance in responding to SEC comment letters.
3. Consultations by the Fund’s management as to the accounting or disclosure 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) |
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Appendix B
Pre-Approved Audit-Related Services for Fiscal Year Ending in 2024
Dated: December 13, 2023
Service |
1. Agreed-upon or expanded audit procedures related to accounting records required to respond to or comply with financial, accounting or regulatory reporting matters
2. Consultations by the Fund’s management as to the accounting or disclosure 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)
3. General assistance with implementation of the requirements of SEC rules or listing standards promulgated pursuant to the Sarbanes-Oxley Act |
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Appendix C
Pre-Approved Tax Services for Fiscal Year Ending in 2024
Dated: December 13, 2023
Service |
1. Preparation of federal and state tax returns, including excise tax returns, and review of required distributions to avoid excise tax
2. Preparation of state tax returns
3. Consultations with the Fund’s management as to the tax treatment of transactions or events
4. Tax advice and assistance regarding statutory, regulatory or administrative developments |
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Appendix D
Pre-Approved “All Other” Services for Fiscal Year Ending in 2024
Dated: December 13, 2023
Service |
None |
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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 |
(f) | The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than fifty percent. |
(h) | The registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
(i) | Not applicable. |
(j) | Not applicable. |
Item 5. | Audit Committee of Listed Registrants. |
The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”). The members of the committee are Donald C. Burke, Mareile B. Cusack, Philip R. McLoughlin, Geraldine M. McNamara, Eileen A. Moran and David J. Vitale.
Item 6. | Investments. |
(a) A schedule of investments is included as part of the report to stockholders filed under Item 1(a) of this report.
(b) Not applicable.
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
The registrant’s board of directors has adopted the following proxy voting policies and procedures.
DNP SELECT INCOME FUND INC.
DUFF & PHELPS UTILITY AND INFRASTRUCTURE FUND INC.
DTF TAX-FREE INCOME 2028 TERM FUND INC.
PROXY VOTING POLICIES AND PROCEDURES
As Amended June 9, 2022
I. | Definitions. As used in these Policies and Procedures, the following terms shall have the meanings ascribed below: |
A. | “Adviser” refers to Duff & Phelps Investment Management Co. |
B. | “corporate governance matters” refers to changes involving the corporate ownership or structure of an issuer whose voting securities are within a portfolio holding, including changes in the state of incorporation, changes in capital structure, including increases and decreases of capital and preferred stock issuance, mergers and other corporate restructurings, and anti-takeover provisions such as staggered boards, poison pills, and supermajority voting provisions. |
C. | “Delegate” refers to the Adviser, any proxy committee to which the Adviser delegates its responsibilities hereunder and any qualified, independent organization engaged by the Adviser to vote proxies on behalf of the Fund. |
D. | “executive compensation matters” refers to stock option plans and other executive compensation issues, including votes on “say on pay” and “golden parachutes.” |
E. | “Fund” refers to DNP Select Income Fund Inc., Duff & Phelps Utility and Infrastructure Fund Inc. or DTF Tax-Free Income 2028 Term Fund Inc., as the case may be. |
F. | “Investment Company Act” refers to the Investment Company Act of 1940, as amended. |
G. | “portfolio holding” refers to any company or entity whose voting securities are held within the investment portfolio of the Fund as of the date a proxy is solicited. |
H. | “Principal Underwriter” refers to Wells Fargo Securities, LLC, solely with respect to DNP Select Income Fund Inc. |
I. | “proxy contests” refer to any meeting of shareholders of an issuer for which there are at least two sets of proxy cards, one solicited by management and the others by a dissident or group of dissidents. |
J. | “social issues” refers to social, political and environmental issues. |
K. | “takeover” refers to “hostile” or “friendly” efforts to effect radical change in the voting control of the board of directors of a company. |
II. | Responsibilities of Delegates. |
A. | In the absence of a specific direction to the contrary from the Board of Directors of the Fund, the Adviser will be responsible for voting proxies for all portfolio holdings in accordance with these Policies and Procedures, or for delegating such responsibility as described below. |
B. | The Adviser has a Proxy Committee (“Proxy Committee”) that is responsible for establishing policies and procedures designed to enable the Adviser to ethically and effectively discharge its fiduciary obligation to vote all applicable proxies on behalf of all clients. The Adviser also utilizes Institutional Shareholder Services (“ISS”), a qualified, non-affiliated independent third party, to serve as the Adviser’s proxy voting agent in the provision of certain administrative, clerical, functional recordkeeping and support services related to the Adviser’s proxy voting processes and procedures. |
C. | In voting proxies on behalf of the Fund, each Delegate shall have a duty of care to safeguard the best interests of the Fund and its shareholders and to act in accordance with these Policies and Procedures. |
D. | No Delegate shall accept direction or inappropriate influence from any other client or third party, or from any director, officer or employee of any affiliated company, and shall not cast any vote inconsistent with these Policies and Procedures without obtaining the prior approval of the Board of Directors of the Fund or its duly authorized representative. |
III. | General policy. |
A. | It is the intention of the Fund to exercise voting stock ownership rights in portfolio holdings in a manner that is reasonably anticipated to further the best economic interests of shareholders of the Fund. Accordingly, the Fund or its Delegate(s) shall endeavor to analyze and vote all proxies that are considered likely to have financial implications, and, where appropriate, to participate in corporate governance, shareholder proposals, management communications and legal proceedings. The Fund and its Delegate(s) must also identify potential or actual conflicts of interests in voting proxies and address any such conflict of interest in accordance with these Policies and Procedures. |
B. | Absent special factors, the policy of the Adviser is to exercise its proxy voting discretion in accordance with ISS guidelines. However, all proposals are individually evaluated by the Proxy Committee, which may determine to vote contrary to an ISS recommendation when it believes that doing so is in the best interest of the Fund. |
IV. | Special factors to be considered when voting. |
A. | The Delegate may abstain from voting when it concludes that the effect on shareholders’ economic interests or the value of the portfolio holding is indeterminable or insignificant. |
B. | In analyzing anti-takeover measures, the Delegate shall vote on a case-by-case basis taking into consideration such factors as overall long-term financial performance of the target company relative to its industry competition. Key measures which shall be considered include, without limitation, five-year annual compound growth rates for sales, operating income, net income, and total shareholder returns (share price appreciation plus dividends). Other financial indicators that will be considered include margin analysis, cash flow, and debt levels. |
C. | In analyzing proxy contests for control, the Delegate shall vote on a case-by-case basis taking into consideration such factors as long-term financial performance of the target company relative to its industry; management’s track record; background of the proxy contest; the strategic plan of the dissident slate and the quality of its critique against management; qualifications of director nominees and any compensatory arrangements (both slates); evaluation of which nominee(s) would be most likely to pursue policies that will have the highest likelihood to maximize the economic interests of shareholders of the Fund; the likelihood that the proposed objectives and goals can be achieved (both slates); and stock ownership positions. |
D. | In analyzing contested elections for director, the Delegate shall vote on a case- by-case basis taking into consideration such factors as long-term financial performance of the company relative to its industry; management’s track record; background of the contested election; the strategic plan of the dissident slate and the quality of its critique against management; qualifications of director nominees and any compensatory arrangements (both slates); whether the board has a sufficient number of independent directors; evaluation of which nominee(s) would be most likely to pursue policies that will have the highest likelihood to maximize the economic interests of shareholders of the Fund; the likelihood that the proposed objectives can be achieved (both slates); and stock ownership positions. |
E. | In analyzing corporate governance matters, the Delegate shall vote on a case-by- case basis taking into consideration such factors as: tax and economic benefits associated with amending an issuer’s state of incorporation; dilution or improved accountability associated with changes in capital structure; management proposals to require a supermajority shareholder vote to amend charters and bylaws and bundled or “conditioned” proxy proposals; long-term financial performance of the company relative to its industry; and management’s track record. |
F. | In analyzing executive compensation matters, the Delegate shall vote on a case- by-case basis, taking into consideration a company’s overall pay program and demonstrated pay-for-performance philosophy, and generally disfavoring such problematic pay practices as (i) repricing or replacing of underwater stock options, (ii) excessive perquisites or tax gross-ups and (iii) change-in-control payments that are excessive or are payable based on a “single trigger” (i.e., without involuntary job loss or substantial diminution of duties). With respect to the advisory vote on the frequency of “say on pay” votes, the Delegate shall vote in favor of an annual frequency for such votes. |
G. | In analyzing shareholder proposals involving social issues, the Delegate shall vote on a case-by-case basis. The Proxy Committee shall incorporate environmental, social and governance (“ESG”) issues into its evaluation of ISS recommendations and the Delegate’s voting of proxies generally, consistent with the Adviser’s fiduciary duties and the economic interests of the Fund and its shareholders. |
H. | In analyzing shareholder proposals calling for a report on political contributions, the Delegate shall vote on a case-by-case basis, evaluating the quality and sufficiency of the current level of reporting and other disclosures provided by the company. |
I. | In analyzing shareholder proposals calling for a report on lobbying activities, the Delegate shall vote on a case-by-case basis, evaluating the quality and sufficiency of the current level of reporting and other disclosures provided by the company. |
V. | Conflicts of interest |
A. | The Fund and its Delegate(s) seek to avoid actual or perceived conflicts of interest in the voting of proxies for portfolio holdings between the interests of Fund shareholders, on the one hand, and those of the Adviser, the Principal Underwriter (if applicable) or any affiliated person of the Fund, the Adviser or the Principal Underwriter (if applicable), on the other hand. The Board of Directors may take into account a wide array of factors in determining whether such a conflict exists, whether such conflict is material in nature, and how to properly address or resolve the same. |
B. | While each conflict situation varies based on the particular facts presented and the requirements of governing law, the Board of Directors or its duly authorized representative may take the following actions, among others, or otherwise give weight to the following factors, in addressing material conflicts of interest in voting (or directing Delegates to vote) proxies pertaining to portfolio holdings: (i) vote pursuant to the recommendation of the proposing Delegate; (ii) abstain from voting; or (iii) rely on the recommendations of an established, independent third party with qualifications to vote proxies, such as Institutional Shareholder Services. |
C. | The Adviser shall notify the Board of Directors of the Fund promptly after becoming aware that any actual or potential conflict of interest exists and shall seek the Board of Directors’ recommendations for protecting the best interests of Fund’s shareholders. The Adviser shall not waive any conflict of interest or vote any conflicted proxies without the prior written approval of the Board of Directors or its duly authorized representative. |
VI. | Miscellaneous. |
A. | The following documents shall be kept in an easily accessible place for the period of time required to comply with applicable laws and regulations and shall be available for inspection either physically or through electronic means: (i) a copy of these Policies and Procedures; (ii) the proxy voting records of the Fund, including the items of information required to be set forth in SEC Form N-PX and a description of the basis for each proxy vote in accordance with these Policies and Procedures; (iii) a copy of any document created by the Delegate that was material to deciding how to vote or that memorialized the basis for that decision. |
B. | In the event that a determination, authorization or waiver under these Policies and Procedures is requested at a time other than a regularly scheduled meeting of the Board of Directors, the Chairman of the Audit Committee shall be the duly authorized representative of the Board of Directors with the authority and responsibility to interpret and apply these Policies and Procedures and shall provide a report of his or her determinations at the next following meeting of the Board of Directors. |
C. | The Adviser shall present a report of any material deviations from these Policies and Procedures at every regularly scheduled meeting of the Board of Directors and shall provide such other reports as the Board of Directors may request from time to time. The Adviser shall provide to the Fund or any shareholder a record of its effectuation of proxy voting pursuant to these Policies and Procedures at such times and in such format or medium as the Fund shall reasonably request. The Adviser shall be solely responsible for complying with its disclosure and reporting requirements under applicable laws and regulations, including, without limitation, Rule 206(4)-6 under the Advisers Act. The Adviser shall gather, collate and present information relating to its proxy voting activities and those of each Delegate in such format and medium as the Fund shall determine from time to time in order for the Fund to discharge its disclosure and reporting obligations pursuant to Rule 30b1-4 under the Investment Company Act. |
D. | The Adviser shall pay all costs associated with proxy voting for portfolio holdings pursuant to these Policies and Procedures and assisting the Fund in providing public notice of the manner in which such proxies were voted, except that the Fund shall pay the costs associated with any filings required under the Investment Company Act. |
E. | In performing its duties hereunder, any Delegate may engage the services of a research and/or voting adviser, the cost of which shall be borne by such Delegate. |
F. | These Policies and Procedures shall be presented to the Board of Directors annually for its amendment and/or approval. |
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
In this Item, the term “Fund” refers to the registrant, Duff & Phelps Utility and Infrastructure Fund Inc.
The Fund’s Portfolio Manager
Eric J. Elvekrog, CFA, CPA, has been Vice President and Chief Investment Officer of the Fund since July 1, 2016 and has been a Portfolio Manager of the Fund since its inception (July 2011). Mr. Elvekrog has been a Senior Managing Director of Duff & Phelps Investment Management Co. (the “Adviser”) since March 2017 (and Managing Director from 2014 to 2017). Mr. Elvekrog is both a CFA and a CPA and has been a member of the Adviser’s utility/infrastructure team since joining the Adviser in 1993.
Effective May 5, 2023, Ellen Elberfeld, CFA, retired from her position as Co-Portfolio Manager of the Fund.
Other Accounts Managed by the Fund’s Portfolio Manager
The Portfolio Manager does not manage any other accounts.
Compensation of the Fund’s Portfolio Manager
The following is a description of the compensation structure of the Fund’s portfolio managers. The Investment Adviser is a wholly-owned indirect subsidiary of Virtus Investment Partners, Inc. (“Virtus”). Virtus and the Investment Adviser are committed to attracting and retaining the highest caliber employees and investment talent. The Investment Adviser’s compensation and benefits program is comprehensive and designed to reward performance and commitment to shareholders. Portfolio managers receive a competitive base salary, an incentive bonus opportunity, and a benefits package.
Following is a more detailed description of the Investment Adviser’s compensation structure:
• | Base Salary: Each individual is paid a fixed based salary, which is designed to be competitive in light of the individual’s experience and responsibilities. Management uses independent, third-party compensation surveys of the investment industry to evaluate competitive market compensation for its employees. |
• | Incentive Bonus: Annual incentive payments for investment personnel are based on targeted compensation levels, adjusted for profitability and investment performance factors, and a subjective assessment of contribution to the team effort. Individual payments are assessed using comparisons of actual investment performance with specific peer group or index measures. For compensation purposes, a fund’s performance is generally measured over one-, three-, and five-year periods and an individual manager’s participation is based on the performance of each fund/account managed. The short-term incentive payment is generally paid in cash, but a portion may be payable in Virtus restricted stock units or as deferred cash that appreciates or depreciates in value based on the rate of return of one or more mutual funds managed or advised by the investment professional. |
• | Other Benefits: Employees are also eligible to participate in broad-based plans offered by Virtus, including 401(k), health, and other employee benefit plans. |
While portfolio managers compensation contains a performance component, this component is adjusted to reward investment personnel for managing within the stated framework and for not taking unnecessary risk. This approach helps ensure that investment management personnel remain focused on managing and acquiring securities that correspond to a fund’s mandate and risk profile and are discouraged from taking on more risk and unnecessary exposure to chase performance for personal gain. The Investment Adviser believes it has appropriate controls in place to handle any potential conflicts that may result from a substantial portion of portfolio manager compensation being tied to performance.
Equity Ownership of Portfolio Manager
The following table sets forth the dollar range of equity securities in the Fund beneficially owned, as of October 31, 2023, by the portfolio manager identified above.
Name of Portfolio Manager | Dollar Range of Equity Securities in the Fund | |||
Eric J. Elvekrog | $ | 100,000-$500,000 |
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
On July 14, 2023, the Fund voluntarily redeemed 200,000 of its outstanding Series C MRP shares.
Item 10. | Submission of Matters to a Vote of Security Holders. |
No changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors have been implemented after the registrant last provided disclosure in response to the requirements of Item 22(b)(15) of Schedule 14A (i.e., in the registrant’s proxy statement dated January 21, 2022, or this Item.
Item 11. | Controls and Procedures. |
(a) | The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective, based on an evaluation of those controls and procedures made as of a date within 90 days of the filing date of this report as required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Exchange Act. |
(b) | There has been no change in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the most recent fiscal period that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. |
Not applicable.
Item 13. | Exhibits. |
(a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. |
(a)(2) |
(a)(2)(1) | There were no written solicitations to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the Registrant to 10 or more persons |
(a)(2)(2) | There was no change in the Registrant’s independent public accountant during the period covered by the report. |
(b) |
(c) |
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) | Duff & Phelps Utility and Infrastructure Fund Inc. |
By (Signature and Title) | /s/ David D. Grumhaus, Jr. | |
David D. Grumhaus, Jr., | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
Date December 22, 2023
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/ David D. Grumhaus, Jr. | |
David D. Grumhaus, Jr., | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
Date December 22, 2023
By (Signature and Title) | /s/ Alan M. Meder | |
Alan M. Meder, | ||
Treasurer and Assistant Secretary | ||
(Principal Financial Officer) |
Date December 22, 2023