Fund Distributions and Managed Distribution Plan: DNP Select Income Fund Inc. (the Fund) has been paying a regular 6.5 cent per share monthly distribution on its common stock since July 1997. In February 2007, the Board of Directors adopted a Managed Distribution Plan, which provides for the Fund to continue to make a monthly distribution on its common stock of 6.5 cents per share. Under the Managed Distribution Plan, the Fund will distribute all available investment income to shareholders, consistent with the Fund’s primary investment objective. If and when sufficient investment income is not available on a monthly basis, the Fund will distribute long-term capital gains and/or return capital to its shareholders in order to maintain the 6.5 cent per share distribution level.

     To the extent that the Fund uses capital gains and/or return of capital to supplement its investment income, you should not draw any conclusions about the Fund’s investment performance from the amount of the Fund’s distributions or from the terms of the Fund’s Managed Distribution Plan.

     The Fund distributed more than its income and capital gains during the year 2012; therefore, a portion of the distribution was a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.”

     The amounts and sources of distributions reported in monthly statements from the Fund are only estimates and are not provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes depend upon the Fund’s investment experience during its fiscal year and may be subject to changes based on tax regulations. In early 2013, you received a Form 1099-DIV for the calendar year 2012 that tells you how to report these distributions for federal income tax purposes.

     The Board may amend, suspend or terminate the Managed Distribution Plan without prior notice to shareholders if it deems such action to be in the best interests of the Fund and its shareholders. For example, the Board might take such action if the Managed Distribution Plan had the effect of shrinking the Fund’s assets to a level that was determined to be detrimental to Fund shareholders. The suspension or termination of the Managed Distribution Plan could have the effect of creating a trading discount (if the Fund’s stock is trading at or above net asset value), widening an existing trading discount, or decreasing an existing premium.

     The Managed Distribution Plan is described in a Question and Answer format on your Fund’s website, www.dnpselectincome.com, and discussed in the section of management’s letter captioned “About Your Fund’s Distribution Policy”.

February 19, 2013

Dear Fellow Shareholders:

     Performance Review: Consistent with its primary objective of current income and long-term growth of income, and its Managed Distribution Plan, the Fund declared three monthly distributions of 6.5 cents per share of common stock during the fourth quarter of 2012. The 6.5 cent per share monthly rate, without compounding, would be 78 cents annualized, which is equal to 8.24% of the December 31, 2012, closing price of $9.47 per share. Please refer to the inside front cover of this report and the portion of this letter captioned “About Your Fund” for important information about the Fund and its Managed Distribution Plan.

     Your Fund had a total return (income plus change in market price) of –1.9% for the quarter ended December 31, 2012, which was slightly more favorable than the –2.1% total return of the composite of the S&P Utilities Index and the Barclays U.S. Utility Bond Index, weighted to reflect the stock and bond ratio of the Fund. In comparison, the S&P Utilities Index — a stock-only index — had a total return of –2.9%.

     The fourth quarter of 2012 was a challenging time period in the market. Volatility and uncertainty continued from earlier in the year and after the November elections dividend-paying stocks, including those of many utility companies, underperformed, due in part to concerns about the potential for a significant increase in tax rates on dividends. Some of the proposals during the debates on fiscal policy would have taxed dividends at the highest ordinary income rate of 39.6%. We have seen utility stocks recover somewhat in early 2013, now that the maximum dividend tax rate was set at 20% (plus, for certain taxpayers, an additional Medicare tax of 3.8%).

     On a longer-term basis, as of December 31, 2012, your Fund had a five-year cumulative total return of 38.6%, which is higher than the 15.4% return of the composite of the S&P 500 Utilities Index and the Barclays U.S. Utility Bond Index, weighted to reflect the stock and bond ratio of the Fund. In comparison, the S&P 500 Utilities Index had a total return during that period of 1.79%. It is important to note that the composite and index returns stated here and below include no fees or expenses, whereas the Fund’s NAV returns are net of expenses.

The table below compares the performance of your Fund to various market benchmarks.

* Total return includes dividends reinvested in the Fund or index, as applicable. The Composite Index is a composite of the returns of the S&P 500 Utilities Index and the Barclays U.S. Utility Bond Index, weighted to reflect the stock and bond ratio of the Fund. Performance returns for the S&P 500 Utilities Index and Barclays U.S. Utility Bond Index were obtained from Bloomberg LLP. Fund returns were obtained from the Administrator of the Fund. Past performance is not indicative of future results.

     Board of Directors Meeting: At the regular February 2013 Board of Directors’ meeting, the Board declared the following monthly dividends:

 

     As the World Turns: Our calendar year 2000 annual report to shareholders included a section titled “Got Natural Gas?” At that time, a tight supply environment had driven the price of gas to record levels. There was a demand/supply imbalance as a result of a drop in production, increased consumption from natural gas-fired electricity generating capacity, a limited increase in Canadian imports, and a decline in production rates from existing wells. A very cold start to the winter season compounded the difficult situation. There were real fears that the then-current conditions would persist into the future.

     Beginning in 2007, the world’s outlook for natural gas supply radically changed. The existence of onshore, unconventional shale gas had been known for decades. However, not until the mid 2000s, with the advancement of horizontal drilling technologies, could large gas volumes be economically extracted from nonporous rock formations. Over time, shale gas producers have achieved lower production costs and higher yields, driving shale economics toward competitiveness with conventional drilling technology. For gas producers, the most profitable deposits produce “wet gas” containing liquid byproducts, key components in the manufacture of certain petrochemicals and plastics.

     The development of shale gas in the United States has moved the country from fearing shortage to enjoying excess, with an estimated supply of more than 100 years. Instead of relying on foreign imports of liquefied natural gas, the U.S. is now becoming an exporter. Shale discoveries have materially changed world gas dynamics.

     We believe that long-term capital allocation decisions are being made based on current low natural gas prices: fuel choices for new electricity plants, valuation of existing coal plants, renewable generation commitments, petrochemical economics, and exploration and production (E&P). Shale gas has also changed local economies, as many U.S. communities not historically involved in energy E&P are reaping economic benefits associated with shale gas production.

     The positive domestic energy developments have recently been highlighted by the France-based International Energy Agency (IEA), which has been widely cited for saying, in its World Energy Outlook, that it is now technically possible for the United States to become energy independent by 2020. Of course, the U.S. is already energy independent in several fuels (such as coal and natural gas), but not in others (such as oil).

     The U.S. has been a net exporter of coal, both metallurgic and thermal, for many years, and it is now producing enough natural gas to begin significant exporting. Indeed, the U.S. has been exporting natural gas from Alaska since 1969. So when it comes to natural gas and coal, the U.S. is already energy independent. On the other hand, according to the U.S. Department of Energy, the U.S. remains very far from nuclear energy independence. Only 9% of the fuel delivered to nuclear utilities in 2011 originated domestically. Australia, Canada, Kazakhstan, Russia, and Uzbekistan accounted for over 70% of uranium used in domestic electricity generation, and there are currently no plans to aggressively develop domestic uranium supplies.

     We are all aware that the U.S. is a huge importer of petroleum. The good news is that domestic oil production is increasing and oil consumption is decreasing. Long-term projections based on current trends might therefore conclude that we are headed toward petroleum independence. But, deep in the 700 page IEA World Energy Outlook is a warning against unchecked exploitation of U.S. petroleum. According to the report, the U.S. ability to lead the world in oil production is limited to between five and ten years based on current statistics. It is uncertain that fossil fuel development and conservation could allow the U.S. to achieve and maintain petroleum independence.

     In the words of Yogi Berra, “the future isn’t what it used to be.” Just as the record high natural gas prices of 2000 gave way to the record low prices of 2012, long-term energy dynamics are hard to predict. It is somewhat easier to anticipate that well managed companies that consistently pay attractive dividends have a good chance of delivering more consistent shareholder total returns. We will work diligently to meet the Fund’s income and total return objectives on your behalf in the coming year and beyond.

     About Your Fund: The Fund seeks to achieve its investment objectives by investing primarily in the public utility industry. Under normal market conditions, more than 65% of the Fund’s total assets will be invested in a diversified portfolio of equity and fixed income securities of companies of public utility companies engaged in the production, transmission or distribution of electric energy, gas or telephone services. The Fund does not currently use derivatives and has no investments in complex or structured investment vehicles.

     The Fund seeks to provide investors with a stable monthly dividend that is primarily derived from current fiscal year earnings and profits. The Investment Company Act of 1940 (1940 Act) and related Securities and Exchange Commission (SEC) rules generally prohibit investment companies from distributing long-term capital gains more often than once in a twelve–month period. However, in 2008, the SEC granted the Fund’s request for exemptive relief from that prohibition, and the Fund is now permitted, subject to certain conditions, to make periodic distributions of long-term capital gains as frequently as twelve times a year. In connection with the exemptive relief, in February 2008 the Board of Directors reaffirmed the current 6.5 cent per share monthly distribution rate and formalized the monthly distribution process by adopting a Managed Distribution Plan (MDP). The Board reviews the operation of the MDP on a quarterly basis, with the most recent review having been conducted in February 2013, and retains an independent consultant to review the plan annually in February. The MDP is described on the inside front cover of this report and in a Question and Answer format on the Fund’s website, www.dnpselectincome.com.

     The Fund’s monthly distribution may be derived from one or more of the following sources: net investment income, realized capital gains, and, to the extent necessary to support the monthly distribution, return of capital. A return of capital distribution does not necessarily reflect the Fund’s investment performance, should not be confused with “yield” or “income,” and requires shareholders to adjust their cost basis. At the time of each distribution, the Fund is required to inform shareholders of the sources of its distributions based on U.S. generally accepted accounting principles (GAAP). However, the tax treatment of the Fund’s distributions can only be determined at the end of the fiscal year, and is reported to shareholders on Form 1099-DIV early in the following year. For federal income tax purposes, 57% of the distributions in 2012 were derived from net investment income, 36% to long-term capital gains and 7% from return of capital.

     The use of leverage enables the Fund to borrow at short-term rates and invest at longer-term rates. As of December 31, 2012 the Fund’s leverage consisted of $138.2 million of Remarketed Preferred Stock (RP) and $861.8 million of debt. On that date the total amount of leverage represented approximately 31% of the Fund’s total assets. The amount and type of leverage used is reviewed by the Board of Directors based on the Fund’s expected earnings relative to the anticipated costs (including fees and expenses) associated with the leverage. In addition, the long-term expected benefits of leverage are weighed against the potential effect of increasing the volatility of both the Fund’s net asset value and the market value of its common stock. Historically, the tendency of the U.S. yield curve to exhibit a positive slope (i.e., long-term rates higher than short-term rates) has fostered an environment in which leverage can make a positive contribution to the earnings of the Fund. There is no assurance that this will continue to be the case in the future. A prolonged period of low longer-term interest rates and the resultant modest reinvestment opportunities for the fixed income portion of the portfolio could adversely affect the income provided from leverage. If the use of leverage were to cease being beneficial, the amount and type of leverage employed by the Fund could potentially be modified or eliminated.

     Early in 2008, disruptions in the short-term fixed income markets resulted in failures in the periodic auctions and remarketings of many closed-end funds’ preferred shares, including the preferred shares of the Fund. After reviewing options for resolving preferred share illiquidity, in March 2009, management arranged a $1 billion credit

facility with a commercial bank. Subsequent to the implementation of the credit facility, the Fund redeemed $300 million of RP and $300 million of Auction Preferred Stock (APS) and made equal draws on the credit facility.

     In May 2012, the Fund commenced a voluntary tender offer, seeking to purchase up to a total $200 million consisting of RP Series D and E, and APS series TH and F at a price equal to 96% of their liquidation preference per share. In mid-June 2012, the Fund accepted for purchase $63,025,000 in aggregate liquidation preference of preferred shares (consisting of 220 shares of Series D RP, 398 shares of Series E RP, 8 shares of Series TH APS, and 41 shares of Series F APS). In order to maintain the same overall leverage following completion of the tender offer, the Fund made an additional draw on the credit facility in the amount of $63.025 million.

     In July 2012, Moody’s Investors Service, Inc. (Moody’s) downgraded the ratings of debt and preferred shares issued by all equity, municipal bond and taxable fixed income closed-end funds, including the Fund. The rating actions followed the publication of Moody’s revised methodology for rating debt and preferred securities issued by closed-end funds. The revised rating methodology incorporates the impact of market volatility, as experienced in the 2008 financial crisis, on the different types of assets in which funds invest, as well as the leverage, portfolio diversity and other factors. Under the terms of the Fund’s charter the rating change resulted in higher dividends paid on the outstanding RP and APS.

     In November 2012, the Fund announced that it would redeem additional shares of APS. Accordingly, in December 2012 the Fund redeemed all 3,992 outstanding shares of its APS, Series TH, and all 3,959 outstanding shares of its APS, Series F. In order to maintain the same overall leverage following the redemption, the Fund made an additional draw on the credit facility in the amount of $198.775 million.

     There are a number of factors that have constrained the Fund from refinancing additional preferred shares with debt. The Fund is limited in its ability to use debt to refinance all of its outstanding preferred shares because of the asset coverage requirements of the Investment Company Act of 1940 and related SEC rules. In addition, the Fund cannot incur indebtedness or enter into reverse repurchase agreements without departing from the guidelines established by the two principal rating agencies, Moody’s and Standard & Poor’s Financial Services LLC. While the Funds’ goal is to provide additional liquidity to preferred shareholders, the Board of Directors and the Fund’s investment adviser, Duff & Phelps Investment Management Co., continue to believe that any action taken to provide such liquidity should not materially disadvantage common shareholders and their ability to benefit from leverage, should be long-term in nature and should not encumber the investment process or reduce the pool of available investment alternatives. Because of all the foregoing considerations, the amount and timing of any future preferred share redemptions are uncertain. The Fund will announce any redemption through press releases and postings to its website.

     Automatic Distribution Reinvestment Plan and Direct Deposit Service—The Fund has a distribution reinvestment plan available as a benefit to all registered shareholders and also offers direct deposit service through electronic funds transfer to all registered shareholders currently receiving a monthly distribution check. These services are offered through Computershare Shareowner Services LLC. For more information and/or an authorization form on automatic distribution reinvestment or direct deposit, please contact Computershare (877.381.2537 or www.cpushareownerservices.com). Information on these services is also available on the Fund’s website at the address noted below.

     Visit us on the Web—You can obtain the most recent shareholder financial reports and distribution information at our website, 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.

Nathan I. Partain, CFA
Director, President, and Chief Executive Officer

DNP SELECT INCOME FUND INC.
SCHEDULE OF INVESTMENTS
December 31, 2012

COMMON STOCKS—111.1%

 

The accompanying notes are an integral part of these financial statements.

DNP SELECT INCOME FUND INC.
SCHEDULE OF INVESTMENTS—(Continued)
December 31, 2012

 

The accompanying notes are an integral part of these financial statements.

     DNP SELECT INCOME FUND INC.
SCHEDULE OF INVESTMENTS—(Continued)
December 31, 2012

 

(a) All or a portion of this security has been segregated and made available for loan.

(b) All or a portion of this security has been loaned.

The percentage shown for each investment category is the total value of that category as a percentage of the net assets applicable to common stock of the Fund.

The accompanying notes are an integral part of these financial statements.

The Fund’s investments are carried at fair value which is defined as the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. The three-tier hierarchy of inputs established to classify fair value measurements for disclosure purposes is summarized in the three broad levels listed below.

Level 1—quoted prices in active markets for identical securities

Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment spreads, credit risks, etc.)

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. The following is a summary of the inputs used to value each of the Fund’s investments at December 31, 2012:

 

There were no Level 3 priced securities held and there were no transfers between Level 1 and Level 2 during the fiscal year ended December 31, 2012.

* Percentages are based on total investments rather than total net assets applicable to common stock and include securities pledged as collateral for the Fund's credit facility.

The accompanying notes are an integral part of these financial statements.

DNP SELECT INCOME FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2012

 

The accompanying notes are an integral part of these financial statements.

DNP SELECT INCOME FUND INC.
STATEMENT OF OPERATIONS
For the year ended December 31, 2012

 

The accompanying notes are an integral part of these financial statements.

DNP SELECT INCOME FUND INC.
STATEMENTS OF CHANGES IN NET ASSETS

 

The accompanying notes are an integral part of these financial statements.

DNP SELECT INCOME FUND INC.
STATEMENT OF CASH FLOWS
For the year ended December 31, 2012

 

The accompanying notes are an integral part of these financial statements.

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 years indicated (excluding supplemental data provided below):

		For the year ended December 31,
		2012				2011				2010				2009				2008
PER SHARE DATA:
Net asset value:
Beginning of year		$	8.33			$	7.50			$	7.23			$	6.60			$	10.19
Net investment income			0.48				0.45				0.54				0.50				0.45
Net realized and unrealized gain (loss)			0.21				1.17				0.52				0.93				(3.18	)
Dividends on auction preferred stock
from net investment income			(0.02	)			(0.01	)			(0.01	)			(0.02	)			(0.06	)
Dividends on auction preferred stock
from net realized gains			—				—				—				—				(0.02	)
Benefit to common stockholders from
tender offer for preferred stock			0.01				—				—				—				—
Net increase (decrease) from investment
operations applicable to common stock			0.68				1.61				1.05				1.41				(2.81	)
Distributions on common stock from:
And in excess of net investment income			(0.44	)			(0.66	)			(0.67	)			(0.54	)			(0.53	)
Realized gains on investment transactions			(0.28	)			(0.09	)			—				—				(0.25	)
Return of capital			(0.06	)			(0.03	)			(0.11	)			(0.24	)			—
Total distributions			(0.78	)			(0.78	)			(0.78	)			(0.78	)			(0.78	)
Net asset value:
End of year		$	8.23			$	8.33			$	7.50			$	7.23			$	6.60
Per share market value:
End of year		$	9.47			$	10.92			$	9.14			$	8.95			$	6.15
RATIOS TO AVERAGE NET ASSETS
APPLICABLE TO COMMON STOCK:
Operating expenses			1.77	%			1.95	%			2.20	%			2.49	%			2.46	%
Net investment income			5.03	%			5.24	%			6.25	%			7.14	%			5.11	%
SUPPLEMENTAL DATA:
Total return on market value (1)			(6.17	%)			29.60	%			11.35	%			61.41	%			(36.54	%)
Total return on net asset value (1)			8.53	%			22.54	%			15.65	%			23.96	%			(28.55	%)
Portfolio turnover rate			14	%			13	%			20	%			18	%			15	%
Asset coverage ratio on borrowings,
end of year			374	%			502	%			465	%			451	%			—
Asset coverage ratio on preferred stock,
end of year			1,706	%			604	%			548	%			526	%			253	%
Net assets applicable to common stock,
end of year (000’s omitted)		$	2,219,458			$	2,013,929			$	1,791,273			$	1,703,400			$	1,527,981

(1)

Total return on market value assumes a purchase of common stock at the current market price on the first day and a sale at the current market price on the last day of each year 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 net asset value uses the same methodology, but with use of net asset value for beginning, ending and reinvestment values.

The accompanying notes are an integral part of these financial statements.

DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2012

Note 1. Organization:

     DNP SELECT INCOME FUND INC. (the “Fund”) was incorporated under the laws of the State of Maryland on November 26, 1986. The Fund commenced operations on January 21, 1987, as a closed-end diversified management investment company registered under the Investment Company Act of 1940 (the “1940 Act”). The primary investment objectives of the Fund are current income and long-term growth of income. Capital appreciation is a secondary objective.

Note 2. Significant Accounting Policies:

The following are the significant accounting policies of the Fund:

A. Securities Valuation: Equity securities traded on a national or foreign securities exchange or traded over-the-counter and quoted on the NASDAQ Stock Market are valued at the last reported sale price using valuation data provided by an independent pricing service or, if there was no sale on the pricing date, then the security is valued at the mean of the bid and ask prices as obtained on that day from one or more dealers regularly making a market in that security and are generally classified as Level 1. Fixed income securities are valued at the mean of bid and ask prices provided by an independent pricing service or broker-dealers when such prices are believed to reflect the fair market value of such securities and are generally classified as Level 2. Such bid and ask prices are determined taking into account securities prices, yields, maturities, call features, ratings, and institutional size trading in similar securities and developments related to specific securities. Short-term investments having a maturity of 60 days or less at time of purchase are valued on an amortized cost basis, which approximates market value and are classified as Level 2. Any 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 and are generally classified as Level 2 or 3.

B. Securities Transactions and Investment Income: 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 financial reporting purposes. Discounts and premiums are not amortized for tax purposes.

The Fund invests in master limited partnerships (“MLPs”) which make distributions that are partially attributable to return of capital. Dividend income is recorded using management’s estimate of the percentage of income included in the distributions received from the MLP investments based on their historical dividend results. Distributions received in excess of this estimated amount are recorded as a reduction of cost of investments (i.e., a return of capital). The actual amounts of income and return of capital are only determined by each MLP after its fiscal year-end and may differ from the estimated amounts. For the year ended December 31, 2012, the Fund estimated that 100% of the MLP distributions received would be treated as a return of capital.

C. Federal Income Taxes: It is the Fund’s intention to comply with requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income and capital gains to its shareholders. Therefore, no provision for Federal income or excise taxes is required. Management of the Fund has concluded that there are no significant uncertain tax positions that

 

Officers of the Fund

     The officers of the Fund are elected at the annual meeting of the board of directors of the Fund. The officers receive no compensation from the Fund, but are also officers of the Fund’s investment adviser or the Fund’s administrator and receive compensation in such capacities. Information about Nathan I. Partain, the President and Chief Executive Officer of the Fund, is provided above under the caption “Interested Director”. The address for all officers listed below is c/o Duff & Phelps Investment Management Co., 200 South Wacker Drive, Suite 500, Chicago, Illinois 60606, except as noted.

Name, Address and Age		Position(s) Held with Fund and Length of Time Served		Principal Occupation(s) During Past 5 Years
T. Brooks Beittel, CFA Age: 62		Secretary and Senior Vice President since 1995 (Treasurer 1995–2002)		Executive Vice President and Assistant Chief Investment Officer of the Adviser since 2008 (Senior Vice President 1993–2008,Vice President 1987–1993)
Alan M. Meder, CFA, CPA Age: 53		Treasurer, Principal Financial and Accounting Officer and Assistant Secretary since 2011 (Assistant Treasurer May 2010–February 2011)		Senior Vice President of the Adviser since 1994; (Chief Risk Officer since 2001); Chair of the Board of Governors of CFA Institute since September 2012 (Board Member since 2008); Financial Accounting Standards Advisory Council Member since 2011
Joyce B. Riegel Age: 58		Chief Compliance Officer since 2004		Senior Vice President and Chief Compliance Officer of the Adviser since 2004 (Vice President and Compliance Officer 2002–2004); Vice President and Chief Compliance Officer, Stein Roe Investment Counsel LLC 2001–2002
Dianna P. Wengler J.J.B. Hilliard, W.L. Lyons, LLC 500 West Jefferson Street Louisville, KY 40202 Age: 52		Vice President since 2006 (Assistant Vice President 2004–2006); Assistant Secretary since 1988		Vice President, J.J.B. Hilliard, W.L. Lyons, LLC since 1990; Treasurer, Hilliard-Lyons Government Fund, Inc. 1988–2010

DNP SELECT INCOME FUND INC.

Summary Description of
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
for Common Shareholders

     DNP Select Income Fund Inc. (the “Fund”) maintains a Dividend Reinvestment and Cash Purchase Plan (the “plan”). Under the plan, shareholders may elect to have all dividends and capital gains distributions paid on their common stock automatically reinvested by Computershare Shareowner Services LLC, as agent for shareholders, in additional shares of common stock of the Fund. Only registered shareholders may participate in the plan. The plan permits a nominee, other than a depository, to participate on behalf of those beneficial owners for whom it is holding shares who elect to participate. However, some nominees may not permit a beneficial owner to participate without transferring the shares into the owner’s name. Shareholders who do not elect to participate in the plan will receive all distributions in cash paid by check mailed directly to the shareholder (or, if the shareholder’s shares are held in street or other nominee name, then to such shareholder’s nominee) by Computershare Shareowner Services LLC as dividend disbursing agent. Registered shareholders may also elect to have cash dividends deposited directly into their bank accounts.

     When a dividend or distribution is reinvested under the plan, the number of shares of common stock equivalent to the cash dividend or distribution is determined as follows:

(i) If shares of the Fund’s common stock are trading at net asset value or at a premium above net asset value at the valuation date, the Fund issues new shares of common stock at the greater of net asset value or 95% of the then current market price.

(ii) If shares of the Fund’s common stock are trading at a discount from net asset value at the valuation date, Computershare Shareowner Services LLC receives the dividend or distribution in cash and uses it to purchase shares of common stock in the open market, on the New York Stock Exchange or elsewhere, for the participants’ accounts. Shares are allocated to participants’ accounts at the average price per share, plus commissions, paid by Computershare Shareowner Services LLC for all shares purchased by it. If, before Computershare Shareowner Services LLC has completed its purchases, the market price exceeds the net asset value of a share, the average purchase price per share paid by Computershare Shareowner Services LLC may exceed the net asset value of the Fund’s shares, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund.

     The valuation date is the business day immediately preceding the date of payment of the dividend or distribution. On that date, the Fund’s administrator compares that day’s net asset value per share and the closing price per share on the New York Stock Exchange and determines which of the two alternative procedures described above will be followed.

     The reinvestment shares are credited to the participant’s plan account in the Fund’s stock records maintained by Computershare Shareowner Services LLC, including a fractional share to four decimal places. Computershare Shareowner Services LLC will send participants written confirmation of all transactions in the participant’s plan account, including information participants will need for tax records. Shares held in the participant’s plan account have full dividend and voting rights. Dividends and distributions paid on shares held in the participant’s plan account will also be reinvested.

     The cost of administering the plan is borne by the Fund. There is no brokerage commission on shares issued directly by the Fund. However, participants do pay a pro rata share of brokerage commissions incurred on any open market purchases of shares by Computershare Shareowner Services LLC.

     The automatic reinvestment of dividends and distributions does not relieve participants of any income taxes that may be payable (or required to be withheld) on dividends or distributions.

     If the closing market price of shares of the Fund’s common stock should be equal to or greater than their net asset value on the valuation date, the participants in the plan would receive shares priced at the higher of net asset value or 95% of the market price. Consequently they would receive more shares at a lower per share price than if they had used the cash distribution to purchase Fund shares on the payment date in the market at the market price plus commission.

     If the market price should be less than net asset value on the valuation date, the cash distribution for the plan participants would be used by Computershare Shareowner Services LLC to purchase the shares to be received by the participants, which would be at a discount from net asset value unless the market price should rise during the purchase period so that the average price and commission exceeded net asset value as of the payment date. Also, since the Fund does not redeem its shares, the price on resale may be less or more than the net asset value.

     Plan participants may purchase additional shares of common stock through the plan by delivering to Computershare Shareowner Services LLC a check for at least $100, but not more than $5,000, in any month. Computershare Shareowner Services LLC will use such funds to purchase shares in the open market or in private transactions.

     The purchase price of such shares may be more than or less than net asset value per share. The Fund will not issue new shares or supply treasury shares for such voluntary additional share investment. Purchases will be made commencing with the time of the first distribution payment following the second business day after receipt of the funds for additional purchases, and may be aggregated with purchases of shares for reinvestment of the distribution. Shares will be allocated to the accounts of participants purchasing additional shares at the average price per share, plus a service charge of $2.50 imposed by Computershare Shareowner Services LLC and a pro rata share of any brokerage commission (or equivalent purchase costs) paid by Computershare Shareowner Services LLC in connection with such purchases. Funds sent to the bank for voluntary additional share reinvestment may be recalled by the participant by written notice received by Computershare Shareowner Services LLC not later than two business days before the next dividend payment date. If for any reason a regular monthly dividend is not paid by the Fund, funds for voluntary additional share investment will be returned to the participant, unless the participant specifically directs that such funds continue to be held by Computershare Shareowner Services LLC for subsequent investment. Participants will not receive interest on voluntary additional funds held by Computershare Shareowner Services LLC pending investment.

     A shareholder may leave the plan at any time by written notice to Computershare Shareowner Services LLC. To be effective for any given distribution, notice must be received by Computershare Shareowner Services LLC at least seven business days before the record date for that distribution. When a shareholder leaves the plan: (i) such shareholder may request that Computershare Shareowner Services LLC sell such shareholder’s shares held in such shareholder’s plan account and send such shareholder a check for the net proceeds (including payment of the value of a fractional share, valued at the closing price of the Fund’s common stock on the New York Stock Exchange on the date discontinuance is effective) after deducting Computershare Shareowner Services LLC’s $5.00 charge and any brokerage commission (or equivalent sale cost) or (ii) if no request is made, such shareholder will receive a certificate for the number of full shares held in such shareholder’s plan account, along with a check for any fractional

share interest, valued at the closing price of the Fund’s common stock on the New York Stock Exchange on the date discontinuance is effective. If and when it is determined that the only balance remaining in a shareholder’s plan account is a fraction of a single share, such shareholder’s participation will be deemed to have terminated, and Computershare Shareowner Services LLC will send to such shareholder a check for the value of such fractional share, valued at the closing price of the Fund’s common stock on the New York Stock Exchange on the date discontinuance is effective.

The Fund may change, suspend or terminate the plan at any time upon mailing a notice to participants.

For more information regarding, and an authorization form for, the plan, please contact Computershare Shareowner Services LLC at 1-877-381-2537 or on the World Wide Web at www.cpushareownerservices.com.

Information on the plan is also available on the Fund’s website at www.dnpselectincome.com.