SCHEDULE 14A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 'SS' 240.14a-12
FORT DEARBORN INCOME SECURITIES, INC.
(Name of Registrant as Specified in Its Charter)
___________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: __________________________________________________
(2) Form, Schedule or Registration Statement No.: ___________________________
(3) Filing Party: ___________________________________________________________
(4) Date Filed: _____________________________________________________________
FORT DEARBORN INCOME SECURITIES, INC.
_______________
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 7, 2007
_______________
TO THE SHAREHOLDERS:
The annual meeting of shareholders of Fort Dearborn Income Securities, Inc.
(the "Fund") will be held on Friday, December 7, 2007 at 1:00 p.m., Central
time, at One North Wacker Drive, 38th Floor, Chicago, Illinois 60606 for the
following purposes:
(1) To elect four (4) directors to serve until the annual meeting of
shareholders in 2008, or until their successors are elected and qualified
or until they resign or are otherwise removed; and
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
You are entitled to vote at the meeting and any adjournments thereof if you
owned Fund shares at the close of business on October 12, 2007. If you attend
the meeting, you may vote your shares in person. IF YOU DO NOT EXPECT TO ATTEND
THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED POSTAGE PAID ENVELOPE.
By order of the Board of Directors,
MARK F. KEMPER
SECRETARY
November 16, 2007
One North Wacker Drive
Chicago, Illinois 60606
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND
SIGN IT, AND RETURN IT IN THE POSTAGE PAID ENVELOPE PROVIDED. IF YOU SIGN, DATE
AND RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE
VOTED "FOR" THE NOMINEES FOR DIRECTOR NAMED IN THE ATTACHED PROXY STATEMENT AND,
IN THE PROXIES' DISCRETION, EITHER "FOR" OR "AGAINST" ANY OTHER BUSINESS THAT
MAY PROPERLY ARISE AT THE ANNUAL MEETING. IN ORDER TO AVOID THE ADDITIONAL
EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING
YOUR PROXY CARD PROMPTLY.
--------------------------------------------------------------------------------
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general guidelines for signing proxy cards may be of
assistance to you and avoid the time and expense to the Fund in validating your
vote if you fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the
registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the proxy card.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
REGISTRATION VALID SIGNATURE
------------ ---------------
Corporate Accounts
(1) ABC Corp. ............................. ABC Corp.
John Doe, Treasurer
(2) ABC Corp. ............................. John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer ..... John Doe
(4) ABC Corp. Profit Sharing Plan ......... John Doe, Trustee
Partnership Accounts
(1) The XYZ Partnership ................... Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership .. Jane B. Smith, General Partner
Trust Accounts
(1) ABC Trust Account ..................... Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/18/78 ... Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust. f/b/o
John B. Smith, Jr. UGMA/UTMA .......... John B. Smith
(2) Estate of John B. Smith ............... John B. Smith, Jr., Executor
FORT DEARBORN INCOME SECURITIES, INC.
ONE NORTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
_______________
PROXY STATEMENT
_______________
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 7, 2007
This proxy statement is furnished to the shareholders of Fort Dearborn
Income Securities, Inc. (the "Fund") in connection with the Board of Directors'
solicitation of proxies to be used at the annual meeting of shareholders of the
Fund to be held on December 7, 2007, at 1:00 p.m., Central time, at the
principal executive offices of the Fund at One North Wacker Drive, 38th Floor,
Chicago, Illinois 60606, or any adjournment or adjournments thereof. This proxy
statement and the related proxy card will first be mailed to shareholders on or
about November 16, 2007.
A majority of the shares outstanding and entitled to vote on October 12,
2007 represented in person or by proxy, must be present for the transaction of
business at the meeting. In the event that a quorum is not present at the annual
meeting, or if a quorum is present at the annual meeting but sufficient votes to
approve any of the proposals are not received, shareholders present in person or
the persons named as proxies may propose one or more adjournments of the annual
meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
annual meeting in person or by proxy. The persons named as proxies will vote
those proxies which they are entitled to vote FOR any such proposal in favor of
such an adjournment and will vote those proxies marked WITHHOLD on any such
proposal against such adjournment. A shareholder vote may be taken on one or
more of the proposals in this proxy statement prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any adjournment or proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
but will have no effect on Proposal 1, for which the required vote is a
plurality of the votes cast on the matter.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your direction as indicated thereon if your proxy card is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you give no voting instructions, your shares will be voted
FOR the four nominees for director named herein and, in the proxies' discretion,
either FOR or AGAINST any other business that may properly arise at the annual
meeting. You may revoke any proxy card by giving another proxy or by submitting
a written notice of revocation to the Fund's Secretary at UBS Global Asset
Management (Americas) Inc., One North Wacker Drive, Chicago, Illinois 60606. To
be effective, your revocation must be received by the Fund prior to the meeting
and must indicate your name and account number. In addition, if you attend the
annual meeting in person you may, if you wish, vote by ballot at the meeting,
thereby cancelling any proxy previously given.
As of the record date, October 12, 2007, the Fund had 8,775,665 shares of
common stock outstanding. The solicitation of proxies, the cost of which will be
borne by the Fund, will be made primarily by mail but also may include telephone
and oral communications by regular employees of UBS Global Asset Management
(Americas) Inc. ("UBS Global AM"), who will not receive any compensation
therefor from the Fund. Each full share of the Fund outstanding is entitled to
one vote, and each fractional share of the Fund outstanding is entitled to a
proportionate share of one vote.
UBS Global AM serves as the Fund's investment advisor. UBS Global AM is an
indirect wholly owned asset management subsidiary of UBS AG. UBS AG is an
internationally diversified organization with headquarters in Zurich and Basel,
Switzerland. UBS AG operates in many areas of the financial services industry.
The principal business offices of UBS Global AM are located at One North Wacker
Drive, Chicago, Illinois 60606. The principal business address of UBS AG is
Bahnhofstrasse 45, Zurich, Switzerland.
THE FUND IS SENDING TO SHAREHOLDERS, IN A SEPARATE MAILING, THE FUND'S
ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2007. YOU MAY OBTAIN,
WITHOUT CHARGE, ADDITIONAL COPIES OF THE FUND'S ANNUAL REPORT AND SEMI-ANNUAL
REPORT BY: (1) WRITTEN REQUEST TO: UBS GLOBAL ASSET MANAGEMENT (AMERICAS) INC.,
ATTN: MARK F. KEMPER, ONE NORTH WACKER DRIVE, CHICAGO, ILLINOIS 60606; OR (2)
CALLING THE FUND'S TOLL-FREE NUMBER: 1-800-647 1568.
PROPOSAL 1. ELECTION OF DIRECTORS
Proposal 1 relates to the election of directors of the Fund. Management
proposes the election of the four nominees named in the table below. Each
nominee has indicated his or her willingness to serve if elected. If elected,
each nominee will hold office until the next annual meeting of shareholders or
until his or her successor is elected and qualified, or until he or she resigns
or is otherwise removed. Each of the nominees was last elected director at the
Fund's December 2006 Annual Meeting of Shareholders. Unless you give contrary
instructions on the enclosed proxy card, your shares will be voted FOR the
election of all four nominees. If any of the nominees should withdraw or
otherwise become unavailable for election, your shares will be voted FOR such
other nominee or nominees as management may recommend.
Directors, including those who are not "interested persons" of the Fund as
that term is defined by the Investment Company Act of 1940, as amended ("1940
Act") ("Independent Directors"), shall be elected by the affirmative vote of the
holders of a plurality of the shares of the Fund cast in person or by proxy and
entitled to vote thereon, provided a quorum is present. Proxies cannot be voted
for a greater number of persons than the number of nominees named. None of the
directors or nominees beneficially owned 1% or more of the Fund's common stock
and none of the executive officers beneficially owned any shares of the Fund's
common stock as of October 12, 2007. In addition, the directors and executive
officers, as a group, beneficially owned less than 1% of the outstanding common
stock of the Fund as of October 12, 2007.
Listed in the table below, for each nominee, is a brief description of the
nominee's experience as a director of the Fund and as a director or trustee of
other funds, as well as other recent professional experience.
2
SHARES
BENEFICIALLY
OWNED
NUMBER OF DIRECTLY OR
POSITION(S) LENGTH OF PRINCIPAL PORTFOLIOS IN OTHER INDIRECTLY AT
HELD WITH TIME OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS OCTOBER 12,
NAME, ADDRESS, AND AGE FUND SERVED DURING PAST 5 YEARS OVERSEEN BY NOMINEE HELD BY NOMINEE 2007
---------------------- ----------- --------- ------------------- ------------------- --------------- -------------
INDEPENDENT DIRECTORS:
Adela Cepeda; 49 Director Since 2000 Ms. Cepeda is Ms. Cepeda is a Ms. Cepeda is 1000
A.C. Advisory, Inc. founder and director or trustee a director of
161 No. Clark Street, president of A.C. of four investment MGI Funds
Suite 4975 Advisory, Inc. companies (consisting (7 portfolios)
Chicago, IL 60601 (since 1995). of 58 portfolios) for (since 2005).
which UBS Global AM
or one of its
affiliates serves as
investment advisor,
sub-advisor or
manager.
Frank K. Reilly; 71 Chairman Since 1993 Mr. Reilly is a Mr. Reilly is a Mr. Reilly is a 7175.4474
Mendoza College of and Professor at the director or trustee Director of
Business Director University of of four investment Discover Bank;
University of Notre Dame Notre Dame companies (consisting Morgan Stanley
Notre Dame, IN since 1982. of 58 portfolios), Trust FSB and
46556-5649 for which UBS Global Morgan Stanley
AM or one of its National Trust.
affiliates serves as
investment advisor,
sub-advisor or
manager.
Edward M. Roob; 73 Director Since 1993 Mr. Roob is retired Mr. Roob is a None. 9000
841 Woodbine Lane (since 1993). director or trustee
Northbrook, IL 60002 of four investment
companies (consisting
of 58 portfolios), for
which UBS Global AM or
one of its affiliates
serves as investment
advisor, sub-advisor
or manager.
J. Mikesell Thomas; 56 Director Since 2002 Mr. Thomas is Mr. Thomas is a Mr. Thomas is a 0
Federal Home Loan Bank President and CEO director or trustee director and
of Chicago of Federal Home of four investment chairman of the
111 East Wacker Drive Loan Bank of companies Audit Committee
Chicago, Illinois 60601 Chicago (since (consisting of 58 for Evanston
2004). Mr. Thomas portfolios) for which Northwestern
was an independent UBS Global AM or Healthcare.
financial advisor one of its affiliates
(2001-2004). serves as investment
advisor, sub-advisor
or manager.
3
INFORMATION ABOUT NOMINEE OWNERSHIP OF FUND SHARES
DOLLAR RANGE AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL
OF EQUITY REGISTERED INVESTMENT COMPANIES OVERSEEN BY NOMINEE
SECURITIES FOR WHICH UBS GLOBAL AM OR AN AFFILIATE SERVES AS
NOMINEE IN FUND + INVESTMENT ADVISOR, SUB-ADVISOR OR MANAGER +
------- ---------- --------------------------------------------
INDEPENDENT DIRECTORS:
Adela Cepeda $10,001--$50,000 $10,001--$50,000
Frank K. Reilly $50,001--$100,000 Over $100,000
Edward M. Roob Over $100,000 Over $100,000
J. Mikesell Thomas None None
-------------
+ Information regarding ownership of shares of the Fund is as of October 12,
2007; information regarding ownership of shares in all registered
investment companies overseen by nominee for which UBS Global AM or an
affiliate serves as investment advisor, sub-advisor or manager is as of
December 31, 2006.
As of December 31, 2006, the Independent Directors and their immediate
family members did not own any securities issued by UBS Global AM or any company
controlling, controlled by or under common control with UBS Global AM.
The Board of Directors (the "Board") of the Fund met seven times during the
fiscal year ended September 30, 2007. Each director attended 75% or more of the
Board meetings during the last fiscal year. In addition, no directors attended
less than 75% of the aggregate of the total number of meetings held by the Board
and the total number of meetings held by all committees on which such director
served during the fiscal year ended September 30, 2007.
The Fund's directors are not required to attend the Fund's annual meetings.
Four directors attended the annual meeting of shareholders in 2006.
The Board has established an Audit Committee that acts pursuant to a
written charter ("Audit Committee Charter") and is responsible for, among other
things: (i) selecting, overseeing and setting the compensation of the Fund's
independent registered public accounting firm; (ii) overseeing the Fund's
accounting and financial reporting policies and practices, its internal controls
and, as appropriate, the internal controls of certain service providers; (iii)
overseeing the quality and objectivity of the Fund's financial statements and
the independent audits thereof; and (iv) acting as a liaison between the Fund's
independent registered public accounting firm and the full Board of Directors. A
copy of the Audit Committee Charter is available on the Fund's website at
www.ubs.com. In fulfilling its duties, the Audit Committee has: (a) reviewed and
discussed the Fund's audited financial statements with management; (b) discussed
with the independent auditors the matters required to be discussed by Statement
on Auditing Standards No. 61; (c) received certain written disclosures and the
letter from the independent auditors required by Independence Standards Board
Standard No. 1 and discussed the independent auditors' independence with them;
and (d) based upon its review of the above, recommended to the Board that the
Fund's audited financial statements be included in the Fund's annual report to
shareholders for the fiscal year ended September 30, 2007. The Audit Committee
currently consists of Ms. Cepeda and Messrs. Reilly, Roob and Thomas, none of
whom have any relationship to the Fund that may interfere with the exercise of
their independence from management or the Fund and each of whom is independent
as defined under listing standards of the New York Stock Exchange ("NYSE")
applicable to closed-end funds. Each member of the Fund's Audit Committee is
also a member of a similar committee established by the boards of certain other
investment companies for which UBS Global AM or an affiliate serves as
investment advisor, sub-advisor or manager. The Audit Committee met five times
during the fiscal year ended September 30, 2007.
4
The Board has also established a Nominating, Compensation and Governance
Committee that acts pursuant to a written charter ("Nominating, Compensation and
Governance Committee Charter"). The Nominating, Compensation and Governance
Committee is responsible for, among other things, selecting, evaluating and
recommending to the Board candidates to be nominated as additional independent
directors of the Board, periodically reviewing the composition of the Board,
periodically reviewing Board governance procedures and recommending any
appropriate changes thereto and periodically reviewing the compensation
structure for independent directors. A copy of the Nominating, Compensation and
Governance Committee Charter was previously filed with the Fund's 2004 proxy
statement. The Nominating, Compensation and Governance Committee currently
consists of Ms. Cepeda and Messrs. Reilly, Roob and Thomas, none of whom is an
"interested person" for purposes of the 1940 Act, and all of whom are
independent as defined under listing standards of the NYSE applicable to
closed-end funds. The Nominating, Compensation and Governance Committee met
three times during the fiscal year ended September 30, 2007.
In nominating candidates, the Nominating, Compensation and Governance
Committee believes that no specific qualifications or disqualifications are
controlling or paramount, or that specific qualities or skills are necessary for
each candidate to possess. In identifying and evaluating nominees for director,
the Nominating, Compensation and Governance Committee takes into consideration
such factors as it deems appropriate. These factors may include: (i) whether or
not the person is an "interested person" as defined in the 1940 Act, meets the
applicable independence and experience requirements of the NYSE and is otherwise
qualified under applicable laws and regulations to serve as a member of the
Board; (ii) whether or not the person has any relationships that might impair
his or her independence, such as any business, financial or family relationships
with Fund management, the investment advisor of the Fund, other Fund service
providers or their affiliates; (iii) whether or not the person is willing to
serve, and willing and able to commit the time necessary for the performance of
the duties of a Board member; (iv) the person's judgment, skill, diversity and
experience with investment companies and other organizations of comparable
purpose, complexity and size and subject to similar legal restrictions and
oversight; (v) the interplay of the candidate's experience with the experience
of other Board members; and (vi) the extent to which the candidate would be a
desirable addition to the Board and any committees thereof.
While the Nominating, Compensation and Governance Committee is solely
responsible for the selection and recommendation to the Board of Board
candidates, the Nominating, Compensation and Governance Committee will consider
nominees recommended by Qualifying Fund Shareholders if a vacancy occurs among
those board members who are independent board members. A Qualifying Fund
Shareholder is a shareholder that: (i) owns of record, or beneficially through a
financial intermediary, 1/2 of 1% or more of the Fund's outstanding shares and
(ii) has been a shareholder of at least 1/2 of 1% of the Fund's total
outstanding shares for 12 months or more prior to submitting the recommendation
to the Nominating, Compensation and Governance Committee. In order to recommend
a nominee, a Qualifying Fund Shareholder should send a letter to the chairperson
of the Nominating, Compensation and Governance Committee, care of the Secretary
of the Fund at UBS Global Asset Management (Americas) Inc., One North Wacker
Drive, Chicago, Illinois 60606. The Qualifying Fund Shareholder's letter should
include: (i) the name and address of the Qualifying Fund Shareholder making the
recommendation; (ii) the number of shares of the Fund which are owned of record
and beneficially by such Qualifying Fund Shareholder and the length of time that
such shares have been so owned by the Qualifying Fund Shareholder; (iii) a
description of all arrangements and understandings between such Qualifying Fund
Shareholder and any other person or persons (naming such person or persons)
pursuant to which the recommendation is being made; (iv) the name and address of
the nominee; and (v) the nominee's resume or curriculum vitae.
5
The Qualifying Fund Shareholder's letter must be accompanied by a written
consent of the individual to stand for election if nominated for the Board and
to serve if elected by shareholders. The Nominating, Compensation and Governance
Committee may also seek such additional information about the nominee as it
considers appropriate, including information relating to such nominee that is
required to be disclosed in solicitations or proxies for the election of board
members.
Shareholders may send other communications to the Board by sending a letter
to the chairperson of the Board of Directors, Mr. Frank K. Reilly, care of the
Secretary of the Fund at UBS Global Asset Management (Americas) Inc., One North
Wacker Drive, Chicago, Illinois 60606. The chairperson of the Board of Directors
will relay shareholder communications to the other Board members.
Each Independent Director receives from the Fund for his or her service to
the Fund, an annual retainer of $5,000 for serving as a board member, a $2,000
retainer for serving as an Audit Committee member, and a $2,000 retainer for
serving as a Nominating, Compensation and Governance Committee member. In
addition, the Chairman of the Board, for serving as Chairman of the Board, the
Chairman of the Audit Committee, for serving as Chairman of the Audit Committee
and the Chairman of the Nominating Committee, for serving as Chairman of the
Nominating Committee, receive, from the Fund for his or her service to the Fund,
an annual retainer of $2,000, $1,500 and $1,000, respectively. Each Independent
Director also will receive from the Fund $500 for each regular Board meeting
(and each in-person special meeting) actually attended. The Fund reimburses each
Director and officer for out-of-pocket expenses in connection with travel and
attendance at Board meetings. No officer, director or employee of UBS Global AM
or any of its affiliates presently receives any compensation from the Fund for
acting as a Board member or officer.
6
COMPENSATION TABLE +
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM THE FUND
FROM AND THE
NAME OF PERSON, POSITION THE FUND* FUND COMPLEX**
------------------------ --------- -------------
Adela Cepeda, Director .................................... $8,055 $104,700
Frank K. Reilly, Director and Chairman .................... 8,001 118,300
Edward M. Roob, Director .................................. 6,972 107,800
J. Mikesell Thomas, Director*** ........................... 8,713 111,450
_______________
+ Only Independent Directors are compensated by the Fund.
* Represents fees paid to each director for service on the Board during the
fiscal year ended September 30, 2007.
** Represents fees paid for services during the fiscal year ended September
30, 2007 to each Board member by four investment companies for which UBS
Global AM or one of its affiliates served as investment advisor,
sub-advisor or manager. The Fund does not have a bonus, pension, profit
sharing or retirement plan.
*** These amounts include compensation paid to Mr. Thomas for his service as
the liaison for the Board of Directors for purposes of the UBS Global AM
(Americas) Profitability Working Group.
7
INFORMATION CONCERNING INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Fund's financial statements for the fiscal year ended September 30,
2007, were audited by Ernst & Young LLP ("Ernst & Young"), independent
registered public accounting firm. In addition, Ernst & Young prepares the
Fund's federal and state annual income tax returns and provides certain
non-audit services. The Audit Committee has considered whether the provision of
those non-audit services is compatible with maintaining Ernst & Young's
independence. In the past two fiscal years, the Audit Committee did not approve
any services provided by Ernst & Young pursuant to Rule 2-01(c)(7)(i)(C) of
Regulation S-X.The Board of Directors of the Fund has selected Ernst & Young as
the independent registered public accounting firm for the Fund for the fiscal
year ending September 30, 2008. Ernst & Young has been the Fund's independent
registered public accounting firm since the fiscal year ended September 30,
2001. Ernst & Young has informed the Fund that it has no material direct or
indirect financial interest in the Fund.
Representatives of Ernst & Young are not expected to be present at the
meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
AUDIT FEES
For the fiscal years ended September 30, 2007 and September 30, 2006, the
aggregate Ernst & Young audit fees for professional services rendered to the
Fund were approximately $34,350 and $33,000, respectively.
Fees included in the audit fees category are those associated with the
annual audits of financial statements and services that are normally provided in
connection with statutory and regulatory filings.
AUDIT-RELATED FEES
In each of the fiscal years ended September 30, 2007 and September 30,
2006, the aggregate audit-related fees billed by Ernst & Young for services
rendered to the Fund that are reasonably related to the performance of the
audits of the financial statements, but not reported as audit fees, were
approximately $2,500 and $2,500, respectively.
Fees included in the audit-related fees category are those associated with
the reading and providing comments on the semi-annual statements.
There were no audit-related fees required to be approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the fiscal years
indicated above.
TAX FEES
In each of the fiscal years ended September 30, 2007 and September 30,
2006, the aggregate tax fees billed by Ernst & Young for professional services
rendered to the Fund were approximately $4,150 and $4,150, respectively.
Fees included in the tax fees category comprise all services performed by
professional staff in the independent accountant's tax division except those
services related to the audits. This category comprises fees for tax return
preparation and review of excise tax calculations.
8
There were no tax fees required to be approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X during the fiscal years indicated
above.
ALL OTHER FEES
In each of the fiscal years ended September 30, 2007 and September 30,
2006, there were no fees billed by Ernst & Young for products and services,
other than the services reported above, rendered to the Fund.
Fees included in the all other fees category would consist of services
related to internal control reviews, strategy and other consulting, financial
information systems design and implementation, consulting on other information
systems, and other tax services unrelated to the Fund.
There were no "all other fees" required to be approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X during the fiscal years
indicated above.
PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee Charter contains the Audit Committee's pre-approval
policies and procedures. Reproduced below is an excerpt from the Audit Committee
Charter regarding pre-approval policies and procedures:
To carry out its purposes, the Audit Committee shall have the following
duties and powers:
(a) To pre-approve the engagement of, and to recommend to the Board the
engagement, retention or termination of, the independent auditors to
provide audit, review or attest services to the Fund, and, in
connection therewith, to review and evaluate the capabilities and
independence of the auditors, and receive the auditors' specific
representations as to their independence. In evaluating the auditor's
qualifications, performance and independence, the Committee must,
among other things, obtain and review a report by the auditors, at
least annually, describing the following items: (i) all relationships
between the independent auditors and the Fund, as well as with the
Fund's investment adviser or any control affiliate of the investment
adviser that provides ongoing services to the Fund; (ii) any material
issues raised by the most recent internal quality control review, or
peer review, of the audit firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding five
years, with respect to one or more independent audits carried out by
the firm, and any steps taken to deal with any such issues; and (iii)
the audit firm's internal quality control procedures.
(b) To pre-approve all non-audit services to be provided to the Fund by
the independent auditors when, without such pre-approval, the auditors
would not be independent of the Fund under applicable federal
securities laws, rules or auditing standards.
(c) To pre-approve all non-audit services to be provided by the Fund's
independent auditors to the Fund's investment adviser or to any entity
that controls, is controlled by or is under common control with the
Fund's investment adviser ("adviser affiliate") and that provides
ongoing services to the Fund, when, without such pre-approval by the
Committee, the auditors would not be independent of the Fund under
applicable federal securities laws, rules or auditing standards.
(d) To establish, if deemed necessary or appropriate as an alternative to
Committee pre-approval of services to be provided by the independent
auditors as required by paragraphs (b) and (c) above, policies and
procedures to permit such services to be pre-approved by other means,
such as by
9
action of a designated member or members of the Committee, subject to
subsequent Committee review or oversight.
(e) To consider whether the non-audit services provided by the Fund's
independent auditor to the Fund's investment adviser or any adviser
affiliate that provides on-going services to the Fund, which services
were not pre-approved by the Committee, are compatible with
maintaining the auditors' independence.
AGGREGATE NON-AUDIT FEES
For the fiscal years ended September 30, 2007 and September 30, 2006, the
aggregate non-audit fees billed by Ernst & Young of $6,650 and $14,650,
respectively, included non-audit services rendered on behalf of the Fund of
$6,650 and $6,650, respectively, and non-audit services rendered on behalf of
the Fund'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 Fund
of $0 and $8,000, respectively.
The Audit Committee was not required to consider whether the provision of
non-audit services that were rendered to the Fund'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 Fund that were not pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining Ernst & Young's independence.
10
EXECUTIVE OFFICERS
Officers of the Fund are appointed by the directors and serve at the
pleasure of the board. None of the Fund's officers currently receives any
compensation from the Fund. The executive officers of the Fund are:
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS;
POSITION(S) HELD LENGTH OF NUMBER OF PORTFOLIOS IN FUND COMPLEX
NAME, ADDRESS, AND AGE WITH THE FUND TIME SERVED FOR WHICH PERSON SERVES AS OFFICER
---------------------- ------------- ----------- ----------------------------------
Joseph J. Allessie*; 42 Vice President Since 2005 Mr. Allessie is an executive director
and Assistant (since 2007) (prior to which he was a director)
Secretary and deputy general counsel (since 2005) at
UBS Global Asset Management (US) Inc.
and UBS Global AM (collectively, "UBS
Global AM--Americas region"). Prior to
joining UBS Global AM--Americas region,
he was senior vice president and general
counsel of Kenmar Advisory Corp. (from
2004 to 2005). Prior to that, Mr. Allessie was
general counsel and secretary of GAM
USA Inc., GAM Investments, GAM Services,
GAM Funds, Inc. and the GAM Avalon
Funds (from 1999 to 2004). Mr. Allessie is a
vice president and assistant secretary of 21
investment companies (consisting of 104
portfolios) for which UBS Global AM or
one of its affiliates serves as investment
advisor, sub-advisor or manager.
Thomas Disbrow*; 41 Vice President, Since 2000 Mr. Disbrow is an executive director (since
Treasurer, and (Vice 2007) (prior to which he was a director) and
Principal President) head of US Mutual Fund Treasury
Accounting and Administration department (since 2006)
Officer since 2006 of UBS Global AM--Americas region.
(Treasurer Mr. Disbrow is vice president, treasurer
and Principal and principal accounting officer of 21
Accounting investment companies (consisting of 104
Officer) portfolios) for which UBS Global AM or
one of its affiliates serves as investment
advisor, sub-advisor or manager.
11
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS;
POSITION(S) HELD LENGTH OF NUMBER OF PORTFOLIOS IN FUND COMPLEX
NAME, ADDRESS, AND AGE WITH THE FUND TIME SERVED FOR WHICH PERSON SERVES AS OFFICER
---------------------- ------------- ----------- -----------------------------------
Michael J. Flook*; 42 Vice President Since 2006 Mr. Flook is an associate director and a
and Assistant senior manager of the US Mutual Fund
Treasurer Treasury Administration department of
UBS Global AM--Americas region (since
2006). Prior to joining UBS Global AM--
Americas region, he was a senior manager
with The Reserve (asset management firm)
from May 2005 to May 2006. Prior to that
he was a senior manager with PFPC
Worldwide since October 2000. Mr. Flook
is a vice president and assistant treasurer of
21 investment companies (consisting of 104
portfolios) for which UBS Global AM or
one of its affiliates serve as investment
advisor, sub-advisor or manager.
Mark F. Kemper**; 49 Vice President Since 1999 Mr. Kemper is general counsel of UBS
and Secretary and 2004, Global AM--Americas region (since 2004).
respectively Mr. Kemper is also a managing director of
UBS Global AM--Americas region (since
2006). He was deputy general counsel of
UBS Global AM from July 2001 to July 2004.
He has been secretary of UBS Global AM--
Americas since 1999 and assistant secretary
of UBS Global Asset Management Trust
Company since 1993. Mr. Kemper is
secretary of UBS Global AM--Americas
region (since 2004). Mr. Kemper is vice
president and secretary of 21 investment
companies (consisting of 104 portfolios) for
which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or
manager.
12
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS;
POSITION(S) HELD LENGTH OF NUMBER OF PORTFOLIOS IN FUND COMPLEX
NAME, ADDRESS, AND AGE WITH THE FUND TIME SERVED FOR WHICH PERSON SERVES AS OFFICER
---------------------- ------------- ----------- -----------------------------------
Joanne M. Kilkeary*; 39 Vice President Since 2006 Ms. Kilkeary is an associate director (since
and Assistant 2000) and a senior manager (since 2004)
Treasurer of the US Mutual Fund Treasury
Administration department of UBS Global
AM--Americas region. Ms. Kilkeary is a
vice president and assistant treasurer of 21
investment companies (consisting of 104
portfolios) for which UBS Global AM or
one of its affiliates serves as investment
advisor, sub-advisor or manager.
Tammie Lee*; 36 Vice President Since 2005 Ms. Lee is a director and associate general
and Assistant counsel of UBS Global AM--Americas
Secretary region (since 2005). Prior to joining UBS
Global AM--Americas region, she was vice
president and counsel at Deutsche Asset
Management/Scudder Investments from
2003 to 2005. Prior to that, she was assistant
vice president and counsel at Deutsche
Asset Management/Scudder Investments
from 2000 to 2003. Ms. Lee is a vice
president and assistant secretary of 21
investment companies (consisting of 104
portfolios) for which UBS Global AM or
one of its affiliates serves as investment
advisor, sub-advisor or manager.
Joseph McGill*; 45 Vice President Since 2004 Mr. McGill is a managing director (since
and Chief 2006) and chief compliance officer (since
Compliance 2003) at UBS Global AM--Americas
Officer region. Prior to joining UBS Global AM--
Americas region, he was assistant general
counsel at J.P. Morgan Investment
Management (from 1999 to 2003).
Mr. McGill is a vice president and chief
compliance officer of 21 investment
companies (consisting of 104 portfolios)
for which UBS Global AM or one of its
affiliates serves as investment advisor,
sub-advisor or manager.
13
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS;
POSITION(S) HELD LENGTH OF NUMBER OF PORTFOLIOS IN FUND COMPLEX
NAME, ADDRESS, AND AGE WITH THE FUND TIME SERVED FOR WHICH PERSON SERVES AS OFFICER
---------------------- ------------- ----------- -----------------------------------
Nancy Osborn*; 41 Vice President Since 2007 Ms. Osborn is an associate director and a
and Assistant senior manager of the US Mutual Fund
Treasurer Treasury Administration department of
UBS Global AM--Americas region (since
2006). Prior to joining UBS Global AM--
Americas region, she was an Assistant Vice
President with Brown Brothers Harriman
since April 1996. Ms. Osborn is a vice
president and assistant treasurer of 21
investment companies (consisting of 104
portfolios) for which UBS Global AM or one
of its affiliates serves as investment advisor,
sub-advisor or manager.
Eric Sanders*; 42 Vice President Since 2005 Mr. Sanders is a director and associate
and Assistant general counsel of UBS Global AM--
Secretary Americas region (since 2005). From 1996
until June 2005, he held various positions at
Fred Alger & Company, Incorporated, the
most recent being assistant vice president
and associate general counsel. Mr. Sanders
is a vice president and assistant secretary of
21 investment companies (consisting of 104
portfolios) for which UBS Global AM or one
of its affiliates serves as investment advisor,
sub-advisor or manager.
Andrew Shoup*; 51 Vice President Since 2006 Mr. Shoup is a managing director and
and Chief senior member of the Global Treasury
Operating Administration department of UBS Global
Officer AM--Americas region (since July 2006).
Prior to joining UBS Global AM--Americas
region, he was Chief Administrative Officer
for the Legg Mason Partner Funds (formerly
Smith Barney, Salomon Brothers, and
CitiFunds mutual funds) from November 2003
to July 2006. Prior to that, he held various
positions with Citigroup Asset Management
and related companies with their domestic
and offshore mutual funds since 1993.
Additionally, he has worked for another
mutual fund complex as well as spending
eleven years in public accounting. Mr. Shoup
is a vice president and chief operating officer
of 21 investment companies (consisting of 104
portfolios) for which UBS Global AM or one
of its affiliates serves as investment advisor,
sub-advisor or manager.
14
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS;
POSITION(S) HELD LENGTH OF NUMBER OF PORTFOLIOS IN FUND COMPLEX
NAME, ADDRESS, AND AGE WITH THE FUND TIME SERVED FOR WHICH PERSON SERVES AS OFFICER
---------------------- ------------- ----------- -----------------------------------
Kai R. Sotorp**; 48 President Since 2006 Mr. Sotorp is the head of the Americas for
UBS Global Asset Management (since
2004); a member of the UBS Group
Managing Board (since 2003) and a member
of the UBS Global Asset Management
Executive Committee (since 2001). Prior to
his current role, Mr. Sotorp was Head of UBS
Global Asset Management--Asia Pacific
(2002-2004), covering Australia, Japan,
HongKong, Singapore and Taiwan; head of
UBS Global Asset Management (Japan) Ltd.
(2001-2004); representative director and
president of UBS Global Asset Management
(Japan) Ltd. (2000-2004); and a member of
the board of Mitsubishi Corp.--UBS Realty
Inc. (2000-2004). Mr. Sotorp is President of
21 investment companies (consisting of 104
portfolios) for which UBS Global AM or one
of its affiliates serves as investment advisor,
sub-advisor or manager.
Keith Weller*; 46 Vice President Since 2004 Mr. Weller is an executive director and
and Assistant senior associate general counsel of UBS
Secretary Global AM--Americas region (since 2005)
and has been an attorney with affiliated
entities since 1995. Mr. Weller is a vice
president and assistant secretary of 21
investment companies (consisting of 104
portfolios) for which UBS Global AM or one
of its affiliates serves as investment advisor,
sub-advisor or manager.
_______________
* This person's business address is 51 West 52nd Street, New York, NY
10019-6114.
** This person's business address is One North Wacker Drive, Chicago, IL
60606.
15
BENEFICIAL OWNERSHIP OF SHARES
As of October 12, 2007, the following person was known by the Registrant to
be the beneficial owner of more than 5% of the Fund's common stock:
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF FUND
---------------- -------------------- ---------------
Doliver Capital Advisors, Inc.* 1,005,600 shares of common 11.5%
6363 Woodway, Suite 963 stock of the Fund
Houston, TX 77057
_______________
* Based on amended Schedule 13G filed with the SEC by Doliver Capital
Advisors, Inc. with respect to the Fund on April 10, 2007 (the "Filing").
The Filing reported that Doliver Capital Advisors, Inc. had shared
dispositive power, but no voting power.
Other than as set forth above, as of October 12, 2007, Management of UBS
Global AM did not know of any other person who owned beneficially 5% or more of
the common stock of the Fund.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Fund is not aware of any outstanding report required to be filed
pursuant to Section 16(a) of the Securities Exchange Act of 1934 by any Board
member or officer.
SHAREHOLDER PROPOSALS
The Fund anticipates mailing this proxy statement on or about November 16,
2007. In addition, the Fund anticipates that its next annual meeting of
shareholders will be held on or around the same date next year. Any shareholder
who wishes to submit proposals for inclusion in the Fund's proxy statement and
proxy card to be considered at the Fund's 2008 annual meeting of shareholders
should send such proposals to the Secretary of the Fund at UBS Global Asset
Management (Americas) Inc., One North Wacker Drive, Chicago, Illinois 60606. In
order for such proposals to be included in the Fund's proxy statement and proxy
card relating to the 2008 annual meeting of shareholders, shareholder proposals
must be received by the Fund no later than July 19, 2008 and must satisfy other
requirements of the federal securities laws. Submission of a proposal by a
shareholder does not guarantee that the proposal will be included in the proxy
statement. A shareholder who wishes to make a proposal at the Fund's 2008 annual
shareholders' meeting without including the proposal in the Fund's proxy
statement and proxy card must notify the Fund of such proposal by directing such
notice to the Secretary of the Fund at the address set forth above by no later
than October 2, 2008. If a shareholder fails to give notice to the Fund by this
date, then the persons named as proxies in the proxies solicited by the Board
for the 2008 annual meeting of shareholders may exercise discretionary voting
power with respect to any such proposal.
16
OTHER BUSINESS
Management knows of no business to be presented at the meeting other than
the matters set forth in this proxy statement, but should any other matter
requiring a vote of shareholders arise, the proxies will vote thereon according
to their best judgment in the interest of the Fund.
By order of the Board of Directors,
MARK F. KEMPER
SECRETARY
November 16, 2007
--------------------------------------------------------------------
IT IS IMPORTANT THAT YOU EXECUTE AND RETURN YOUR PROXY PROMPTLY.
--------------------------------------------------------------------
17
-----------------
FORT
DEARBORN INCOME
SECURITIES, INC.
-----------------
---------------------------------
FORT
DEARBORN INCOME
SECURITIES, INC.
---------------------------------
----------------
PROXY NOTICE OF
STATEMENT ANNUAL MEETING
TO BE HELD ON
DECEMBER 7, 2007
AND
PROXY STATEMENT
----------------
FORT DEARBORN INCOME
SECURITIES, INC.
Using a BLACK INK pen, mark your votes with an X as shown in |X|
this example. Please do not write outside the designated areas.
====================================================================================================================================
ANNUAL MEETING PROXY CARD
====================================================================================================================================
\/ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.\/
------------------------------------------------------------------------------------------------------------------------------------
|A| PROPOSALS -- THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
1. Election of Directors: FOR WITHHOLD FOR WITHHOLD FOR WITHHOLD +
01 - A. Cepeda |_| |_| 02 - F.K. Reilly |_| |_| 03 - E.M. Roob |_| |_|
04 - J.M. Thomas |_| |_|
FOR AGAINST ABSTAIN
2. In their discretion, the proxies are authorized to vote upon
other matters as may properly come before the Meeting or |_| |_| |_|
any adjournment thereof.
|B| NON-VOTING ITEMS
CHANGE OF ADDRESS -- Please print your new address below. COMMENTS -- Please print your comments below. MEETING ATTENDANCE |_|
---------------------------------------------------------- ----------------------------------------------- Mark the box to the
right if you plan to
attend the Annual
---------------------------------------------------------- ----------------------------------------------- Meeting.
|C| AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
(PLEASE DATE AND SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.)
Date (mm/dd/yyyy) -- Please print Signature 1 -- Please keep signature within Signature 2 -- Please keep signature within
date below. the box. the box.
---------------------------------------- ------------------------------------------- -------------------------------------------
/ /
---------------------------------------- ------------------------------------------- -------------------------------------------
4 1 D V +
00SDIB
\/ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION \/
IN THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROXY -- FORT DEARBORN INCOME SECURITIES, INC.
--------------------------------------------------------------------------------
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS -- DECEMBER 7, 2007
The undersigned, having received the Notice of the 2007 Annual Meeting and Proxy
Statement, appoints Joseph J. Allessie and Tammie Lee and each or any of them as
proxies, with full power of substitution and revocation, to represent the
undersigned and to vote all shares (including those owned beneficially by the
undersigned through the Automatic Dividend Reinvestment Plan) which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of Fort
Dearborn Income Securities, Inc. to be held on December 7, 2007, 1:00 P.M.,
Central Time, at the offices of UBS Global Asset Management, One N. Wacker
Drive, 38th floor, Chicago, Illinois, 60606 and any adjournments thereof.
You are encouraged to specify your choices by marking the appropriate boxes ON
THE REVERSE SIDE. If you do not mark any boxes, your proxy will be voted in
accordance with the Board of Directors' recommendations. The Proxies cannot vote
your shares unless you sign and return the card.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS.
(Continued and to be dated and signed on the reverse side.)