UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 Section 240.14a-12
FORT DEARBORN INCOME SECURITIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(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:
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(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 and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED
IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
FORT DEARBORN INCOME SECURITIES, INC.
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NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
December 6, 2005
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TO THE SHAREHOLDERS:
The annual meeting of shareholders of Fort Dearborn Income Securities, Inc.
(the "Fund") will be held on December 6, 2005 at 3:00 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 2006, 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 November 7, 2005. 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 15, 2005
One North Wacker Drive
Chicago, Illinois 60606
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 ALL NOMINEES" TO ELECT THE DIRECTORS 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
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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
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PROXY STATEMENT
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Annual Meeting of Shareholders to be Held on December 6, 2005
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 6, 2005, at 3:00 p.m., Central time, 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 15, 2005.
A majority of the shares outstanding and entitled to vote on November 7,
2005, 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 ALL NOMINEES to elect 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, November 7, 2005, 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
1
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,
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.
You may obtain, without charge, a copy of the Fund's annual report and most
recent semi-annual report succeeding the 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.
2
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 2004 Annual Meeting of Shareholders. Unless you give contrary
instructions on the enclosed proxy card, your shares will be voted FOR ALL
NOMINEES to elect the 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
executive officers beneficially owned any shares of the Fund's common stock on
November 7, 2005.
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.
Shares
Number of Beneficially
Portfolios in Owned
Position(s) Length Fund Complex Directly or
Held with of Time Principal Occupation(s) Overseen Other Directorships Indirectly at
Name, Age and Address Fund Served During Past 5 Years by Nominee Held by Nominee November 7, 2005
--------------------- ---- ------ ------------------- ---------- --------------- ----------------
INDEPENDENT DIRECTORS:
Adela Cepeda; 47 Director Since Ms. Cepeda is founder Ms. Cepeda is a Ms. Cepeda is a 1,000
A.C. Advisory, Inc. 2000 and president of A.C. director or director of Lincoln
161 No. Clark Street, Advisory, Inc. (since trustee of four National Income
Suite 4975 1995). investment Fund, Inc.; Lincoln
Chicago, IL 60601 companies National
(consisting of 53 Convertible
portfolios) for Securities Fund
which UBS Global (both since 1992)
AM or one of its and MGI Funds
affiliates serves (7 portfolios)
as investment (since 2005). She
advisor, is also a director
sub-advisor or of Amalgamated Bank
manager. of Chicago (since
2003) and Wyndham
International Inc.
(since 2004).
Frank K. Reilly; 69 Chairman Since Mr. Reilly is a Mr. Reilly is a Mr. Reilly is a 6,506
Mendoza College of and 1993 Professor at the director or Director of
Business Director University of Notre trustee of four Discover Bank;
University of Notre Dame since 1982. investment Morgan Stanley
Dame companies Trust and FSB.
Notre Dame, IN (consisting of 53
46556-5649 portfolios), for
which UBS Global
AM or one of its
affiliates serves
as investment
advisor,
sub-advisor or
manager.
3
Shares
Number of Beneficially
Portfolios in Owned
Position(s) Length Fund Complex Directly or
Held with of Time Principal Occupation(s) Overseen Other Directorships Indirectly at
Name, Age and Address Fund Served During Past 5 Years by Nominee Held by Nominee November 7, 2005
--------------------- ---- ------ ------------------- ---------- --------------- ----------------
Edward M. Roob; 71 Director Since Mr. Roob is retired Mr. Roob is a Mr. Roob is a 9,000
841 Woodbine Lane 1993 (since 1993). Mr. Roob director or Trustee of the AHA
Northbrook, IL 60002 was a Committee Member trustee of four Investment Funds
of the Chicago Stock investment (6 portfolios).
Exchange from companies
1993-1999. (consisting of 53
portfolios), for
which UBS Global
AM or one of its
affiliates serves
as investment
advisor,
sub-advisor or
manager.
J. Mikesell Thomas; 54 Director Since Mr. Thomas is President Mr. Thomas is a Mr. Thomas is a None
Federal Home Loan Bank 2002 and CEO of Federal Home director or director and
of Chicago Loan Bank of Chicago trustee of four chairman of the
111 East Wacker Drive (since 2004). investment Finance Committee
Chicago, Mr. Thomas was an companies for Evanston
Illinois 60601 independent financial (consisting of 53 Northwestern
advisor (2001-2004). He portfolios) for Healthcare.
was a managing director which UBS Global
of Lazard Freres & Co. AM or one of its
(1995 to 2001). affiliates serves
as investment
advisor,
sub-advisor or
manager.
Information About Nominee Ownership of Fund Shares
Aggregate Dollar Range of Equity Securities in All
Dollar Range Registered Investment Companies Overseen by
of Equity Nominee for Which UBS Global AM or an
Securities Affiliate Serves as Investment Advisor,
Nominee in Fund+ 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
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+ Information regarding ownership of shares of the Fund is as of
November 7, 2005; 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, 2004.
As of December 31, 2004, 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 of the Fund met five times during the fiscal year
ended September 30, 2005. Each director attended 75% or more of the board
meetings during the last fiscal year.
4
The Fund's directors are not required to attend the Fund's annual meetings.
Three directors attended the annual meeting of shareholders in 2004.
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) overseeing the scope of the Fund's audit; (ii) overseeing the Fund's
accounting and financial reporting policies, practices and internal controls;
and (iii) approving, and recommending to the board for ratification of, the
selection of the Fund's independent auditors. A copy of the Audit Committee
Charter was previously filed with the Fund's 2004 proxy statement. 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, 2005. 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 board has determined that
Mr. Thomas qualifies as an "audit committee financial expert," as defined by
Securities and Exchange Commission regulations. The Audit Committee met four
times during the fiscal year ended September 30, 2005, and each member attended
75% or more of those meetings.
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 once
during the fiscal year ended September 30, 2005.
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
5
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 AM, 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. 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 AM, One North Wacker Drive, Chicago,
Illinois 60606. The chairperson of the Board of Directors will relay shareholder
communications to the other board members.
Each director who has attained the age of seventy-two (72) years will be
subject to retirement on the last day of the month in which he or she attains
such age.
Each Independent Director receives, in the aggregate from the UBS Global AM
funds, an annual retainer of $30,000 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 Committee member. The foregoing fees will be allocated
among all such funds as follows: (i) one-half of the expense will be allocated
pro rata based on the funds' relative net assets at the end of the calendar
quarter preceding the date of payment and (ii) one-half of the expense will be
allocated equally according to the number of such funds (i.e., expenses divided
by number of funds). Each Independent Director will receive $300 from the Fund
for each regular board meeting (and each in-person special meeting) actually
attended. 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. Board members are reimbursed for expenses incurred in
attending meetings.
6
Compensation Table+
Total
Compensation
Aggregate From the Fund
Name of Compensation and the
Person, Position from the Fund* Fund Complex**
---------------- -------------- --------------
Adela Cepeda, Director.................. $5,160 $63,299
Frank K. Reilly, Director............... $4,387 $58,863
Edward M. Roob, Director................ $4,387 $58,609
J. Mikesell Thomas, Director............ $5,360 $57,194
---------
+ Only Independent Directors are compensated by the funds for which UBS
Global AM or an affiliate serves as investment advisor, sub-advisor or
manager.
* Represents fees paid to each director for service on the board during
the fiscal year ended September 30, 2005.
** Represents fees paid for services during the fiscal year ended
September 30, 2005 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. No fund within the UBS fund complex has
a bonus, pension, profit sharing or retirement plan.
INFORMATION CONCERNING INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Fund's financial statements for the fiscal year ended September 30,
2005, 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. 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, 2006. 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, 2005 and September 30, 2004, the
aggregate Ernst & Young audit fees for professional services rendered to the
Fund were approximately $33,000 and $28,000, 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.
7
Audit-Related Fees:
In each of the fiscal years ended September 30, 2005 and September 30, 2004,
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 $0, respectively.
Fees included in the audit-related fees category are those associated with
the reading and providing comments on the 2005 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, 2005 and September 30, 2004,
the aggregate tax fees billed by Ernst & Young for professional services
rendered to the Fund were approximately $5,000 and $4,400, 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.
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, 2005 and September 30, 2004,
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.
8
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 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, 2005 and September 30, 2004, the
aggregate non-audit fees billed by Ernst & Young of $61,000 and $160,400,
respectively, included non-audit services rendered on behalf of the Fund of
$7,500 and $4,400, 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
9
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 $53,500 and $156,000,
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.
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:
Length of Principal Occupation(s) During Past 5 Years;
Position(s) Held Time Number of Portfolios in Fund Complex
Name, Address, and Age with the Fund Served for which Person Serves as Officer
---------------------- ------------- ------ ----------------------------------
Joseph J. Allessie*; 40 Vice President and Assistant Since 2005 Mr. Allessie is a director and deputy
Secretary general counsel at UBS Global AM (US) Inc.
and UBS Global AM (collectively, "UBS Global
AM-Americas region") (since 2005). Prior to
joining UBS Global AM-Americas region, he
was senior vice president and general
counsel of Kenmar Advisory Corp. (from
2004-2005). Prior to that Mr. Allessie was
general counsel and secretary of Global
Asset Management (USA) Inc., GAM
Investments, GAM Services, GAM Funds, Inc.
and the GAM Avalon Funds (from 1999 to
2004). Such entities are affiliates of UBS
Global AM-Americas region. Prior to joining
GAM, Mr. Allessie was Regulatory Officer to
the State of New Jersey, Department of Law
and Public Safety, Bureau of Securities
(from 1993 to 1999). Mr. Allessie is a vice
president and assistant secretary of 20
investment companies (consisting of 86
portfolios) for which UBS Global AM or one
of its affiliates serves as investment
advisor, sub-advisor or manager.
10
Length of Principal Occupation(s) During Past 5 Years;
Position(s) Held Time Number of Portfolios in Fund Complex
Name, Address, and Age with the Fund Served for which Person Serves as Officer
---------------------- ------------- ------ ----------------------------------
W. Douglas Beck*; 38 President Since 2005 Mr. Beck is an executive director and head
of mutual fund product management of UBS
Global AM-Americas region (since 2002). From
March 1998 to November 2002, he held various
positions at Merrill Lynch, the most recent
being first vice president and co-manager of
the managed solutions group. Mr. Beck is
president of 20 investment companies
(consisting of 86 portfolios) for which UBS
Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager
and was vice president of such investment
companies from 2003 to 2005.
Rose Ann Bubloski*; 37 Vice President and Assistant Since 2004 Ms. Bubloski is an associate director and a
Treasurer senior manager of the mutual fund finance
department of UBS Global AM-Americas region.
Ms. Bubloski is vice president and assistant
treasurer of four investment companies
(consisting of 53 portfolios) for which UBS
Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.
Thomas Disbrow*; 39 Vice President and Assistant Since 2000 Mr. Disbrow is a director, head of retail
Treasurer and 2004, mutual fund operations, and a co-head of the
respectively mutual fund finance department of UBS Global
AM-Americas region. Mr. Disbrow is vice
president and treasurer of 16 investment
companies (consisting of 33 portfolios) and
vice president and assistant treasurer of
four investment companies (consisting of 53
portfolios) for which UBS Global AM or one
of its affiliates serves as investment
advisor, sub-advisor or manager.
Craig G. Ellinger**; 35 Vice President Since 2001 Mr. Ellinger is a portfolio manager in the
Fixed Income Group at UBS Global AM-
Americas region (since 2000). Mr. Ellinger
is also Global Head of Credit Research for
UBS Global AM-Americas region since May
2005. He previously served in a similar
position at PPM America, Inc. (1997 to
2000). Mr. Ellinger is vice president of one
investment company (consisting of one
portfolio) for which UBS Global AM serves as
investment advisor.
11
Length of Principal Occupation(s) During Past 5 Years;
Position(s) Held Time Number of Portfolios in Fund Complex
Name, Address, and Age with the Fund Served for which Person Serves as Officer
---------------------- ------------- ------ ----------------------------------
Mark F. Kemper**; 47 Vice President and Secretary Since 1999 Mr. Kemper is general counsel of UBS Global
and 2004, Asset Management-Americas region (since July
respectively 2004). Mr. Kemper is also an executive
director of UBS Global AM-Americas region.
He was deputy general counsel of UBS Global
AM from July 2001 to July 2004. He has been
secretary of UBS Global AM since 1999 and
assistant secretary of UBS Global Asset
Management Trust Company since 1993.
Mr. Kemper is secretary of UBS Global Asset
Management (US) Inc. (since 2004).
Mr. Kemper is vice president and secretary
of 20 investment companies (consisting of 86
portfolios) for which UBS Global AM or one
of its affiliates serves as investment
advisor, sub-advisor or manager.
Joseph T. Malone*; 38 Vice President, Treasurer and Since 2004 Mr. Malone is a director and a co-head of
Principal Accounting Officer the mutual fund finance department of UBS
Global AM-Americas region. From August 2000
through June 2001, he was controller at AEA
Investors Inc. From March 1998 to August
2000, Mr. Malone was a manager within the
investment management services practice of
PricewaterhouseCoopers LLC. Mr. Malone is
vice president and assistant treasurer of 16
investment companies (consisting of 33
portfolios) and vice president, treasurer
and principal accounting officer of four
investment companies (consisting of 53
portfolios) for which UBS Global AM or one
of its affiliates serves as investment
advisor, sub-advisor or manager, and was
assistant treasurer of such investment
companies until 2004.
12
Length of Principal Occupation(s) During Past 5 Years;
Position(s) Held Time Number of Portfolios in Fund Complex
Name, Address, and Age with the Fund Served for which Person Serves as Officer
---------------------- ------------- ------ ----------------------------------
Joseph McGill*; 43 Vice President and Chief Compliance Since 2004 Mr. McGill is an executive director and
Officer chief compliance officer at UBS Global AM-
Americas region. Prior to joining UBS Global
AM-Americas region, he was Assistant General
Counsel at J.P. Morgan Investment Management
(from 1999-2003). Mr. McGill is a vice
president and chief compliance officer for
20 investment companies (consisting of 86
portfolios) for which UBS Global AM or one
of its affiliates serves as investment
advisor, sub-advisor or manager.
Eric Sanders*; 40 Vice President and Assistant Since 2005 Mr. Sanders is a director and associate
Secretary general counsel of UBS Global AM-Americas
region (since July 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 20
investment companies (consisting of 86
portfolios) for which UBS Global AM or one
of its affiliates serves as investment
advisor, sub-advisor or manager.
Keith Weller*; 44 Vice President and Assistant Since 2004 Mr. Weller is an executive director and
Secretary senior associate general counsel of UBS
Global AM-Americas region. Mr. Weller is a
vice president and assistant secretary of 20
investment companies (consisting of 86
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.
13
BENEFICIAL OWNERSHIP OF SHARES
As of November 7, 2005, Management did not know of any person who owned
beneficially 5% or more of the common stock of the Fund.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit proposals to be considered at the
Fund's 2006 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 to be considered at that
meeting, shareholder proposals must be received by the Fund no later than July
15, 2006 and must satisfy other requirements of the federal securities laws.
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 15, 2005
It is important that you execute and return your proxy
promptly.
14
-------------------
FORT DEARBORN
INCOME
SECURITIES, INC.
-------------------
-------------------
FORT DEARBORN
INCOME
SECURITIES, INC.
-------------------
-------------------
Notice of
Annual Meeting
to be held on
December 6, 2005
and
Proxy Statement
-------------------
DETACH HERE ZFDI32
PROXY
FORT DEARBORN INCOME SECURITIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS - DECEMBER 6, 2005
The undersigned, having received the Notice of the 2005 Annual Meeting and Proxy
Statement, appoints Joseph J. Allessie and Keith A. Weller 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 6, 2005, 3:00 P.M.,
Central Time, at UBS Global Asset Management, One N. Wacker Drive, 38th floor,
Chicago, Illinois, 60606 and any adjournments thereof.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------------------------ -------------------------------------------------
------------------------------------------ -------------------------------------------------
------------------------------------------ -------------------------------------------------
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.
(CONTINUED AND TO BE DATED AND SIGNED ON THE REVERSE SIDE.)
FORT DEARBORN
INCOME SECURITIES, INC.
C/O COMPUTERSHARE
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL ZFDI31
/X/ PLEASE MARK 6210
VOTES AS IN
THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES IN THE
ELECTION OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES IN THE ELECTION OF
DIRECTORS.
1. Election of Directors. 2. In their discretion, the proxies are authorized to vote upon such
NOMINEES: (01) A. Cepeda, (02) F.K. Reilly, other matters as may properly come before the Meeting or any adjournment
(03) E.M. Roob and (04) J.M. Thomas thereof.
FOR / / / / WITHHOLD
ALL FROM ALL
NOMINEES NOMINEES
/ / ________________________________________
FOR ALL NOMINEES EXCEPT AS WRITTEN ABOVE
If you plan to attend the Annual Meeting, please check this / /
box.
Mark box at right if an address change or comment has been / /
noted on the reverse side of this card.
(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.)
Signature: ___________________ Date: ___________ Signature: ___________________ Date: _________