SCHEDULE 14A INFORMATION 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-11(c) or Section 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)(4) 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 and 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 To The Shareholders of Fort Dearborn Income Securities, Inc.: The Annual Meeting of Shareholders of Fort Dearborn Income Securities, Inc. (the "Company") will be held on Monday, December 15, 1997, at 2:00 P.M., Chicago time, at Brinson Partners, Inc., 209 South LaSalle Street, ninth floor, Chicago, Illinois 60604, for the following purposes and for the transaction of such other business as may properly come before the meeting: (1) electing five directors; and (2) voting to ratify or reject the selection of independent certified public accountants made by the Board of Directors for the year ending September 30, 1998. The subjects referred to above are discussed in detail in the Proxy Statement attached to this notice. Each shareholder is invited to attend the Annual Meeting of Shareholders in person. Shareholders of record at the close of business on October 27, 1997, have the right to vote at the meeting. WE URGE YOU TO FILL IN, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN ORDER THAT THE MEETING CAN BE HELD AND A MAXIMUM NUMBER OF SHARES MAY BE VOTED. JOSEPH A. ANDERSON SECRETARY Chicago, Illinois November 7, 1997 FORT DEARBORN INCOME SECURITIES, INC. 209 S. LASALLE ST., ELEVENTH FLOOR CHICAGO, ILLINOIS 60604-1295 -------------- PROXY STATEMENT INTRODUCTION This statement, which is being mailed to shareholders on or about November 7, 1997, is furnished in connection with the solicitation of proxies by the Board of Directors of Fort Dearborn Income Securities, Inc. (the "Company") for use at the Annual Meeting of Shareholders (the "Annual Meeting") to be held at Brinson Partners, Inc., 209 South LaSalle Street, ninth floor, Chicago, Illinois 60604, on Monday, December 15, 1997, at 2:00 P.M., Chicago time. Proxies may be solicited by mail, telephone and personal interview. The Company may also request brokers, custodians, nominees and fiduciaries to forward proxy material to the beneficial owners of stock of record. Any proxy given pursuant to such solicitation and received in time for the Annual Meeting will be voted as specified in such proxy. The enclosed proxy is revocable at any time. The proxy may be revoked in writing, by giving a later-dated proxy, or orally at the Annual Meeting. Signing and mailing the proxy will not affect your right to give a later proxy or to attend the meeting and vote your shares in person. The cost of soliciting proxies will be paid by the Company. On October 27, 1997, the date for determination of shareholders entitled to receive notice of and to vote at the Annual Meeting, or any adjournments thereof, there were issued and outstanding 8,793,465 shares of Capital Stock of the Company, each entitled to one vote, constituting all of the Company's then- outstanding securities. For purposes of determining the outcome of the vote on a matter, an instruction to "abstain" from voting on a proposal will be treated as shares present and entitled to vote and will have the same effect as a vote against the proposal. "Broker non-votes" are not counted for the purpose of determining the number of shares present on a voting matter and have no effect on the outcome of the vote. Any adjournment of the meeting would require the affirmative vote of a majority of those present in person or by proxy at the session of the meeting to be adjourned. The proxy solicited hereby confers authority to vote for any such adjournment; however, a proxy voted against or abstained from voting on any proposal herein would not be voted in favor of an adjournment to permit further solicitation of proxies. 1. ELECTION OF DIRECTORS Five directors are to be elected at the Annual Meeting as the entire Board of Directors to hold office until the next annual meeting or until their successors shall have been elected and shall have qualified. If authority is granted on the accompanying proxy to vote in the election of directors, it is the intention of the persons named in the proxy to vote at the Annual Meeting for the election of the nominees named below. If any of the nominees are unavailable to serve as directors, an event which the Board of Directors does not now expect, the persons named in the proxy will vote for such other persons as they, in their discretion, may choose. The affirmative vote of the holders of a majority of the shares represented at the Annual Meeting is required for the election of a director. All of the nominees are presently directors of the Company and all have consented to serve if elected. 1 SHARES BENEFICIALLY OWNED WHEN DIRECTLY OR FIRST INDIRECTLY NAMES AND AGES PRINCIPAL OCCUPATIONS BECAME SEPTEMBER 30, OF NOMINEES AND OTHER DIRECTORSHIPS DIRECTOR 1997 - ------------------------------------ -------------------------------------------------- ----------- --------------- Richard M. Burridge, 68............. Chairman, The Burridge Group since 1996 1972 5,845 (Investment Management); Director of Lincoln National Income Fund, Lincoln National Convertible Bond Fund, Cincinnati Financial Corporation and The Blue Cross of Illinois; Vice Chairman, Alliance Capital Management Corp. prior to March, 1986. Richard S. Peterson, 67............. Formerly Chief Economist, Continental Bank 1995 1,000 (1969-1994); Currently Chairman, Board of Directors, Illinois Council on Economic Education; Past member, Economic Advisory Council, American Bankers Association (1978-1981 and 1990-1993). C. Roderick O'Neil, CFA, 66......... Chairman, O'Neil Associates (formerly Greenspan 1992 3,106 O'Neil Associates), an investment and financial consulting firm; Director, Beckman Instruments, Inc. (Since January, 1994) Director, Ambac Financial Group, Inc. and Ambac Assurance Corporation (Since 1991) and Cadre Institutional Investors Trust (Since 1995); Trustee, Memorial Drive Trust (Since 1974); Member, Fiduciary Committee ASARCO (Since 1991). Frank K. Reilly, CFA, 61............ Bernard J. Hank Professor of Business 1993 1,774 Administration, University of Notre Dame (since 1981); Director, The Brinson Funds (since June 1992); Director, Greenwood Trust Corp. (since 1993); Director, Dean Witter Trust (since 1996); Director, NIBCO (since 1993); Director, Battery Park Fund (since 1996); Vice Chairman of Board of Governors, Association for Investment Management and Research (since 1993); Board of Trustees, Institute of Chartered Financial Analysts (since 1993). Edward M. Roob, 63.................. Senior Vice President, Daiwa Securities America, 1993 6,000 Inc. (1986-1993); Senior Vice President, First National Bank of Chicago (1975-1985); Director, The Brinson Funds; Director, The Brinson Relationship Funds; Trustee, Brinson Trust Company; Member, Board of Governors Chicago Stock Exchange, (1988-1991); Member U.S. Treasury and Federal Agency Advisory Committee, (1972-1985). 2 The Board of Directors has an Audit Committee comprised of all of the directors. The Board of Directors does not have a nominating or compensation committee. During the fiscal year ended September 30, 1997, five meetings of the Board of Directors and one meeting of the Audit Committee were held. All directors attended 100% of the total number of such meetings. Among other things, the Audit Committee makes recommendations concerning the retention of the Company's independent auditors, their fees and duties, including any non-audit related services performed by them; confers with such auditors; reviews the Company's financial reporting activities; and confers with and makes appropriate recommendations to personnel of the Company's investment advisor who perform services of a financial nature for the Company. The Company pays each of its directors (except Mr. Burridge) at the rate of $9,000 annually to serve as directors and $750 for each Board of Directors meeting attended. The Company pays Mr. Burridge at the rate of $13,000 annually to serve as Chairman of the Board of Directors and $750 for each Board of Directors meeting attended. The following table sets forth as to each Director the compensation paid to him in the fiscal year ended September 30, 1997 for service on the Board of the Company and, in the case of Messrs. Reilly and Roob, on the boards of two other investment companies for which the Advisor performed investment advisory services. COMPENSATION TABLE PENSION OR AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL TOTAL COMPENSATION COMPENSATION ACCRUED AS PART OF BENEFITS UPON FROM COMPANY AND NAME OF DIRECTOR FROM COMPANY COMPANY EXPENSES RETIREMENT FUND COMPLEX - -------------------------------------------- -------------- ------------------- --------------------- ------------------ Richard M. Burridge......................... $ 16,750 0 0 $ 16,750 C. Roderick O'Neil.......................... $ 12,750 0 0 $ 12,750 Richard S. Peterson......................... $ 12,750 0 0 $ 12,750 Frank K. Reilly............................. $ 12,750 0 0 $ 40,350 Edward M. Roob.............................. $ 12,750 0 0 $ 40,350 2. SELECTION OF INDEPENDENT AUDITORS The Board of Directors has selected KPMG Peat Marwick LLP as auditors of the Company for the fiscal year ending September 30, 1998. To the best knowledge of the Board of Directors, the firm of KPMG Peat Marwick LLP has no direct or material indirect financial interest in the Company. Under the Investment Company Act of 1940, such selection must be submitted to the shareholders for ratification or rejection at the Annual Meeting. The Board of Directors recommends that such selection be ratified by the shareholders of the Company. The affirmative vote of the holders of a majority of the shares represented at the Annual Meeting is required for ratification. Representatives of KPMG Peat Marwick LLP will attend the Annual Meeting, have an opportunity to make a statement and be available to respond to appropriate questions from shareholders. KPMG Peat Marwick LLP has been the independent auditors for the Company since its organization. INVESTMENT ADVISOR Brinson Partners, Inc. ("Advisor"), 209 South LaSalle St., Chicago, Illinois 60604-1295, is the investment advisor to the Company. The Advisor is a wholly-owned subsidiary of Brinson Holdings, Inc., 209 South LaSalle St., Chicago, Illinois 60604-1295. Swiss Bank Corporation (Basel, Switzerland) owns 100% of the common stock of Brinson Holdings, Inc. 3 OFFICERS The Company does not pay direct compensation to officers for their services to the Company. The Company's officers are as follows: Gary P. Brinson (age 54), who has served as President of the Company (since 1983), is President and Managing Partner of Brinson Partners, Inc. (since 1989), and was President and Chief Executive Officer of First Chicago Investment Advisors (1984-1989), and was a Senior Vice President of The First National Bank of Chicago (1981-1989). Dennis L. Hesse (age 54), who serves as Vice President of the Company (since 1985), is Managing Partner, Fixed Income Group, Brinson Partners, Inc. (since 1989), and was Managing Director, Fixed Income Division, First Chicago Investment Advisors (1985-1989), a Vice President of the First National Bank of Chicago (1985-1989), and was Director of Investments United Airlines, Inc. (1980-1985). Joseph A. Anderson (age 35), who serves as Secretary-Treasurer of the Company is a Partner of Brinson Partners, Inc. (since 1993), was the Assistant Secretary and Assistant Treasurer of Fort Dearborn (1992-1995) and is currently the Vice President of Brinson Trust Company (since February, 1995). Gregory P. Smith (age 37), who serves as Portfolio Manager of the Company (since 1988), is a Portfolio Manager, Fixed Income Group, Brinson Partners, Inc. (since 1989), was a Portfolio Manager, Fixed Income Division, First Chicago Investment Advisors (1987-1989), and was an Assistant Vice President of The First National Bank of Chicago (1988-1989). PRINCIPAL SHAREHOLDERS Generally, under the Securities and Exchange Commission rules, a person is deemed to be the beneficial owner of a security with respect to which such person, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power (which includes power to vote, or direct the voting of, such security) or investment power (which includes power to dispose of, or direct the disposition of, such security). On September 30, 1997, the directors and officers of the Company as a group owned or were deemed to own beneficially, directly or indirectly, a total of 79,509 shares of Capital Stock of the Company (less than 1% of the outstanding shares). SHAREHOLDER PROPOSALS Any shareholder proposal to be presented for action at the Company's 1998 annual meeting of shareholders must be received at the Company's office in Chicago, Illinois not less than 120 days in advance of that date in 1997 which corresponds to the date of this Proxy Statement in order to be considered for inclusion in the proxy materials for that meeting. OTHER MATTERS Shareholders are urged to review the Company's Annual Report which accompanies this Proxy Statement. 4 The Board of Directors does not know of any matters to be presented at the Annual Meeting other than those mentioned in this Proxy Statement. If any other business should come before the meeting, the persons named in the proxy will vote thereon in accordance with their best judgment. Please complete and sign the enclosed proxy and return it in the envelope provided so that the meeting may be held and action taken on the matters described herein with the greatest possible participating shares. JOSEPH A. ANDERSON SECRETARY/TREASURER 5 PROXY FORT DEARBORN INCOME SECURITIES, INC. ---------------- PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS, DECEMBER 15, 1997 The undersigned, having received Notice of Meeting and Proxy Statement dated November 7, 1997, appoints M. Finley Maxson and Iver M. Nelson and each 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 Investment 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 15, 1997, 2:00 P.M., at Brinson Partners, Inc., 209 South LaSalle St., Ninth Floor, Chicago, Illinois, and any adjournments thereof: COMMENTS: (change of address) Election of Directors, Nominees: ------------------------------------- R. M. Burridge, C. R. O'Neill, R. S. Peterson, F. K. Reilly ------------------------------------- E. M. Roob ------------------------------------- ------------------------------------- (If you have written in the above space, please mark the corresponding box on the reverse side of this card.) 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 THIS CARD. SEE REVERSE SIDE /X/ PLEASE MARK YOUR 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 ELECTION OF DIRECTORS AND FOR PROPOSAL 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF DIRECTORS AND FOR PROPOSAL 2. FOR WITHHELD 1. Election of Directors. (see reverse) / / / / For, except vote withheld from the following nominee(s): ______________________________________ FOR AGAINST ABSTAIN 2. Ratification of KPMG Peat Marwick LLP as independent accountants. / / / / / / 3. In their discretion, the proxies are authorized to vote upon such other matters as may properly come before the Meeting or any adjournment thereof. Change of Address/Comments on Reverse Side. / / 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. - -------------------------------------------- 1997 - -------------------------------------------- SIGNATURE(S) DATE