Edgar Filing: FORT DEARBORN INCOME SECURITIES INC

FORT DEARBORN INCOME SECURITIES, INC.

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NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 8, 2006
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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 8, 2006 at 2:30 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 2007, 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 13, 2006. 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, 2006
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.

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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

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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 8, 2006

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 8, 2006, at 2:30 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 16, 2006.

A majority of the shares outstanding and entitled to vote on October 13,
2006 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 13, 2006, 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, 2006. 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 2005 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
executive officers beneficially owned any shares of the Fund's common stock on
October 13, 2006.

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.

SHARE
BENEFICIALLY
OWNED
DIRECTLY OR
POSITION(s) LENGTH OF NUMBER OF PORTFOLIOS OTHER INDIRECTLY AT
HELD WITH TIME PRINCIPAL OCCUPATION(s) IN FUND COMPLEX DIRECTORSHIPS OCTOBER 13,
NAME, ADDRESS, AND AGE FUND SERVED DURING PAST 5 YEARS OVERSEEN BY NOMINEE HELD BY NOMINEE 2006
----------------------- ----------- ----------- ----------------------- --------------------- ------------------ -------------

INDEPENDENT DIRECTORS:
Adela Cepeda; 48 Director Since 2000 Ms. Cepeda is Ms. Cepeda is a Ms. Cepeda is 1,000
A.C. Advisory, Inc. founder and director or trustee a director of
161 No. Clark Street, president of of four investment MGI Funds
Suite 4975 Chicago, A.C. Advisory, companies (consisting (8 portfolios)
IL 60601 Inc. (since of 56 portfolios) for (since 2005). She
1995). which UBS Global is also a director
AM or one of its of Amalgamated
affiliates serves as Bank of Chicago
investment advisor, (since 2003).
sub-advisor or
manager.

Frank K. Reilly; 70 Chairman Since 1993 Mr. Reilly is a Mr. Reilly is a Mr. Reilly is a 6,792
Mendoza College of and Professor at the director or trustee Director of
Business University of Director University of of four investment Discover Bank;
Notre Dame Notre Dame, Notre Dame companies (consisting Morgan Stanley
IN 46556-5649 since 1982. of 56 portfolios), Trust and FSB.
for which UBS Global
AM or one of its
affiliates serves as
investment advisor,
sub-advisor or
manager.

Edward M. Roob; 72 Director Since 1993 Mr. Roob is retired Mr. Roob is a None. 9,000
841 Woodbine Lane (since 1993). director or trustee
Northbrook, IL 60002 of four investment
companies (consisting
of 56 portfolios),
for which UBS Global
AM or one of its
affiliates serves as
investment advisor,
sub-advisor or
manager.

J. Mikesell Thomas; 55 Director Since 2002 Mr. Thomas is Mr. Thomas is a Mr. Thomas is a None
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 (consisting Audit Committee
Chicago, Illinois 60601 Chicago (since of 56 portfolios) for for Evanston
2004). Mr. Thomas which UBS Global AM Northwestern
was an independent or one of its Healthcare.
financial advisor affiliates serves as
(2001-2004). He was investment advisor,
a managing director sub-advisor or
of Lazard Freres & manager.
Co. (1995 to 2001).

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+
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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 October 13,
2006; 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, 2005.

As of December 31, 2005, 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 eight times during the
fiscal year ended September 30, 2006. Each director attended 75% or more of the
Board meetings during the last fiscal year.

The Fund's directors are not required to attend the Fund's annual meetings.
Three directors attended the annual meeting of shareholders in 2005.

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 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, 2006. 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
six times during the fiscal year ended September 30, 2006, 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
three times during the fiscal year ended September 30, 2006, and each member
attended 75% or more of those meetings.

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. 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, in the aggregate from the UBS Global AM
family of funds for his or her service to four registered investment companies
and two unregistered investment companies (one with respect to Ms. Cepeda and
Mr. Thomas) managed by UBS Global AM, an annual retainer of $40,000 for serving
as a board member, a $5,000 retainer for serving as an Audit Committee member,
and a $5,000 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, and the Chairman of the Audit Committee, for serving as
Chairman of the Audit Committee, receive, in the aggregate from the UBS Global
AM family of funds for his or her service to four registered investment
companies and two unregistered investment companies (one with respect to Mr.
Thomas) managed by UBS Global AM, an annual retainer of $10,000 and $5,000,
respectively. 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 also will receive from the Fund $300 for each regular Board
meeting (and each in-person special meeting) actually attended. In addition,
each Independent Director will receive $200 and $100 from the Fund,
respectively, for each Audit Committee meeting and Nominating, Compensation and
Governance Committee 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.

COMPENSATION TABLE+

TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM THE FUND
FROM AND THE
NAME OF PERSON, POSITION THE FUND* FUND COMPLEX**
------------------------ --------- --------------

Adela Cepeda, Director ..................................... $7,949 $112,880
Frank K. Reilly, Director and Chairman ..................... 7,813 114,144
Edward M. Roob, Director ................................... 6,819 105,875
J. Mikesell Thomas, Director ............................... 7.949 112,880

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+ 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, 2006.

** Represents fees paid for services during the fiscal year ended September
30, 2006 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,
2006, 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, 2007. 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, 2006 and September 30, 2005, the
aggregate Ernst & Young audit fees for professional services rendered to the
Fund were approximately $33,000 and $30,800, 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, 2006 and September 30, 2005,
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, 2006 and September 30, 2005,
the aggregate tax fees billed by Ernst & Young for professional services
rendered to the Fund were approximately $4,150 and $5,000, 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, 2006 and September 30, 2005,
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 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, 2006 and September 30, 2005, the
aggregate non-audit fees billed by Ernst & Young of $14,650 and $61,000,
respectively, included non-audit services rendered on behalf of the Fund of
$6,650 and $7,500, 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 $8,000 and $53,500, 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:

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*; 41 Vice President Since 2005 Mr. Allessie is a director and deputy general
and Assistant counsel at UBS Global AM (US) Inc. and
Secretary 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 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 20
investment companies (consisting of 91
portfolios) for which UBS Global AM or one
of its affiliates serves as investment
advisor, sub-advisor or manager.

Rose Ann Bubloski*; 38 Vice President Since 2004 Ms. Bubloski is an associate director (since
and Assistant 2004) and a senior manager of the U.S. Mutual
Treasurer Fund Treasury Administration department of
UBS Global AM--Americas region. Ms. Bubloski
is vice president and assistant treasurer of
20 investment companies (consisting of 91
portfolios) for which UBS Global AM or one
of its affiliates serves as investment
advisor, sub-advisor or manager.

Thomas Disbrow*; 40 Vice President, Since 2000 Mr. Disbrow is a director (since 2001), and
Treasurer, and (Vice head of the U.S. Mutual Fund Treasury
Principal President) Administration department of UBS Global
Accounting and AM--Americas region (since 2006).
Officer since 2006 Mr. Disbrow is vice president, treasurer
(Treasurer and principal accounting officer of 20
and Principal investment companies (consisting of 91
Accounting portfolios) for which UBS Global AM or
Officer) one of its affiliates serves as investment
advisor, sub-advisor or manager.

Michael J. Flook*; 41 Vice President Since 2006 Mr. Flook is an associate director and a
and Assistant senior manager of the U.S. 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 20 investment
companies (consisting of 91 portfolios) for
which UBS Global AM or one of its affiliates
serve as investment advisor, sub-advisor or
manager.

Mark F. Kemper**; 48 Vice President Since 1999 Mr. Kemper is general counsel of UBS Global
and Secretary and 2004, Asset Management--Americas region (since
respectively 2004). 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 region 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 20 investment companies
(consisting of 91 portfolios) for which UBS
Global AM or one of its affiliates serves as
investment advisor, sub-advisor or manager.

Joanne M. Kilkeary*; 38 Vice President Since 2006 Ms. Kilkeary is an associate director (since
and Assistant 2000) and a senior manager (since 2004) of
Treasurer the U.S. Mutual Fund Treasury Administration
department of UBS Global AM--Americas
region. Ms. Kilkeary is a vice president and
assistant treasurer of 20 investment
companies (consisting of 91 portfolios) for
which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or
manager.

Tammie Lee*; 35 Vice President Since 2005 Ms. Lee is a director and associate general
and Assistant counsel of UBS Global AM--Americas region
Secretary (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 20 investment
companies (consisting of 91 portfolios) for
which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or
manager.

Joseph McGill*; 44 Vice President Since 2004 Mr. McGill is a managing director and chief
and Chief compliance officer at UBS Global AM--
Compliance Americas region (since 2003). Prior to
Officer 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 of 20 investment
companies (consisting of 91 portfolios) for
which UBS Global AM or one of its affiliates
serves as investment advisor, sub-advisor or
manager.

Eric Sanders*; 41 Vice President Since 2005 Mr. Sanders is a director and associate
and Assistant general counsel of UBS Global AM-- Americas
Secretary 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 20
investment companies (consisting of 91
portfolios) for which UBS Global AM or one
of its affiliates serves as investment
advisor, sub-advisor or manager.

Andrew Shoup*; 50 Vice President Since 2006 Mr. Shoup is a managing director and senior
and Chief member of the Global Treasury Administration
Operating department of UBS Global AM--Americas region
Officer (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 20 investment
companies (consisting of 91 portfolios) for
which UBS Global AM or one of its affiliates
serves as investment advisor, sub- advisor
or manager.

Kai R. Sotorp**; 47 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) Lts.
(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 20 investment companies (consisting of 91
portfolios) for which UBS Global AM or one
of its affiliates serves as investment
advisor, sub-advisor or manager.

Keith Weller*; 45 Vice President Since 2004 Mr. Weller is an executive director and senior
and Assistant associate general counsel of UBS Global AM--
Secretary Americas region (since 2005) and has been an
attorney with affiliated entities since
1995. Mr. Weller is a vice president and
assistant secretary of 20 investment
companies (consisting of 91 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.

BENEFICIAL OWNERSHIP OF SHARES

As of October 13, 2006, Management did not know of any 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

Any shareholder who wishes to submit proposals to be considered at the
Fund's 2007 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, 2007 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 16, 2006

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IT IS IMPORTANT THAT YOU EXECUTE AND RETURN YOUR PROXY PROMPTLY.
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FORT
DEARBORN INCOME
SECURITIES, INC.
==================

PROXY
STATEMENT

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FORT
DEARBORN INCOME
SECURITIES, INC.
==================

------------------
NOTICE OF
ANNUAL MEETING
TO BE HELD ON
DECEMBER 8, 2006
AND
PROXY STATEMENT
==================

FORT DEARBORN INCOME
SECURITIES, INC.

[ ] Mark this box with an X if you have made
changes to your name or address details above.

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ANNUAL MEETING PROXY CARD
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A ELECTION OF DIRECTORS

1. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS.

For Withhold
01 - A. Cepeda [ ] [ ]

For Withhold
02 - F.K. Reilly [ ] [ ]

For Withhold
03 - E.M. Roob [ ] [ ]

For Withhold
04 - J.M. Thomas [ ] [ ]

2. In their discretion, the proxies are authorized to vote upon Mark this box with an X if you have made comments below. [ ]
other matters as may properly come before the Meeting or any
adjournment thereof. _______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
If you plan to attend the Annual Meeting, [ ]
please check this box.

C AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.

(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 1 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (mm/dd/yyyy)

__________________________________________________ __________________________________________________ _________________

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PROXY - FORT DEARBORN INCOME SECURITIES, INC.
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PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS - DECEMBER 8, 2006

The undersigned, having received the Notice of the 2006 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 8, 2006, 2:30 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.)