UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-07096

Investment Grade Municipal Income Fund Inc.
(Exact name of registrant as specified in charter)

51 West 52nd Street, New York, New York 10019-6114
(Address of principal executive offices) (Zip code)

Mark F. Kemper, Esq.
UBS Global Asset Management
51 West 52nd Street
New York, NY 10019-6114
(Name and address of agent for service)

Copy to:
Jack W. Murphy, Esq.
Dechert LLP
1775 I Street, N.W.
Washington, DC 20006-2401

Registrant’s telephone number, including area code: 212-882 5000

Date of fiscal year end: September 30

Date of reporting period: June 30, 2006


Item 1. Schedule of Investments

Investment Grade Municipal Income Fund Inc.
SCHEDULE OF INVESTMENTS — June 30, 2006 (unaudited)

Principal                              
Amount       Moody’s   S&P   Maturity   Interest        
(000) ($)       Rating   Rating   Dates   Rates (%)     Value ($)  
Long-Term Municipal Bonds—163.83%
Alaska—2.01%
  1,000    

Alaska International Airports Revenues Refunding-Series A (MBIA Insured)††

   Aaa   AAA   10/01/19   5.000       1,028,210  
  1,000    

Alaska International Airports Revenues Refunding-Series A (MBIA Insured)††

   Aaa   AAA   10/01/20   5.000       1,024,110  
  1,000    

Alaska International Airports Revenues Refunding-Series A (MBIA Insured)††

   Aaa   AAA   10/01/21   5.000       1,021,660  
                                3,073,980  
Arizona—1.64%
  2,380    

Arizona State Transportation Board Highway Revenue-Series B

   Aa1   AAA   07/01/18   5.250       2,510,091  
Arkansas—1.02%
  1,525    

Little Rock Capital Improvement Revenue Parks & Recreation Projects-Series A

   NR   NR   01/01/18   5.700       1,561,859  
California—34.00%
  5,000    

California Educational Facilities Authority Revenue Refunding-Pepperdine University-Series A (FGIC Insured)

   Aaa   AAA   09/01/33   5.000       5,081,900  
  5,000    

California Health Facilities Financing Authority Revenue-Kaiser Permanente-Series A

   NR   A+   04/01/39   5.250       5,102,900  
  3,000    

California Statewide Communities Development Authority Apartment Development Revenue Refunding-Irvine Apartment Communities-Series A-3 (Mandatory Put 05/17/10 @ 100)

   Baa2   BBB   05/15/25   5.100 †     3,066,810  
  1,750    

California Statewide Communities Development Authority Revenue-Kaiser Permanente-Series H (Mandatory Put 05/01/08 @ 100)

   NR   A+   04/01/34   2.625 †     1,693,563  
  2,150    

Fontana Redevelopment Agency Tax Allocation Refunding-Jurupa Hills Redevelopment Project A

   NR   A-   10/01/17   5.500       2,223,250  
  2,905    

Inglewood Unified School District 1998 Election-Series C (FSA Insured)

   Aaa   AAA   10/01/28   5.000       2,963,187  
  2,390    

Los Angeles County Sanitation Districts Financing Authority Revenue Capital Projects-District No. 14-Subseries B (FGIC Insured)

   NR   AAA   10/01/28   5.000       2,448,531  
  6,250    

Los Angeles Wastewater System Revenue Refunding-Series A (FSA Insured)

   Aaa   AAA   06/01/32   5.000       6,355,750  
  5,000    

Los Angeles Water & Power Revenue Power System-Series A, Subseries A-2 (MBIA Insured)

   Aaa   AAA   07/01/27   5.000       5,106,550  
  10,000    

Sacramento County Sanitation District Financing Authority Revenue Refunding (AMBAC Insured)

   Aaa   AAA   12/01/27   5.000       10,156,300  
  2,600    

San Diego County Regional Airport Authority Airport Revenue Refunding
(AMBAC Insured)††

   Aaa   AAA   07/01/16   5.250       2,749,240  
  5,000    

University of California Revenues-Series A (AMBAC Insured)#

   Aaa   AAA   05/15/28   5.000       5,101,700  
                                52,049,681  

Investment Grade Municipal Income Fund Inc.
SCHEDULE OF INVESTMENTS — June 30, 2006 (unaudited)

Principal                              
Amount       Moody’s   S&P   Maturity   Interest        
(000) ($)       Rating   Rating   Dates   Rates (%)     Value ($)  
Long-Term Municipal Bonds—(continued)
Colorado—1.00%
  1,452    

University of Colorado Participation Interests

   NR   A+   12/01/13   6.000       1,523,381  
Florida—6.22%
  3,350    

Florida State Board of Education Capital Outlay-Series E (FGIC Insured)

   Aaa   AAA   06/01/24   5.000       3,425,743  
  1,175    

Gainesville Utilities System Revenue-Series A

   Aa2   AA   10/01/20   5.250       1,247,780  
  2,000    

Miami-Dade County Aviation Revenue Refunding-Miami International Airport-Series B (XLCA Insured)††

   Aaa   AAA   10/01/13   5.000       2,078,100  
  2,700    

Miami-Dade County Aviation Revenue Refunding-Miami International Airport-Series B (XLCA Insured)††

   Aaa   AAA   10/01/18   5.000       2,778,408  
                                9,530,031  
Illinois—0.98%
  1,200    

Illinois Educational Facilities Authority Revenues Refunding-Augustana College-Series A

   Baa1   NR   10/01/22   5.625       1,245,288  
  250    

Metropolitan Pier & Exposition Authority Dedicated State Tax Revenue

   A1   NR   06/15/27   6.500       250,475  
                                1,495,763  
Indiana—4.68%
  4,480    

Indiana Health Facility Financing Authority Revenue Ascension Health Subordinated Credit-A

   Aa3   AA-   04/01/10   5.000       4,616,282  
  2,500    

Indianapolis Airport Authority Revenue Refunding-Special Facilities-FedEx Corp. Project (Federal Express Co. Insured)††

   Baa2   BBB   01/15/17   5.100       2,550,625  
                                7,166,907  
Kentucky—1.35%
  2,055    

Boone County Pollution Control Revenue Refunding-Dayton Power & Light Co.-Series A

   Baa1   BBB-   11/15/22   6.500       2,072,755  
Massachusetts—7.36%
  5,000    

Massachusetts Health & Educational Facilities Authority Revenue-Harvard University-Series B

   Aaa   AAA   07/15/32   5.000       5,139,050  
  6,000    

Massachusetts Health & Educational Facilities Authority Revenue-Harvard University-Series DD

   Aaa   AAA   07/15/35   5.000       6,133,860  
                                11,272,910  
Michigan—4.71%
  2,055    

Michigan State Hospital Finance Authority Revenue Ascension Health Subordinated Credit-A

   Aa3   AA-   05/01/12   5.000       2,134,138  
  5,000    

Michigan State Hospital Finance Authority Revenue Refunding-Trinity Health Credit-Series D

   Aa3   AA-   08/15/25   5.000       5,072,900  
                                7,207,038  
Minnesota—1.00%
  1,500    

Shakopee Health Care Facilities Revenue-Saint Francis Regional Medical Center

   NR   BBB   09/01/17   5.000       1,526,370  

Investment Grade Municipal Income Fund Inc.
SCHEDULE OF INVESTMENTS — June 30, 2006 (unaudited)

Principal                              
Amount       Moody’s   S&P   Maturity   Interest        
(000) ($)       Rating   Rating   Dates   Rates (%)     Value ($)  
Long-Term Municipal Bonds—(continued)
Nevada—4.48%
  6,750    

Clark County Pollution Control Revenue Refunding-Nevada Power Co. Project-Series B (FGIC Insured)

   Aaa   AAA   06/01/19   6.600       6,861,510  
New Jersey—16.17%
  10,000    

New Jersey State Educational Facilities Authority Revenue-Princeton University-Series D

   Aaa   AAA   07/01/29   5.000       10,299,000  
  10,000    

New Jersey Transportation Trust Fund Authority Transportation System-Series A

   A1   AA-   12/15/20   5.250       10,637,100  
  3,500    

New Jersey Transportation Trust Fund Authority Transportation System-Series A

   A1   AA-   12/15/21   5.500       3,817,240  
                                24,753,340  
New York—26.26%
  4,030    

Long Island Power Authority Electric System Revenue-Series C

   A3   A-   09/01/17   5.500       4,279,417  
  1,765    

Metropolitan Transportation Authority New York Dedicated Tax Fund-Series A (FSA Insured)

   Aaa   AAA   11/15/24   5.250       1,861,157  
  2,500    

New York City General Obligation-Series G

   A1   A+   08/01/13   5.000       2,611,725  
  4,815    

New York City General Obligation-Series O

   A1   A+   06/01/24   5.000       4,880,532  
  2,000    

New York City Industrial Development Agency Special Facilities Revenue-Terminal One Group Association Project ††

   A3   BBB+   01/01/15   5.500       2,111,080  
  2,750    

New York City Industrial Development Agency Special Facilities Revenue-Terminal One Group Association Project ††

   A3   BBB+   01/01/17   5.500 †     2,897,648  
  3,250    

New York City Industrial Development Agency Special Facilities Revenue-Terminal One Group Association Project ††

   A3   BBB+   01/01/18   5.500 †     3,406,813  
  8,000    

New York City Municipal Water Finance Authority Water & Sewer System Revenue-Series C (MBIA Insured)

   Aaa   AAA   06/15/27   5.000       8,208,960  
  3,140    

Triborough Bridge & Tunnel Authority Revenues Refunding-Series B

   Aa2   AA-   11/15/19   5.250       3,331,571  
  6,400    

Triborough Bridge & Tunnel Authority Revenues-Subordinate Bonds

   Aa3   A+   11/15/30   5.250       6,620,928  
                                40,209,831  
North Carolina—12.41%
  5,000    

North Carolina Eastern Municipal Power Agency Power System Revenue Refunding-Series A

   Baa2   BBB   01/01/11   5.500       5,259,950  
  2,000    

North Carolina Eastern Municipal Power Agency Power System Revenue Refunding-Series A

   Baa2   BBB   01/01/12   5.500       2,120,520  
  3,065    

North Carolina Eastern Municipal Power Agency Power System Revenue-Series A (Escrowed to Maturity)

   Baa2   AAA   01/01/21   6.400       3,631,136  
  8,745    

North Carolina State Public Improvement-Series A

   Aa1   AAA   03/01/24   4.000       7,992,580  
                                19,004,186  
Ohio—6.91%
  2,185    

Ohio State Higher Education-Series B

   Aa1   AA+   11/01/17   5.250       2,310,091  

Investment Grade Municipal Income Fund Inc.
SCHEDULE OF INVESTMENTS — June 30, 2006 (unaudited)

Principal                              
Amount       Moody’s   S&P   Maturity   Interest        
(000) ($)       Rating   Rating   Dates   Rates (%)     Value ($)  
Long-Term Municipal Bonds—(continued)
Ohio—(concluded)
  8,000    

Ohio State Water Development Authority Water Pollution Control Revenue-Water Quality

   Aaa   AAA   06/01/24   5.000       8,263,680  
                                10,573,771  
Pennsylvania—10.14%
  7,125    

Allegheny County Sanitation Authority Sewer Revenue Refunding-Series A (MBIA Insured)

   Aaa   AAA   12/01/24   5.000       7,324,144  
  5,000    

Northumberland County Authority-Guaranteed Lease Revenue-Mountain View Manor Project

   NR   NR   10/01/20   7.000       5,188,400  
  3,000    

Susquehanna Area Regional Airport Authority Airport System
Revenue-Subseries D

   Baa2   NR   01/01/18   5.375       3,013,860  
                                15,526,404  
Puerto Rico—2.02%
  3,000    

Puerto Rico Housing Finance Authority-Capital Funding Program (HUD Insured)

   Aa3   AA   12/01/18   5.000       3,087,900  
Rhode Island—1.17%
  1,600    

Rhode Island Health & Educational Building Corp. Revenue Refunding-Hospital Financing-Lifespan Obligation-Series A

   A3   A-   05/15/11   5.000       1,652,896  
  145    

Rhode Island Housing & Mortgage Finance Corp. Homeownership Opportunity-Series 10-A

   Aa2   AA+   04/01/27   6.500       145,161  
                                1,798,057  
South Carolina—0.70%
  1,000    

Greenville Waterworks Revenue

   Aa1   AAA   02/01/20   5.250       1,065,750  
South Dakota—0.74%
  1,120    

Standing Rock New Public Housing**

   NR   NR   08/07/13   6.000       1,135,524  
Tennessee—1.67%
  2,500    

Memphis-Shelby County Airport Authority Special Facilities Revenue Refunding-Federal Express Corp.

   Baa2   BBB   09/01/09   5.000       2,551,200  
Texas—15.19%
  6,665    

Austin Water & Wastewater System Revenue Refunding (MBIA Insured)

   Aaa   AAA   05/15/28   5.000       6,789,502  
  4,000    

Coastal Bend Health Facilities Development Corp.-Incarnate Word Health System-Series A (Escrowed to Maturity) (AMBAC Insured)

   Aaa   AAA   01/01/17   6.300       4,418,160  
  210    

Eagle Mountain & Saginaw Independent School District-School Building-Unrefunded Balance (PSF-GTD)

   Aaa   AAA   08/15/14   5.375       222,951  
  6,576    

Harris County Texas Lease‡

   NR   NR   05/01/20   6.750       6,908,839  

Investment Grade Municipal Income Fund Inc.
SCHEDULE OF INVESTMENTS — June 30, 2006 (unaudited)

Principal                              
Amount       Moody’s   S&P   Maturity   Interest        
(000) ($)       Rating   Rating   Dates   Rates (%)     Value ($)  
Long-Term Municipal Bonds—(concluded)
Texas—(concluded)
  3,007    

Houston Community College System Participation Interests‡

   NR   NR   06/15/25   7.875       3,357,632  
  1,485    

Lower Colorado River Authority Transmission Contract Revenue-LCRA Transmission Services Corp. Project B (FSA Insured)

   Aaa   AAA   05/15/20   5.250       1,552,048  
                                23,249,132  
Total Long-Term Municipal Bonds (cost—$251,492,013)                       250,807,371  
Short-Term Municipal Notes—2.12%
Illinois—0.88%
  1,345    

Chicago Board of Education-Dedicated Revenues-Series D-2 (CIFG Insured)

   VMIG-1   A-1+   07/03/06   3.970 *     1,345,000  
Tennessee—1.24%
  1,900    

Clarksville Public Building Authority Revenue Pooled Financing

   VMIG-1   NR   07/03/06   3.990 *     1,900,000  
Total Short-Term Municipal Notes (cost—$3,245,000)                       3,245,000  
Tax Exempt Commercial Paper—2.02%
Texas—2.02%
  2,000    

Harris County

           08/04/06   3.550       2,000,000  
  1,100    

Harris County-Series B

           08/04/06   3.570       1,100,000  
Total Tax Exempt Commercial Paper (cost—$3,100,000)                       3,100,000  
Total Investments (cost—$257,837,013)(1)(2)—167.97%                       257,152,371  
Other assets in excess of liabilities—3.88%                       5,940,418  
Liquidation value of auction preferred shares—(71.85)%                       (110,000,000 )
Net Assets applicable to common shareholders—100.00%                       153,092,789  

†   Floating rate security. The interest rate shown is the current rate as of June 30, 2006.
††   Security subject to Alternative Minimum Tax.
#   Partial amount pledged as collateral for futures transactions.
*   Variable rate demand notes are payable on demand. The maturity dates shown are the next interest rate reset dates. The interest rates shown are the current rates as of June 30, 2006.
**   Security exempt from registration under Rule 144A of the Securities Act of 1933. This security, which represents 0.74% of net assets applicable to common shareholders as of June 30, 2006, is considered illiquid and restricted. (See table below for more information).

                Acquisition       Market
                Cost as a       Value as a
                Percentage       Percentage
Illiquid and       Acquisition   Acquisition   of Common   Market   of Common
Restricted Security       Date   Cost ($)   Net Assets (%)   Value ($)   Net Assets (%)
Standing Rock New Public Housing,
   6.000%, 08/07/13		       08/08/02   1,120,487   0.73   1,135,524   0.74

‡   The securities detailed in the table below are considered illiquid and restricted and represent 6.71% of net assets applicable to common shareholders as of June 30, 2006.

              Acquisition       Market
              Cost as a       Value as a
              Percentage       Percentage
Illiquid and     Acquisition   Acquisition   of Common   Market   of Common
Restricted Securities     Date   Cost ($)   Net Assets (%)   Value ($)   Net Assets (%)
Harris County Texas Lease, 6.750%, 05/01/20     09/07/00   6,575,839   4.30   6,908,839   4.51
Houston Community College System
   Participation Interests, 7.875%, 06/15/25		     04/22/02   3,007,095   1.96   3,357,632   2.20
          9,582,934   6.26   10,266,471   6.71

(1)   Cost of investments shown approximates cost for federal income tax purposes. Gross unrealized appreciation of investments and gross unrealized depreciation of investments at June 30, 2006 were $2,654,581 and $3,339,223, respectively, resulting in net unrealized depreciation of investments of $684,642.
(2)   The Fund calculates its net asset value based on the current market value, where available, for its portfolio securities. The Fund normally obtains market values for its securities from independent pricing sources and broker-dealers. Independent pricing sources may use last reported sale prices, current market quotations or valuations from computerized “matrix” systems that derive values based on comparable securities. A matrix system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio securities. If a market value is not available from an independent pricing source for a particular security, that security is valued at fair value as determined in good faith by or under the direction of the Fund’s Board of Directors (the “Board”). Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; and changes in overall market conditions. If events occur that materially affect the value of securities (particularly non-US securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities are fair valued. The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt instruments with sixty days or less remaining to maturity, unless the Board or its delegate determines that this does not represent fair value. Securities traded in the over-the-counter (“OTC”) market are valued at the last bid price available on the valuation date prior to valuation.

AMBAC   -   American Municipal Bond Assurance Corporation
CIFG   -   CDC IXIS Financial Guaranty
FGIC   -   Financial Guaranty Insurance Company
FSA   -   Financial Security Assurance
GTD   -   Guaranteed
HUD   -   Housing and Urban Development
MBIA   -   Municipal Bond Investors Assurance
NR   -   Not Rated
PSF   -   Permanent School Fund
XLCA   -   XL Capital Assurance

Futures Contracts
                 
Number of       In   Expiration   Unrealized
Contracts   Contracts to Deliver   Exchange For ($)   Date   Apppreciation ($)
55   US Treasury Bond 30 Year Futures   5,881,356   September 2006   15,262
                 
                 
For more information regarding the Fund’s other significant accounting policies, please refer to the Fund’s semiannual report to shareholders dated March 31, 2006.


Item 2. Controls and Procedures.

  (a)  
The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (“Investment Company Act”)) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
       
  (b)  
The registrant’s principal executive officer and principal financial officer are aware of no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3. Exhibits.

  (a)  
Certifications of principal executive officer and principal financial officer of registrant pursuant to Rule 30a-2(a) under the Investment Company Act is attached hereto as Exhibit EX-99.CERT.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Investment Grade Municipal Income Fund Inc.

By:   /s/ W. Douglas Beck  
   
 
    W. Douglas Beck  
    President  
       
Date:   August 18, 2006  
   
 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:   /s/ W. Douglas Beck  
   
 
    W. Douglas Beck  
    President  
       
Date:   August 18, 2006  
   
 
       
By:   /s/ Thomas Disbrow  
   
 
    Thomas Disbrow  
    Vice President and Treasurer  
       
Date:   August 18, 2006