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: December 31, 2006


Item 1. Schedule of Investments

Investment Grade Municipal Income Fund Inc.
Schedule of investments—December 31, 2006 (unaudited)

Principal                            
amount       Moody’s   S&P   Maturity   Interest      
(000) ($)       rating   rating   dates   rates (%)     Value ($)
Long-term municipal bonds—164.35%
Alaska — 1.99%
1,000   Alaska International Airports Revenues Refunding-Series A (MBIA Insured)1   Aaa   AAA   10/01/19   5.000       1,064,250
1,000   Alaska International Airports Revenues Refunding-Series A (MBIA Isured))1   Aaa   AAA   10/01/20   5.000       1,060,960
1,000   Alaska International Airports Revenues Refunding-Series A (MBIA Isured))1   Aaa   AAA   10/01/21   5.000       1,058,500
                            3,183,710
Arizona — 1.59%
2,380   Arizona State Transportation Board Highway Revenue-Series B   Aa1   AAA   07/01/18   5.250       2,551,217
Arkansas — 0.98%
1,525   Little Rock Capital Improvement Revenue Parks & Recreation Projects-Series A   NR   NR   01/01/18   5.700       1,569,820
California — 37.11%
5,000   California Educational Facilities Authority Revenue Refunding-Pepperdine
University-Series A (FGIC Insured)		   Aaa   AAA   09/01/33   5.000       5,222,850
5,000   California Health Facilities Financing Authority Revenue-Kaiser Permanente-
Series A		   NR   A+   04/01/39   5.250       5,309,350
5,000   California State Refunding   A1   A+   05/01/27   5.000       5,267,900
3,000   California State Refunding-Series 2   A1   A+   09/01/27   5.000       3,173,940
3,000   California Statewide Communities Development Authority Apartment Development Revenue Refunding-Irvine Apartment Communities-Series A–3 (Mandatory Put 05/17/10 @ 100)   NR   BBB+   05/15/25   5.100 2     3,089,160
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 2     1,717,432
2,150   Fontana Redevelopment Agency Tax Allocation Refunding-Jurupa Hills
Redevelopment Project A		   NR   A–   10/01/17   5.500       2,242,751
2,905   Inglewood Unified School District 1998 Election-Series C (FSA Insured)   Aaa   AAA   10/01/28   5.000       3,066,518
6,250   Los Angeles Wastewater System Revenue Refunding-Series A (FSA Insured)   Aaa   AAA   06/01/32   5.000       6,582,625
5,000   Los Angeles Water & Power Revenue Power System-Series A, Subseries A–2
(MBIA Insured)		   Aaa   AAA   07/01/27   5.000       5,269,250
10,000   Sacramento County Sanitation District Financing Authority Revenue Refunding (AMBAC Insured)   Aaa   AAA   12/01/27   5.000       10,413,700
2,600   San Diego County Regional Airport Authority Airport Revenue Refunding
(AMBAC Insured)1		   Aaa   AAA   07/01/16   5.250       2,834,494
5,000   University of California Revenues-Series A (AMBAC Insured)3   Aaa   AAA   05/15/28   5.000       5,264,400
                            59,454,370

Investment Grade Municipal Income Fund Inc.
Schedule of investments—December 31, 2006 (unaudited)

Principal                            
amount       Moody’s   S&P   Maturity   Interest      
(000) ($)       rating   rating   dates   rates (%)     Value ($)
Long-term municipal bonds—(continued)
Colorado — 4.91%
3,000   Colorado Health Facilities Authority Revenue Refunding-Adventist
Health/Sunbelt-Series E		   A2   A+   11/15/18   5.125 2     3,210,060
3,000   Colorado Health Facilities Authority Revenue Refunding-Adventist
Health/Sunbelt-Series E		   A2   A+   11/15/19   5.125 2     3,202,320
1,374   University of Colorado Participation Interests   NR   A+   12/01/13   6.000       1,457,615
                            7,869,995
Florida — 6.10%
3,350   Florida State Board of Education Capital Outlay-Series E (FGIC Insured)   Aaa   AAA   06/01/24   5.000       3,518,404
1,175   Gainesville Utilities System Revenue-Series A   Aa2   AA   10/01/20   5.250       1,277,789
2,000   Miami-Dade County Aviation Revenue Refunding-Miami International
Airport-Series B (XLCA Insured)1		   Aaa   AAA   10/01/13   5.000       2,121,500
2,700   Miami-Dade County Aviation Revenue Refunding-Miami International
Airport-Series B (XLCA Insured)1		   Aaa   AAA   10/01/18   5.000       2,858,733
                            9,776,426
Illinois — 4.87%
1,200   Illinois Educational Facilities Authority Revenues Refunding-Augustana
College-Series A		   Baa1   NR   10/01/22   5.625       1,273,944
6,000   Illinois Finance Authority Revenue-University of Chicago-Series A   Aa1   AA   07/01/34   5.000       6,286,560
250   Metropolitan Pier & Exposition Authority Dedicated State Tax Revenue   A1   AAA   06/15/27   6.500       250,525
                            7,811,029
Indiana — 4.26%
4,000   Indiana Health & Educational Facilities Financing Authority Hospital Revenue Refunding-Clarian Health Obligation Group-Series B   A2   A+   02/15/21   5.000       4,178,600
2,500   Indianapolis Airport Authority Revenue Refunding-Special Facilities-FedEx Corp. Project (Federal Express Co. Insured)1   Baa2   BBB   01/15/17   5.100       2,640,375
                            6,818,975
Massachusetts — 3.90%
6,000   Massachusetts Health & Educational Facilities Authority Revenue-Harvard
University-Series DD		   Aaa   AAA   07/15/35   5.000       6,246,960
Michigan — 5.26%
5,000   Michigan State Hospital Finance Authority Revenue Refunding-Trinity
Health Credit Group-Series D		   Aa2   AA–   08/15/25   5.000       5,257,200
3,000   Michigan State Hospital Finance Authority Revenue-Trinity
Health Credit Group-Series A		   Aa2   AA–   12/01/26   5.000       3,173,040
                            8,430,240

Investment Grade Municipal Income Fund Inc.
Schedule of investments—December 31, 2006 (unaudited)

Principal                            
amount       Moody’s   S&P   Maturity   Interest      
(000) ($)       rating   rating   dates   rates (%)     Value ($)
Long-term municipal bonds—(continued)
Minnesota — 0.98%
1,500   Shakopee Health Care Facilities Revenue-Saint Francis Regional Medical Center   NR   BBB   09/01/17   5.000       1,569,915
New Jersey — 13.61%
10,000   New Jersey State Educational Facilities Authority Revenue-Princeton
University-Series D		   Aaa   AAA   07/01/29   5.000       10,609,600
10,000   New Jersey Transportation Trust Fund Authority Transportation System-Series A   A1   AA–   12/15/20   5.250       11,201,800
                            21,811,400
New York — 21.07%
1,765   Metropolitan Transportation Authority New York Dedicated Tax Fund-Series A
(FSA Insured)		   Aaa   AAA   11/15/24   5.250       1,899,564
7,390   Metropolitan Transportation Authority Revenue Transportation-Series A   A2   A   11/15/25   5.000       7,875,966
4,815   New York City General Obligation-Series O   A1   AA–   06/01/24   5.000       5,075,251
2,000   New York City Industrial Development Agency Special Facilities Revenue-Terminal One Group Association Project1   A3   BBB+   01/01/15   5.500       2,173,800
2,750   New York City Industrial Development Agency Special Facilities Revenue-Terminal One Group Association Project1   A3   BBB+   01/01/17   5.500 2     2,996,400
3,250   New York City Industrial Development Agency Special Facilities Revenue-Terminal One Group Association Project1   A3   BBB+   01/01/18   5.500 2     3,528,557
3,140   Triborough Bridge & Tunnel Authority Revenues Refunding-Series B   Aa2   AA–   11/15/19   5.250       3,386,270
6,400   Triborough Bridge & Tunnel Authority Revenues-Subordinate Bonds   Aa3   A+   11/15/30   5.250       6,825,088
                            33,760,896
North Carolina — 15.55%
5,000   North Carolina Eastern Municipal Power Agency Power System Revenue
Refunding-Series A		   Baa2   BBB   01/01/11   5.500       5,290,200
2,000   North Carolina Eastern Municipal Power Agency Power System Revenue
Refunding-Series A		   Baa2   BBB   01/01/12   5.500       2,140,480
3,065   North Carolina Eastern Municipal Power Agency Power System
Revenue-Series A (Escrowed to Maturity)		   Baa2   AAA   01/01/21   6.400       3,742,518
5,000   North Carolina Medical Care Commission Health Care Facilities Revenue-Novant
Health Obligation Group		   Aa3   AA–   11/01/34   5.000       5,241,250
8,745   North Carolina State Public Improvement-Series A   Aa1   AAA   03/01/24   4.000       8,500,840
                            24,915,288
Ohio — 6.78%
2,185   Ohio State Higher Education-Series B   Aa1   AA+   11/01/17   5.250       2,347,018
8,000   Ohio State Water Development Authority Water Pollution Control
Revenue-Water Quality		   Aaa   AAA   06/01/24   5.000       8,514,400
                            10,861,418

Investment Grade Municipal Income Fund Inc.
Schedule of investments—December 31, 2006 (unaudited)

Principal                            
amount       Moody’s   S&P   Maturity   Interest      
(000) ($)       rating   rating   dates   rates (%)     Value ($)
Long-term municipal bonds—(concluded)
Pennsylvania — 6.67%
7,125   Allegheny County Sanitation Authority Sewer Revenue
Refunding-Series A (MBIA Insured)		   Aaa   AAA   12/01/24   5.000       7,599,881
3,000   Susquehanna Area Regional Airport Authority Airport System Revenue-Subseries D   Ba1   NR   01/01/18   5.375       3,079,470
                            10,679,351
Puerto Rico — 6.31%
3,000   Puerto Rico Housing Finance Authority-Capital Funding Program (HUD Insured)   Aa3   AA   12/01/18   5.000       3,179,940
6,465   University of Puerto Rico Revenues System-Series Q   Baa2   BBB   06/01/17   5.000       6,932,484
                            10,112,424
Rhode Island — 1.04%
1,600   Rhode Island Health & Educational Building Corp. Revenue Refunding-Hospital Financing-Lifespan Obligation-Series A   A3   A–   05/15/11   5.000       1,664,912
South Carolina — 8.99%
7,570   Charleston Educational Excellence Financing Corp. Revenue-Charleston County
School District Project		   A1   AA–   12/01/24   5.000       8,006,638
5,000   Greenville County School District Installment Purchase Refunding-Building
Equity Sooner-Series AGC		   Aa3   AA–   12/01/24   5.000       5,309,200
1,000   Greenville Waterworks Revenue   Aa1   AAA   02/01/20   5.250       1,084,340
                            14,400,178
South Dakota — 0.67%
1,049   Standing Rock New Public Housing4   NR   NR   08/07/13   6.000       1,071,395
Tennessee — 1.59%
2,500   Memphis-Shelby County Airport Authority Special Facilities Revenue
Refunding-Federal Express Corp.		   Baa2   BBB   09/01/09   5.000       2,550,550
Texas — 10.12%
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       4,455,480
6,429   Harris County Texas Lease5   NR   NR   05/01/20   6.750       6,794,627
3,007   Houston Community College System Participation Interests5   NR   NR   06/15/25   7.875       3,384,576
1,485   Lower Colorado River Authority Transmission Contract Revenue-LCRA
Transmission Services Corp. Project B (FSA Insured)		   Aaa   AAA   05/15/20   5.250       1,582,089
                            16,216,772
Total long-term municipal bonds (cost—$256,806,523)                       263,327,241

Investment Grade Municipal Income Fund Inc.
Schedule of investments—December 31, 2006 (unaudited)

Principal                            
amount       Moody’s   S&P   Maturity   Interest      
(000) ($)       rating   rating   dates   rates (%)     Value ($)
Short-term municipal notes1 6—2.52%
Illinois — 0.18%
300   Chicago Midway Airport Revenue-Second Lien-Series A (MBIA Insured)   VMIG-1   A–1+   01/02/07   4.040       300,000
Indiana — 0.71%
1,135   Whiting Industrial Environmental Facilities Revenue-Amoco Oil Co. Project   VMIG-1   A–1+   01/02/07   4.020       1,135,000
Texas — 1.63%
2,600   West Side Calhoun County Naval District Environmental Facilities
Revenue-BP Chemicals, Inc. Project		   NR   A–1+   01/02/07   4.020       2,600,000
Total short-term municipal notes (cost—$4,035,000)                       4,035,000
Total investments (cost —$260,841,523)7 8 — 166.87%                       267,362,241
Other assets in excess of liabilities — 1.78%                       2,862,431
Liquidation value of auction preferred shares — (68.65)%                       (110,000,000)
Net assets applicable to common shareholders — 100.00%                       160,224,672

1   Security subject to Alternative Minimum Tax.
     
2   Floating rate security. The interest rate shown is the current rate as of December 31, 2006.
     
3   Partial amount pledged as collateral for futures transactions.
     
4   Security exempt from registration under Rule 144A of the Securities Act of 1933. This security, which represents 0.67% of net assets applicable to common shareholders as of December 31, 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   1,048,742   0.65   1,071,395   0.67

5   The securities detailed in the table below are considered illiquid and restricted and represent 6.35% of net assets applicable to common shareholders as of December 31, 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   6,429,435   4.01     6,794,627   4.24
Houston Community College
System Participation Interests,
7.875%, 06/15/25		   04/22/02   3,007,095   1.88     3,384,576   2.11
        9,436,530   5.89   10,179,203   6.35

     
6   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 December 31, 2006.
     
7   Cost of investments shown approximates cost for federal income tax purposes. Gross unrealized appreciation of investments and gross unrealized depreciation of investments at December 31, 2006 were $6,675,834 and $155,116, respectively, resulting in net unrealized appreciation of investments of $6,520,718.
     
8   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 restricitions 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.
     
     
     

Investment Grade Municipal Income Fund Inc.
Schedule of investments—December 31, 2006 (unaudited)


AMBAC   American Municipal Bond Assurance Corporation
     
BP   British Petroleum
     
FGIC   Financial Guaranty Insurance Company
     
FSA   Financial Security Assurance
     
HUD   Housing and Urban Development
     
MBIA   Municipal Bond Investors Assurance
     
NR   Not Rated
     
XLCA   XL Capital Assurance
     
     
     

Futures contracts
                     
Number of       Expiration       Current   Unrealized
contracts   Sale contracts   dates   Proceeds ($)   value ($)   appreciation ($)
130   US Treasury Bond 20 Year Futures   March 2007   14,870,294   14,486,875   383,419
100   US Treasury Note 10 Year Futures   March 2007   10,919,156   10,746,875   172,281
                    555,700

For more information regarding the Fund’s other significant accounting policies, please refer to the Fund’s annual report to shareholders dated September 30, 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/ Kai R. Sotorp
    Kai R. Sotorp
    President
     
Date:   March 1, 2007

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/ Kai R. Sotorp
    Kai R. Sotorp
    President
     
Date:   March 1, 2007
     
By:   /s/ Thomas Disbrow
    Thomas Disbrow
    Vice President and Treasurer
     
Date:   March 1, 2007