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, 2007


Item 1. Schedule of Investments

Investment Grade Municipal Income Fund Inc.
Schedule of investments – June 30, 2007 (unaudited)

Principal                                              
amount           Moody’s       S&P       Maturity     Interest        
(000) ($)           rating       rating       dates     rates (%)     Value ($)  
Long-term municipal bonds—160.79%                                        
Alaska — 2.00%                                        
1,000     Alaska International Airports Revenue                                        
      Refunding-Series A (MBIA Insured)1     Aaa       AAA       10/01/19       5.000       1,037,440  
1,000     Alaska International Airports Revenue                                        
      Refunding-Series A (MBIA Insured)1     Aaa       AAA       10/01/20       5.000       1,033,610  
1,000     Alaska International Airports Revenue                                        
      Refunding-Series A (MBIA Insured)1     Aaa       AAA       10/01/21       5.000       1,030,560  
                                            3,101,610  
Arizona — 1.61%                                        
2,380     Arizona State Transportation Board Highway                                        
      Revenue-Series B     Aa1       AAA       07/01/18       5.250       2,498,334  
Arkansas — 0.94%                                        
1,435     Little Rock Capital Improvement Revenue                                        
      Parks & Recreation Projects-Series A     NR       NR       01/01/18       5.700       1,464,805  
California — 36.85%                                        
5,000     California Educational Facilities Authority                                        
      Revenue Refunding-Pepperdine University-                                        
      Series A (FGIC Insured)     Aaa       AAA       09/01/33       5.000       5,118,550  
5,000     California Health Facilities Financing                                        
      Authority Revenue-Kaiser Permanente-Series A     NR       A+       04/01/39       5.250       5,119,400  
5,000     California State Refunding     A1       A+       05/01/27       5.000       5,120,150  
3,000     California State Refunding-Series 2     A1       A+       09/01/27       5.000       3,078,360  
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     3,063,120  
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     1,722,910  
2,150     Fontana Redevelopment Agency Tax                                        
      Allocation Refunding-Jurupa Hills                                        
      Redevelopment Project A     NR       A-       10/01/17       5.500       2,217,811  
6,250     Los Angeles Wastewater System Revenue                                        
      Refunding-Series A (FSA Insured)     Aaa       AAA       06/01/32       5.000       6,411,937  
5,000     Los Angeles Water & Power Revenue Power                                        
      System-Series A, Subseries A-2 (MBIA                                        
      Insured)     Aaa       AAA       07/01/27       5.000       5,153,700  
10,000     Sacramento County Sanitation District                                        
      Financing Authority Revenue Refunding                                        
      (AMBAC Insured)     Aaa       AAA       12/01/27       5.000       10,257,100  
2,600     San Diego County Regional Airport Authority                                        
      Airport Revenue Refunding (AMBAC                                        
      Insured)1     Aaa       AAA       07/01/16       5.250       2,773,810  
2,000     San Francisco City & County Public Utilities                                        
      Commission Water Revenue-Series A (MBIA                                        
      Insured)     Aaa       AAA       11/01/25       5.000       2,055,680  

Investment Grade Municipal Income Fund Inc.
Schedule of investments – June 30, 2007 (unaudited)

Principal                                              
amount           Moody’s       S&P       Maturity     Interest        
(000) ($)           rating       rating       dates     rates (%)     Value ($)  
Long-term municipal bonds—(continued)                                        
California—(concluded)                                        
5,000     University of California Revenue-Series A                                        
      (AMBAC Insured)3     Aaa       AAA       05/15/28       5.000       5,137,350  
                                            57,229,878  
Colorado — 4.86%                                        
3,000     Colorado Health Facilities Authority Revenue                                        
      Refunding-Adventist Health/Sunbelt-Series E     A2       A+       11/15/18       5.125 2     3,107,160  
3,000     Colorado Health Facilities Authority Revenue                                        
      Refunding-Adventist Health/Sunbelt-Series E     A2       A+       11/15/19       5.125 2     3,095,640  
1,293     University of Colorado Participation Interests     NR       A+       12/01/13       6.000       1,353,324  
                                            7,556,124  
Florida — 4.02%                                        
3,350     Florida State Board of Education Capital                                        
      Outlay-Series E (FGIC Insured)     Aaa       AAA       06/01/24       5.000       3,450,466  
2,700     Miami-Dade County Aviation Revenue                                        
      Refunding-Miami International Airport-Series                                        
      B (XLCA Insured)1     Aaa       AAA       10/01/18       5.000       2,790,180  
                                            6,240,646  
Illinois — 12.27%                                        
11,270     Chicago O’Hare International Airport                                        
      Revenue-General-Third Lien-Series D
(MBIA Insured)1		     Aaa       AAA       01/01/26       5.000       11,428,682  
1,200     Illinois Educational Facilities Authority                                        
      Revenue Refunding-Augustana College-Series A     Baa1       NR       10/01/22       5.625       1,245,408  
6,000     Illinois Finance Authority Revenue-University                                        
      of Chicago-Series A     Aa1       AA       07/01/34       5.000       6,131,520  
250     Metropolitan Pier & Exposition Authority                                        
      Dedicated State Tax Revenue     A1       AAA       06/15/27       6.500       250,460  
                                            19,056,070  
Indiana — 5.25%                                        
4,000     Indiana Health & Educational Facilities                                        
      Financing Authority Hospital Revenue                                        
      Refunding-Clarian Health Obligation Group-Series B     A2       A+       02/15/21       5.000       4,041,680  
4,000     Indianapolis Airport Authority Revenue                                        
      Refunding-Special Facilities-FedEx Corp. Project1     Baa2       BBB       01/15/17       5.100       4,113,760  
                                            8,155,440  
Kentucky — 1.41%                                        
2,080     Kenton County Airport Board Airport                                        
      Revenue-Cincinnati/Northern Kentucky-Series                                        
      B (MBIA Insured)1     Aaa       AAA       03/01/18       5.500       2,191,488  
Massachusetts — 4.61%                                        
6,000     Massachusetts Health & Educational Facilities                                        
      Authority Revenue-Harvard University-Series DD     Aaa       AAA       07/15/35       5.000       6,127,740  

Investment Grade Municipal Income Fund Inc.
Schedule of investments – June 30, 2007 (unaudited)

Principal                                              
amount           Moody’s       S&P       Maturity     Interest        
(000) ($)           rating       rating       dates     rates (%)     Value ($)  
Long-term municipal bonds—(continued)                                        
Massachusetts—(concluded)                                        
1,000     Massachusetts Port Authority Revenue-US                                        
      Airways Project (MBIA Insured)1     Aaa       AAA       09/01/21       6.000       1,040,140  
                                            7,167,880  
Michigan — 5.24%                                        
5,000     Michigan State Hospital Finance Authority                                        
      Revenue Refunding-Trinity Health Credit                                        
      Group-Series D     Aa2       AA-       08/15/25       5.000       5,079,800  
3,000     Michigan State Hospital Finance Authority                                        
      Revenue-Trinity Health Credit Group-Series A     Aa2       AA-       12/01/26       5.000       3,051,750  
                                            8,131,550  
Minnesota — 0.98%                                        
1,500     Shakopee Health Care Facilities Revenue-                                        
      Saint Francis Regional Medical Center     NR       BBB       09/01/17       5.000       1,525,200  
New Jersey — 3.48%                                        
5,000     New Jersey Transportation Trust Fund                                        
      Authority Transportation System-Series A     A1       AA-       12/15/20       5.250       5,401,700  
New York — 16.35%                                        
1,765     Metropolitan Transportation Authority New                                        
      York Dedicated Tax Fund-Series A (FSA Insured)     Aaa       AAA       11/15/24       5.250       1,860,239  
4,815     New York City General Obligation-Series O     A1       AA-       06/01/24       5.000       4,960,846  
2,000     New York City Industrial Development                                        
      Agency Special Facilities Revenue-Terminal                                        
      One Group Association Project1     A3       BBB+       01/01/15       5.500       2,145,940  
2,750     New York City Industrial Development                                        
      Agency Special Facilities Revenue-Terminal                                        
      One Group Association Project1     A3       BBB+       01/01/17       5.500 2     2,944,562  
3,250     New York City Industrial Development                                        
      Agency Special Facilities Revenue-Terminal                                        
      One Group Association Project1     A3       BBB+       01/01/18       5.500       3,463,395  
3,140     Triborough Bridge & Tunnel Authority                                        
      Revenue Refunding-Series B     Aa2       AA-       11/15/19       5.250       3,309,435  
6,400     Triborough Bridge & Tunnel Authority                                        
      Revenue-Subordinate Bonds     Aa3       A+       11/15/30       5.250       6,702,976  
                                            25,387,393  
North Carolina — 10.88%                                        
3,065     North Carolina Eastern Municipal Power                                        
      Agency Power System Revenue-Series A                                        
      (Escrowed to Maturity)     Baa2       AAA       01/01/21       6.400       3,597,114  
5,000     North Carolina Medical Care Commission                                        
      Health Care Facilities Revenue-Novant Health                                        
      Obligation Group     Aa3       AA-       11/01/34       5.000       5,074,250  
8,745     North Carolina State Public Improvement-                                        
      Series A     Aa1       AAA       03/01/24       4.000       8,235,604  
                                            16,906,968  
Ohio — 6.82%                                        
2,185     Ohio State Higher Education-Series B     Aa1       AA+       11/01/17       5.250       2,298,052  

Investment Grade Municipal Income Fund Inc.
Schedule of investments – June 30, 2007 (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       8,302,800  
                                            10,600,852  
Pennsylvania — 1.97%                                        
3,000     Susquehanna Area Regional Airport Authority                                        
      Airport System Revenue-Subseries D     Ba1       NR       01/01/18       5.375       3,056,310  
Puerto Rico — 8.42%                                        
3,000     Puerto Rico Commonwealth Highway &                                        
      Transportation Authority Revenue Refunding-                                        
      Series N     Baa3       BBB+       07/01/22       5.500       3,256,320  
3,000     Puerto Rico Housing Finance Authority-                                        
      Capital Funding Program (HUD Insured)     Aa3       AA       12/01/18       5.000       3,118,530  
6,465     University of Puerto Rico-Revenue System-                                        
      Series Q     Baa2       BBB       06/01/17       5.000       6,710,735  
                                            13,085,585  
South Carolina — 9.03%                                        
7,570     Charleston Educational Excellence Financing                                        
      Corp. Revenue-Charleston County School                                        
      District Project     A1       AA-       12/01/24       5.000       7,793,315  
5,000     Greenville County School District Installment                                        
      Purchase Refunding-Building Equity Sooner-                                        
      Series AGC     Aa3       AA-       12/01/24       5.000       5,166,800  
1,000     Greenville Waterworks Revenue     Aa1       AAA       02/01/20       5.250       1,058,930  
                                            14,019,045  
South Dakota — 0.64%                                        
975     Standing Rock New Public Housing4     NR       NR       08/07/13       6.000       987,576  
Tennessee — 2.31%                                        
1,000     Memphis-Shelby County Airport Authority                                        
      Airport Revenue-Series D (AMBAC Insured)1     Aaa       AAA       03/01/24       6.000       1,050,300  
2,500     Memphis-Shelby County Airport Authority                                        
      Special Facilities Revenue Refunding-Federal Express Corp.     Baa2       BBB       09/01/09       5.000       2,537,850  
                                            3,588,150  
Texas — 17.88%                                        
3,700     Coastal Bend Health Facilities Development                                        
      Corp.-Incarnate Word Health System-Series A                                        
      (Escrowed to Maturity) (AMBAC Insured)     Aaa       AAA       01/01/17       6.300       4,048,947  
6,278     Harris County Texas Lease5     NR       NR       05/01/20       6.750       6,556,952  
3,007     Houston Community College System                                        
      Participation Interests5     NR       NR       06/15/25       7.875       3,387,102  
1,485     Lower Colorado River Authority                                        
      Transmission Contract Revenue-LCRA                                        
      Transmission Services Corp. Project B (FSA Insured)     Aaa       AAA       05/15/20       5.250       1,550,384  
2,000     San Leanna Educational Facilities Corp.                                        
      Higher Educational Revenue Refunding-Saint                                        
      Edwards University Project     Baa2       BBB+       06/01/18       5.000       2,048,660  

Investment Grade Municipal Income Fund Inc.
Schedule of investments – June 30, 2007 (unaudited)

Principal                                              
amount           Moody’s     S&P       Maturity     Interest        
(000) ($)           rating       rating       dates     rates (%)     Value ($)  
Long-term municipal bonds—(concluded)                                        
Texas—(concluded)                                        
5,000     Tarrant County Cultural Education Facilities                                        
      Finance Corp. Revenue Refunding-Texas                                        
      Health Resources-Series A     Aa3       AA-       02/15/19       5.000       5,169,250  
5,000     Texas State Water Development-Series D     Aa1       AA       08/01/19       5.000       5,004,250  
                                            27,765,545  
Washington — 2.97%                                        
4,225     Chelan County Public Utility District No. 001                                        
      Consolidated Revenue Refunding-Chelan                                        
      Hydropower-Series A (MBIA Insured)1     Aaa       AAA       07/01/32       6.050       4,618,221  
Total long-term municipal bonds (cost—$249,977,899)                                     249,736,370  
Short-term municipal notes6—8.11%                                        
Illinois — 0.96%                                        
1,400     Chicago Midway Airport Revenue-Second                                        
      Lien-Series A (MBIA Insured)1     VMIG-1       A-1+       07/02/07       3.860       1,400,000  
100     Illinois Health Facilities Authority Revenue-                                        
      University of Chicago Hospitals Project-Series C (MBIA Insured)     VMIG-1       A-1+       07/02/07       3.800       100,000  
                                            1,500,000  
Indiana — 0.26%                                        
400     Indiana Development Finance Authority                                        
      Environmental Revenue-Republic Services                                        
      Inc. Project1     VMIG-1       NR       07/02/07       3.820       400,000  
Texas — 6.57%                                        
6,300     Harris County Health Facilities Development                                        
      Corp. Revenue-Methodist Hospital Systems-Series A     NR       A-1+       07/02/07       3.790       6,300,000  
3,900     Texas Water Development Board Revenue                                        
      Refunding-State Revolving-Sub Lien-A     VMIG-1       A-1+       07/02/07       3.790       3,900,000  
                                            10,200,000  
Virginia — 0.32%                                        
500     King George County Industrial Development                                        
      Authority Exempt Facilities Revenue-                                        
      Birchwood Power Partners-Series A1     NR       A-1+       07/02/07       3.870       500,000  
Total short-term municipal notes (cost — $12,600,000)                                     12,600,000  
Total investments (cost — $262,577,899)7,8 — 168.90%                                     262,336,370  
Other assets in excess of liabilities — 1.92%                                     2,980,893  
Liquidation value of auction preferred shares — (70.82)%                                     (110,000,000 )
Net assets applicable to common shareholders — 100.00%                                     155,317,263  

1   Security subject to Alternative Minimum Tax.
     
2   Floating rate security. The interest rate shown is the current rate as of June 30, 2007.
     
3   Partial amount delivered to broker as collateral for futures transactions.
     
4   Security exempt from registration under Rule 144A of the Securities Act of 1933. This security, which represents 0.64% of net assets applicable to common shareholders as of June 30, 2007, 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   974,844   0.63   987,576   0.64

Investment Grade Municipal Income Fund Inc.
Schedule of investments – June 30, 2007 (unaudited)

     
5   The securities detailed in the table below are considered illiquid and restricted and represent 6.40% of net assets applicable to common shareholders as of June 30, 2007.
     
            Acquisition       Market
            cost as a       value as a
            percentage       percentage
Illiquid and   Acquisition   Acquisition   of common   Market   of common
restricted securities   dates   cost ($)   net assets (%)   value ($)   net assets (%)
Harris County Texas Lease,                    
6.750%, 05/01/20   09/07/00   6,278,020   4.04   6,556,952   4.22
Houston Community College System Participation Interests,
7.875%, 06/15/25		   04/22/02   3,007,095   1.94   3,387,102   2.18
        9,285,115   5.98   9,944,054   6.40

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 June 30, 2007.
     
7   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, 2007 were $2,360,716 and $2,602,245, respectively, resulting in net unrealized depreciation of investments of $241,529.
     
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 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
     
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   date   Proceeds ($)   value ($)   appreciation ($)
125   US Treasury Bond 30 Year Futures   September 2007   13,569,088   13,468,750   100,338

For more information regarding the Fund’s other significant accounting policies, please refer to the Fund’s semiannual report to shareholders dated March 31, 2007.


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:   August 29, 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:   August 29, 2007
     
By:   /s/ Thomas Disbrow
    Thomas Disbrow
    Vice President and Treasurer
     
Date:   August 29, 2007