Notes to Financial Statements
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Investment Grade Municipal Income Fund (formerly PaineWebber Premier Tax-Free Income Fund Inc.) (the
"Fund") was incorporated in Maryland on August 6, 1992 as a closed-end, diversified management investment
company. Effective August 14, 1995, the Fund commenced conducting business under the name "Investment
Grade Municipal Income Fund." The Board of Directors approved the change of the Fund's name at a meeting
held on June 2, 1995, subject to shareholder approval of the change. Prior to November 6, 1992, the Fund had
no activities other than organizational matters and the sale of 6,667 shares of common stock to Mitchell Hutchins
Asset Management Inc. ("Mitchell Hutchins"), a wholly owned subsidiary of PaineWebber Incorporated.
Organizational costs have been deferred and are being amortized on the straight line method over a period not to
exceed 60 months from the date the Fund commenced operations.
Valuation of Investments--Where market quotations are readily available, portfolio securities are valued thereon,
provided such quotations adequately reflect, in the judgment of Mitchell Hutchins, investment adviser and
administrator of the Fund, the fair value of the securities. When market quotations are not readily available,
securities are valued based upon appraisals received from a pricing service which utilizes a computerized matrix
pricing system, or based upon appraisals derived from information concerning those securities or similar securities
received from recognized dealers in those securities. All other securities are valued at fair value as determined in
good faith by or under the direction of the Fund's board of directors. The amortized cost method of valuation,
which approximates market value, is used to value certain debt obligations with 60 days or less remaining to
maturity, unless the Fund's board of directors determines that this does not represent fair value.
The Fund follows an investment policy