SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14 A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by the Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
INVESTMENT GRADE MUNICIPAL INCOME FUND INC.
-------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE>
INVESTMENT GRADE MUNICIPAL INCOME FUND INC.
----------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 18, 2001
----------------
TO THE SHAREHOLDERS:
The annual meeting of shareholders of Investment Grade Municipal Income
Fund Inc. ("Fund") will be held on January 18, 2001 at 10:00 a.m., Eastern time,
at 1285 Avenue of the Americas, 14th Floor, New York, New York 10019 for the
following purposes:
MATTERS TO BE VOTED UPON BY ALL SHAREHOLDERS:
(1) To elect seven (7) directors to serve until the annual meeting of
shareholders in 2002, or until their successors are elected and qualified;
(2) To ratify the selection of PricewaterhouseCoopers LLP as the Fund's
independent accountants, for the fiscal year ending September 30, 2001; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
MATTERS TO BE VOTED UPON ONLY BY HOLDERS OF AUCTION PREFERRED SHARES:
(4) To elect two (2) directors to serve until the annual meeting of
shareholders in 2002 or until their successors are elected and qualified.
You are entitled to vote at the meeting and any adjournments thereof if you
owned Fund shares at the close of business on November 17, 2000. 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,
DIANNE E. O'DONNELL
SECRETARY
November 30, 2000
51 West 52nd Street
New York, New York 10019-6114
--------------------------------------------------------------------------------
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 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 FOR WHICH YOU ARE ENTITLED TO CAST A VOTE NAMED
IN THE ATTACHED PROXY STATEMENT AND "FOR" ALL OTHER PROPOSALS NOTICED ABOVE. IN
ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE
ASK YOUR COOPERATION IN MAILING IN YOUR PROXY CARD PROMPTLY.
--------------------------------------------------------------------------------
<PAGE>
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:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
------------ ---------------
<S> <C>
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
</TABLE>
<PAGE>
INVESTMENT GRADE MUNICIPAL INCOME FUND INC.
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019-6114
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 18, 2001
This statement is furnished to the shareholders of Investment Grade
Municipal Income Fund Inc. ("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 January 18, 2001, or any adjournment or adjournments thereof.
This proxy statement and the related proxy card will first be mailed to
shareholders on or about November 30, 2000.
A majority of the shares outstanding on November 17, 2000, 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
(including a quorum of the Fund's auction preferred shares ("APS") with respect
to the election of the two directors to be elected by the APS), or if a quorum
is present at the annual meeting but sufficient votes to approve any of the
proposals are not received, 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
required to be voted AGAINST 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 and 4, for which the required vote is a
plurality, or Proposal 2, for which the required vote is a majority, of the
votes cast.
Except as otherwise indicated herein, all of the outstanding shares of the
Fund's common stock and APS will vote together as a single class. Each full
share of the Fund's common stock or APS is entitled to one vote and each
fractional share of the Fund's common stock or APS is entitled to a
proportionate share of one vote. However, as described below in connection with
Proposals 1 and 4, the holders of the APS, voting as a separate class, are
entitled to elect two of the Fund's directors.
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 your duly appointed agent or
attorney-in-fact. With respect to the holders of the APS, if you give no voting
instructions, your shares will be voted FOR the nine nominees for director named
herein and FOR the remaining proposals described in this proxy statement. With
respect to the holders of the Fund's common stock, if you give no voting
instructions, your shares will be voted FOR the seven nominees for director for
which the holders of the common stock are
<PAGE>
entitled to vote and FOR the remaining proposals described in this proxy
statement. You may revoke any proxy card by giving another proxy or by letter or
telegram revoking the initial proxy. 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, November 17, 2000, the Fund had outstanding
10,356,667 shares of common stock and 1,600 shares of the APS, representing
Series A and Series B shares. 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 or oral communications by regular employees of Mitchell Hutchins Asset
Management Inc. ("Mitchell Hutchins") or PaineWebber Incorporated
("PaineWebber"), who will not receive any compensation therefor from the Fund.
Management does not know of any person who owns beneficially 5% or more of the
shares of the Fund.
Mitchell Hutchins serves as the Fund's investment adviser and
administrator. Mitchell Hutchins, a Delaware corporation, is a wholly owned
asset management subsidiary of PaineWebber, which is a wholly owned indirect
subsidiary of UBSAG("UBS"), an internationally diversified organization with
headquarters in Zurich, Switzerland and operations in many areas of the
financial services industry. Mitchell Hutchins is located at 51 West 52nd
Street, New York, New York 10019-6114. The principal business offices of
PaineWebber are located at 1285 Avenue of the Americas, New York, New York
10019-6028. The principal business offices of UBS are located at Bahnhofstrasse
45, Zurich, Switzerland.
The Fund's annual report containing financial statements for the fiscal
year ended September 30, 2000, is being mailed to shareholders concurrently with
this proxy statement.
PROPOSALS 1 AND 4. ELECTION OF DIRECTORS
Proposals 1 and 4 relate to the election of directors of the Fund.
Management proposes the election of the nine nominees named in the table below.
Each nominee, including those who are not "interested persons" of the Fund as
that term is defined by the Investment Company Act of 1940 ("1940 Act")
("Independent Directors"), 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.
Holders of the outstanding shares of the APS, voting as a separate class,
are entitled to elect two of the Fund's directors. Margo N. Alexander and Meyer
Feldberg have been nominated as the directors that are to be elected by holders
of the APS. The other seven directors will be elected by holders of the
outstanding common stock and APS, voting together as a single class. Richard Q.
Armstrong, E. Garrett Bewkes, Jr., Richard R. Burt, George W. Gowen, Frederic V.
Malek, Carl W. Schafer and Brian M. Storms have been nominated as the directors
that are to be elected by all common stock and APS holders. Unless you give
contrary instructions on the enclosed proxy card: if you are a holder of the
APS, your shares will be voted FOR the election of all nine nominees; and, if
you are a holder of the common stock, your shares will be voted FOR the seven
nominees that are to be elected by all common stock and APS holders. 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.
2
<PAGE>
Mr. Feldberg and, except for a brief period during 1993, Mr. Bewkes have
served as directors from the Fund since its inception. Messrs. Armstrong and
Burt have served as directors of the Fund since February 15, 1995. Mrs.
Alexander has served as a director of the Fund since January 18, 1996. Messrs.
Gowen, Malek and Schafer have served as directors of the Fund since April 11,
1996. Mr. Storms has served as director since May 13, 1999. Effective September
8, 2000, Mary Farrell resigned her position as a director. A nominee has not yet
been selected to fill the vacancy created by her resignation. Directors shall be
elected by the affirmative vote of the holders of a plurality of the shares of
the Fund present in person or by proxy and entitled to vote thereon, provided a
quorum is present. If each of the nine nominees is elected, one vacancy will
remain on the board of directors of the Fund. Proxies cannot be voted for a
greater number of persons than the number of nominees named. None of the current
directors and executive officers (18 persons) beneficially owned any shares of
the common stock or APS of the Fund on October 31, 2000.
<TABLE>
<CAPTION>
PRESENT POSITION WITH THE SHARES OWNED
FUND; BUSINESS EXPERIENCE DURING BENEFICIALLY ON
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS OCTOBER 31, 2000**
------------ ------------------------------------ ------------------
<S> <C> <C>
Margo N. Alexander; 53* DIRECTOR. Mrs. Alexander is chairman (since March, --
1999) and a director of Mitchell Hutchins (since
January 1995) and an executive vice president and
director of PaineWebber (since March 1984). She
was chief executive officer of Mitchell Hutchins
from January 1995 to October 2000. Mrs. Alexander
is a director or trustee of 30 investment
companies for which Mitchell Hutchins, PaineWebber
or one of their affiliates serves as investment
adviser.
Richard Q. Armstrong; 65 DIRECTOR. Mr. Armstrong is chairman and principal --
of R.Q.A. Enterprises (management consulting firm)
(since April 1991 and principal occupation since
March 1995). He is also a director of AlFresh
Beverages Canada, Inc. (a Canadian beverage
subsidiary of AlFresh Foods Inc.)(since October
2000). Mr. Armstrong was chairman of the board,
chief executive officer and co-owner of Adirondack
Beverages (producer and distributor of soft drinks
and sparkling/still waters) (October 1993-March
1995). He was a partner of The New England
Consulting Group (management consulting firm)
(December 1992-September 1993). He was managing
director of LVMH U.S. Corporation (U.S. subsidiary
of the French luxury goods conglomerate, Louis
Vuitton Moet Hennessey Corporation) (1987-1991)
and chairman of its wine and spirits subsidiary,
Schieffelin & Somerset Company (1987-1991). Mr.
Armstrong is a director or trustee of 29
investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as
investment adviser.
E. Garrett Bewkes, Jr.; 74* DIRECTOR AND CHAIRMAN OF THE BOARD OF DIRECTORS. --
Mr. Bewkes serves as a consultant to PaineWebber
(since May 1999). Prior to November 2000, he was a
director
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRESENT POSITION WITH THE SHARES OWNED
FUND; BUSINESS EXPERIENCE DURING BENEFICIALLY ON
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS OCTOBER 31, 2000**
------------ ------------------------------------- ------------------
<S> <C> <C>
of Paine Webber Group Inc. ("PW Group"). Prior to
1996, he was a consultant to PW Group. Prior to
1988, he was chairman of the board, president and
chief executive officer of American Bakeries
Company. Mr. Bewkes is also a director of
Interstate Bakeries Corporation. Mr. Bewkes is a
director or trustee of 40 investment companies for
which Mitchell Hutchins, PaineWebber or one of
their affiliates serves as investment adviser.
Richard R. Burt; 53 DIRECTOR. Mr. Burt is chairman of IEP Advisors, --
LLP (international investments and consulting
firm) (since March 1994) and a partner of McKinsey
& Company (management consulting firm) (since
1991). He is also a director of
Archer-Daniels-Midland Co. (agricultural
commodities), Hollinger International Co.
(publishing), Homestake Mining Corp. (gold
mining), six investment companies in the
DeutscheBank family of funds, nine investment
companies in the Flag Investors family of funds,
The Central European Fund, Inc. and The Germany
Fund, Inc., vice chairman of Anchor Gaming
(provides technology to gaming and wagering
industry) (since July 1999) and chairman of
Weirton Steel Corp. (makes and finishes steel
products) (since April 1996). He was the chief
negotiator in the Strategic Arms Reduction Talks
with the former Soviet Union (1989-1991) and the
U.S. Ambassador to the Federal Republic of Germany
(1985-1989). Mr. Burt is a director or trustee of
29 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.
Meyer Feldberg; 58 DIRECTOR. Mr. Feldberg is Dean and Professor of --
Management of the Graduate School of Business,
Columbia University. Prior to 1989, he was
president of the Illinois Institute of Technology.
Dean Feldberg is also a director of Primedia Inc.
(publishing), Federated Department Stores, Inc.
(operator of department stores) and Revlon, Inc.
(cosmetics). Dean Feldberg is a director or
trustee of 37 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
George W. Gowen; 71 DIRECTOR. Mr. Gowen is a partner in the law firm --
of Dunnington, Bartholow & Miller. Prior to May
1994, he
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRESENT POSITION WITH THE SHARES OWNED
FUND; BUSINESS EXPERIENCE DURING BENEFICIALLY ON
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS OCTOBER 31, 2000**
------------ ------------------------------------ ------------------
<S> <C> <C>
was a partner in the law firm of Fryer, Ross &
Gowen. Mr. Gowen is a director or trustee of 37
investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as
investment adviser.
Frederic V. Malek; 63 DIRECTOR. Mr. Malek is chairman of Thayer Capital --
Partners (merchant bank) and chairman of Thayer
Hotel Investors II and Lodging Opportunities Fund
(hotel investment partnerships). From January 1992
to November 1992, he was campaign manager of
Bush-Quayle '92. From 1990 to 1992, he was vice
chairman and, from 1989 to 1990, he was president
of Northwest Airlines Inc. and NWA Inc. (holding
company of Northwest Airlines Inc.). Prior to
1989, he was employed by the Marriott Corporation
(hotels, restaurants, airline catering and
contract feeding), where he most recently was an
executive vice president and president of Marriott
Hotels and Resorts. Mr. Malek is also a director
of Aegis Communication Inc. (teleservices),
American Management Systems, Inc. (management
consulting and computer related services),
Automatic Data Processing, Inc. (computing
services), CB Richard Ellis, Inc. (real estate
services), FPL Group, Inc. (electric services),
Global Vacation Group (packaged vacations),
HCR/Manor Care, Inc. (health care), SAGA Systems,
Inc. (software company) and Northwest Airlines
Inc. Mr. Malek is a director or trustee of 29
investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as
investment adviser.
Carl W. Schafer; 64 DIRECTOR. Mr. Schafer is president of the Atlantic --
Foundation (charitable foundation supporting
mainly oceanographic exploration and research). He
is a director of Labor Ready, Inc. (temporary
employment), Roadway Express, Inc. (trucking), The
Guardian Group of Mutual Funds, the Harding,
Loevner Funds, E.I.I. Realty Trust (investment
company), Evans Systems, Inc. (motor fuels,
convenience store and diversified company),
Electronic Clearing House, Inc. (financial
transactions processing), Frontier Oil Corporation
and Nutraceutix, Inc. (biotechnology company).
Prior to January 1993, he was chairman of the
Investment Advisory Committee of the Howard Hughes
Medical Institute. Mr. Schafer is a director or
trustee of 29 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as an investment adviser.
</TABLE>
(FOOTNOTES ON NEXT PAGE)
5
<PAGE>
<TABLE>
<CAPTION>
PRESENT POSITION WITH THE SHARES OWNED
FUND; BUSINESS EXPERIENCE DURING BENEFICIALLY ON
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS OCTOBER 31, 2000**
------------ ------------------------------------ -------------------
<S> <C> <C>
Brian M. Storms**; 46 DIRECTOR AND PRESIDENT. Mr. Storms is chief --
executive officer (since October 2000) and
president of Mitchell Hutchins (since March 1999).
Mr. Storms was president of Prudential Investments
(1996-1999). Prior to joining Prudential he was a
managing director at Fidelity Investments. Mr.
Storms is president and a director or trustee of
30 investment companies for which Mitchell
Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.
</TABLE>
* Mrs. Alexander, Mr. Bewkes and Mr. Storms are "interested persons" of the
Fund as defined by the 1940 Act by virtue of their positions with Mitchell
Hutchins and/or PaineWebber.
** Unless otherwise stated, as of the date indicated, each director had sole
voting and investment power of any shares owned.
The board of directors of the Fund met six times during the fiscal year
ended September 30, 2000. Each director attended 75% or more of the board
meetings during the last fiscal year. The board has established an Audit
Committee that acts pursuant to a written charter and is responsible for
overseeing the Fund's accounting and financial reporting policies, practices and
internal controls. A copy of the charter is attached as Exhibit A. 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
accountants the matters required to be discussed by Statement on Auditing
Standards No. 61; (c) received certain written disclosures and the letter from
the independent accountants required by Independence Standards Board Standard
No. 1 and discussed with the independent accountants the independent
accountants' independence; and (d) based upon its review of the above,
recommended to the board that the audited financial statements be included in
the Fund's annual report to shareholders. The Audit Committee currently consists
of Messrs. Armstrong, Burt, Feldberg, Gowen, Malek and Schafer, none of whom
have any relationship to the Fund that would interfere with the exercise of
their independence from management or the Fund and who are independent as
defined under listing standards of the New York Stock Exchange. Each member of
the Fund's Audit Committee is also a member of a similar committee established
by the boards of other investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser. The Audit Committee met once during
the fiscal year ended September 30, 2000 and each member attended that meeting.
The board does not have a standing nominating or compensation committee.
The Fund pays the Independent Directors $1,000 annually and up to $150 for each
board meeting and for each separate meeting of a board committee. The Chairmen
of the Audit Committees and the audit and contract review committees of
individual funds within the PaineWebber fund complex receive additional annual
compensation aggregating $15,000 each from the relevant funds. Directors of the
Fund who are "interested persons" as defined by the 1940 Act receive no
compensation from the Fund. Directors are reimbursed for any expenses incurred
in attending meetings. Each director will be subject to mandatory retirement at
the end of the year in which he or she becomes 72 years old. The board has
waived this requirement with respect to Mr. Bewkes for the next year. The table
below includes certain information relating to the compensation of the Fund's
directors.
6
<PAGE>
COMPENSATION TABLE+
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM THE FUND
NAME OF FROM AND THE
PERSON, POSITION THE FUND* FUND COMPLEX**
-------------- ------------ --------------
Richard Q. Armstrong, Director............. $1,780 $104,650
Richard R. Burt, Director.................. $1,780 $102,850
Meyer Feldberg, Director................... $2,455 $143,650
George W. Gowen, Director.................. $1,780 $138,400
Frederic V. Malek, Director................ $1,780 $104,650
Carl W. Schafer, Director.................. $1,750 $104,650
----------
+ Only independent members of the board are compensated by the Fund and
identified above; directors who are "interested persons," as defined
by the 1940 Act, do not receive compensation.
* Represents fees paid to each director during the fiscal year ended
September 30, 2000.
** Represents total compensation paid to each director by 31 investment
companies (34 in the case of Messrs. Feldberg and Gowen) for which
Mitchell Hutchins, PaineWebber or one of their affiliates served as
investment adviser during the twelve months ended December 31, 1999;
no fund within the complex has a bonus, pension, profit sharing or
retirement plan.
PROPOSAL 2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Fund's financial statements for the fiscal year ended September 30,
2000 were audited by PricewaterhouseCoopers LLP ("Pricewaterhouse"), independent
accountants. In addition, PriceWaterhouse prepares the Fund's federal and state
annual income tax returns.
The board of directors of the Fund has selected Pricewaterhouse as the
independent accountants for the Fund for the fiscal year ending September 30,
2001, subject to ratification by shareholders of the Fund at the annual meeting.
Pricewaterhouse has been the Fund's independent accountants since its inception
in November 1992. The ratification of Pricewaterhouse as independent accountants
is to be voted upon at the annual meeting, and it is intended that the persons
named in the accompanying proxy will vote FOR such ratification unless contrary
instructions are given. Pricewaterhouse has informed the Fund that it has no
material direct or indirect financial interest in the Fund. The affirmative vote
of the holders of a majority of the shares of the Fund cast at the annual
meeting is required for ratification, provided a quorum is present.
Representatives of Pricewaterhouse 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 2.
7
<PAGE>
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, other than Mr.
Storms, who is a nominee for director, are:
THOMAS DISBROW, age 34, vice president and assistant treasurer of the Fund
(appointed February 2000). Mr. Disbrow is a first vice president and a senior
manager of the mutual fund finance department of Mitchell Hutchins. Prior to
November 1999, he was a vice president of Zweig/Glaser Advisers. Mr. Disbrow is
a vice president and assistant treasurer of 30 investment companies for which
Mitchell Hutchins, PaineWebber or one of their affiliates serves as investment
adviser.
AMY R. DOBERMAN, age 38, vice president of the Fund (appointed September
2000). Ms. Doberman is a senior vice president and general counsel of Mitchell
Hutchins. From December 1996 through July 2000, she was general counsel of
Aeltus Investment Management, Inc. Prior to working at Aeltus, Ms. Doberman was
a Division of Investment Management Assistant Chief Counsel at the SEC. Ms.
Doberman is a vice president of 29 investment companies and a vice president and
secretary of one investment company for which Mitchell Hutchins, PaineWebber or
one of their affiliates serves as investment adviser.
ELBRIDGE T. GERRY III, age 43, vice president of the Fund (appointed April
1996). Mr. Gerry is a managing director and a portfolio manager of Mitchell
Hutchins. Prior to January 1996, he was with J.P. Morgan Private Banking where
he was responsible for managing municipal assets, including several municipal
bond funds. Mr. Gerry is a vice president of 20 investment companies for which
Mitchell Hutchins, PaineWebber or one of their affiliates serves as investment
adviser.
JOHN J. LEE, age 32, vice president and assistant treasurer of the Fund
(appointed May 1998). Mr. Lee is a vice president and a manager of the mutual
fund finance department of Mitchell Hutchins. Prior to September 1997, he was an
audit manager in the financial services practice of Ernst & Young LLP. Mr. Lee
is a vice president and assistant treasurer of 30 investment companies for which
Mitchell Hutchins, PaineWebber or one of their affiliates serves as investment
adviser.
KEVIN J. MAHONEY, age 35, vice president and assistant treasurer (appointed
May 1999). Mr. Mahoney is a first vice president and a senior manager of the
mutual fund finance department of Mitchell Hutchins. From August 1996 through
March 1999, he was the manager of the mutual fund internal control group of
Salomon Smith Barney. Prior to August 1996, he was an associate and assistant
treasurer of BlackRock Financial Management L.P. Mr. Mahoney is a vice president
and assistant treasurer of 30 investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as investment adviser.
ANN E. MORAN, age 43, vice president and assistant treasurer of the Fund
(appointed June 1993). Ms. Moran is a vice president and a manager of the mutual
fund finance department of Mitchell Hutchins. Ms. Moran is a vice president and
assistant treasurer of 30 investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as investment adviser.
DIANNE E. O'DONNELL, age 48, vice president and secretary of the Fund
(appointed August 1992). Ms. O'Donnell is a senior vice president and deputy
general counsel of Mitchell Hutchins. Ms. O'Donnell is a vice president and
secretary of 29 investment companies and vice president and assistant secretary
of one investment company for which Mitchell Hutchins, PaineWebber or one of
their affiliates serves as investment adviser.
8
<PAGE>
PAUL H. SCHUBERT, age 37, vice president (appointed September 1994) and
treasurer (appointed May 1997) of the Fund. Mr. Schubert is a senior vice
president and the director of the mutual fund finance department of Mitchell
Hutchins. Mr. Schubert is a vice president and treasurer of 30 investment
companies for which Mitchell Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.
BARNEY A. TAGLIALATELA, age 39, vice president and assistant treasurer of
the Fund (appointed May 1997). Mr. Taglialatela is a vice president and a
manager of the mutual fund finance department of Mitchell Hutchins. Mr.
Taglialatela is a vice president and assistant treasurer of 30 investment
companies for which Mitchell Hutchins, PaineWebber or one of their affiliates
serves as investment adviser.
KEITH A. WELLER, age 39, vice president and assistant secretary of the Fund
(appointed September 1995). Mr. Weller is a first vice president and senior
associate general counsel of Mitchell Hutchins. Mr. Weller is a vice president
and assistant secretary of 30 investment companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves as an investment adviser.
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.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit proposals to be considered at the
Fund's 2002 annual meeting of shareholders should send such proposals to the
secretary of the Fund at 1285 Avenue of the Americas, New York, NY 10019-6028.
In order to be considered at that meeting, shareholder proposals must be
received by the Fund no later than August 2, 2001 and must satisfy the 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,
DIANNE E. O'DONNELL
SECRETARY
November 30, 2000
9
<PAGE>
EXHIBIT A
PAINEWEBBER CLOSED-END FUNDS
AUDIT COMMITTEE CHARTER
ESTABLISHMENT AND PURPOSE
The Audit Committee (the "Committee") of the Board of Directors of each of
the closed-end PaineWebber Funds (collectively the "Funds" and, individually, a
"Fund") is hereby established on this the 11th day of May, 2000. The primary
purpose of the Audit Committee is to oversee each Fund's accounting and
financial reporting policies, practices and internal controls, as required by
the statutes and regulations administered by the Securities and Exchange
Commission, including the Investment Company Act of 1940 (the "Act"), and by the
rules of the New York Stock Exchange, Inc. or other relevant securities exchange
on which shares of the Fund are listed.
The Committee will endeavor to assure the quality and objectivity of each
Fund's independent audit and the Fund's financial statements, act as a liaison
between the Board of Directors and each Fund's independent auditors and
periodically report to the Board of Directors. In performing its duties, the
Committee shall have unrestricted access to each Fund's Directors, the
independent auditors, and the executive and financial management of the Fund.
COMPOSITION
The Committee, which will have at least three members at all times, shall
be composed of all the non-interested Directors (as defined in the Act) of each
Fund's Board of Directors, other than those who are not qualified to serve or
who choose not to serve.
Each member of the Committee must meet the independence and experience
requirements set forth in Appendix A. At least one member of each Sub-Committee
must also meet the financial expertise requirements set forth in Appendix A.
The Committee shall elect a chairman, who shall preside over Committee
meetings (the "Chairman"), and may elect a deputy chairman to preside in the
absence of the Chairman.
SUB-COMMITTEES
The Committee shall have two Audit Sub-Committees (the "Sub-Committees" or,
individually, a "Sub-Committee"). Each member of the Committee shall serve on
one of the two Sub-Committees. Each Sub-Committee shall be assigned the
responsibility of initially performing the Committee's duties with respect to
specific Funds as determined from time to time by the Committee. Each
Sub-Committee shall report its findings and recommendations to the full
Committee, which will retain ultimate responsibility for audit oversight.
Each Sub-Committee shall have a Chairman, one of whom shall also be the
Chairman of the Committee. The other Sub-Committee Chairman shall be elected by
all members of the Committee.
MEETINGS
The Committee and each Sub-Committee shall meet on a regular basis, but not
less frequently than annually. An Agenda shall be established for each meeting.
Special meetings shall be called as circumstances
10
<PAGE>
require. The Chairman of the Committee and each Sub-Committee may invite
Fund officers and other interested parties to participate in meetings. The
Committee and each Sub-Committee may, in its discretion, meet in executive
session outside the presence of Fund officers and other parties.
A majority of the Committee's and each Sub-Committee's members shall
constitute a quorum. However, if either Sub-Committee does not have a quorum but
a quorum of the Committee as a whole is present, the committee as a whole may
act in the Sub-Committee's place. At any meeting of the Committee or a
Sub-Committee, the decision of a majority of the members present and voting
shall be determinative as to any matter submitted to a vote. Members may attend
telephonically or otherwise whereby they can hear and be heard by all other
attendees.
REPORTING
The Committee Chairman (and, as necessary, the Chairman of any
Sub-Committee) shall report to the Board of Directors on the result of its
reviews and make such recommendations as deemed appropriate. The Committee and
each Sub-Committee will keep minutes of its meetings and will make such minutes
available as requested to the full Board for its review.
DUTIES AND RESPONSIBILITIES
As a general rule, each Fund's independent auditors are ultimately
accountable to the Board of Directors of the Fund and the Committee, and the
Committee and the Board of Directors have the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the
independent auditors of each Fund, subject to the requirements of the Act. In
addition, the Committee and each designated Sub-Committee shall have the
following specific duties and responsibilities:
Audit Oversight
o In connection with the organization of each Fund and annually
thereafter, recommend to the Board of Directors the selection of an
independent public accounting firm.
o Review the scope of each Fund's proposed audit each year, including the
extent of audit and non-audit services provided to each Fund by the
independent auditors, and the audit procedures to be utilized. At the
conclusion of each audit, the Committee will review the audit, including
any comments or recommendations, with the independent auditors.
o Ensure that the independent auditors for each Fund submit on a periodic
basis to the Committee a formal written statement delineating all
relationships between the auditors and each Fund consistent with
Independence Standards Board Standard No. 1.
o Discuss with the independent auditors any disclosed relationships or
services that may impact the objectivity and independence of the
independent auditors.
o Recommend that the Board of Directors of each Fund take appropriate
action in response to the independent auditors' report to satisfy itself
of, and oversee, the independence of the independent auditors.
o Discuss with Management the performance of the independent auditors,
Management's recommendation with respect to the reasonableness of their
fees and the recommendation to the Board of Directors regarding the
retention of the independent auditors.
11
<PAGE>
o Review and discuss with independent auditors and Management each Fund's
annual report to shareholders and significant accounting policies
underlying the reports and their presentation to the public.
o Discuss with each Fund's independent auditors any matters required to be
discussed pursuant to Statement of Auditing Standards No. 61, as
modified or supplemented.
o Discuss with each Fund's independent auditors, to the extent required by
Statement of Auditing Standards No. 71, any adjustments which were made
to previously reported financial information.
o Review with each Fund's independent auditors the adequacy and
effectiveness of relevant internal controls and procedures and the
quality of the staff implementing these controls and procedures.
o As necessary, review with the independent auditors and Management any
"illegal acts," as defined in Section 10A of the Securities Exchange Act
of 1934 and required by that statute to be reported to the Committee, or
other significant issues that could have a material effect on a Fund's
financial statements.
o Make recommendations to the Board of Directors of each Fund, based on
the Committee's review and discussions with each Fund's independent
auditors and Management, with respect to each Fund's financial
statements as to whether the financial statements should be included in
each Fund's annual report for the previous fiscal year.
OTHER
o Review with each Fund's Management, investment adviser and, if
applicable, sub-adviser:
(a) such compliance matters as are appropriate to be brought to the
attention of the Committee; and
(b) any comments or criticisms from the staff of the Securities and
Exchange Commission or any other regulators as are appropriate to be
brought to the attention of the Committee.
ANNUAL REVIEW
The Committee shall review and reassess the adequacy of this charter on an
annual basis.
AMENDMENTS
This charter may be amended by a vote of the Board.
LIMITS ON COMMITTEE LIABILITY
Except under extraordinary circumstances, actions taken by the Committee as
a whole shall not subject the Committee members to any personal liability.
The Committee is not responsible for either the preparation of the
financial statements or the auditing of the financial statements. Management of
the Fund has the responsibility for preparing the financial statements and
implementing internal controls and the independent auditors have the
responsibility for auditing the financial statements and monitoring the
effectiveness of the internal controls. The review of the financial statements
by the Committee is not of the same quality as the audit performed by the
independent auditors. In carrying out its responsibilities, the Committee
believes its policies and procedures should remain flexible in order to best
react to a changing environment.
12
<PAGE>
APPENDIX A
Independence Requirements
In order to be deemed independent, each member of the Committee must be
free of any relationships that may interfere with the exercise of his or her
independent judgment. To ensure the independence of each Committee member, the
following restrictions shall apply to each Committee member:
o A Director who is an employee (including non-employee executive
officers) of a Fund or any of its affiliates may not serve on the
Committee until three years following the termination of his or her
employment. In the event the employment relationship is with a former
parent or predecessor of a Fund, the Director could serve on the
Committee after three years following the termination of the
relationship between the Fund and the former parent or predecessor.
o A Director: (a) who is a partner, controlling shareholder, or executive
officer of an organization that has a business relationship with a Fund,
or (b) who has a direct business relationship with a Fund (e.g., a
consultant) may serve on the Committee only if the Board of Directors of
that Fund determines in its business judgment that the relationship does
not interfere with the Director's exercise of independent judgment. In
making a determination regarding the independence of a Director pursuant
to this paragraph, the Board of Directors of the Fund should consider,
among other things, the materiality of the relationship to the Fund, to
the Director, and, if applicable, to the organization with which the
Director is affiliated.
"Business relationship" can include commercial, industrial, banking,
consulting, legal, accounting and other relationships. A Director can
have this relationship directly with the Fund, or the Director can be a
partner, officer or employee of an organization that has such a
relationship. The Director may serve on the Committee without the
above-referenced Board of Directors' determination after three years
following the termination of, as applicable, either: (a) the
relationship between the organization with which the Director is
affiliated and the Fund, (b) the relationship between the Director and
his or her partnership status, shareholder interest or executive officer
position, or (c) the direct business relationship between the Director
and the Fund.
o A Director who is employed as an executive of another corporation where
a Fund's executives serve on that corporation's compensation committee
may not serve on the Committee.
o A Director who is an "Immediate Family" member (as this term is defined
in Rule 303.02(A) of the NYSE Listed Company Manual) of an individual
who is an executive officer of a Fund or any of its affiliates cannot
serve on the Committee until three years following the termination of
such employment relationship.
Exceptions
One Independent Director who does not meet the independence requirements
above, and is not a current employee or an immediate family member of such an
employee, may be appointed as a member of the Committee, if the Boards of
Directors of the PaineWebber Funds, under exceptional and limited circumstances,
determines that his or her membership on the Committee is required by the best
interests of the Funds and their shareholders, and the Boards disclose, in the
next annual proxy statement for each closed-end Fund subsequent to the person's
appointment, the nature of the relationship and the reasons why the person was
appointed to the Committee.
13
<PAGE>
Experience Requirements
Each member of the Committee must be "financially literate." A member of
the Committee will be deemed to be "financially literate" if he or she is able
to read and understand financial statements, including, but not limited to, the
Funds' balance sheets, income statements, and cash flow statements, or will
become able to do so within a reasonable time after becoming a member of the
Committee.
Financial Expertise Requirements
At least one member of each Sub-Committee must have past employment
experience in finance or accounting, requisite professional certification in
accounting, or any comparable experience or background which would result in the
individual's financial sophistication, including being or having been a chief
executive officer, chief financial officer or other senior officer with
financial oversight responsibilities.
14
<PAGE>
-------------------------------------------------------------------------------
INVESTMENT
GRADE
MUNICIPAL
INCOME FUND INC.
-------------------------------------------------------------------------------
PROXY
STATEMENT
-------------------------------------------------------------------------------
INVESTMENT
GRADE
MUNICIPAL
INCOME FUND INC.
-------------------------------------------------------------------------------
NOTICE OF
ANNUAL MEETING
TO BE HELD ON
JANUARY 18, 2001
AND
PROXY STATEMENT
-------------------------------------------------------------------------------
15
<PAGE>
APS
PROXY
------
INVESTMENT GRADE MUNICIPAL INCOME FUND INC.
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 18, 2001
THE UNDERSIGNED HEREBY APPOINTS AS PROXIES SCOTT GRIFF AND VICTORIA DRAKE AND
EACH OF THEM (WITH POWER OF SUBSTITUTION) TO VOTE FOR THE UNDERSIGNED ALL SHARES
OF PREFERRED STOCK OF THE UNDERSIGNED AT THE AFORESAID MEETING AND ANY
ADJOURNMENT THEREOF WITH ALL THE POWER THE UNDERSIGNED WOULD HAVE IF PERSONALLY
PRESENT. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS INSTRUCTED.
UNLESS INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO GRANT AUTHORITY
TO VOTE "FOR" ALL PROPOSALS. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF INVESTMENT GRADE MUNICIPAL INCOME FUND INC.
YOUR VOTE IS IMPORTANT
Please date and sign this proxy on the reverse side and return it in the
enclosed envelope to PFPC Inc., P.O. Box 9426, Wilmington, DE 19809-9938. PFPC
Inc. has been engaged to forward the enclosed proxy material and to tabulate
proxies by mail.
PLEASE INDICATE YOUR VOTE BY AN `X' IN THE APPROPRIATE BOX BELOW. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR".
<TABLE>
<CAPTION>
FOR ALL OR FOR ALL EXCEPT OR WITHHOLD
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW
AND MARK CENTER BOX TO RIGHT.)
Margo N. Alexander, Richard Q. Armstrong, E. Garrett Bewkes, Jr., [ ] [ ] [ ]
Richard R. Burt, Meyer Feldberg, George W. Gowen, Frederic V. Malek, Carl
W. Schafer, Brian M. Storms.
2. To ratify the selection of PricewaterhouseCoopers LLP as the Fund's FOR AGAINST ABSTAIN
independent accountants for the fiscal year ending September 30, 2001. [ ] [ ] [ ]
</TABLE>
Continued and to be signed on reverse side
<PAGE>
This proxy will not be voted unless it is dated and signed exactly
as instructed below.
If shares are held by an individual, sign your name exactly as it appears on
this card. If shares are held jointly, either party may sign, but the name of
the party signing should conform exactly to the name shown on this proxy card.
If shares are held by a corporation, partnership or similar account, the name
and the capacity of the individual signing the proxy card should be indicated
unless it is reflected in the form of registration. For example: "ABC Corp.,
John Doe, Treasurer."
Sign exactly as name appears hereon.
__________________________________________(L.S.)
__________________________________________(L.S.)
Date_____________________________________, 2000
<PAGE>
COMMON STOCK
PROXY
------
INVESTMENT GRADE MUNICIPAL INCOME FUND INC.
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 18, 2001
THE UNDERSIGNED HEREBY APPOINTS AS PROXIES SCOTT GRIFF AND VICTORIA DRAKE AND
EACH OF THEM (WITH POWER OF SUBSTITUTION) TO VOTE FOR THE UNDERSIGNED ALL SHARES
OF COMMON STOCK OF THE UNDERSIGNED AT THE AFORESAID MEETING AND ANY ADJOURNMENT
THEREOF WITH ALL THE POWER THE UNDERSIGNED WOULD HAVE IF PERSONALLY PRESENT. THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS INSTRUCTED. UNLESS INDICATED
TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO GRANT AUTHORITY TO VOTE "FOR" ALL
PROPOSALS. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
INVESTMENT GRADE MUNICIPAL INCOME FUND INC.
YOUR VOTE IS IMPORTANT
Please date and sign this proxy on the reverse side and return it in the
enclosed envelope to PFPC Inc., P.O. Box 9426, Wilmington,
DE 19809-9938. PFPC Inc. has been engaged to forward the enclosed proxy material
and to tabulate proxies by mail.
PLEASE INDICATE YOUR VOTE BY AN `X' IN THE APPROPRIATE BOX BELOW. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR".
<TABLE>
<CAPTION>
FOR ALL OR FOR ALL EXCEPT OR WITHHOLD
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW
AND MARK CENTER BOX TO RIGHT.)
Richard Q. Armstrong, E. Garrett Bewkes, Jr., Richard R. Burt, George [ ] [ ] [ ]
W. Gowen, Frederic V. Malek, Carl W. Schafer, Brian M. Storms.
2. To ratify the selection of PricewaterhouseCoopers LLP as the Fund's
independent accountants for the fiscal year ending September 30, 2001. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
Continued and to be signed on reverse side
<PAGE>
This proxy will not be voted unless it is dated and signed exactly
as instructed below.
If shares are held by an individual, sign your name exactly as it appears on
this card. If shares are held jointly, either party may sign, but the name of
the party signing should conform exactly to the name shown on this proxy card.
If shares are held by a corporation, partnership or similar account, the name
and the capacity of the individual signing the proxy card should be indicated
unless it is reflected in the form of registration. For example: "ABC Corp.,
John Doe, Treasurer."
Sign exactly as name appears hereon.
__________________________________________(L.S.)
__________________________________________(L.S.)
Date_____________________________________, 2000
