SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
Brinson Investment Grade Municipal Income Fund, Inc.
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(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 table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
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):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
________________________________________________________________________________
[_] 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:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
INVESTMENT GRADE MUNICIPAL INCOME FUND INC.
----------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 17, 2002
----------
TO THE SHAREHOLDERS:
The annual meeting of shareholders of Investment Grade Municipal Income
Fund Inc. ("Fund") will be held on January 17, 2002 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 ten (10) directors to serve until the annual meeting of
shareholders in 2003, or until their successors are elected and qualified;
and
(2) 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:
(3) To elect two (2) directors to serve until the annual meeting of
shareholders in 2003, 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 16, 2001. 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,
AMY R. DOBERMAN
SECRETARY
November 30, 2001
51 West 52nd Street
New York, New York 10019-6114
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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.
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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:
REGISTRATION VALID SIGNATURE
------------ ---------------
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
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 17, 2002
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 17, 2002, 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, 2001.
A majority of the shares outstanding on November 16, 2001, 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 3, for which the required vote is a
plurality.
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 3, 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 twelve nominees for director
named herein. With respect to the holders of the Fund's common stock, if you
give no voting instructions, your shares will be voted FOR the ten nominees for
director for which
the holders of the common stock are entitled to vote. 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 16, 2001, 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 Brinson Advisors, Inc.
("Brinson Advisors") or UBS PaineWebber Inc. ("UBS PaineWebberSM*"), 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.
Brinson Advisors serves as the Fund's investment advisor and administrator.
Brinson Advisors, a Delaware corporation, is an indirect wholly owned asset
management subsidiary of UBSAG, with headquarters in Zurich, Switzerland, is an
internationally diversified organization with operations in many areas of the
financial services industry. Brinson Advisors is located at 51 West 52nd Street,
New York, New York 10019-6114. The principal business offices of UBS PaineWebber
are located at 1285 Avenue of the Americas, New York, New York 10019-6028. The
principal business offices of UBSare located at Bahnhofstrasse 45, Zurich,
Switzerland.
The Fund's annual report containing financial statements for the fiscal
year ended September 30, 2001, is being mailed to shareholders concurrently with
this proxy statement.
PROPOSALS 1 AND 3. ELECTION OF DIRECTORS
Proposals 1 and 3 relate to the election of directors of the Fund.
Management proposes the election of the twelve 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 ten directors will be elected by holders of both the
outstanding common stock and APS, voting together as a single class. Richard Q.
Armstrong, David J. Beaubien, E. Garrett Bewkes, Jr., Richard R. Burt, George W.
Gowen, William W. Hewitt, Jr., Morton Janklow, Frederic V. Malek, Carl W.
Schafer and William D. White 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 twelve nominees; and, if you are a
holder of the common stock, your shares will be voted FOR the ten 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.
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*UBS PaineWebber is a service mark of UBS AG.
2
Mr. Feldberg and, except for a brief period during 1993, Mr. Bewkes have
served as directors for 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. Effective
September 20, 2001, Mr. Storms resigned his position as director and David J.
Beaubien, William W. Hewitt, Morton L. Janklow and William D. White were
appointed directors of the Fund. 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. Proxies
cannot be voted for a greater number of persons than the number of nominees
named. None of the current directors and executive officers (19 persons)
beneficially owned any shares of the common stock or APS of the Fund on October
31, 2001.
SHARES OWNED
PRESENT POSITION WITH THE BENEFICIALLY
FUND; BUSINESS EXPERIENCE DURING ON OCTOBER 31,
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS 2001**
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Margo N. Alexander; 54* DIRECTOR. Mrs. Alexander is an --
executive vice president and director
of UBS PaineWebber (since March
1984). She was chief executive
officer of Brinson Advisors from
January 1995 to October 2000, a
director (from January 1995 to
September 2001) and chairman (from
March 1999 to September 2001) of
Brinson Advisors. Mrs. Alexander is a
director or trustee of 22 investment
companies for which Brinson Advisors,
UBS PaineWebber or one of their
affiliates serves as investment
advisor, sub-advisor or manager.
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 22 investment
companies for which Brinson Advisors,
UBS PaineWebber or one of their
affiliates serves as investment
advisor, sub-advisor or manager.
David J. Beaubien; 67 DIRECTOR. Mr. Beaubien is chairman of --
Yankee Environmental Systems, Inc.,
a manufacturer of meteorological
3
SHARES OWNED
PRESENT POSITION WITH THE BENEFICIALLY
FUND; BUSINESS EXPERIENCE DURING ON OCTOBER 31,
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS 2001**
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measuring systems. Prior to January
1991, he was senior vice president
of EG&G, Inc., a company which makes
and provides a variety of scientific
and technically oriented products
and services. He is also director of
IEC Electronics, Inc., a
manufacturer of electronic
assemblies. From 1985 to January
1995, Mr. Beaubien served as a
director or trustee on the boards of
the Kidder, Peabody & Co.
Incorporated mutual funds. Mr.
Beaubien is a trustee of 22
investment companies for which
Brinson Advisors, UBS PaineWebber or
one of their affiliates serves as
investment advisor, sub-advisor or
manager.
E. Garrett Bewkes, Jr.; 75* DIRECTOR AND CHAIRMAN OF THE BOARD --
OF DIRECTORS. Mr. Bewkes serves as a
consultant to UBS PaineWebber (since
May 1999). Prior to November 2000,
he was a director of Paine Webber
Group Inc. ("PW Group"), formerly
the holding company of UBS
PaineWebber and Brinson Advisors and
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 a
director of Interstate Bakeries
Corporation. Mr. Bewkes is a
director or trustee of 32 investment
companies for which Brinson
Advisors, UBS PaineWebber or one of
their affiliates serves as
investment advisor, sub-advisor or
manager.
Richard R. Burt; 54 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), 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
4
SHARES OWNED
PRESENT POSITION WITH THE BENEFICIALLY
FUND; BUSINESS EXPERIENCE DURING ON OCTOBER 31,
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS 2001**
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Federal Republic of Germany
(1985-1989). Mr. Burt is a director
or trustee of 22 investment
companies for which Brinson
Advisors, UBS PaineWebber or one of
their affiliates serves as
investment advisor, sub-advisor or
manager.
Meyer Feldberg; 59 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),
Revlon, Inc. (cosmetics) and Select
Medical Inc. (healthcare services).
Dean Feldberg is a director or
trustee of 30 investment companies
for which Brinson Advisors, UBS
PaineWebber or one of their
affiliates serves as investment
advisor, sub-advisor or manager.
George W. Gowen; 71 DIRECTOR. Mr. Gowen is a partner in --
the law firm of Dunnington,
Bartholow & Miller. Prior to May
1994, he was a partner in the law
firm of Fryer, Ross & Gowen. Mr.
Gowen is a director or trustee of 30
investment companies for which
Brinson Advisors, UBS PaineWebber or
one of their affiliates serves as
investment advisor, sub-advisor or
manager.
William W. Hewitt, Jr.; 73 DIRECTOR. Mr. Hewitt is retired. --
Since 1988, he has served as a
director or trustee on the boards of
the Guardian Life Insurance Company
mutual funds. From 1990 to January
1995, Mr. Hewitt served as a
director or trustee on the boards of
the Kidder, Peabody & Co
Incorporated mutual funds. From
1986-1988, he was an executive vice
president and director of mutual
funds, insurance and trust services
of Shearson Lehman Brothers Inc.
From 1976-1986, he was president of
Merrill Lynch Funds Distributor,
Inc. Mr. Hewitt is a trustee of 22
investment companies for which
Brinson Advisors, UBS PaineWebber or
one of their affiliates serves as
investment advisor, sub-advisor or
manager.
Morton Janklow; 71 DIRECTOR. Mr. Janklow is senior --
partner of Janklow & Nesbit
Associates, an international
literary agency representing leading
authors in their relationships with
publishers and motion picture,
television and multi-media
5
SHARES OWNED
PRESENT POSITION WITH THE BENEFICIALLY
FUND; BUSINESS EXPERIENCE DURING ON OCTOBER 31,
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS 2001**
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companies, and of counsel to the law
firm of Janklow & Ashley. Mr.
Janklow is a trustee of 22
investment companies for which
Brinson Advisors, UBS PaineWebber or
one of their affiliates serves as
investment advisor, sub-advisor or
manager.
Frederic V. Malek; 64 DIRECTOR. Mr. Malek is chairman of --
Thayer Capital Partners (merchant
bank) and chairman of Thayer Hotel
Investors III, 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
Communications, 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), Classic
Vacation Group (packaged vacations),
Manor Care, Inc. (health care) and
Northwest Airlines Inc. Mr. Malek is
a director or trustee of 22
investment companies for which
Brinson Advisors, UBS PaineWebber or
one of their affiliates serves as
investment advisor, sub-advisor or
manager.
Carl W. Schafer; 65 DIRECTOR. Mr. Schafer is president --
of the Atlantic Foundation
(charitable foundation). 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),
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
22 investment companies for which
Brinson Advisors, UBS PaineWebber or
one of their affiliates serves as an
investment advisor, sub-advisor or
manager.
6
SHARES OWNED
PRESENT POSITION WITH THE BENEFICIALLY
FUND; BUSINESS EXPERIENCE DURING ON OCTOBER 31,
NOMINEE; AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS 2001**
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William D. White; 67 DIRECTOR. Mr. White is retired. From --
February 1989 through March 1994, he
was president of the National League
of Professional Baseball Clubs.
Prior to 1989, he was a television
sportscaster for WPIX-TV, New York.
Mr. White served on the Board of
Directors of Centel from 1989 to
1993 and until recently on the board
of directors of Jefferson Banks
Incorporated, Philadelphia, PA. Mr.
White is a trustee of 22 investment
companies for which Brinson
Advisors, UBS PaineWebber or one of
their affiliates serves as
investment advisor, sub-advisor or
manager.
* Mrs. Alexander and Mr. Bewkes are "interested persons" of the Fund as
defined by the 1940 Act by virtue of their positions with Brinson Advisors
and/or UBS 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 seven times during the fiscal year
ended September 30, 2001. Each director (except Messrs. Beaubien, Hewitt,
Janklow and White, each of whom was appointed as a director, effective September
20, 2001) 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, Beaubien, Burt, Feldberg,
Gowen, Hewitt, Janklow, Malek, Schafer and White, 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 Brinson Advisors or UBS
PaineWebber serves as investment advisor. The Audit Committee met once during
the fiscal year ended September 30, 2001 and each individual who was a member of
the Audit Committee at that time attended that meeting.
Each board member who is not an "interested person" receives, in the
aggregate from Brinson and PACE Select mutual funds, an annual retainer of
$50,000, and a $10,000 fee for each regular board meeting (and each in-person
special board meeting) actually attended. Each such board member is also
entitled to a $2,000 fee for each special telephone meeting attended. The
chairperson and vice chairperson of the Audit and Contract Review Committee
receives annually $12,500 and $7,500, respectively. The chairperson of the
Nominating Committee receives annually $5,000. The foregoing fees will be
allocated among all such mutual funds (or each relevant mutual fund in the case
of a special meeting) PRO RATA based on the mutual funds' relative net assets at
the end of the calendar quarter preceding the date of payment. No officer,
director or employee of Brinson Advisors or one of its affiliates presently
receives any compensation from the fund for acting as a board member or officer.
7
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 $108,232
David J. Beaubien, Director*** ................. -0- 69,000
Richard R. Burt, Director ...................... 1,630 108,232
Meyer Feldberg, Director ....................... 2,781 173,982
George W. Gowen, Director ...................... 1,750 173,982
William W. Hewitt, Director*** ................. -0- 75,000
Morton L. Janklow, Director*** ................. -0- 65,000
Federick V. Malek, Director .................... 1,780 108,232
Carl W. Schafer, Director ...................... 1,780 106,372
William D. White, Director*** .................. -0- 65,000
+ Only independent board members are compensated by the funds for which
Brinson Advisors or UBS PaineWebber serve as investment advisor,
sub-advisor or manager; board members who are "interested persons," as
defined by the Investment Company Act, do not receive compensation.
* Represents fees paid to each board member for the fiscal year ended
September 30, 2001.
** Represents fees paid during the calendar year ended December 31, 2000 to
each board member by: (a) 33 investment companies in the case of Messrs.
Armstrong, Burt, Malek and Schafer; (b) 37 investment companies in the case
of Messrs. Feldberg and Gowen; and (c) one investment company in the case
of Messrs. Beaubien, Hewitt, Janklow and White for which Brinson Advisors,
UBS PaineWebber or one of their affiliates served as investment advisor,
sub-advisor or manager. None of these funds has a bonus, pension, profit
sharing or retirement plan.
*** This person did not commence serving on the Fund's board until September
2001 and therefore did not receive compensation from the Fund during the
fiscal year ended September 30, 2001.
INFORMATION CONCERNING INDEPENDENT AUDITORS
The Fund's financial statements for the fiscal year ended September 30,
2001, were audited by Ernst & Young LLP ("Ernst & Young"), independent auditors.
In addition, Ernst & Young will be preparing the Fund's federal and state annual
income tax returns and will provide certain non-audit services. The Audit
Committee has considered whether the provision of those non-audit services is
compatible with maintaining Ernst & Young's independence.
On July 25, 2001, the Board of Directors of the Fund, upon the
recommendation of the Board's Audit Committee, determined not to retain
PricewaterhouseCoopers ("PwC") and approved a change of the Fund's independent
auditors to Ernst & Young LLP. For the fiscal years ended September 30, 2000 and
September 30, 1999, PwC's audit reports contained no adverse opinion or
disclaimer of opinion; nor were their reports qualified or modified as to
uncertainty, audit scope, or accounting principles. Further, there were no
disagreements between the Fund and PwC on accounting principles or practices,
financial statement disclosure
8
or audit scope or procedure, which if not resolved to the satisfaction of PwC
would have caused them to make reference to the disagreement in their report.
Representatives of Ernst & Young 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.
AUDIT FEES
The aggregate fees billed by Ernst & Young for professional services
rendered for the audit of the Fund's annual financial statements for the most
recent calendar year and the review of the financial statements included in the
Fund's reports to shareholders are $23,750.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by Ernst & Young for the most recent fiscal year
end for professional services rendered for financial information systems design
and implementation services or other services provided to the Fund. Brinson
Advisors and entities that control, are controlled by or are under common
control with Brinson Advisors that provide services to the Fund.
ALL OTHER FEES
There were $106,250 in fees billed by Ernst & Young for the most recent
fiscal year for other services provided to the Fund, Brinson Advisors and
entities that control, are controlled by or are under common control with
Brinson Advisors that provide services to the Fund.
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 are:
THOMAS DISBROW, age 35, vice president and assistant treasurer of the Fund
(appointed February 2000). Mr. Disbrow is a director and a senior manager of the
mutual fund finance department of Brinson Advisors. Prior to November 1999, he
was a vice president of Zweig/Glaser Advisers. Mr. Disbrow is a vice president
and assistant treasurer of 22 investment companies for which Brinson Advisors,
UBS PaineWebber or one of their affiliates serves as investment advisor,
sub-advisor or manager.
AMY R. DOBERMAN, age 39, vice president of the Fund (appointed September
2000). Ms. Doberman is an executive director and general counsel of Brinson
Advisors. 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 and secretary of 24 investment companies for which
Brinson Advisors, UBS PaineWebber or one of their affiliates serves as
investment advisor.
ELBRIDGE T. GERRY III, age 44, vice president of the Fund (appointed April
1996). Mr. Gerry is a managing director and chief investment officer-fixed
income of Brinson Advisors. Mr. Gerry is a vice president of 11 investment
companies for which Brinson Advisors, UBS PaineWebber or one of their affiliates
serves as investment advisor, sub-advisor or manager.
9
KEVIN J. MAHONEY, age 36, vice president and assistant treasurer (appointed
May 1999). Mr. Mahoney is a director and a senior manager of the mutual fund
finance department of Brinson Advisors. From August 1996 through March 1999, he
was the manager of the mutual fund internal control group of Salomon Smith
Barney. Mr. Mahoney is a vice president and assistant treasurer of 22 investment
companies for which Brinson Advisors, UBS PaineWebber or one of their affiliates
serves as investment advisor, sub-advisor or manager.
PAUL H. SCHUBERT, age 38, vice president (appointed September 1994) and
treasurer (appointed May 1997) of the Fund. Mr. Schubert is an executive
director and head of the mutual fund finance department of Brinson Advisors. Mr.
Schubert is a vice president and treasurer of 22 investment companies for which
Brinson Advisors, UBS PaineWebber or one of their affiliates serves as
investment advisor, sub-advisor or manager.
BRIAN M. STORMS, age 47, president of the Fund (appointed September 2001).
Mr. Storms is chief operating officer (since September 2001) and president of
Brinson Advisors (since March 1999). Mr. Storms was chief executive officer of
Brinson Advisors from October 2000 to September 2001. He was president of
Prudential Investments (1996-1999). Prior to joining Prudential Investments he
was a managing director at Fidelity Investments. Mr. Storms is president of 22
investment companies and president and trustee of 2 investment companies for
which Brinson Advisors, UBS PaineWebber or one of their affiliates serves as
investment advisor, sub-advisor or manager.
KEITH A. WELLER, age 40, vice president and assistant secretary of the Fund
(appointed September 1995). Mr. Weller is a director and senior associate
general counsel of Brinson Advisors. Mr. Weller is a vice president and
assistant secretary of 22 investment companies for which Brinson Advisors, UBS
PaineWebber or one of their affiliates serves as an investment advisor,
sub-advisor or manager.
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 2003 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, 2002 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,
AMY R. DOBERMAN
SECRETARY
November 30, 2001
10
EXHIBIT A
AUDIT AND CONTRACT REVIEW COMMITTEE CHARTER
ESTABLISHMENT AND PURPOSE
The Audit and Contract Review Committee (the "Committee") of the Boards of
Trustees and Boards of Directors (each, a "Board" and collectively, the
"Boards") of the funds for which Brinson Advisors, Inc. ("Brinson Advisors")
serves as investment adviser or investment manager (each, a "Fund" and
collectively, the "Funds") is hereby established on this the 12th day of
September, 2001. The two primary purposes of the Committee are to oversee the
Funds' accounting and financial reporting policies, practices and internal
controls as required by the Investment Company Act of 1940, as amended (the
"Act") and, for those Funds organized as closed-end investment management
companies, the rules of the New York Stock Exchange, Inc. or other relevant
securities exchange, if any, on which shares of the Fund are listed, and to
review the performance by certain service providers of their contracts and
arrangements with the Funds as required by the Act.
In connection with the oversight of each Fund's accounting and financial
reporting policies, practices and internal controls, the Committee will endeavor
to assure the quality and objectivity of each Fund's independent audit and each
Fund's financial statements, act as a liaison between the Boards and each Fund's
independent auditors and periodically report to the Boards. In performing its
duties, the Committee shall have unrestricted access to the Boards' Trustees and
Directors, the independent auditors, Fund officers, and the senior management of
Brinson Advisors.
With respect to its contract review function, the Committee will consider
the performance of the Funds' investment advisor or investment manager (as
appropriate) and administrator, sub-advisors, distributor and all other service
providers. The Committee will determine whether compensation paid by the Funds
pursuant to their contracts and arrangements is reasonable and appropriate in
light of the nature and quality of the services rendered. In performing its
duties, the Committee shall have unrestricted access to the Funds' Trustees and
Directors, the officers of the Funds and senior management of each service
provider.
COMPOSITION
The Committee shall be composed of all the independent Trustees/Directors
of the Funds. The Boards shall elect a chairperson, who shall preside over
Committee meetings (the "Chairperson"). The Chairperson shall serve for an
initial interim term of one year and, thereafter, for successive terms of three
years.
Each member of the Committee must meet the independence and experience
requirements set forth in Appendix A.
MEETINGS
The 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 require. The Chairperson may invite the Funds'
officers and other interested parties to participate in meetings. The Committee
may, in its discretion, meet in executive session outside the presence of the
Funds' officers and other parties.
11
A majority of the Committee's members shall constitute a quorum. At any
meeting of the Committee, the decision of a majority of the members present and
voting shall be determinative as to any matter submitted to a vote.
REPORTING
The Chairperson shall report to the Boards on the result of its
deliberations and make such recommendations as deemed appropriate.
DUTIES AND RESPONSIBILITIES
As a general rule, the Funds' independent auditors are ultimately
accountable to the applicable Board and the Committee, and the Committee and the
Boards have the ultimate authority and responsibility to select, evaluate and
where appropriate, replace the independent auditors of the Funds. In addition,
the Committee shall have the following specific duties and responsibilities for
each Fund:
AUDIT OVERSIGHT
o Recommend to the Board the selection of an independent public accounting
firm.
o Review the scope of the Fund's proposed audit each year, including the
extent of audit and non-audit services provided to the 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 submit on a periodic basis to the
Committee a formal written statement delineating all relationships of
the auditors 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 to the Board appropriate actions in response to the
independent auditors' report to satisfy itself of, and oversee, the
independence of the 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 regarding the retention of the
independent auditors.
o Review and discuss with the independent auditors and management the
Fund's annual report to shareholders and significant accounting policies
underlying the report and its presentation to the public.
o Discuss with the 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 the 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.
12
o Review with the 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 the Fund's
financial statements.
o Make recommendations to the Board, based on the Committee's review and
discussions with the Fund's independent auditors and management, with
respect to the Fund's financial statements as to whether the financial
statements should be included in the Fund's annual report for the
previous fiscal year.
CONTRACT REVIEW
o Request such information as is deemed relevant by the Committee
regarding the performance of each of the contracts and arrangements
required to be reviewed and approved by the Board.
o Review all information and data provided by the service providers in
connection with their performance of these contracts and arrangements.
o Meet with such representatives of the service providers as the Committee
deems necessary.
o Make recommendations to the Board concerning the initial approval and/or
continuation of each of the proposed contracts and arrangements and the
reasonableness and appropriateness of the proposed fees.
o Consider such other matters as the Committee may deem appropriate in
carrying out the above responsibilities and any other matters that may
be assigned to it by the Board.
OTHER
o Review with the Fund's investment manager and sub-advisors:
(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.
LIMITS ON COMMITTEE LIABILITY
The Audit and Contract Review Committee is not responsible for either the
preparation of the financial statements or the auditing of the financial
statements. Management of the Funds 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 audit committee is not of the same quality as the
audit performed by the independent auditors. In carrying out its
responsibilities, the audit committee's policies and procedures shall be
adapted, as appropriate, in order to best react to a changing environment.
AMENDMENTS
This charter may be amended by a vote of a majority of the Committee
members.
13
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/Trustee 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/Trustee 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/Trustee: (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/Trustees of that Fund determines in its business judgment that
the relationship does not interfere with the Director's/Trustee's
exercise of independent judgment. In making a determination regarding
the independence of a Director/Trustee pursuant to this paragraph, the
Board of Directors/Trustees of the Fund should consider, among other
things, the materiality of the relationship to the Fund, to the
Director/Trustee, and, if applicable, to the organization with which the
Director/Trustee is affiliated.
"Business relationship" can include commercial, industrial,
banking, consulting, legal, accounting and other relationships. A
Director/Trustee can have this relationship directly with the
Fund, or the Director/Trustee can be a partner, officer or
employee of an organization that has such a relationship. The
Director/Trustee may serve on the Committee without the
above-referenced Board of Directors'/Trustees' determination
after three years following the termination of, as applicable,
either: (a) the relationship between the organization with which
the Director/Trustee is affiliated and the Fund, (b) the
relationship between the Director/Trustee and his or her
partnership status, shareholder interest or executive officer
position, or (c) the direct business relationship between the
Director/Trustee and the Fund.
o A Director/Trustee 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/Trustee 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.
14
EXCEPTIONS
One Independent Director/Trustee 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/Trustees of the Brinson Advisors Funds, under exceptional
and limited circumstances, determine 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.
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 the 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.
15
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INVESTMENT
GRADE
MUNICIPAL
INCOME FUND INC.
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INVESTMENT
GRADE
MUNICIPAL
INCOME FUND INC.
=========================
PROXY
STATEMENT
------------------
NOTICE OF
ANNUAL MEETING
TO BE HELD ON
JANUARY 17, 2002
AND
PROXY STATEMENT
==================