UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-07528
______________________________________________

Insured Municipal Income Fund Inc.
______________________________________________________________________________
(Exact name of registrant as specified in charter)

51 West 52nd Street, New York, New York 10019-6114
______________________________________________________________________________
(Address of principal executive offices) (Zip code)

Mark F. Kemper, Esq.
UBS Global Asset Management
51 West 52nd Street
New York, NY 10019-6114
(Name and address of agent for service)
 
Copy to:
Jack W. Murphy, Esq.
Dechert LLP
1775 I Street, N.W.
Washington, DC 20006-2401

Registrant’s telephone number, including area code: 212-882 5000

Date of fiscal year end: March 31

Date of reporting period: December 31, 2006


Item 1. Schedule of Investments

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

Principal                          
amount     Moody’s S&P Maturity Interest    
(000) ($)     rating rating dates rates (%)   Value ($)
Long-term municipal bonds—163.52%
California — 50.16%
3,000   California State Department of Water Resources Revenue-Central Valley Project-Series AC (MBIA Insured)   Aaa   AAA   12/01/27   5.000       3,176,820
4,000   California State General Obligation   A1   A+   02/01/33   5.000       4,174,360
30   California State General Obligation (FGIC Insured)   Aaa   AAA   11/01/12   7.000       30,335
7,000   California State General Obligation Refunding-Series 2   A1   A+   09/01/27   5.000       7,405,860
3,305   Chino Valley Unified School District-Series A (FSA Insured)   Aaa   AAA   08/01/26   5.000       3,484,858
4,400   Inglewood Unified School District-1998 Election-Series C
(FSA Insured)		   Aaa   AAA   10/01/28   5.000       4,644,640
2,000   Long Beach Finance Authority Lease Revenue-Aquarium of the South Pacific (AMBAC Insured)   Aaa   AAA   11/01/15   5.500       2,165,420
5,000   Long Beach Harbor Revenue Refunding-Series A (FGIC Insured)1   Aaa   AAA   05/15/13   6.000       5,597,450
5,000   Los Angeles Community College District Refunding-Election 2001-Series A (FSA Insured)   Aaa   AAA   08/01/25   5.000       5,334,050
9,000   Los Angeles Community College District Refunding-Election 2001-Series A (FSA Insured)   Aaa   AAA   06/01/26   5.000       9,587,790
8,475   Los Angeles County Sanitation Districts Financing Authority Revenue-Capital Projects-Series A (FSA Insured)   Aaa   AAA   10/01/20   5.000       9,091,133
3,000   Los Angeles Unified School District-Series A (FSA Insured)   Aaa   AAA   07/01/20   5.250       3,288,450
11,625   Los Angeles Wastewater System Revenue Refunding-Subseries A (MBIA Insured)   Aaa   AAA   06/01/26   5.000       12,243,683
5,000   Los Angeles Water & Power Revenue-Power System-Series A, Subseries A-2 (MBIA-IBC Insured)   Aaa   AAA   07/01/30   5.000       5,269,250
6,000   Los Angeles Water & Power Revenue-Power System-Series B (FSA Insured)   Aaa   AAA   07/01/25   5.000       6,358,320
15,000   Manteca Financing Authority Water Revenue-Series A
(MBIA Insured)		   Aaa   AAA   07/01/33   4.750       15,430,950
10,000   Metropolitan Water District of Southern California Waterworks Revenue-Series A (FSA Insured)   Aaa   AAA   07/01/35   5.000       10,626,000
7,160   Oxnard Financing Authority Wastewater Revenue-Redwood
Trunk Sewer & Headworks-Series A (FGIC Insured)		   Aaa   AAA   06/01/34   5.250       7,699,148
10,000   Sacramento County Sanitation District Financing Authority Revenue Refunding (AMBAC Insured)   Aaa   AAA   12/01/27   5.000       10,413,700
7,000   Sacramento Municipal Utility District Electric Revenue-Municipal Utility District-Series R (MBIA Insured)   Aaa   AAA   08/15/19   5.000       7,500,500
5,000   Sacramento Municipal Utility District Electric Revenue-Municipal Utility District-Series R (MBIA Insured)   Aaa   AAA   08/15/33   5.000       5,255,650

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

Principal                          
amount     Moody’s S&P Maturity Interest    
(000) ($)     rating rating dates rates (%)   Value ($)
Long-term municipal bonds—(continued)
California—(concluded)
4,000   San Francisco City & County Airports Commission International Airport Revenue Refunding-Second Series 27B (FGIC Insured)   Aaa   AAA   05/01/15   5.250       4,242,920
7,910   San Jose Libraries, Parks & Public Safety Project (MBIA Insured)   Aaa   AAA   09/01/27   5.000       8,330,891
3,825   Walnut Energy Center Authority Revenue-Series A
(AMBAC Insured)		   Aaa   AAA   01/01/34   5.000       4,004,316
                            155,356,494
District of Columbia — 4.05%
4,000   District of Columbia Hospital Revenue Refunding-Medlantic Healthcare-Series A (Escrowed to Maturity) (MBIA Insured)   Aaa   AAA   08/15/14   5.750       4,086,400
6,000   District of Columbia Water & Sewer Authority Public Utility Revenue-Subordinate Lien Revenue (FGIC Insured)   Aaa   AAA   10/01/33   5.000       6,272,220
2,000   Metropolitan Washington, D.C. Airport Authority Airport System Revenue-Series A (MBIA Insured)1   Aaa   AAA   10/01/16   5.250       2,181,780
                            12,540,400
Florida — 12.28%
8,000   Florida State Board of Education-Capital Outlay-Series E
(FGIC Insured)		   Aaa   AAA   06/01/24   5.000       8,402,160
10,220   Florida State Board of Education-Public Education-Series A
(FSA Insured)		   Aaa   AAA   06/01/27   5.000       10,763,908
1,060   Hillsborough County Port District Revenue-Tampa Port Authority Project-Series A (MBIA Insured)1   Aaa   AAA   06/01/16   5.750       1,160,848
1,115   Hillsborough County Port District Revenue-Tampa Port Authority Project-Series A (MBIA Insured)1   Aaa   AAA   06/01/17   5.750       1,221,081
1,175   Hillsborough County Port District Revenue-Tampa Port Authority Project-Series A (MBIA Insured)1   Aaa   AAA   06/01/18   5.750       1,286,790
1,240   Hillsborough County Port District Revenue-Tampa Port Authority Project-Series A (MBIA Insured)1   Aaa   AAA   06/01/19   5.750       1,357,974
10,000   Miami-Dade County Aviation Revenue Refunding-Miami International Airport-Series B (XLCA Insured)1   Aaa   AAA   10/01/18   5.000       10,587,900
3,000   Miami-Dade County Expressway Authority Toll System Revenue-Series B (FGIC Insured)   Aaa   AAA   07/01/26   5.250       3,259,290
                            38,039,951
Georgia — 9.10%
11,545   Atlanta Airport Revenue Refunding-Series D (FGIC Insured)1   Aaa   AAA   01/01/15   5.250       12,397,252
1,015   Columbus Building Authority Lease Revenue-Series A
(FGIC Insured)		   Aaa   AAA   01/01/16   5.250       1,112,430
5,000   George L Smith II World Congress Center Authority Revenue Refunding-Domed Stadium Project (MBIA Insured)1   Aaa   AAA   07/01/14   5.750       5,333,850

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

Principal                          
amount     Moody’s S&P Maturity Interest    
(000) ($)     rating rating dates rates (%)   Value ($)
Long-term municipal bonds—(continued)
Georgia—(concluded)
15   Georgia Municipal Electric Authority Power Revenue-Series Y (Escrowed to Maturity) (MBIA-IBC Insured)   Aaa   AAA   01/01/10   10.000       17,646
4,515   Georgia Municipal Electric Authority Power Revenue-Unrefunded Balance-Series Y (FSA-CR Insured)2   Aaa   AAA   01/01/10   10.000       5,308,646
3,410   Georgia Municipal Electric Authority Power Revenue-Unrefunded Balance-Series Y (MBIA-IBC Insured)   Aaa   AAA   01/01/10   10.000       4,009,410
                            28,179,234
Illinois — 3.73%
1,500   Chicago General Obligation-Series A (FSA Insured)   Aaa   AAA   01/01/25     5.000       1,579,620
2,000   Chicago General Obligation-Series A (FSA Insured)   Aaa   AAA   01/01/26     5.000       2,103,660
4,500   Illinois Health Facilities Authority Revenue-Franciscan Sisters Health Care-Series C (Escrowed to Maturity) (MBIA Insured)   Aaa   AAA   09/01/18     5.750       5,066,370
2,395   Metropolitan Pier & Exposition Authority Dedicated State Tax-Series A-2002 (Pre-refunded with US Government Securities to 06/15/19 @ 100) (FGIC Insured)   Aaa   AAA   12/15/23     5.500       2,808,233
                            11,557,883
Indiana — 3.72%
5,000   Indiana Health & Educational Facilities Financing Authority Hospital Revenue Refunding-Clarian Health Obligation Group-Series B   A2   A+   02/15/30     5.000       5,162,500
5,000   Indianapolis Airport Authority Revenue Refunding-Special Facilities-Fed Ex Corp. Project (Federal Express Co. Insured)1   Baa2   BBB   01/15/17     5.100       5,280,750
1,000   Indiana University Revenues-Student Fee-Series O (FGIC Insured)   Aaa   AAA   08/01/18     5.250       1,079,550
                            11,522,800
Maine — 1.56%
4,785   Maine Health & Higher Educational Facilities Authority Revenue-Series A (Escrowed to Maturity) (FSA Insured)   NR   AAA   07/01/23     5.500       4,825,864
Michigan — 3.92%
5,525   Michigan State Hospital Finance Authority Revenue Refunding-Trinity Health Credit Group-Series D   Aa3   AA–   08/15/25     5.000       5,809,206
6,000   Michigan State Hospital Finance Authority Revenue-Trinity
Health Credit Group-Series A		   Aa2   AA–   12/01/26     5.000       6,346,080
                            12,155,286
Minnesota — 1.73%
5,000   Minneapolis & St. Paul Metropolitan Airport Commission
Airport Revenue-Series B (FGIC Insured)1		   Aaa   AAA   01/01/19     6.000       5,344,000

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

Principal                          
amount     Moody’s S&P Maturity Interest    
(000) ($)     rating rating dates rates (%)   Value ($)
Long-term municipal bonds—(continued)
Missouri — 1.65%
1,740   St. Louis Airport Revenue-Capital Improvement Program-Series A (MBIA Insured)     Aaa   AAA   07/01/15   5.375       1,867,385
2,035   St. Louis Airport Revenue-Capital Improvement Program-Series A (MBIA Insured)   Aaa   AAA   07/01/16   5.375       2,179,831
1,000   St. Louis Airport Revenue-Capital Improvement Program-Series A (MBIA Insured)   Aaa   AAA   07/01/18   5.375       1,071,420
                            5,118,636
Nevada — 2.05%
1,800   Clark County-Bond Bank (Pre-refunded with State & Local
Government Securities to 12/01/12 @ 100) (MBIA Insured)		   Aaa   AAA   06/01/32   5.000       1,927,332
4,200   Clark County-Bond Bank-Unrefunded Balance (MBIA Insured)   Aaa   AAA   06/01/32   5.000       4,414,872
                            6,342,204
New Jersey — 4.67%
3,150   New Jersey Economic Development Authority Revenue-Cigarette Tax (FGIC Insured)   Aaa   AAA   06/15/09   5.000       3,248,438
10,000   New Jersey Transportation Trust Fund Authority-Transportation System-Series A   A1   AA–   12/15/20   5.250       11,201,800
                            14,450,238
New Mexico — 2.85%
4,130   University of New Mexico Revenues-Hospital Mortgage
(FSA-FHA Insured)		   Aaa   AAA   01/01/23   5.000       4,365,327
4,230   University of New Mexico Revenues-Hospital Mortgage
(FSA-FHA Insured)		   Aaa   AAA   07/01/23   5.000       4,471,026
                            8,836,353
New York — 22.00%
5,000   Hudson Yards Infrastructure Corp. Revenue-Series A
(FGIC Insured)		   Aaa   AAA   02/15/47   5.000       5,318,050
1,360   Long Island Power Authority Electric System Revenue-
Series A-Unrefunded Balance (FSA Insured)		   Aaa   AAA   12/01/22   5.125       1,403,112
5,650   Metropolitan Transportation Authority Dedicated Tax Fund-
Series A (FSA Insured)		   Aaa   AAA   11/15/24   5.250       6,080,756
6,000   New York City General Obligation-Series O   A1   AA–   06/01/24   5.000       6,324,300
4,615   New York City General Obligation-Subseries F-1   A1   AA–   09/01/25   5.000       4,873,901
1,710   New York City Industrial Development Agency Special Facilities
Revenue-Terminal One Group Association Project1		   A3   BBB+   01/01/07   5.000       1,710,103
5,000   New York City Industrial Development Agency Special Facilities Revenue-Terminal One Group Association Project1   A3   BBB+   01/01/15   5.500       5,434,500
6,685   New York City Industrial Development Agency Special Facilities Revenue-Terminal One Group Association Project1   A3   BBB+   01/01/16   5.500       7,304,833

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

Principal                          
amount     Moody’s S&P Maturity Interest    
(000) ($)     rating rating dates rates (%)   Value ($)
Long-term municipal bonds—(continued)
New York—(concluded)
2,750   New York City Industrial Development Agency Special Facilities Revenue-Terminal One Group Association Project1   A3   BBB+   01/01/18   5.5003       2,985,703
7,000   New York City Municipal Water Finance Authority Water & Sewer System Revenue-Series C (MBIA Insured)   Aaa   AAA   06/15/26   5.000       7,451,640
10,080   New York City Municipal Water Finance Authority Water & Sewer System Revenue-Series C (MBIA Insured)   Aaa   AAA   06/15/27   5.000       10,708,085
3,000   New York State Dormitory Authority Revenues-Memorial Sloan Kettering Center-Series 1 (MBIA Insured)   Aaa   AAA   07/01/16   5.000       3,193,320
5,000   Triborough Bridge & Tunnel Authority Revenues-Subordinate Bonds (AMBAC Insured)   Aaa   AAA   11/15/26   5.125       5,338,200
                            68,126,503
North Carolina — 0.86%
2,500   North Carolina Eastern Municipal Power Agency Power System Revenue Refunding-Series A   Baa2   BBB   01/01/12   5.500       2,675,600
Ohio — 1.70%
5,000   Cleveland Airport System Revenue-Series A (FSA Insured)   Aaa   AAA   01/01/14   5.250       5,270,600
Pennsylvania — 5.30%
15,390   Allegheny County Sanitation Authority Sewer Revenue Refunding-Series A (MBIA Insured)   Aaa   AAA   12/01/23   5.000       16,427,594
Puerto Rico — 6.05%
17,625   University of Puerto Rico University Revenues Refunding System-Series P   Baa2   BBB   06/01/21   5.000       18,726,386
South Carolina — 10.89%
2,500   Medical University of South Carolina Hospital Authority Hospital Facilities Revenue Refunding-Series A (MBIA-FHA Insured)   Aaa   AAA   02/15/25   5.250       2,683,175
1,000   Myrtle Beach Water & Sewer Revenue System Refunding
(FGIC Insured)		   Aaa   AAA   03/01/15   5.375       1,092,770
20,000   South Carolina Public Service Authority Revenue-Santee Cooper-Series A (MBIA Insured)   Aaa   AAA   01/01/25   5.000       21,359,600
8,180   South Carolina Transportation Infrastructure Bank Revenue-Series A Aaa   NR   10/01/33   5.000       8,587,773
                            33,723,318
Texas — 12.46%
5,170   Fort Bend Independent School District Refunding-Series A
(PSF-GTD)		   NR   AAA   08/15/26   5.250       5,608,674
13,500   Houston Utility System Revenue Refunding-First Lien-Series A (FGIC Insured)   Aaa   AAA   05/15/23   5.250       14,613,075
5,665   Houston Utility System Revenue Refunding-First Lien-Series A (MBIA Insured)   Aaa   AAA   05/15/25   5.250       6,132,079
2,000   Jefferson County General Obligation Refunding (FGIC Insured)   Aaa   AAA   08/01/20   5.250       2,139,520

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

Principal                          
amount     Moody’s S&P Maturity Interest    
(000) ($)     rating rating dates rates (%)   Value ($)
Long-term municipal bonds—(concluded)
Texas—(concluded)
720   San Antonio Water Revenue (Pre-refunded with US Government Securities to 05/15/07 @ 100) (MBIA Insured)   Aaa   AAA   05/15/16   6.000       801,166
9,000   Wylie Independent School District Refunding (PSF-GTD)   Aaa   AAA   08/15/30   5.000       9,311,040
                            38,605,554
Washington — 2.39%
2,220   Cowlitz County School District No. 458 Kelso (FSA Insured)   Aaa   NR   12/01/15   5.750       2,437,782
1,000   Cowlitz County School District No. 458 Kelso (FSA Insured)   Aaa   NR   12/01/18   5.750       1,093,680
1,500   King County Public Hospital District No. 2 Refunding-Evergreen Healthcare (MBIA Insured)   Aaa   AAA   12/01/18   5.000       1,619,385
2,095   King County Public Hospital District No. 2 Refunding-Evergreen Healthcare (MBIA Insured)   Aaa   AAA   12/01/19   5.000       2,252,858
                            7,403,705
Wisconsin — 0.40%
1,105   Ladysmith-Hawkins School District Refunding (FGIC Insured)   Aaa   NR   04/01/20   5.500       1,240,274
Total long-term municipal bonds (cost—$498,229,231)                       506,468,877
Short-term municipal notes4—2.09%
Alaska — 0.10%
300   North Slope Boro Exempt Facility Industrial Revenue-BP Exploration Project1   VMIG-1   A-1+   01/02/07   4.020       300,000
Georgia — 0.13%
415   Sunshine State Governmental Financing Commission Revenue (AMBAC Insured)   VMIG-1   NR   01/02/07   3.970       415,000
Illinois — 0.28%
850   Chicago Midway Airport Revenue-Second Lien-Series B
(MBIA Insured)1		   VMIG-1   A-1+   01/02/07   4.040       850,000
Kentucky — 1.58%
4,900   Lexington-Fayette Urban County Airport Corp. Revenue-1st Mortgage-Series A (MBIA Insured)1   VMIG-1   NR   01/02/07   4.090       4,900,000
Total short-term municipal notes (cost—$6,465,000)                       6,465,000
Total investments (cost—$504,694,231)5,6 — 165.61%                       512,933,877
Other assets in excess of liabilities — 2.19%                       6,793,310
Liquidation value of auction preferred shares — (67.80)%                       (210,000,000)
Net assets applicable to common shareholders — 100.00%                       309,727,187

1   Security subject to Alternative Minimum Tax.
     
2   Partial amount pledged as collateral for futures transactions.
     
3   Floating rate security. The interest rate shown is the current rate as of December 31, 2006.
     
4   Variable rate demand notes are payable on demand. The maturity dates shown are the next interest rate reset dates. The interest rates shown are the current rates as of December 31, 2006.

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

5   Cost of investments shown approximates cost for federal income tax purposes. Gross unrealized appreciation of investments and gross unrealized depreciation of investments at December 31, 2006 were $8,902,365 and $662,719, respectively, resulting in net unrealized appreciation of investments of $8,239,646.
     
6   The Fund calculates its net asset value based on the current market value, where available, for its portfolio securities. The Fund normally obtains market values for its securities from independent pricing sources and broker-dealers. Independent pricing sources may use last reported sale prices, current market quotations or valuations from computerized “matrix” systems that derive values based on comparable securities. A matrix system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio securities. If a market value is not available from an independent pricing source for a particular security, that security is valued at fair value as determined in good faith by or under the direction of the Fund’s Board of Directors (the “Board”). Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors may include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; and changes in overall market conditions. If events occur that materially affect the value of securities (particularly non-US securities) between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities are fair valued. The amortized cost method of valuation, which approximates market value, generally is used to value short-term debt instruments with sixty days or less remaining to maturity, unless the Board or its delegate determines that this does not represent fair value. Securities traded in the over-the-counter (“OTC”) market are valued at the last bid price available on the valuation date prior to valuation.
     
AMBAC   American Municipal Bond Assurance Corporation
     
BP   British Petroleum
     
CR   Custodial Receipts
     
FGIC   Financial Guaranty Insurance Company
     
FHA   Federal Housing Authority
     
FSA   Financial Security Assurance
     
GTD   Guaranteed
     
IBC   Insured Bond Certificate
     
MBIA   Municipal Bond Investors Assurance
     
NR   Not Rated
     
PSF   Permanent School Fund
     
XLCA   XL Capital Assurance

                       
Futures contracts                
                       
Number of     Expiration       Current   Unrealized
contracts Sale contracts   dates   Proceeds   value   appreciation
215   US Treasury Bond 20 Year Futures   March 2007   $24,593,178   $23,959,062   $634,116  
110   US Treasury Note 10 Year Futures   March 2007     12,011,071     11,821,563   189,508  
                    $823,624  

For more information regarding the Fund’s other significant accounting policies, please refer to the Fund’s semiannual report to shareholders dated September 30, 2006.


Item 2. Controls and Procedures.

(a)  
The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (“Investment Company Act”)) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
     
(b)  
The registrant’s principal executive officer and principal financial officer are aware of no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3. Exhibits.

(a)  
Certifications of principal executive officer and principal financial officer of registrant pursuant to Rule 30a-2(a) under the Investment Company Act is attached hereto as Exhibit EX-99.CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Insured Municipal Income Fund Inc.

By:   /s/ Kai R. Sotorp
    Kai R. Sotorp
    President
     
Date:   March 1, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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