<PAGE>
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MUNICIPAL
HIGH INCOME
FUND INC.
SEMI-ANNUAL
REPORT
[LOGO]
APRIL
30, 1994
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[LOGO]
MUNICIPAL HIGH INCOME FUND INC.
Dear Shareholder:
The past six months were volatile ones for the financial markets,
including
the municipal bond market. The Municipal High Income Fund performed modestly
in
this environment and, like most fixed income investors, experienced a loss
in
value. The Fund's market price per share declined to $9.00 from $9.875
on
October 31, 1993, and the Fund's net asset value per share declined to
$9.21
from $9.72. This disparity in the decline between the actual worth of the
bonds
in the portfolio (its net asset value per share) and the Fund's market
price
reflects the degree of nervousness and volatility in the financial markets
and
speaks to the emotional reaction of many investors to rising interest rates.
The
Fund's income and gain distributions of $.34 per share somewhat offset
the
decline in its market price, but nonetheless the total return for this
period
was (5.49%). In this Semi-Annual Report we provide you with some insight
into
the dynamics of the municipal bond market and the Fund's investment
activities
during these months.
THE MUNICIPAL MARKET AND THE ECONOMIC ENVIRONMENT
After maintaining an accommodative policy and keeping interest rates low,
on
February 4, 1994, the Federal Reserve signaled an important shift in
direction
and tightened monetary policy for the first time since 1989. An increase
in
consumers' disposable income had ignited economic growth during the last
two
fiscal quarters of 1993. In a preemptive move, the Fed attempted to rein in
the
economy's growth by increasing the Federal funds rate (an important indicator
of
the direction of interest rates) to 4.25% from 3% in four successive
moves
between February and May.
These increases in short-term rates were intended to control
possible
inflationary pressures and keep long-term interest rates low. However, at
the
time there was an enormous amount of investments in the marketplace
predicated
on short-term interest rates staying low. As short-term interest rates
rose,
investors met liquidity demands by selling long-term U.S. Treasuries
which
caused an unintended and unwarranted rise in long-term interest rates.
Interest
rates on municipals followed suit as dealers sold their municipal inventory
in
order to meet the selling demands of Treasury investors. This
uncertain
investment environment caused many investors to purchase shorter
maturities
which are generally less volatile than longer-term issues, and this
also
contributed to higher interest rates on longer-term tax-exempt securities.
PORTFOLIO STRATEGY
Our goal is to provide investors with tax-free income through investments
in
securities exempt from Federal personal income taxes. In our effort to meet
this
goal, we have invested the majority of the portfolio in pollution
control
revenue, hospital, and utility bonds. Although the Fund has the ability
to
invest more heavily in lower-rated securities
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than it does, we are currently focusing on higher-quality, longer-
term
securities. Our belief is that lower-rated issues currently do not
adequately
compensate the investor for the additional risk they are taking, even in
an
improving economic environment. At the end of this reporting
period
approximately 53% of the Fund was invested in securities rated as
investment
grade; 34% of the Fund was non-rated. Non-rated is not necessarily
synonymous
with lower quality. Many municipalities that would be rated as investment
grade
make the decision for a variety of reasons to issue bonds without a rating
from
any of the rating agencies. Similarly, some municipalities are rated by only
one
of the rating agencies and are non-rated by another. For example, Oglala
Sioux
Tribe, South Dakota, Pine Ridge County Revenue Bonds are rated Aaa by
Moody's
Investors Services but are not rated by Standard & Poor's Ratings Group; on
the
other hand, Crestwood, Illinois Cook County Tax Increment Bonds are not rated
by
Moody's but are rated AAA by Standard & Poor's.
As interest rates rose during the fourth quarter of 1993 and the
first
quarter of 1994, we shortened the Fund's average maturity to avoid some of
the
volatility of the long-term bond market. More recently, believing that the
worst
of the interest rate rise is behind us, we have begun extending the
average
maturity of the Fund, now at 19 years, to try and capture a little bit
more
yield. This higher yield will be important for maintaining the Fund's
income
stream which has been reduced by the bond calls and refinancings of the
past
year and will continue to be challenged by bond calls during the rest of 1994.
We are pleased to share with you that the Fund continues to be awarded
a
four-star rating from Morningstar Closed-End Funds, and a "Buy"
recommendation
from Frank Capiello's Closed-End Fund Digest. Both publications
are
well-respected sources of information about closed-end funds. Please call
The
Shareholder Services Group, Inc. at 1-800-331-1710 if you have any
questions
about your investment in the Fund. As we have since the Fund's inception
in
1988, we will continue to strive to provide you a steady and attractive
stream
of tax-exempt dividends with investment performance that best serves
the
interests of the Fund's investors.
Sincerely,
<TABLE>
<S> <C>
Heath B. McLendon Lawrence T. McDermott
CHAIRMAN OF THE BOARD VICE PRESIDENT AND INVESTMENT
OFFICER
June 1, 1994
</TABLE>
2
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UNAUDITED FINANCIAL DATA
PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
CAPITAL
GAINS
DIVIDEND
NYSE NET ASSET DIVIDEND DIVIDEND
REINVESTMENT
CLOSING PRICE VALUE PAID PAID
PRICE
------------- --------- -------- --------
- - ------------
<S> <C> <C> <C> <C>
<C>
November 30, 1993........... $9.50 $9.62 $.0540 --
$9.55
December 31, 1993........... 9.38 9.66 .0540 $.0210
9.47
January 31, 1994............ 9.63 9.70 .0540 --
9.47
February 28, 1994........... 9.63 9.57 .0540 --
9.41
March 31, 1994.............. 8.75 9.29 .0540 --
8.96
April 30, 1994.............. 9.00 9.21 .0540 --
9.01
</TABLE>
DIVIDEND DATA*
<TABLE>
<CAPTION>
EQUIVALENT TAXABLE DISTRIBUTION RATE
------------------------------------------------
- - ----
PER SHARE ANNUALIZED ASSUMING ASSUMING ASSUMING
ASSUMING
DIVIDEND DISTRIBUTION 28% FEDERAL 31% FEDERAL 36% FEDERAL 39.6%
FEDERAL
DISTRIBUTIONS RATE TAX BRACKET TAX BRACKET TAX BRACKET TAX
BRACKET
------------ ------------ ----------- ----------- ----------- ---------
- - ----
<S> <C> <C> <C> <C> <C>
$0.3240 7.04% 9.78% 10.20% 11.00% 11.66%
</TABLE>
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* Based on April 30, 1994 net asset value of $9.21 per share. Does not include
capital gains dividend of $.021 per share.
Generally, each registered shareholder is considered a participant in
the
Fund's Dividend Reinvestment Plan, unless the shareholder elects to receive
all
dividends and distributions in cash, or unless the shareholder's shares
are
registered in the name of a broker, bank or nominee (other than Smith
Barney
Inc.) which does not provide the service. Questions and
correspondence
concerning the Dividend Reinvestment Plan should be directed to The
Shareholder
Services Group, Inc. ("TSSG"), P.O. Box 1376, Boston, Massachusetts 02104.
If
interested in joining or for more information concerning the
Dividend
Reinvestment Plan please call TSSG at 1-800-331-1710.
3
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<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of
Investments
April 30, 1994
(unaudited)
[LOGO]
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KEY TO INSURANCE ABBREVIATIONS
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- - -- -------------
<C> <S> <C> <C>
<C>
MUNICIPAL BONDS AND NOTES--97.8%
ALABAMA--0.5%
$ 905,000 Alabama Housing Finance Authority, Single
Family Mortgage Revenue,
10.500% due 12/01/02........................ A1 AA-
$ 963,825
ARIZONA--2.1%
Gila County, Arizona, Industrial Development
Authority, Pollution Control Revenue,
(ASARCO), Series 1985:
600,000 8.900% due 07/01/06......................... Baa2 BBB
669,750
2,700,000 8.900% due 07/01/06......................... Baa2 BBB
3,020,625
ARKANSAS--1.7%
2,750,000 Pope County, Arkansas, Pollution Control
Revenue, (Arkansas Power & Light Company
Project),
11.000% due 12/01/15........................ Baa2 BBB
3,042,188
CALIFORNIA--1.2%
2,000,000 Los Angeles County, California, Regional
Airport Authority, (Continental Airlines,
Inc.),
9.000% due 08/01/17......................... NR NR
2,185,000
COLORADO--0.7%
1,250,000 Colorado Health Facilities, Authority Revenue
Project, (Beth Israel at Shalom Park
Project),
8.000% due 12/15/22......................... NR NR
1,284,375
CONNECTICUT--0.8%
1,500,000 Connecticut State, Development Authority,
Health Care Revenue, Series B,
8.000% due 07/01/17......................... NR NR
1,501,875
DISTRICT OF COLUMBIA--0.6%
1,100,000 District of Columbia, Housing Finance Agency,
Multifamily Housing Revenue,
11.375% due 07/01/08........................ A NR
1,127,500
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
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MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
FLORIDA--6.6%
$1,500,000 Broward County, Florida, Educational
Facilities, (NOVA Project),
8.500% due 04/01/10......................... NR BBB
$ 1,642,500
1,000,000 Hillsborough County, Florida, Industrial
Development Revenue, (Seaboard Tampa
Terminals Venture Project),
8.600% due 01/15/22......................... B2 B+
1,005,000
1,000,000 Homestead, Florida, Industrial Development
Revenue, Project A,
7.950% due 11/01/18......................... NR NR
940,000
2,110,000 Jacksonville, Florida, Health Facilities
Authority, Health Facilities Revenue,
9.125% due 10/15/19......................... NR NR
2,173,300
1,000,000 Lady Lake, Florida, Industrial Development
Project Revenue, (Sunbelt Utilities Inc.
Project)
9.500% due 07/01/10......................... NR NR
1,037,500
1,500,000 Ocean Highway & Port Authority, Florida,
Pollution Control Revenue, Solid Waste,
9.375% due 11/01/04......................... NR B+
1,511,250
Palm Beach County, Florida, Health Facilities
Authority, Insured Hospital Revenue,
(JFK Medical Center):
1,155,000 8.875% due 12/01/18......................... NR BBB
1,279,163
1,320,000 8.875% due 12/01/18 (prerefunded 12/01/98).. NR NR
1,549,350
650,000 Tampa, Florida, (Aquarium Inc. Revenue
Project),
7.750% due 05/01/27......................... NR NR
694,688
GEORGIA--2.0%
2,510,000 Georgia Municipal Electric Authority, General
Power Revenue, Series 85-K,
9.875% due 01/01/16......................... A A+
2,648,050
1,000,000 Walton County, Georgia, Industrial Development
Authority, (Walton Project),
8.500% due 09/01/07......................... NR NR
1,030,000
ILLINOIS--6.2%
3,032,000 Chicago, Illinois, O'Hare International
Airport, Special Facilities Revenue Bonds,
Series B,
8.950% due 05/01/18......................... Baa2 BB
3,361,730
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- - -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
ILLINOIS (CONTINUED)
Crestwood, Illinois,
Cook County Tax Increment Bonds:
$ 450,000 10.000% due 12/01/96........................ NR AAA
$ 474,750
550,000 10.000% due 12/01/97........................ NR AAA
580,250
650,000 10.000% due 12/01/98........................ NR AAA
685,750
2,000,000 East Chicago, Illinois, Industrial Pollution
Control Revenue, (Inland Steel Company),
Project 10,
6.800% due 06/01/13......................... Ba3 BB-
1,937,500
1,960,000 Hanover Park, Illinois, First Mortgage,
(Windsor Project),
9.250% due 12/01/07......................... NR NR
2,026,150
1,750,000 Hennepin, Illinois, Industrial Development
Revenue,
10.250% due 01/01/05 (in default)........... NR NR
218,750
795,000 Loves Park, Illinois, First Mortgage Revenue,
(Hoosier Care Project), Series A,
9.750% due 08/01/19......................... NR NR
810,900
1,000,000 Sterling, Illinois, First Mortgage Revenue,
(Hoosier Care Project), Series A,
9.750% due 08/01/19......................... NR NR
1,037,500
INDIANA--0.8%
1,500,000 Sullivan, Indiana, Pollution Control Revenue
Refunding, (Indiana Michigan Power Company),
5.950% due 05/01/09......................... Baa2 BBB
1,387,500
IOWA--0.7%
1,240,000 Marion, Iowa, Multi-family Housing Revenue,
9.500% due 07/01/18......................... NR NR
1,250,850
KENTUCKY--2.8%
1,440,000 Jefferson County, Kentucky, Health Facilities
Authority,
10.125% due 05/01/08........................ A1 NR
1,630,800
Kenton County, Kentucky, Airport Board:
1,000,000 (Delta Airlines),
6.750% due 02/01/02......................... Ba1 BB
986,250
1,500,000 (Greater Cincinnati Airport Revenue),
Project A,
7.500% due 02/01/20......................... Ba1 BB
1,511,250
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- - -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
KENTUCKY (CONTINUED)
$1,000,000 Pendleton County, Kentucky, Multi-Lease
Revenue, Series A,
6.500% due 03/01/19......................... NR A
$ 976,250
LOUISIANA--1.3%
1,200,000 Lake Charles, Louisiana, (Harbor & Terminal
Project),
7.750% due 08/15/22......................... Ba1 NR
1,273,500
25,000 Louisiana Housing Finance Agency, Single
Family Mortgage Revenue,
13.625% due 09/01/02........................ A1 BB
26,187
1,000,000 Port New Orleans, Louisiana, Industrial
Development Revenue, (Continental Grain
Company Project),
7.500% due 07/01/13......................... NR BB-
991,250
MAINE--1.4%
2,500,000 Maine State Housing Authority, Mortgage
Purchases, Series D-1,
8.300% due 11/15/28......................... A1 AA-
2,565,625
MARYLAND--2.0%
3,000,000 Maryland State Health & Higher Education
Facilities Authority, (Doctors Community
Hospital Project),
8.750% due 07/01/22 (prerefunded 07/01/00).. Aaa NR
3,611,250
MASSACHUSETTS--5.9%
2,000,000 Commonwealth of Massachusetts Health &
Educational Facilities Authority Revenue,
(North Adams State College),
9.625% due 07/01/18......................... NR NR
2,042,500
Commonwealth of Massachusetts Industrial
Finance Agency:
1,700,000 Series A, (S.E. Mass Project),
9.000% due 07/01/15......................... NR NR
1,899,750
5,940,000 Series B, (S.E. Mass Project),
9.250% due 07/01/15......................... NR NR
6,667,650
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- - -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
MICHIGAN--2.4%
$1,855,000 Greater Detroit, Michigan, Recreation
Authority, Series C,
9.250% due 12/13/08......................... NR BBB-
$ 1,982,531
755,000 Greater Detroit, Michigan, Resource Recovery
Authority Revenue, Series B,
9.250% due 12/13/08......................... NR BBB-
806,906
1,500,000 Western Townships, Michigan, Utility Revenue,
Sewage System,
8.300% due 01/01/19......................... NR BBB+
1,567,500
MISSISSIPPI--3.4%
3,300,000 Claiborne County, Mississippi, Pollution
Control Revenue, Series C,
9.875% due 12/01/14......................... NR NR
3,807,375
2,000,000 Mississippi Hospital Equipment & Facilities
Authority, (Methodist Hospital),
9.375% due 05/01/12......................... NR NR
2,362,500
MONTANA--1.1%
2,000,000 Montana State Board Investment Resource
Recovery Revenue, (Yellowstone Energy
Project),
7.000% due 12/31/19......................... NR NR
1,922,500
NEW HAMPSHIRE--2.2%
New Hampshire State Industrial Development
Authority, (United Illuminating Company):
1,000,000 Series A,
9.375% due 07/01/12......................... Baa3 BBB-
1,108,750
2,500,000 Series B,
10.750% due 10/01/12........................ Ba3 BBB-
2,928,125
NEW JERSEY--2.7%
1,300,000 New Jersey Educational Facilities, Series C,
6.625% due 07/01/23......................... NR NR
1,200,875
New Jersey Health Care Facilities, Finance
Authority Revenue:
1,730,000 7.600% due 07/01/21......................... Ba NR
1,704,050
1,500,000 (Zurbrugg Memorial Hospital), Series C,
8.500% due 07/01/12......................... Baa BBB-
1,575,000
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- - -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
NEW JERSEY (CONTINUED)
$ 310,000 New Jersey Housing and Mortgage Finance
Agency, Home Buyer Revenue, Series E, (MBIA
Insured),
7.650% due 10/01/16......................... Aaa AAA
$ 328,988
NEW MEXICO--1.1%
1,860,000 New Mexico Mortgage Finance Authority, Single
Family Mortgage Program, Series B,
8.300% due 03/01/20......................... NR AA
1,980,900
NEW YORK--6.3%
1,680,000 Babylon, New York, Industrial Development
Agency, (Recycling Project), Series A,
8.875% due 03/01/11......................... NR NR
840,000
2,055,000 New York City Industrial Development Agency,
Civic Facility Revenues, (International
Center for Integrated Studies -- Door
Project),
9.000% due 03/01/09 (in default)............ NR NR
411,000
1,400,000 New York City, New York, Battery Park
Authority Revenue,
5.800% due 11/01/22......................... A A
1,277,500
New York City, New York, Certificates of
Participation:
875,000 Series C,
7.750% due 09/01/05......................... Baa1 A-
941,719
2,000,000 Series E,
6.000% due 05/15/15......................... Baa1 A-
1,885,000
Series H:
1,000,000 7.000% due 02/01/21......................... Baa1 A-
1,057,500
2,000,000 Sub-Series H-1,
6.125% due 08/01/10......................... Baa1 A-
1,935,000
1,000,000 New York City, New York, Health & Hospital
Corporation, Series A,
6.300% due 02/15/20......................... Baa BBB
977,500
1,950,000 New York State, Energy, Research & Development
Authority, Electric Facility Revenue,
7.150% due 12/01/20......................... Baa3 BB+
1,993,875
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- - -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
NORTH CAROLINA--1.4%
$2,300,000 North Carolina, Eastern Municipal Power
Agency, Power Systems Revenue,
7.000% due 01/01/08......................... A A-
$ 2,472,500
OHIO--2.8%
1,000,000 Cleveland, Ohio, Airport Special Revenue,
(Continental Airlines Inc.),
9.000% due 12/01/19......................... NR NR
1,042,500
1,000,000 Cuyahoga County, Ohio, Health Care Facilities,
(Judson Retirement Community),
8.875% due 11/15/19......................... NR NR
1,085,000
1,500,000 Montgomery County, Ohio, Health Systems
Revenue, Series B,
8.100% due 07/01/18......................... Baa BBB-
1,616,250
155,000 Ohio Housing Finance Agency, Single Family
Mortgage Revenue,
11.375% due 08/01/14........................ Aa A
160,231
1,000,000 Ohio Water Development Authority, Pollution
Control Revenue, Series A,
8.100% due 10/01/13......................... Baa3 BB+
1,071,250
OKLAHOMA--0.4%
625,000 Oklahoma Housing Finance Agency, Single Family
Housing,
10.750% due 03/01/07........................ Aa A+
641,406
PENNSYLVANIA--12.8%
2,200,000 Allegheny County, Pennsylvania, Industrial
Development Authority, Special Facilities
Revenue, Series B, (U.S. Air Project),
8.500% due 03/01/21......................... B2 B+
2,156,000
Delaware County, Pennsylvania, Industrial
Development Authority, First Mortgage:
240,000 8.250% due 07/01/94......................... NR NR
240,900
1,500,000 (White Horse),
9.700% due 07/01/09......................... NR NR
1,535,625
3,000,000 Lebanon County, Pennsylvania, (Samaritan
Hospital), Series B,
8.250% due 11/01/18......................... NR BBB+
3,487,500
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- - -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
PENNSYLVANIA (CONTINUED)
$2,500,000 Luzerne County, Pennsylvania, Industrial
Development Authority,
7.125% due 12/01/22......................... Baa3 BBB-
$ 2,475,000
2,000,000 Montgomery County, Pennsylvania, Higher
Education & Health Authority,
8.375% due 11/01/11......................... Ba1 NR
2,095,000
4,440,000 Montgomery County, Pennsylvania, Industrial
Development Authority, Pollution Control
Revenue, (Philadelphia Electric Company),
Series A,
10.500% due 05/15/15........................ Baa1 BBB
4,806,300
625,000 Northumberland County, Pennsylvania,
Industrial Development Authority Revenue,
6.875% due 02/01/03......................... NR NR
620,312
2,000,000 Philadelphia, Pennsylvania, Gas Revenue,
Series B,
6.400% due 11/15/16......................... Ba BB
1,870,000
1,000,000 Schuylkill County, Pennsylvania, Industrial
Development Revenue,
6.500% due 01/01/10......................... NR NR
937,500
1,500,000 Scranton-Lackawanna, Pennsylvania, Health &
Welfare Authority, (Mercy Health Systems),
Series B,
8.500% due 07/01/20......................... NR BB+
1,636,875
1,250,000 Sharon, Pennsylvania, Regional Health Systems,
(Project B),
6.875% due 12/01/22......................... NR BBB+
1,217,188
SOUTH CAROLINA--0.6%
965,000 McCormick County, South Carolina, Certificates
of Participation,
9.750% due 07/01/09......................... NR NR
993,950
SOUTH DAKOTA--2.4%
Oglala Sioux Tribe, South Dakota, Pine Ridge
County, Revenue Bonds:
340,000 7.000% due 07/01/99......................... Aaa NR
338,725
1,865,000 7.500% due 07/01/13......................... Aaa NR
1,848,681
1,900,000 10.000% due 07/01/13........................ Aaa NR
2,087,625
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- - -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
TENNESSEE--1.0%
$1,750,000 State of Tennessee, Certificates of
Participation, (Town Project),
8.000% due 08/01/08......................... NR NR
$ 1,798,125
TEXAS--14.5%
600,000 Angelina County, Texas, Jail Facilities
Financing Corporation, (Criminal Detention
Center), Mortgage Revenue Bonds,
9.750% due 08/01/09 (in default)............ NR NR
6,000
1,000,000 Bell County, Texas, Health Facilities
Development Corporation, (Living Tech, Inc.
Project), Series A,
10.500% due 06/15/18........................ NR NR
920,000
Brazos River, Texas, Pollution Control
Revenue, (Collateral-Tax, Project A):
1,000,000 9.875% due 10/01/17......................... Baa2 BBB
1,137,500
2,000,000 8.250% due 01/01/19......................... Baa2 BBB
2,187,500
1,000,000 Dallas-Fort Worth, Texas, International
Airport Facilities, (Delta Airlines Inc.),
6.250% due 11/01/13......................... Ba1 BB
887,500
1,630,000 El Paso, Texas, Housing Finance Corporation,
Single Family Mortgage Revenue,
8.750% due 10/01/11......................... A NR
1,748,175
2,000,000 El Paso, Texas, International Airport Revenue
Bonds,
7.750% due 03/01/12......................... B2 B
2,015,000
1,215,612 Harris County, Texas, Industrial Development
Corporation,
7.950% due 07/01/19......................... NR NR
1,151,792
840,000 La Salle County, Texas, Jail Facilities
Financing Corporation, (Criminal Detention
Center), Mortgage Revenue Bonds,
9.750% due 08/01/09 (in default)............ NR NR
8,400
1,400,000 Matagorda County, Texas, Navigation District
No. 1, Pollution Control Revenue, (Houston
Lighting & Power Company Project), Series A,
7.875% due 02/01/19......................... A3 A
1,506,750
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- - -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
TEXAS (CONTINUED)
$1,400,000 North Central, Texas, Health Facilities
Development Project, (Hospital-Baylor Health
Care Systems, Project A),
8.980% due 05/15/08......................... Aa AA
$ 1,491,000
Northgate Crossing, Texas, Municipal Utilities
District:
1,000,000 Series 1,
8.875% due 12/01/13......................... NR NR
1,006,250
1,000,000 Series 2,
8.875% due 12/01/13......................... NR NR
1,006,250
570,000 Pecos County, Texas, Jail Facilities Financing
Corporation, (Criminal Detention Center),
Mortgage Revenue Bonds,
9.750% due 08/01/09 (in default)............ NR NR
5,700
Port Corpus Christi, Texas, Industrial
Development Corporation Revenue, (Valero
Refinancing and Marketing Company):
2,500,000 Series A,
10.250% due 06/01/17........................ Baa3 BBB-
2,831,250
2,000,000 Series B,
10.625% due 06/01/08........................ Baa3 BBB-
2,285,000
3,515,000 Sam Rayburn, Texas, Municipal Power Agency,
Power Revenue,
9.625% due 09/01/04 (prerefunded 09/01/95).. Aaa AAA
3,844,531
2,000,000 San Saba County, Texas, Certificates of
Participation,
8.625% due 02/15/19......................... NR NR
2,112,500
UTAH--1.1%
1,800,000 Hurricane, Utah, Health Services Project,
10.500% due 07/01/20........................ NR NR
1,914,750
VERMONT--1.4%
2,365,000 Vermont Housing Finance Agency,
Home Mortgage, Series B,
8.100% due 06/01/22......................... A1 NR
2,447,775
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- - -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- - -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
VIRGINIA--1.4%
$2,600,000 Hopwell, Virginia, Industrial Development
Resource Authority,
8.250% due 06/01/16......................... NR NR
$ 2,606,500
WEST VIRGINIA--1.4%
2,500,000 Marion County, West Virginia,
County Commission,
7.750% due 12/01/11......................... NR NR
2,446,875
PUERTO RICO--0.1%
200,000 Commonwealth of Puerto Rico, General
Obligation Bonds,
8.000% due 07/01/08......................... Baa1 A
223,500
- - -------------
TOTAL MUNICIPAL BONDS AND NOTES (Cost
$176,224,008)............................ 175,879,866
- - -------------
</TABLE>
<TABLE>
<S> <C>
<C>
TOTAL INVESTMENTS (Cost $176,224,008*)................................
97.8% $175,879,866
OTHER ASSETS AND LIABILITIES (Net)....................................
2.2 3,935,366
----
- - - ----------
NET ASSETS............................................................
100.0% $179,815,232
----
- - - ----------
----
- - - ----------
<FN>
- - ---------------
* Aggregate cost for Federal tax purposes.
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<CAPTION>
SUMMARY OF MUNICIPAL BONDS
BY COMBINED RATINGS
APRIL 30, 1994
STANDARD & PERCENT
MOODY'S OR POOR'S OF VALUE
- - --------- ---------- ----------
<S> <C> <C> <C>
Aaa AAA 8%
Aa AA 4
A A 12
Baa BBB 29
Ba BB 9
B B 4
NR NR 34
--
100%
--
--
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Statement of Assets and
Liabilities
April 30, 1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $176,224,008) (Note
1)
See accompanying schedule....................
$175,879,866
Interest receivable............................
4,881,777
-----------
- - -
Total Assets.................................
180,761,643
-----------
- - -
LIABILITIES:
Dividends payable.............................. $416,249
Due to custodian............................... 336,255
Investment advisory fee payable (Note 2)....... 59,267
Administration fee payable (Note 2)............ 29,634
Transfer agent fees payable (Note 2)........... 13,300
Custodian fees payable (Note 2)................ 7,000
Accrued Directors' fees and expenses (Note
2)............................................ 3,000
Accrued expenses and other payables............ 81,706
--------
Total Liabilities............................
946,411
-----------
- - -
NET ASSETS.......................................
$179,815,232
-----------
- - -
-----------
- - -
NET ASSETS consist of:
Undistributed net investment income............ $
296,403
Accumulated net realized loss on investments
sold..........................................
(2,515,924)
Unrealized depreciation of investments.........
(344,142)
Par value......................................
195,212
Paid-in capital in excess of par value.........
182,183,683
-----------
- - -
Total Net Assets.............................
$179,815,232
-----------
- - -
-----------
- - -
NET ASSET VALUE, per share ($179,815,232
DIVIDED BY 19,521,241 shares of common stock
outstanding)....................................
$9.21
-----------
- - -
-----------
- - -
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Statement of
Operations
For the Six Months Ended April 30,
1994
(unaudited)
[LOGO]
- - ------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest........................................ $
7,184,746
EXPENSES:
Investment advisory fee (Note 2)................ $368,501
Administration fee (Note 2)..................... 184,251
Shareholder reports expense..................... 67,208
Legal and audit fees............................ 29,298
Transfer agent fees (Note 2).................... 23,334
Custodian fees (Note 2)......................... 20,430
Amortization of organization costs (Note 5)..... 10,425
Directors' fees and expenses (Note 2)........... 10,253
Other........................................... 49,523
--------
Total Expenses................................
763,223
----------
- - -
NET INVESTMENT INCOME.............................
6,421,523
----------
- - -
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTES
1 AND 3):
Net realized loss on investments sold during the
period.........................................
(2,498,364)
Net unrealized depreciation of investments
during the period..............................
(7,105,508)
----------
- - -
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS...
(9,603,872)
----------
- - -
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................
$(3,182,349)
----------
- - -
----------
- - -
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Statement of Changes in Net
Assets
[LOGO]
- - ------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
04/30/94 ENDED
(UNAUDITED) 10/31/93
----------- ----------
- - -
<S> <C> <C>
Net investment income.......................... $ 6,421,523
$12,709,523
Net realized gain/(loss) on investments sold
during the period............................. (2,498,364)
722,591
Net unrealized appreciation/(depreciation) of
investments during the period................. (7,105,508)
3,697,189
----------- ----------
- - -
Net increase/(decrease) in net assets resulting
from operations............................... (3,182,349)
17,129,303
Distributions to shareholders from:
Net investment income........................ (6,301,604)
(12,707,110)
Net realized gain on investments............. (406,809) --
Net increase in net assets from Fund share
transactions (Note 4)......................... 1,411,963
4,768,088
----------- ----------
- - -
Net increase/(decrease) in net assets.......... (8,478,799)
9,190,281
NET ASSETS:
Beginning of period............................ 188,294,031
179,103,750
----------- ----------
- - -
End of period (including undistributed net
investment income of $296,403 and $176,484,
respectively)................................. $179,815,232
$188,294,031
----------- ----------
- - -
----------- ----------
- - -
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Financial
Highlights
For a Fund share outstanding throughout each
period
[LOGO]
- - ------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
YEAR YEAR YEAR PERIOD
04/30/94 ENDED
ENDED ENDED ENDED ENDED
(UNAUDITED) 10/31/93
10/31/92 10/31/91 10/31/90 10/31/89*
----------- --------- --
- - ------- --------- --------- ------------
<S> <C> <C>
<C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 9.72 $ 9.49 $
9.42 $ 9.28 $ 9.52 $ 9.35
----------- --------- --
- - ------- --------- --------- ------------
Net investment income......................... 0.33 0.67
0.70 0.74 0.75 0.66
Net realized and unrealized gain/(loss) on
investments.................................. (0.50) 0.23
0.06 0.15 (0.23) 0.15
----------- --------- --
- - ------- --------- --------- ------------
Net increase/(decrease) in net assets
resulting from operations.................... (0.17) 0.90
0.76 0.89 0.52 0.81
----------- --------- --
- - ------- --------- --------- ------------
DISTRIBUTIONS:
Dividends from net investment income.......... (0.32) (0.67)
(0.69) (0.75) (0.76) (0.64)
Dividends from net realized gains............. (0.02) --
- - -- -- -- --
----------- --------- --
- - ------- --------- --------- ------------
Total distributions........................... (0.34) (0.67)
(0.69) (0.75) (0.76) (0.64)
----------- --------- --
- - ------- --------- --------- ------------
Net asset value, end of period................ $ 9.21 $ 9.72 $
9.49 $ 9.42 $ 9.28 $ 9.52
----------- --------- --
- - ------- --------- --------- ------------
----------- --------- --
- - ------- --------- --------- ------------
Market value, end of period................... $ 9.000 $ 9.875 $
9.125 $ 9.500 $ 9.000 $ 9.500
----------- --------- --
- - ------- --------- --------- ------------
----------- --------- --
- - ------- --------- --------- ------------
Total investment return***.................... (5.49)% 17.07%
2.74% 17.88% (1.45)% 1.72%
----------- --------- --
- - ------- --------- --------- ------------
----------- --------- --
- - ------- --------- --------- ------------
Ratios to average net assets/ supplemental
data:
Net assets, end of period
(in 000's)................................... $179,815 $188,294
$179,104 $173,290 $164,531 $164,221
Ratio of net investment income to average net
assets....................................... 6.97%** 6.89%
7.31% 7.90% 8.00% 7.54%**
Ratio of operating expenses to average net
assets....................................... 0.83%** 0.87%
0.87% 0.90% 0.87% 0.86%**+
Portfolio turnover rate....................... 5% 13%
12% 22% 11% 16%
<FN>
- - ---------------
* The Fund commenced operations on November 28, 1988.
** Annualized.
*** Based on market value per share.
+ Annualized expense ratio before fees waived by investment adviser was
0.88%.
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Notes to Financial Statements
(unaudited)
[LOGO]
- - ------------
1. SIGNIFICANT ACCOUNTING POLICIES
Municipal High Income Fund Inc. (the "Fund") was organized as a
corporation
under the laws of the State of Maryland on March 4, 1988 and is registered
with
the Securities and Exchange Commission as a diversified, closed-end
management
investment company under the Investment Company Act of 1940, as amended.
The
policies described below are followed consistently by the Fund in
the
preparation of its financial statements in conformity with generally
accepted
accounting principles.
PORTFOLIO VALUATION: Investments are valued by The Boston Company
Advisors,
Inc. ("Boston Advisors") after consultation with an independent pricing
service
(the "Service") approved by the Board of Directors. When, in the judgment of
the
Service, quoted bid prices for investments are readily available and
are
representative of the bid side of the market, these investments are valued
at
the mean between the quoted bid prices and asked prices. Investments for
which,
in the judgment of the Service, no readily obtainable market quotations
are
available, are carried at fair value as determined by the Service or by
the
Fund's Board of Directors. The Service may use electronic data
processing
techniques and/ or a matrix system to determine valuations. Short-
term
investments that mature in fewer than 60 days are valued at amortized cost.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are
recorded as of the trade date. Securities purchased or sold on a when-issued
or
delayed-delivery basis may be settled a month or more after trade date.
Realized
gains and losses on investments sold are recorded on the basis of
identified
cost. Interest income is recorded on the accrual basis.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Fund
to
make monthly distributions of substantially all of its net investment income
to
shareholders. Net realized capital gains, if any, will be distributed
to
shareholders at least once a year. In addition, in order to avoid
the
application of a 4% nondeductible excise tax on certain undistributed amounts
of
ordinary income and capital gains, the Fund may make an additional
distribution
shortly before December 31 in each year of any undistributed ordinary income
or
capital gains and expects to make any other distributions as are necessary
to
avoid the application of this tax. To the extent that net realized capital
gains
can be offset by capital losses and loss carryforwards, it is the policy of
the
Fund not to distribute such gains. Income distributions and capital
gain
distributions are determined in accordance with income tax regulations which
may
differ from generally accepted accounting principles. These differences
are
primarily due to timing differences and differing characterization
of
distributions made by the Fund as a whole.
20
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Notes to Financial Statements
(unaudited)
(continued)
[LOGO]
- - ------------
FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated
investment company, if such qualification is in the best interest of
its
shareholders, by complying with the requirements of the Internal Revenue Code
of
1986, as amended, applicable to regulated investment companies and
by
distributing substantially all of its earnings to its shareholders.
Therefore,
no Federal income tax provision is required.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS
The Fund has entered into an investment advisory agreement (the
"Advisory
Agreement") with Greenwich Street Advisors, a division of Mutual
Management
Corp., which is controlled by Smith Barney Holdings Inc. ("Holdings").
Holdings
is a wholly owned subsidiary of The Travelers Inc. Under the Advisory
Agreement,
the Fund pays a monthly fee at the annual rate of 0.40% of the value of
its
average monthly net assets.
The Fund has also entered into an administration agreement
("Administration
Agreement") with Boston Advisors, an indirect wholly owned subsidiary of
Mellon
Bank Corporation ("Mellon"). Under the Administration Agreement, the Fund pays
a
monthly fee at the annual rate of 0.20% of the value of its average monthly
net
assets.
No officer, director, or employee of Smith Barney Inc. ("Smith
Barney"),
Boston Advisors or of any parent or subsidiary of those corporations
receives
any compensation from the Fund for serving as a Director or officer of the
Fund.
The Fund pays each Director, who is not an officer, director or employee
of
Smith Barney, Boston Advisors or any of their affiliates, $5,000 per annum
plus
$500 per meeting attended and reimburses each such Director for travel
and
out-of-pocket expenses.
Boston Safe Deposit and Trust Company, an indirect wholly owned
subsidiary
of Mellon, serves as the Fund's custodian. The Shareholder Services Group,
Inc.,
a subsidiary of First Data Corporation, serves as the Fund's transfer agent.
3. SECURITIES TRANSACTIONS
For the six months ended April 30, 1994, cost of purchases and proceeds
from
sales of investment securities, excluding short-term investments,
aggregated
$11,342,050 and $9,161,045, respectively.
At April 30, 1994, aggregate gross unrealized appreciation for
all
securities in which there was an excess of value over tax cost amounted
to
$7,812,026, and the aggregate gross unrealized depreciation for all
securities
in which there was an excess of tax cost over value amounted to $8,156,168.
21
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Notes to Financial Statements
(unaudited)
(continued)
[LOGO]
- - ------------
4. FUND SHARES
At April 30, 1994, 500,000,000 shares of common stock, with a par value
of
$.01 per share were authorized.
Common stock transactions were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR
ENDED
4/30/94
10/31/93
------------------- ---------
- - ----------
SHARES AMOUNT SHARES
AMOUNT
------- ---------- -------
- - ----------
<S> <C> <C> <C>
<C>
Issued as reinvestment of dividends.......... 149,378 $1,411,963 503,252
$4,768,088
------- ---------- -------
- - ----------
------- ---------- -------
- - ----------
</TABLE>
5. ORGANIZATION COSTS
Costs incurred by the Fund in connection with its organization and
initial
public offering of shares amounted to $625,578 and have been amortized on
a
straight-line basis over a five-year period, beginning November 28, 1988,
the
date of the Fund's commencement of operations. All such costs have been
fully
amortized at April 30, 1994.
6. CONCENTRATION OF CREDIT
The Fund invests in securities offering high current income which
generally
will be in the lower rating categories of recognized rating agencies.
These
securities generally involve more credit risk than securities in the
higher
rating categories. In addition, the trading market for high yield securities
may
be relatively less liquid than the market for higher-rated securities.
7. SUBSEQUENT EVENT
On June 1, 1994, the Fund's Board of Directors approved a new
administration
agreement with Smith Barney Advisers, Inc. ("Smith Barney Advisers")
containing
substantially the same terms and conditions, including the level of fees, as
the
current administration agreement with Boston Advisors. The Board also approved
a
sub-administration agreement with Boston Advisors. Under the
proposed
arrangements, Boston Advisors would be paid a portion of the amount paid by
the
Fund to Smith Barney Advisers at a rate as agreed upon from time to time
between
Smith Barney Advisers and Boston Advisors.
22
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Notes to Financial Statements
(unaudited)
(continued)
[LOGO]
- - ------------
QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET INCREASE/
NET
REALIZED (DECREASE)
NET AND
UNREALIZED IN NET ASSETS
INVESTMENT INVESTMENT
GAIN/(LOSS) RESULTING FROM
INCOME INCOME ON
INVESTMENTS OPERATIONS
----------------- ----------------- --------------
- - -------- -------------------
PER PER
PER PER
QUARTER ENDED TOTAL SHARE TOTAL SHARE TOTAL
SHARE TOTAL SHARE
----------------------- ---------- ----- ---------- ----- -------------
- - ------ ----------- ------
<S> <C> <C> <C> <C> <C>
<C> <C> <C>
January 31, 1992....... $3,703,283 $0.20 $3,308,313 $0.18 $ 598,707
$ 0.03 $ 3,907,020 $ 0.21
April 30, 1992......... 3,602,971 0.19 3,244,453 0.17 (657,952)
(0.03) 2,586,501 0.14
July 31, 1992.......... 3,723,175 0.20 3,295,472 0.18 5,255,933
0.28 8,551,405 0.46
October 31, 1992....... 3,491,667 0.19 3,126,003 0.17 (3,926,544)
(0.22) (800,541) (0.05)
January 31, 1993....... 3,823,950 0.20 3,413,585 0.18 2,944,261
0.16 6,357,846 0.34
April 30, 1993......... 3,416,422 0.18 3,042,358 0.16 241,324
0.01 3,283,682 0.17
July 31, 1993.......... 3,503,367 0.18 3,094,861 0.16 (691,663)
(0.04) 2,403,198 0.12
October 31, 1993....... 3,570,033 0.18 3,158,719 0.17 1,925,858
0.10 5,084,577 0.27
January 31, 1994....... 3,648,178 0.19 3,253,314 0.17 (48,811)
- - -- 3,204,503 0.17
April 30, 1994......... 3,536,568 0.18 3,168,209 0.16 (9,555,061)
(0.50) (6,386,852) (0.34)
</TABLE>
23
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Management of the
Fund
[LOGO]
- - ------------
DIRECTORS
Charles F. Barber
Allan J. Bloostein
Martin Brody
Dwight B. Crane
Heath B. McLendon
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD
Stephen J. Treadway
PRESIDENT
Richard P. Roelofs
EXECUTIVE VICE PRESIDENT
Lawrence T. McDermott
VICE PRESIDENT AND
INVESTMENT OFFICER
Karen Mahoney-Malcolmson
INVESTMENT OFFICER
Michael J. Maher
INVESTMENT OFFICER
Vincent Nave
TREASURER
Francis J. McNamara, III
SECRETARY
INVESTMENT ADVISER
Greenwich Street Advisors
Two World Trade Center
New York, New York 10048
ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
AUDITORS AND COUNSEL
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit and
Trust Company
One Boston Place
Boston, Massachusetts 02108
24
<PAGE>
[LOGO]
This report is sent to shareholders of Municipal High Income Fund Inc. for
their
information. It is not a Prospectus, circular or representation intended for
use
in the purchase or sale of shares of the Fund or of any securities mentioned
in
this report.
MUNICIPAL HIGH INCOME FUND INC.
Two World Trade Center
New York, NY 10048
(212) 720-9218
