<PAGE>
O
O
MUNICIPAL
HIGH INCOME
FUND INC.
QUARTERLY
REPORT
O
JANUARY
31, 1994
<PAGE>
- ----------------------
- ----------------------
O
MUNICIPAL HIGH INCOME FUND INC.
Dear Shareholder:
For most of the period since our annual report to you in October of
1993,
the tax-exempt market followed the lead of the Treasury bond market and
rallied
to higher prices. However, as investors became concerned that the economy
and
inflation were rising and that the Federal Reserve Board was likely to
increase
short-term interest rates, a standoff between investors and the market
developed
and cash flows to the fixed income market dwindled to a trickle. In turn,
bond
prices came under downward price pressure. This slowdown in cash flow
and
weakness in prices also took its toll on the issuance of new bonds. As we
have
previously reported in past reports, bond volume in 1993 set a record of
over
$290 billion but is expected to decline to less than $200 billion in 1994.
The
decrease in bond prices, which move in the opposite direction to interest
rates,
made bond issuers reluctant to enter the market and many postponed their
deals.
We expect this trend to continue until interest rates stabilize.
While these issues are of concern to us, we believe that the markets
are
oversold and offer a buying opportunity at present levels. We are entering
the
tax-paying season which will be more painful than usual as taxpayers face
not
only higher, retroactive tax rates but also loss of deductions. In
conjunction
with dwindling new issue supply, a higher demand for tax-exempt income
should
eventually stabilize the municipal market.
Over the near term we will tread cautiously as market forces continue
to
dwell on fears of increased inflation. Until this atmosphere improves, we
will
continue to be defensive in our asset allocation. The majority of the
portfolio
- -- 54% -- is invested in securities rated BBB/BAA or higher by Moody's
Investors
Services, Inc. or Standard & Poor's Corporation, two nationally recognized
bond
rating organizations. Bonds in these rating categories are considered to
be
investment grade. We have invested the majority of the Fund's assets
in
industrial development bonds and hospital revenue bonds. On January 31,
1994,
the Fund had an average maturity of 21 years.
The Fund is invested in high coupon bonds that tend to cushion the
Fund's
net asset value per share against market fluctuations. (It is, however,
not
impervious to market volatility.) The Fund's net asset value increased
during
this past quarter even as its market price showed some fluctuations.
In
December, it paid a capital gain of $0.021 per share to investors in addition
to
a regular monthly tax-free dividend of $.054 per share.
On a final note, we are pleased to share with you that Morningstar
Mutual
Fund Values, a mutual fund evaluation agency, in its March 11th issue
awarded
the Fund a rating of four stars out of a possible five stars for the
attractive
returns and historically low
- -------------------------------------------------------------------
<PAGE>
- ---------------------------
- ---------------------------
O
volatility. It also earned a four-star rating for the past three- and five-
year
periods. FRANK CAPIELLO'S CLOSED-END FUND DIGEST recommended the Fund as a
"Buy"
in its March 1994 issue.
We thank you for your continued investment in our Fund, and look forward
to
reporting to you again next quarter.
Sincerely,
<TABLE>
<S> <C>
Heath B. McLendon Lawrence T. McDermott
CHAIRMAN OF THE VICE PRESIDENT AND INVESTMENT
BOARD OFFICER
March 21, 1994
</TABLE>
2
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<PAGE>
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O
UNAUDITED FINANCIAL DATA
PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
DIVIDEND
NYSE NET ASSET DIVIDEND
REINVESTMENT
CLOSING PRICE VALUE PAID PRICE
------------- --------- -------- --------
- ----
<S> <C> <C> <C> <C>
November 30, 1993........... $9.50 $9.62 $.0540
$9.55
December 31, 1993........... 9.38 9.66 .0750
9.47
January 31, 1994............ 9.63 9.70 .0540
9.47
</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>
$0.1830 6.90% 9.58% 10.00% 10.78%
11.42%
</TABLE>
- ------------
* Based on January 31, 1994 net asset value of $9.70 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
Shearson 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
January 31, 1994
(unaudited)
O
- ------------
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-
$ 975,138
ARIZONA--2.0%
Gila County, Arizona, Industrial Development
Authority Pollution Control Revenue, (ASARCO
Inc. Project), Series 1985:
600,000 8.900% due 07/01/06......................... Baa2 BBB-
696,000
2,700,000 8.900% due 07/01/06......................... Baa2 BBB
3,138,750
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
3,152,188
CALIFORNIA--1.2%
2,000,000 Los Angeles County, California, Regional
Airport Authority, (Continental Airlines,
Inc.),
9.000% due 08/01/17......................... NR NR
2,252,500
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
1,320,313
CONNECTICUT--0.8%
1,500,000 Connecticut State, Development Authority
Health Care Revenue, Series B,
8.000% due 07/01/17......................... NR NR
1,567,500
DISTRICT OF COLUMBIA--0.7%
1,255,000 District of Columbia, Housing Finance Agency,
Multifamily Housing Revenue,
11.375% due 07/01/08........................ A NR
1,308,338
</TABLE>
See Note to Portfolio of Investments.
4
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
January 31, 1994
(unaudited)
O
- ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
FLORIDA--6.6%
$1,500,000 Broward County, Florida, Educational Facility,
8.500% due 04/01/10......................... NR BBB
$ 1,736,250
1,000,000 Hillsborough County, Florida, Industrial
Development Revenue, (Seaboard Tampa
Terminals Venture Project),
8.600% due 01/15/22......................... Ba2 BB-
1,138,750
1,000,000 Homestead, Florida, Industrial Development
Revenue, Project A,
7.950% due 11/01/18......................... NR NR
1,008,750
2,110,000 Jacksonville, Florida, Health Facilities
Authority, Health Facilities Revenue,
9.125% due 10/15/19......................... NR NR
2,236,600
1,000,000 Lady Lake, Florida, Industrial Development
Project Revenue (Sunbelt Utilities Inc.
Project)
9.500% due 07/01/10......................... NR NR
1,078,750
1,500,000 Ocean Highway & Port Authority, Florida,
Pollution Control Revenue,
9.375% due 11/01/04......................... NR B+
1,550,625
Palm Beach County, Florida, Health Facilities
Authority, Insured Hospital Revenue, (JFK
Medical Center):
1,155,000 8.875% due 12/01/18......................... NR BBB
1,334,025
1,320,000 8.875% due 12/01/18 (prerefunded
12/01/98)................................... NR NR
1,633,500
650,000 Tampa, Florida, (Aquarium Inc. Revenue
Project),
7.750% due 05/01/27......................... NR NR
729,625
GEORGIA--2.2%
2,510,000 Georgia Municipal Electric Authority, General
Power Revenue, Series 85-K,
9.875% due 01/01/16......................... A1 AA-
2,701,388
1,000,000 Walton County, Georgia, Industrial Development
Authority (Walton Project),
8.500% due 09/01/07......................... NR NR
1,090,000
2,550,000 Warren County, Georgia, Industrial Development
Authority Revenue, (Foundry East Project),
10.000% due 07/01/19 (in default)........... NR NR
255,000
</TABLE>
See Note to Portfolio of Investments.
5
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
January 31, 1994
(unaudited)
O
- ------------
<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--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
$ 3,573,970
Crestwood, Illinois,
Cook County Tax Increment Bonds:
450,000 10.000% due 12/01/96........................ NR AAA
483,187
550,000 10.000% due 12/01/97........................ NR AAA
590,563
650,000 10.000% due 12/01/98........................ NR AAA
697,937
2,000,000 East Chicago, Illinois, Industrial Pollution
Control Revenue, (Inland Steel Company),
Project 10,
6.800% due 06/01/13......................... Ba3 BB-
2,090,000
1,960,000 Hanover Park, Illinois, First Mortgage,
(Windsor Project),
9.250% due 12/01/07......................... NR NR
2,092,300
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
839,719
1,000,000 Sterling, Illinois, First Mortgage Revenue,
(Hoosier Care Project), Series A,
9.750% due 08/01/19......................... NR NR
1,072,500
IOWA--0.7%
1,240,000 Marion, Iowa, Multi-family Housing Revenue,
9.500% due 07/01/18......................... NR NR
1,277,200
KENTUCKY--2.9%
1,440,000 Jefferson County, Kentucky, Health Facilities
Authority,
10.125% due 05/01/08........................ A1 NR
1,677,600
Kenton County, Kentucky, Airport Board:
1,000,000 (Delta Airlines),
6.750% due 02/01/02......................... Ba1 BB
1,060,000
1,500,000 (Greater Cincinnati Airport Revenue),
Project A,
7.500% due 02/01/20......................... Ba1 BB
1,636,875
1,000,000 Pendleton County, Kentucky, Multi-Lease
Revenue, Series A,
6.500% due 03/01/19......................... NR A
1,066,250
</TABLE>
See Note to Portfolio of Investments.
6
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
January 31, 1994
(unaudited)
O
- ------------
<TABLE>
<CAPTION>
RATINGS
-----------------
- -- MARKET
FACE STANDARD
& VALUE
VALUE MOODY'S POOR'S
(NOTE 1)
---------- ------- --------
- -- -------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C>
<C>
LOUISIANA--1.4%
$1,200,000 Lake Charles, Louisiana (Harbor & Terminal
Project),
7.750% due 08/15/22......................... Ba2 NR
$ 1,360,500
195,000 Louisiana Housing Finance Agency, Single
Family Mortgage Revenue,
13.625% due 09/01/02........................ A1 BB
205,481
1,000,000 Port New Orleans, Louisiana, Industrial
Development Revenue, (Continental Grain
Company Project),
7.500% due 07/01/13......................... NR BB-
1,070,000
MAINE--1.4%
2,500,000 Maine State Housing Authority, Mortgage
Purchases, Series D-1,
8.300% due 11/15/28......................... A1 AA-
2,590,625
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)................................... NR BBB-
3,825,000
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
2,215,000
Commonwealth of Massachusetts Industrial
Finance Agency:
1,700,000 Series A, (S.E. Mass Project),
9.000% due 07/01/15......................... NR NR
1,991,125
5,940,000 Series B, (S.E. Mass Project),
9.250% due 07/01/15......................... NR NR
6,986,925
MICHIGAN--2.4%
755,000 Greater Detroit, Michigan, Resource Recovery
Authority Revenue, Series B,
9.250% due 12/13/08......................... NR BBB-
826,725
1,855,000 Greater Detroit Recreation Authority, Series
C,
9.250% due 12/13/08......................... NR BBB-
2,031,225
</TABLE>
See Note to Portfolio of Investments.
7
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
January 31, 1994
(unaudited)
O
- ------------
<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 (CONTINUED)
$1,500,000 Western Townships, Michigan,
Utility Sewage System,
8.300% due 01/01/19......................... NR BBB+
$ 1,627,500
MISSISSIPPI--3.5%
3,300,000 Claiborne County, Mississippi,
Pollution Control Revenue,
Series C, 9.875% due 12/01/14............... NR NR
4,100,250
2,000,000 Mississippi Hospital Equipment & Facilities
Authority, (Methodist Hospital),
9.375% due 05/01/12......................... NR NR
2,477,500
MONTANA--1.1%
2,000,000 Montana State Board Investment Resource,
Recovery Revenue, (Yellowstone Energy
LP Project),
7.000% due 12/31/19......................... NR NR
2,057,500
NEW HAMPSHIRE--2.3%
New Hampshire State Industrial Development
Authority, (UTD Illuminating):
1,000,000 Series A,
9.375% due 07/01/12......................... Baa3 BBB-
1,171,250
2,500,000 Series B,
10.750% due 10/01/12........................ Baa3 BBB-
3,065,625
NEW JERSEY--3.0%
1,300,000 New Jersey Educational Facilities, Series C,
6.625% due 07/01/23......................... NR NR
1,317,875
New Jersey Health Care Facilities, Finance
Authority Revenue:
1,730,000 7.600% due 07/01/21......................... Ba NR
1,753,788
1,500,000 (Zurbrugg Memorial Hospital), Series C,
8.500% due 07/01/12......................... Baa BBB
1,608,750
310,000 New Jersey Housing and Mortgage Finance
Agency, Home Buyer Revenue, Series E, (MBIA
Insured),
7.650% due 10/01/16......................... Aaa AAA
332,862
</TABLE>
See Note to Portfolio of Investments.
8
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
January 31, 1994
(unaudited)
O
- ------------
<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)
$ 500,000 Western New York, New Jersey Municipal
Utilities, Authorized Revenue, Series A,
(MBIA Insured),
8.125% due 12/15/17 (prerefunded
12/15/95)................................... Baa NR
$ 554,375
NEW MEXICO--1.1%
1,975,000 New Mexico Mortgage Finance Authority, Single
Family Mortgage Program, Series B,
8.300% due 03/01/20......................... NR AA
2,147,813
NEW YORK--5.8%
1,725,000 Babylon, New York, Industrial Development
Agency, (Recycling Project), Series A,
8.875% due 03/01/11......................... NR NR
1,746,562
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
1,442,000
New York City, New York, Certificates of
Participation:
875,000 Series C,
7.750% due 09/01/05......................... Baa1 A-
970,156
2,000,000 Series E,
6.000% due 05/15/15......................... Baa1 A-
2,040,000
1,000,000 Series H,
7.000% due 02/01/21......................... Baa1 A-
1,112,500
1,000,000 New York City, New York, Health & Hospital
Corporation, Series A,
6.300% due 02/15/20......................... Baa BBB
1,042,500
1,950,000 New York State, Energy, Research &
Development, Authority, Electric Facility
Revenue,
7.150% due 12/01/20......................... Baa3 BB+
2,130,375
</TABLE>
See Note to Portfolio of Investments.
9
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
January 31, 1994
(unaudited)
O
- ------------
<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-
$ 2,705,375
OHIO--2.8%
1,000,000 Cleveland, Ohio, Airport Special Revenue,
(Continental Airlines Inc.),
9.000% due 12/01/19......................... NR NR
1,076,250
1,000,000 Cuyahoga County, Ohio, Health Care Facilities,
(Judson Retirement Community),
8.875% due 11/15/19......................... NR NR
1,125,000
1,500,000 Montgomery County, Ohio, Health Systems
Revenue, Series B,
8.100% due 07/01/18......................... Baa BBB-
1,764,375
185,000 Ohio Housing Finance Agency, Single Family
Mortgage Revenue,
11.375% due 08/01/14........................ Aa A
192,400
1,000,000 Ohio Water Development Authority, Pollution
Control Revenue, Series A,
8.100% due 10/01/13......................... Baa3 BB+
1,147,500
OKLAHOMA--0.5%
950,000 Oklahoma Housing Finance Agency, Single Family
Housing,
10.750% due 03/01/07........................ Aa A+
970,188
PENNSYLVANIA--12.9%
2,200,000 Allegheny County, Pennsylvania, Industrial
Development Authority, Special Facilities
Revenue, Series B, (U.S. Air Project),
8.500% due 03/01/21......................... Ba3 BB-
2,475,000
Delaware County Pennsylvania, Industrial
Development Authority, First Mortgage:
240,000 8.250% due 07/01/94......................... NR NR
242,700
1,500,000 (White Horse),
9.700% due 07/01/09......................... NR NR
1,588,125
3,000,000 Lebanon County, Pennsylvania, (Samaritan
Hospital), Series B,
8.250% due 11/01/18......................... NR BBB+
3,393,750
</TABLE>
See Note to Portfolio of Investments.
10
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
January 31, 1994
(unaudited)
O
- ------------
<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-
$ 2,765,625
2,000,000 Montgomery County, Pennsylvania, Higher
Education & Health Authority,
8.375% due 11/01/11......................... Ba1 NR
2,190,000
4,440,000 Montgomery County, Pennsylvania, Industrial
Development Authority, Pollution Control
Revenue, (Philadelphia Electric Company),
Series A,
10.500% due 05/15/15........................ Baa2 BBB
4,939,500
625,000 Northumberland County, Pennsylvania,
Industrial Development Authority Revenue,
6.875% due 02/01/03......................... NR NR
642,187
2,000,000 Philadelphia, Pennsylvania, Gas Revenue,
Series B,
6.400% due 11/15/16......................... Ba BB
2,090,000
1,000,000 Schuylkill County, Pennsylvania, Industrial
Development Revenue,
6.500% due 01/01/10......................... NR NR
1,006,250
1,500,000 Scranton-Lackawanna, Pennsylvania, Health &
Welfare Authority, (Mercy Health Systems),
Series B,
8.500% due 07/01/20......................... NR BBB
1,745,625
1,250,000 Sharon, Pennsylvania, Regional Health Systems,
(Project B),
6.875% due 12/01/22......................... NR BBB+
1,328,125
SOUTH CAROLINA--0.5%
965,000 McCormick County, South Carolina, Certificates
of Participation,
9.750% due 07/01/09......................... NR NR
1,019,281
SOUTH DAKOTA--2.3%
Oglala Sioux Tribe, South Dakota, Pine Ridge
County, Revenue Bonds:
340,000 7.000% due 07/01/99......................... Aaa NR
349,350
1,865,000 7.500% due 07/01/13......................... Aaa NR
1,930,275
1,900,000 10.000% due 07/01/13........................ Aaa NR
2,132,750
</TABLE>
See Note to Portfolio of Investments.
11
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
January 31, 1994
(unaudited)
O
- ------------
<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
$ 1,911,875
TEXAS--15.1%
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
1,000,000 Bexar County, Texas, Health Facilities
Development Corporation,
7.900% due 05/01/18......................... Baa1 BBB
1,110,000
Brazos River, Texas, Pollution Control
Revenue, (Collateral-Tax, Project A):
1,000,000 9.875% due 10/01/17......................... Baa2 BBB
1,190,000
2,000,000 8.250% due 01/01/19......................... Baa2 BBB
2,310,000
1,000,000 Dallas-Fort Worth, Texas, International
Airport Facilities, (Delta Airlines Inc.),
6.250% due 11/01/13......................... Ba1 BB
1,012,500
1,730,000 El Paso, Texas, Housing Finance Corporation,
Single Family Mortgage Revenue,
8.750% due 10/01/11......................... A NR
1,892,187
2,000,000 El Paso, Texas, International Airport Revenue
Bonds,
7.750% due 03/01/12......................... B2 B
2,125,000
1,215,612 Harris County, Texas, Industrial Development
Corporation,
7.950% due 07/01/19......................... NR NR
1,230,807
840,000 La Salle County, Texas, Jail Facilities
Financing Corporation, (Criminal Detention
Center), Revenue Mortgage Bonds,
9.750% due 08/01/09 (in default)............ NR NR
8,400
</TABLE>
See Note to Portfolio of Investments.
12
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
January 31, 1994
(unaudited)
O
- ------------
<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 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
$ 1,569,750
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
1,599,500
Northgate Crossing, Texas, Municipal Utilities
District:
1,000,000 Series 1,
8.875% due 12/01/13......................... NR NR
1,037,500
1,000,000 Series 2,
8.875% due 12/01/13......................... NR NR
1,037,500
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-
2,990,625
2,000,000 Series B,
10.625% due 06/01/08........................ Baa3 BBB-
2,415,000
3,515,000 Sam Rayburn, Texas, Municipal Power Agency,
Power Revenue,
9.625% due 09/01/04......................... Aaa AAA
3,945,587
2,000,000 San Saba County, Texas, Certificates of
Obligation,
8.625% due 02/15/19......................... NR NR
2,197,500
UTAH--1.1%
1,800,000 Hurricane, Utah, Health Services Project,
10.500% due 07/01/20........................ NR NR
1,993,500
VERMONT--1.3%
2,365,000 Vermont Housing Finance Agency, Home Mortgage,
Series B,
8.100% due 06/01/22......................... A1 NR
2,471,425
</TABLE>
See Note to Portfolio of Investments.
13
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Portfolio of Investments
(continued)
January 31, 1994
(unaudited)
O
- ------------
<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
$ 2,658,500
WEST VIRGINIA--1.3%
2,500,000 Marion County, West Virginia, County
Commission,
7.750% due 12/01/11......................... NR NR
2,518,750
PUERTO RICO--0.1%
200,000 Commonwealth of Puerto Rico, General
Obligation Bonds,
8.000% due 07/01/08......................... Baa1 A
235,250
- -------------
TOTAL MUNICIPAL BONDS AND NOTES (Cost
$178,246,138)............................ 184,706,115
- -------------
</TABLE>
<TABLE>
<S> <C>
<C>
TOTAL INVESTMENTS (Cost $178,246,138*)................................
97.8% $184,706,115
OTHER ASSETS AND LIABILITIES (Net)....................................
2.2 4,202,104
----
- - ----------
NET ASSETS............................................................
100.0% $188,908,219
----
- - ----------
----
- - ----------
SHARES
OUTSTANDING............................................................
19,477,215
- ------------
- ------------
NET ASSET VALUE PER
SHARE..................................................... $9.70
- ----
- ----
<FN>
- ---------------
* Aggregate cost for Federal tax purposes.
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF MUNICIPAL BONDS
BY COMBINED RATINGS
JANUARY 31, 1994
STANDARD & PERCENT
MOODY'S OR POOR'S OF VALUE
- --------- ---------- ----------
<S> <C> <C> <C>
Aaa AAA 6%
Aa AA 6
A A 10
Baa BBB 32
Ba BB 10
B B 1
NR NR 35
--
100%
--
--
</TABLE>
See Note to Portfolio of Investments.
14
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Note to Portfolio of Investments
(unaudited)
O
- ------------
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
policy described below is followed consistently by the Fund in the valuation
of
its portfolio.
PORTFOLIO VALUATION: Investments are valued by The Boston Company
Advisors,
Inc. 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.
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....... 3,649,428 0.19 3,254,564 0.17 1,936,802
0.10 5,191,366 0.27
</TABLE>
15
<PAGE>
MUNICIPAL HIGH INCOME FUND
INC.
Management of the
Fund
O
- ------------
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
16
<PAGE>
O
This report is sent to shareholders of the 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
