<PAGE>
Small circle centered on top front cover with fund name in in. Entire front
cover is an American Flag with two stars at top right and left corner.
MUNICIPAL
HIGH INCOME
FUND INC.
SEMI-ANNUAL
REPORT
[LOGO]
APRIL
30, 1995
<PAGE>
- ----------------------
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[LOGO]
MUNICIPAL HIGH INCOME FUND INC.
Dear Shareholder:
We are pleased to provide the semi-annual report for Municipal High
Income Fund Inc. for the six months ended April 30, 1995. Over the past three
months, the Fund paid dividends totaling $0.1620 per share, equivalent to
an annualized rate of 6.98% based on the Fund's April 30, 1995 net asset
value of $9.28 per share and 7.20% based on the New York Stock Exchange
closing price on that date of $9.00.
MARKET AND PORTFOLIO UPDATE
Following the direction of the Treasury securities market, the
tax-exempt market has had virtually a non-stop rally since the beginning
of the year and has recovered the losses of 1994. This increase in the
prices of fixed income securities resulted from the Federal Reserve's
seemingly successful policies to slow economic growth and achieve a soft
landing for the economy. A decline of approximately 40% in new bond
issuance, while at the same time, older higher interest rate debt
continued to be called and mature at a record pace, also
helped strengthen the tax-exempt market. We expect this supply-demand
imbalance will continue over the next six months and contribute to
greater market stability. However, recent calls by the House and Senate
for tax reform have added a somewhat negative tone and uncertainty to the
tax-exempt market. The 17% flat tax proposal which has received the most
press would result in increased borrowing costs for state and local
governments, and also reduce the value of home mortgage and charitable
deductions. Although some form of tax reform is necessary, we think it
is too early in the legislative process to accurately predict what kind
of reform will actually be enacted. From our perspective it appears
likely that the current yield range of 6 3/4 to 7% on long-term
Treasuries and 5 3/4% on AAA-rated municipals will be sustained.
During the past reporting period the Fund continued to be invested
in long-term tax-exempt issues in order to offer investors a high
level of tax-exempt income. At the end of April 1995, 55% of the Fund was
invested in securities rated as investment grade by either Standard & Poor's
Corporation or Moody's Investors Service. The majority of its holdings were
in industrial development revenue, hospital, and pollution control revenue
bonds. Other large holdings for the Fund were housing, utility and
transportation issues. The Fund's average maturity at the end of April was
20.8 years.
We are pleased to report that the Fund continues to receive a four-star
(out of a possible five) rating by Morningstar, Inc., a widely-recognized
mutual fund evaluation organization. The May 1995 issue of THE CLOSED-END
FUND DIGEST also recommends the Fund as a "Buy." We are pleased with this
recognition and will endeavor to maintain this performance record. We
appreciate your continued confidence and support, and look
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forward to reporting to you in the Fund's next quarterly report to
investors. Should you have any questions about your investment in the Fund,
please call The Shareholders Services Group, Inc. at (800) 331-1710.
Sincerely,
<TABLE>
<S> <C>
Heath B. McLendon Lawrence T. McDermott
CHAIRMAN OF THE BOARD VICE PRESIDENT AND INVESTMENT
OFFICER
June 1, 1995
</TABLE>
2
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<PAGE>
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[LOGO]
UNAUDITED FINANCIAL DATA
PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
CAPITAL
GAINS DIVIDEND
RECORD PAY NYSE NET ASSET DIVIDEND DIVIDEND
REINVESTMENT
DATE DATE CLOSING PRICE* VALUE* PAID PAID PRICE
-------- -------- -------------- --------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
5/23/94 5/31/94 $9.000 $9.18 $.0540 -- $9.00
6/23/94 6/30/94 9.000 9.23 .0540 -- 8.98
7/22/94 7/31/94 9.125 9.20 .0540 -- 9.02
8/24/94 8/31/94 8.750 9.22 .0540 -- 8.87
9/23/94 9/30/94 8.500 9.13 .0540 -- 8.66
10/24/94 10/31/94 8.375 9.03 .0540 -- 8.17
11/22/94 11/30/94 8.125 8.71 .0540 -- 8.34
12/22/94 12/31/94 8.125 8.84 .0540 -- 8.29
1/24/95 1/31/95 8.625 8.99 .0540 -- 8.83
2/21/95 2/28/95 8.750 9.13 .0540 -- 8.85
3/24/95 3/31/95 8.875 9.25 .0540 -- 8.94
4/21/95 4/30/95 9.000 9.32 .0540 -- 8.94
</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>
$0.648 6.98% 9.69% 10.12% 10.91% 11.56%
<FN>
- ------------
* As of Record Date.
** Based on April 30, 1995 net asset value of $9.28 per share.
</TABLE>
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., 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, 1995 (unaudited)
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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>
LONG-TERM MUNICIPAL BONDS AND NOTES--98.1%
ALABAMA--2.8%
$ 655,000 Alabama Housing Finance Authority, Single
Family Mortgage Revenue,
10.500% due 12/01/02........................ A1 AA- $ 695,938
4,000,000 Butler, Alabama, Industrial Development
Revenue,
8.000% due 09/01/28......................... NR BBB- 4,350,000
ARIZONA--2.0%
3,300,000 Gila County, Arizona, Industrial Development
Authority, Pollution Control Revenue,
(ASARCO), Series 1985,
8.900% due 07/01/06......................... Baa2 BBB 3,583,500
ARKANSAS--1.6%
2,750,000 Pope County, Arkansas, Pollution Control
Revenue, (Arkansas Power & Light Company
Project),
11.000% due 12/01/15........................ Baa2 BBB 2,880,625
CALIFORNIA--1.2%
2,000,000 Los Angeles County, California, Regional
Airport Authority, (Continental Airlines,
Inc.),
9.000% due 08/01/17......................... NR NR 2,137,500
COLORADO--2.6%
1,250,000 Colorado Health Facilities, Authority Revenue
Project, (Beth Israel at Shalom Park
Project),
8.000% due 12/15/22......................... NR NR 1,273,438
Denver, Colorado, Airport, Series A:
1,650,000 8.500% due 11/15/23......................... Baa BBB- 1,792,312
1,600,000 8.000% due 11/15/25......................... Baa BB 1,690,000
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
- ------------
<TABLE>
<CAPTION>
RATINGS
------------------- MARKET
FACE STANDARD & VALUE
VALUE MOODY'S POOR'S (NOTE 1)
---------- ------- ---------- -------------
LONG-TERM MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C> <C>
CONNECTICUT--0.8%
$1,500,000 Connecticut State, Development Authority,
Health Care Revenue, Series B,
8.000% due 07/01/17......................... NR NR $ 1,483,125
FLORIDA--6.8%
1,000,000 Hillsborough County, Florida, Industrial
Development Revenue, (Seaboard Tampa
Terminals Venture Project),
8.600% due 01/15/22......................... B2 B- 1,012,500
1,000,000 Homestead, Florida, Industrial Development
Revenue, Project A,
7.950% due 11/01/18......................... NR NR 955,000
2,110,000 Jacksonville, Florida, Health Facilities
Authority, Health Facilities Revenue,
9.125% due 10/15/19......................... NR NR 2,163,150
1,000,000 Lady Lake, Florida, Industrial Development
Project Revenue, (Sunbelt Utilities Inc.
Project),
9.500% due 07/01/10......................... NR NR 1,213,750
2,000,000 Martin County, Florida, Industrial Development
Revenue,
7.875% due 12/15/25......................... Baa3 BBB- 2,132,500
1,500,000 Ocean Highway & Port Authority, Florida,
Pollution Control Revenue, Solid Waste,
9.375% due 11/01/04......................... NR B+ 1,556,250
Palm Beach County, Florida, Health Facilities
Authority, Insured Hospital Revenue, (JFK
Medical Center):
1,125,000 8.875% due 12/01/18......................... NR BBB 1,114,688
1,320,000 8.875% due 12/01/18 (prerefunded)........... NR NR 1,625,900
650,000 Tampa, Florida, (Aquarium Inc. Revenue
Project),
7.750% due 05/01/27......................... NR NR 670,313
GEORGIA--0.6%
1,000,000 Walton County, Georgia, Industrial Development
Authority, (Walton Project),
8.500% due 09/01/07......................... NR NR 1,037,500
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
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<TABLE>
<CAPTION>
RATINGS
------------------- MARKET
FACE STANDARD & VALUE
VALUE MOODY'S POOR'S (NOTE 1)
---------- ------- ---------- -------------
LONG-TERM MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C> <C>
ILLINOIS--8.0%
$2,987,500 Chicago, Illinois, O'Hare International
Airport, Special Facilities Revenue Bonds,
Series B,
8.950% due 05/01/18......................... Baa2 BB $ 3,278,232
Chicago, Illinois, Skyway Toll Bridge:
2,000,000 6.500% due 01/01/10......................... Baa BBB- 1,957,500
1,700,000 6.750% due 01/01/17......................... Baa BBB- 1,685,125
2,000,000 East Chicago, Illinois, Industrial Pollution
Control Revenue, (Inland Steel Company),
Project 10,
6.800% due 06/01/13......................... Ba3 BB- 1,945,000
1,915,000 Hanover Park, Illinois, First Mortgage,
(Windsor Project),
9.250% due 12/01/07......................... NR NR 1,960,481
1,750,000 Hennepin, Illinois, Industrial Development
Revenue,
10.250% due 01/01/05 (in default)........... NR NR 157,500
1,500,000 Illinois Housing Development Authority, Series
5,
6.650% due 09/01/14......................... A1 A+ 1,541,250
795,000 Loves Park, Illinois, First Mortgage Revenue,
(Hoosier Care Project), Series A,
9.750% due 08/01/19......................... NR NR 845,681
1,000,000 Sterling, Illinois, First Mortgage Revenue,
(Hoosier Care Project), Series A,
9.750% due 08/01/19......................... NR NR 1,048,750
IOWA--0.7%
1,240,000 Marion, Iowa, Multi-family Housing Revenue,
9.500% due 07/01/18......................... NR NR 1,247,750
KENTUCKY--2.8%
1,410,000 Jefferson County, Kentucky, Health Facilities
Authority,
10.125% due 05/01/08........................ A1 NR 1,563,338
Kenton County, Kentucky, Airport Board:
1,000,000 (Delta Airlines),
6.750% due 02/01/02......................... Ba1 BB 990,000
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
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<TABLE>
<CAPTION>
RATINGS
------------------- MARKET
FACE STANDARD & VALUE
VALUE MOODY'S POOR'S (NOTE 1)
---------- ------- ---------- -------------
LONG-TERM MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C> <C>
KENTUCKY (CONTINUED)
Kenton County, Kentucky, Airport Board
(continued):
$1,500,000 (Greater Cincinnati Airport Revenue),
Project A,
7.500% due 02/01/20......................... Ba1 BB $ 1,528,125
1,000,000 Pendleton County, Kentucky, Multi-Lease
Revenue, Series A,
6.500% due 03/01/19......................... NR A 990,000
LOUISIANA--5.5%
1,200,000 Lake Charles, Louisiana, (Harbor & Terminal
Project),
7.750% due 08/15/22......................... Baa3 NR 1,290,000
Port New Orleans, Louisiana, Industrial
Development Revenue:
2,000,000 8.250% due 06/01/04......................... NR NR 2,157,500
3,000,000 8.500% due 06/01/14......................... NR NR 3,281,250
1,000,000 (Continental Grain Company Project),
7.500% due 07/01/13......................... NR BB- 1,021,250
2,400,000 West Feliciana Parish, Louisiana, Pollution
Control Revenue,
8.000% due 12/01/24......................... Baa3 BBB- 2,499,000
MAINE--1.7%
Maine State Housing Authority, Mortgage
Purchases:
500,000 Series C-2,
7.000% due 11/15/32......................... A1 AA- 513,125
2,500,000 Series D-1,
8.300% due 11/15/28......................... A1 AA- 2,562,500
MARYLAND--1.9%
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 3,555,000
MASSACHUSETTS--5.7%
1,980,000 Commonwealth of Massachusetts Health &
Educational Facilities Authority Revenue,
(North Adams State College),
9.625% due 07/01/18......................... NR NR 2,031,975
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
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<TABLE>
<CAPTION>
RATINGS
------------------- MARKET
FACE STANDARD & VALUE
VALUE MOODY'S POOR'S (NOTE 1)
---------- ------- ---------- -------------
LONG-TERM MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C> <C>
MASSACHUSETTS (CONTINUED)
Commonwealth of Massachusetts Industrial
Finance Agency:
$1,700,000 Series A, (S.E. Mass Project),
9.000% due 07/01/15......................... NR NR $ 1,855,125
5,940,000 Series B, (S.E. Mass Project),
9.250% due 07/01/15......................... NR NR 6,504,300
MICHIGAN--2.4%
1,855,000 Greater Detroit, Michigan, Recreation
Authority, Series C,
9.250% due 12/13/08......................... NR BBB- 1,936,156
755,000 Greater Detroit, Michigan, Resource Recovery
Authority Revenue, Series B,
9.250% due 12/13/08......................... NR BBB- 788,031
1,500,000 Western Townships, Michigan, Utility Revenue,
Sewage System,
8.300% due 01/01/19......................... NR BBB+ 1,620,000
MINNESOTA--1.2%
2,000,000 Minnesota Housing Finance Authority,
6.700% due 01/01/18......................... Aa AA+ 2,055,000
MISSISSIPPI--3.3%
3,300,000 Claiborne County, Mississippi, Pollution
Control Revenue, Series C,
9.875% due 12/01/14......................... NR NR 3,749,625
2,000,000 Mississippi Hospital Equipment & Facilities
Authority, (Methodist Hospital),
9.375% due 05/01/12......................... NR NR 2,300,000
NEW HAMPSHIRE--2.1%
New Hampshire State Industrial Development
Authority, (United Illuminating Company):
1,000,000 Series A,
9.375% due 07/01/12......................... Baa3 BBB- 1,083,750
2,500,000 Series B,
10.750% due 10/01/12........................ Ba1 BBB- 2,821,875
NEW JERSEY--3.1%
1,300,000 New Jersey Educational Facilities, Series C,
6.625% due 07/01/23......................... NR NR 1,139,125
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
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<TABLE>
<CAPTION>
RATINGS
------------------- MARKET
FACE STANDARD & VALUE
VALUE MOODY'S POOR'S (NOTE 1)
---------- ------- ---------- -------------
LONG-TERM MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C> <C>
NEW JERSEY (CONTINUED)
New Jersey Health Care Facilities:
$1,000,000 7.250% due 07/01/27......................... NR NR $ 937,500
Finance Authority Revenue:
1,730,000 7.600% due 07/01/21......................... Ba NR 1,630,238
1,500,000 (Zurbrugg Memorial Hospital), Series C,
8.500% due 07/01/12......................... Baa BBB- 1,561,875
310,000 New Jersey Housing and Mortgage Finance
Agency, Home Buyer Revenue, Series E, (MBIA
Insured),
7.650% due 10/01/16......................... Aaa AAA 328,212
NEW MEXICO--1.0%
1,665,000 New Mexico Mortgage Finance Authority, Single
Family Mortgage Program, Series B,
8.300% due 03/01/20......................... NR AA 1,781,550
NEW YORK--6.1%
1,680,000 Babylon, New York, Industrial Development
Agency, (Recycling Project), Series A,
8.875% due 03/01/11 (in default)............ NR NR 672,000
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 780,900
1,400,000 New York City, New York, Battery Park
Authority Revenue,
5.800% due 11/01/22......................... A A 1,289,750
New York City, New York, Certificates of
Participation:
875,000 Series C,
7.750% due 09/01/05......................... Baa1 A- 910,000
4,715,000 Series F,
6.625% due 05/15/25......................... Baa1 A- 4,608,912
1,000,000 Series H,
7.000% due 02/01/21 Baa1 A- 1,015,000
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
- ------------
<TABLE>
<CAPTION>
RATINGS
------------------- MARKET
FACE STANDARD & VALUE
VALUE MOODY'S POOR'S (NOTE 1)
---------- ------- ---------- -------------
LONG-TERM MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
$1,950,000 New York State, Energy, Research & Development
Authority, Electric Facility Revenue,
7.150% due 12/01/20......................... Ba1 BB+ $ 1,874,438
NORTH CAROLINA--2.3%
1,750,000 Martin County, North Carolina, Industrial
Facilities Pollution Control,
6.800% due 05/01/24......................... A2 A 1,780,625
2,300,000 North Carolina, Eastern Municipal Power
Agency, Power Systems Revenue,
7.000% due 01/01/08......................... A A- 2,423,625
OHIO--2.7%
1,000,000 Cleveland, Ohio, Airport Special Revenue,
(Continental Airlines Inc.),
9.000% due 12/01/19......................... NR NR 1,001,250
1,000,000 Cuyahoga County, Ohio, Health Care Facilities,
Judson Retirement Community,
8.875% due 11/15/19......................... NR NR 1,071,250
1,500,000 Montgomery County, Ohio, Health Systems
Revenue, Series B,
8.100% due 07/01/18......................... Baa BBB- 1,618,125
100,000 Ohio Housing Finance Agency, Single Family
Mortgage Revenue,
11.375% due 08/01/14........................ Aa A 102,875
1,000,000 Ohio Water Development Authority, Pollution
Control Revenue, Series A,
8.100% due 10/01/23......................... Baa3 BB+ 1,053,750
PENNSYLVANIA--10.2%
2,200,000 Allegheny County, Pennsylvania, Industrial
Development Authority, Special Facilities
Revenue, Series B, (USAir Project),
8.500% due 03/01/21......................... B2 B+ 2,211,000
1,500,000 Delaware County, Pennsylvania, Industrial
Development Authority, First Mortgage,
(White Horse),
9.700% due 07/01/09......................... NR NR 1,565,625
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
- ------------
<TABLE>
<CAPTION>
RATINGS
------------------- MARKET
FACE STANDARD & VALUE
VALUE MOODY'S POOR'S (NOTE 1)
---------- ------- ---------- -------------
LONG-TERM MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
$3,000,000 Lebanon County, Pennsylvania, (Samaritan
Hospital), Series B,
8.250% due 11/01/18......................... NR BBB+ $ 3,431,250
2,500,000 Luzerne County, Pennsylvania, Industrial
Development Authority,
7.125% due 12/01/22......................... Baa3 BBB- 2,515,625
2,000,000 Montgomery County, Pennsylvania, Higher
Education & Health Authority,
8.375% due 11/01/11......................... Ba1 NR 2,077,500
625,000 Northumberland County, Pennsylvania,
Industrial Development Authority Revenue,
6.875% due 02/01/03......................... NR NR 600,781
1,500,000 Pennsylvania Housing Finance Authority, Series
C,
6.900% due 04/01/25......................... Aa AA 1,526,250
1,985,000 Philadelphia, Pennsylvania, Gas Revenue,
Series B,
6.400% due 11/15/16......................... Baa BBB- 1,898,156
1,500,000 Scranton-Lackawanna, Pennsylvania, Health &
Welfare Authority, (Mercy Health Systems),
Series B,
8.500% due 07/01/20......................... NR BB+ 1,545,000
1,250,000 Sharon, Pennsylvania, Regional Health Systems,
(Project B),
6.875% due 12/01/22......................... NR BBB+ 1,218,750
SOUTH CAROLINA--0.5%
940,000 McCormick County, South Carolina, Certificates
of Participation,
9.750% due 07/01/09......................... NR NR 969,375
SOUTH DAKOTA--2.2%
Oglala Sioux Tribe, South Dakota, Pine Ridge
County, Revenue Bonds:
290,000 7.000% due 07/01/99......................... NR NR 290,725
1,865,000 7.500% due 07/01/13......................... NR NR 1,869,663
1,875,000 10.000% due 07/01/13
prerefunded 07/01/95........................ Aaa NR 1,949,250
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
- ------------
<TABLE>
<CAPTION>
RATINGS
------------------- MARKET
FACE STANDARD & VALUE
VALUE MOODY'S POOR'S (NOTE 1)
---------- ------- ---------- -------------
LONG-TERM MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C> <C>
TENNESSEE--0.4%
$ 750,000 SCA Tax-Exempt Trust Mortgage Revenue,
7.125% due 01/01/30......................... Aaa AAA $ 769,688
TEXAS--11.1%
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
Brazos River, Texas, Pollution Control
Revenue, (Collateral-Tax, Project A):
1,000,000 9.875% due 10/01/17......................... Baa2 BBB 1,097,500
2,000,000 8.250% due 01/01/19......................... Baa2 BBB 2,147,500
1,500,000 Dallas-Fort Worth, Texas, International
Airport Facilities,
7.500% due 11/01/25......................... Baa2 BB+ 1,518,750
1,415,000 El Paso, Texas, Housing Finance Corporation,
Single Family Mortgage Revenue,
8.750% due 10/01/11......................... A NR 1,533,506
2,000,000 El Paso, Texas, International Airport Revenue
Bonds,
7.750% due 03/01/12......................... B2 B 1,995,000
1,215,612 Harris County, Texas, Industrial Development
Corporation,
7.950% due 07/01/19......................... NR NR 1,145,714
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
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 1,491,000
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
- ------------
<TABLE>
<CAPTION>
RATINGS
------------------- MARKET
FACE STANDARD & VALUE
VALUE MOODY'S POOR'S (NOTE 1)
---------- ------- ---------- -------------
LONG-TERM 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),
6.400% due 05/15/08......................... Aa AA $ 1,456,000
Northgate Crossing, Texas, Municipal Utilities
District:
1,000,000 Series 1,
8.875% due 12/01/13......................... NR NR 1,000,000
1,000,000 Series 2,
8.875% due 12/01/13......................... NR NR 1,000,000
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- 2,762,500
2,000,000 Series B,
10.625% due 06/01/08........................ Baa3 BBB- 2,225,000
UTAH--1.0%
1,780,000 Hurricane, Utah, Health Services Project,
10.500% due 07/01/20........................ NR NR 1,935,750
VERMONT--1.4%
2,365,000 Vermont Housing Finance Agency, Home Mortgage,
Series B,
8.100% due 06/01/22......................... A1 NR 2,483,250
VIRGINIA--1.1%
2,000,000 Hopwell, Virginia, Industrial Development
Resource Authority,
8.250% due 06/01/16......................... NR NR 2,011,625
WEST VIRGINIA--1.2%
2,500,000 Marion County, West Virginia, County
Commission,
7.750% due 12/01/11......................... NR NR 2,231,250
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
- ------------
<TABLE>
<CAPTION>
RATINGS
------------------- MARKET
FACE STANDARD & VALUE
VALUE MOODY'S POOR'S (NOTE 1)
---------- ------- ---------- -------------
LONG-TERM MUNICIPAL BONDS AND NOTES (CONTINUED)
<C> <S> <C> <C> <C>
PUERTO RICO--0.1%
$ 200,000 Commonwealth of Puerto Rico, General
Obligation Bonds,
8.000% due 07/01/08......................... Baa1 A $ 220,000
-------------
TOTAL LONG-TERM MUNICIPAL BONDS AND NOTES (Cost $177,175,128)..................
178,946,266
-------------
SHORT-TERM BONDS AND NOTES--0.7%
GEORGIA--0.3%
500,000 Savannah, Georgia, Port Authority Revenue,
5.100% due 12/01/08+........................ P-1 NR 500,000
ILLINOIS--0.4%
800,000 Southwestern, Illinois Development Authority,
Solid Waste,
5.050% due 08/01/21+........................ Aa2/VMIG-1 AAA 800,000
-------------
TOTAL SHORT-TERM BONDS AND NOTES (Cost $1,300,000).............................
1,300,000
-------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $178,475,128*)................................ 98.8% 180,246,266
OTHER ASSETS AND LIABILITIES (Net).................................... 1.2 2,232,900
----- ----------
NET ASSETS............................................................ 100.0% $182,479,166
----- ----------
----- ----------
<FN>
- ---------------
* Aggregate cost for Federal tax purposes.
+ Variable rate demand notes are payable upon not more than one day's notice.
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Portfolio of Investments (continued)
April 30, 1995 (unaudited)
[LOGO]
- ------------
<TABLE>
<CAPTION>
SUMMARY OF MUNICIPAL BONDS
BY COMBINED RATINGS
APRIL 30, 1995
STANDARD & PERCENT
MOODY'S OR POOR'S OF VALUE
- --------- ---------- ----------
<S> <C> <C> <C>
Aaa AAA 4.1%
Aa AA 5.9
A A 12.1
Baa BBB 33.1
Ba BB 7.0
B B 3.8
NR NR 34.0
---
100%
---
---
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Statement of Assets and Liabilities
April 30, 1995 (unaudited)
[LOGO]
- ------------
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $178,475,128) (Note
1)
See accompanying schedule.................... $180,246,266
Interest receivable............................ 4,839,643
------------
Total Assets................................. 185,085,909
------------
LIABILITIES:
Payable for investment securities purchased.... $2,006,195
Dividends payable.............................. 392,736
Investment advisory fee payable (Note 2)....... 60,124
Due to custodian............................... 34,215
Administration fee payable (Note 2)............ 30,062
Transfer agent fees payable (Note 2)........... 11,568
Custodian fees payable (Note 2)................ 6,800
Accrued Directors' fees and expenses (Note
2)............................................ 2,917
Accrued expenses and other payables............ 62,126
----------
Total Liabilities............................ 2,606,743
------------
NET ASSETS....................................... $182,479,166
------------
------------
NET ASSETS consist of:
Undistributed net investment income............ $ 115,434
Accumulated net realized loss on investments
sold.......................................... (3,034,954)
Unrealized appreciation of investments......... 1,771,138
Par value...................................... 196,599
Paid-in capital in excess of par value......... 183,430,949
------------
Total Net Assets............................. $182,479,166
------------
------------
NET ASSET VALUE per share ($182,479,166
DIVIDED BY 19,659,882 shares of common stock
outstanding).................................... $9.28
------------
------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Statement of Operations
For the Six Months Ended April 30, 1995
(unaudited)
[LOGO]
- ------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest........................................ $ 6,940,923
EXPENSES:
Investment advisory fee (Note 2)................ $352,818
Administration fee (Note 2)..................... 176,408
Transfer agent fees (Note 2).................... 59,859
Legal and audit fees............................ 53,938
Custodian fees (Note 2)......................... 20,098
Directors' fees and expenses (Note 2)........... 16,585
Other........................................... 59,268
--------
Total Expenses................................ 738,974
-----------
NET INVESTMENT INCOME............................. 6,201,949
-----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(NOTES 1 AND 3):
Net realized loss on investments during the
period......................................... (368,304)
Net unrealized appreciation of investments
during the period.............................. 6,479,420
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS... 6,111,116
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $12,313,065
-----------
-----------
</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
04/30/95 ENDED
(UNAUDITED) 10/31/94
----------- -----------
<S> <C> <C>
Net investment income.......................... $ 6,201,949 $12,777,035
Net realized loss on investments sold during
the period.................................... (368,304) (2,666,650)
Net unrealized appreciation/(depreciation)
during the period............................. 6,479,420 (11,469,648)
----------- -----------
Net increase/(decrease) in net assets resulting
from operations............................... 12,313,065 (1,359,263)
Distributions to shareholders from:
Net investment income........................ (6,367,018) (12,673,016)
Net realized gain on investments............. (389,249)
---
Net increase in net assets from Fund share
transactions (Note 4)......................... 154,164 2,506,452
----------- -----------
Net increase/(decrease) in net assets.......... 6,100,211 (11,915,076)
NET ASSETS:
Beginning of period............................ 176,378,955 188,294,031
----------- -----------
End of period (including undistributed net
investment income of $115,434 and $280,503,
respectively)................................. $182,479,166 $176,378,955
----------- -----------
----------- -----------
</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
04/30/95 ENDED ENDED
(UNAUDITED) 10/31/94 10/31/93
----------- --------- ---------
<S> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 8.98 $ 9.72 $ 9.49
----------- --------- ---------
Net investment income......................... 0.32 0.65 0.67
Net realized and unrealized gain/(loss) on
investments.................................. 0.30 (0.72) 0.23
----------- --------- ---------
Net increase/(decrease) in net assets
resulting from operations.................... 0.62 (0.07) 0.90
DISTRIBUTIONS:
Distributions from net investment income...... (0.32) (0.65) (0.67)
Distributions from net realized gains......... -- (0.02) --
----------- --------- ---------
Total distributions........................... (0.32) (0.67) (0.67)
----------- --------- ---------
Net asset value, end of period................ $ 9.28 $ 8.98 $ 9.72
----------- --------- ---------
----------- --------- ---------
Market value, end of period................... $ 9.000 $ 8.250 $ 9.875
----------- --------- ---------
----------- --------- ---------
Total investment return***.................... 11.86% (11.79)% 17.07%
----------- --------- ---------
----------- --------- ---------
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's).......... $182,479 $176,379 $188,294
Ratio of net investment income to average net
assets....................................... 7.03%** 6.98% 6.89%
Ratio of operating expenses to average net
assets....................................... 0.84%** 0.84% 0.87%
Portfolio turnover rate....................... 9% 17% 13%
<FN>
- ---------------
** Annualized.
*** Based on market value per share.
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Financial Highlights (continued)
For a Fund share outstanding throughout each period
[LOGO]
- ------------
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/92 10/31/91 10/31/90 10/31/89*
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 9.42 $ 9.28 $ 9.52 $ 9.35
--------- --------- --------- ------------
Net investment income.............. 0.70 0.74 0.75 0.66
Net realized and unrealized
gain/(loss) on investments........ 0.06 0.15 (0.23) 0.15
--------- --------- --------- ------------
Net increase in net assets
resulting from operations......... 0.76 0.89 0.52 0.81
DISTRIBUTIONS:
Distributions from net investment
income............................ (0.69) (0.75) (0.76) (0.64)
Distributions from net realized
gains............................. -- -- -- --
--------- --------- --------- ------------
Total distributions................ (0.69) (0.75) (0.76) (0.64)
--------- --------- --------- ------------
Net asset value, end of period..... $ 9.49 $ 9.42 $ 9.28 $ 9.52
--------- --------- --------- ------------
--------- --------- --------- ------------
Market value, end of period........ $ 9.125 $ 9.500 $ 9.000 $ 9.500
--------- --------- --------- ------------
--------- --------- --------- ------------
Total investment return***......... 2.74% 17.88% (1.45)% 1.72%
--------- --------- --------- ------------
--------- --------- --------- ------------
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)............................ $179,104 $173,290 $164,531 $164,221
Ratio of net investment income to
average net assets................ 7.31% 7.90% 8.00% 7.54%**
Ratio of operating expenses to
average net assets................ 0.87% 0.90% 0.87% 0.86%**+
Portfolio turnover rate............ 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.
20
<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.
21
<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 has been transferred effective November 7,
1994, to Smith Barney Mutual Funds Management Inc. ("SBMFM") (formerly
known as "Smith, Barney Advisers, Inc."). Mutual Management Corp. and
SBMFM are both wholly owned subsidiaries of 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 is party to an administration agreement
("Administration Agreement") with SBMFM. 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.
The Fund and SBMFM have also entered into a sub-administration
agreement (the "Sub-Administration Agreement") with Boston Advisors, an
indirect wholly owned subsidiary of Mellon Bank Corporation
("Mellon"). Under the Sub-Administration Agreement, SBMFM pays Boston
Advisors a portion of its administration fee at a rate agreed upon from
time to time between SBMFM and Boston Advisors.
No officer, director, or employee of Smith Barney Inc.("Smith Barney") or
of any of its affiliates 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 or any of its
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, 1995, cost of purchases and proceeds
from sales of investment securities, excluding short-term investments,
aggregated $17,574,409 and $15,264,669, respectively.
22
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Notes to Financial Statements (unaudited)
(continued)
[LOGO]
- ------------
At April 30, 1995, aggregate gross unrealized appreciation for
all securities in which there was an excess of value over tax cost
amounted to $7,826,059, and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value amounted to
$6,054,921.
4. FUND SHARES
At April 30, 1995, 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
4/30/95 10/31/94
---------------- -------------------
SHARES AMOUNT SHARES AMOUNT
------ -------- ------- ----------
<S> <C> <C> <C> <C>
Issued as reinvestment of dividends.......... 17,187 $154,164 270,832 $2,506,452
------ -------- ------- ----------
------ -------- ------- ----------
</TABLE>
5. 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.
6. CAPITAL LOSS CARRYFORWARD
At October 31, 1994, the Fund had available for Federal income tax
purposes an unused capital loss carryforward of $2,666,650 expiring in 2002.
23
<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, 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)
July 31, 1994.......... 3,603,790 0.18 3,191,200 0.16 612,747 0.04 3,803,947 0.20
October 31, 1994....... 3,519,883 0.18 3,164,312 0.16 (5,145,173) (0.26) (1,980,861)
(0.10)
January 31, 1995....... 3,524,651 0.18 3,184,522 0.16 1,626,418 0.08 4,810,940
0.24
April 30, 1995......... 3,416,272 0.17 3,017,427 0.16 4,484,698 0.22 7,502,125
0.38
</TABLE>
24
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Additional Information (unaudited)
[LOGO]
- ------------
On February 16, 1995 the annual meeting of the shareholders of the Fund
was held for the purpose of voting on the following matters:
1. To approve or disapprove for the Fund the re-election of Mr.
Heath B. McLendon and Mr. Robert A. Frankel as Directors; and
2. To approve or disapprove the selection of KPMG Peat Marwick as
the independent accountants for the Fund for the current fiscal year
of the Fund.
The results of the vote on Proposal 1 were as follows:
<TABLE>
<S> <C> <C> <C> <C>
% VOTING AGAINST THE %
% VOTING FOR THE PROPOSAL PROPOSAL ABSTAINING
- ----------------------------- ------------------------- -------
Mr. McLendon 88.291 % Mr. McLendon 1.28 % 10.429 %
Mr. Frankel 88.825 % Mr. Frankel 2.262 % 8.913 %
</TABLE>
The results of the the vote on Proposal 2 were as follows:
<TABLE>
<S> <C> <C> <C> <C>
% VOTING AGAINST THE %
% VOTING FOR THE PROPOSAL PROPOSAL ABSTAINING
- ----------------------------- ------------------------- -------
88.268% 0.578% 1.707%
</TABLE>
25
<PAGE>
MUNICIPAL HIGH INCOME FUND INC.
Management of the Fund
[LOGO]
- ------------
DIRECTORS
Charles F. Barber
Allan J. Bloostein
Martin Brody
Dwight B. Crane
Robert A. Frankel
Heath B. McLendon
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD
Jessica M. Bibliowicz
PRESIDENT
Lawrence T. McDermott
VICE PRESIDENT AND
INVESTMENT OFFICER
Karen Mahoney-Malcolmson
INVESTMENT OFFICER
Michael J. Maher
INVESTMENT OFFICER
Lewis E. Daidone
SENIOR VICE PRESIDENT
AND TREASURER
Christina T. Sydor
SECRETARY
INVESTMENT ADVISER AND ADMINISTRATOR
Smith Barney Mutual Funds
Management Inc.
388 Greenwich Street
New York, New York 10013
AUDITORS AND COUNSEL
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154
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
26
<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.
388 Greenwich Street
New York, NY 10013
(212) 723-9218
