<PAGE>
- --------------------------------------------------------------------------------
LETTER TO
SHAREHOLDERS
NOVEMBER 30, 1993
MANAGED
HIGH INCOME
PORTFOLIO INC.
Dear Shareholder:
We are pleased to provide the quarterly report for the Managed High
Income Portfolio Inc. (the "Portfolio") for the period ended November
30, 1993. The Portfolio's primary objective is to deliver a consistently
high level of current income, with total return a secondary objective.
To achieve these goals, the Portfolio uses a consistent and developed
strategy of investing primarily in better-quality, high-yield corporate
bonds that we believe are likely to receive an upgrade in credit rating
over the next one to three years. The Portfolio also selectively adds
attractively valued convertible bonds, preferred stock and common stock
in an attempt to further enhance total return. By emphasizing the
improving credits in the high yield market, we believe the Portfolio can
generate not only an attractive current dividend yield for its
shareholders, but some capital appreciation as well.
While the Portfolio attempts to maintain a consistent monthly
dividend, it does NOT attempt to maximize yield regardless of credit
risk. Instead, the Portfolio attempts to provide a competitive dividend
yield with superior total return performance over a full economic cycle.
HIGH YIELD MARKET AND ECONOMIC OVERVIEW
The strong rally which characterized the high yield market over the
past year slowed to a more moderate pace during the quarter ended
November 30, 1993. A combination of heavy new issue supply pressures and
investor concern over the state of the economy caused the market to
generate relatively weaker, though still
1
<PAGE>
attractive, results than in prior quarters. In the beginning of
November, when it became apparent that fourth quarter economic growth
was accelerating, the high yield market began to generate improving
results. The lower quality sectors of the market, as well as the more
cyclical companies, generated the strongest returns for the period. It
appears that the dramatic decline in interest rates finally is
beginning to encourage economic growth. We believe the economy will
continue to gain strength during 1994 and that the cyclical industries
will benefit the most from such gain. Therefore cyclical industries
will likely demonstrate the greatest improvement in operating results.
INVESTMENT STRATEGY
The primary philosophy underlying the Portfolio's investment
strategy is very straightforward. In summary, we do not try to
speculate or chase higher-risk, higher-yielding issues. Instead, the
Portfolio looks for improving credits with the potential for rating
upgrades. Despite the improvement in the economy, the Portfolio
continues to invest in the better-quality high-yield companies which
we believe have the greatest potential for being upgraded in credit
quality. These issues usually are rated B or higher. The Portfolio
tends to avoid lower-rated issues which have greater default risk and
tries to invest in companies categorized as "cash cows," meaning they
do not rely heavily on external borrowings to finance their operations
or to buy plant and equipment. Such companies generally are self
sufficient and not beholden to the debt or equity markets to grow
their business. As a result, cash cows are in a stronger position to
reduce their debt levels and achieve a higher credit rating.
The Portfolio's sell discipline is equally straightforward. We will
generally reduce the Portfolio's exposure to a company after two
consecutive quarters of disappointing earnings and will eliminate its
position entirely if the disappointing earning results continue beyond
six months.
During the six months ended November 30, 1993, we have continued to
shift the Portfolio's assets into more cyclical companies that we
believe are benefiting from cost cutting and a weak U.S. dollar.
2
<PAGE>
The U.S. manufacturing sector in general is much more competitive
today and the Portfolio is making every attempt to take advantage of
that trend. The Portfolio has only a small exposure to retailers and
other consumer-dependent companies because of the intense competition
among such companies, coupled with the weak level of consumption
occurring in the economy. The Portfolio's only heavy retail exposure
is in the regional grocery chains that have strong market shares in
their territories.
While we believe that the high yield market should generate superior
returns in 1994, we would be remiss not to also tell you that we
expect that the total return performance of the high yield market in
1994 will be lower than in 1993. It seems far more likely that the
watchword will be "earning the coupon" rather than earning the coupon
plus capital appreciation. As we have done since the Portfolio's
inception, we will endeavor to achieve our primary goal of providing
shareholders with a consistently high level of current income and,
secondarily, achieving an attractive total return.
If you have any questions about your investment in the Portfolio,
please contact The Shareholder Services Group, Inc. at (800) 331-1710.
We appreciate your continued support and look forward to reporting to
you in the annual report.
Sincerely,
Heath B. McLendon John C. Bianchi
CHAIRMAN OF THE BOARD INVESTMENT OFFICER
3
<PAGE>
- --------------------------------------------------------------------------------
UNAUDITED FINANCIAL DATA
PER SHARE OF COMMON STOCK
NOVEMBER 30, 1993 (Unaudited)
<TABLE>
<CAPTION>
INCOME DIVIDEND
NYSE NET ASSET DIVIDEND REINVESTMENT
CLOSING PRICE VALUE PAID PRICE
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 31, 1993* -- $12.00 -- --
April 30, 1993 $12.125 12.03 -- --
May 31, 1993 12.375 12.10 $0.096 $12.10
June 30, 1993 12.250 12.34 0.096 12.28
July 31, 1993 12.125 12.33 0.096 12.23
August 31, 1993 12.000 12.34 0.096 12.22
September 30, 1993 12.125 12.24 0.096 12.19
October 31, 1993 12.250 12.39 0.096 12.28
November 30, 1993 12.125 12.37 0.096 12.38
------------------------------------------------------------------------
<FN>
*The Portfolio commenced operations on March 26, 1993.
</TABLE>
- --------------------------------------------------------------------------------
DIVIDEND DATA**
<TABLE>
<CAPTION>
PER SHARE ANNUALIZED
DIVIDEND DISTRIBUTION
DISTRIBUTIONS RATE
-------------------------------------------------------------------
<S> <C> <C>
$0.672 9.31%
-------------------------------------------------------------------
<FN>
**Based on November 30, 1993 net asset value of $12.37 per share.
</TABLE>
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., P.O. Box 1376, Boston,
Massachusetts 02104.
4 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited)
<TABLE>
<CAPTION>
MARKET
FACE RATINGS VALUE
VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
CORPORATE BONDS AND NOTES - 87.8%
HOTELS, CASINOS, AND GAMING - 8.7%
$ 8,475,000 Bally's Casino Holdings Inc.,
Sr. Discount Note,
Zero coupon due 6/15/1998..... B3 B $ 5,424,000
4,405,000 Bally's Park Place Funding,
Inc.,
First Mortgage,
11.875% due 8/15/1999......... B1 BB- 4,740,881
5,450,000 GNF Corporation,
First Mortgage Note, Series B,
10.625% due 4/1/2003.......... B2 NR 5,293,313
4,725,000 Showboat Inc., Guaranteed
First Mortgage,
9.250% due 5/1/2008........... Ba3 BB- 4,807,688
4,475,000 Station Casinos, Inc., Sr.
Sub. Note,
9.625% due 6/1/2003........... B2 B 4,530,938
6,375,000 Trump Plaza Funding, Inc.,
First Mortgage,
10.875% due 6/15/2001......... B3 B 6,398,906
13,444,000 Trump Taj Mahal Funding,
Unit Building 1 Management,
11.350% due 11/15/1999........ Caa NR 13,494,415
----------------------------------------------------------------------------
44,690,141
----------------------------------------------------------------------------
GROCERY AND RETAIL - 7.8%
4,175,000 Barnes & Noble Inc.,
Sr. Sub. Note, Series B,
11.875% due 1/15/2003......... B2 B 4,853,438
4,535,000 Bradlees, Inc., Sr. Sub. Note,
11.000% due 8/1/2002.......... B2 B+ 4,926,144
Grand Union Company, Sr.
Notes:
3,775,000 11.250% due 7/15/2000......... B2 B+ 3,982,625
4,725,000 12.750% due 7/15/2002......... NR NR 4,984,875
Pathmark Stores Inc.,
Sub. Notes:
3,550,000 11.625% due 6/15/2002......... B3 B 3,905,000
3,025,000 12.625% due 6/15/2002......... B3 B 3,365,312
6,425,000 9.625% due 5/1/2003........... B2 B 6,392,875
</TABLE>
5 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET
FACE RATINGS VALUE
VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
CORPORATE BONDS AND NOTES - CONTINUED)
GROCERY AND RETAIL - (CONTINUED)
$ 3,125,000 Zero Coupon due 11/1/2023..... B3 B $ 1,687,500
5,675,000 Penn Traffic Company, Sr. Sub.
Note,
9.625% due 4/15/2005.......... B2 B 5,887,813
----------------------------------------------------------------------------
39,985,582
----------------------------------------------------------------------------
BUILDING AND CONSTRUCTION - 7.6%
American Standard, Inc.:
11,575,000 Sr. Sub. Debenture,
11.375% due 5/15/2004......... Ba3 B+ 12,877,188
4,700,000 Sr. Sub. Discount Note,
Zero coupon to 6/1/1998,
10.500% due 6/1/2005.......... B1 B 3,055,000
3,050,000 Kaufman & Broad Home
Corporation,
Sr. Sub. Note,
9.375% due 5/1/2003........... Ba3 BB- 3,172,000
Hovnanian (K.) Enterprises
Inc.,
(Home Builder):
1,450,000 Guaranteed Note,
11.250% due 4/15/2002......... B1 B 1,584,125
3,450,000 Sub. Note,
9.750% due 6/1/2005........... B1 B 3,536,250
6,925,000 UDC Homes, Notes,
11.750% due 4/30/2003......... B2 B+ 7,288,563
7,235,000 US Home Corporation, Note,
9.750% due 6/15/2003.......... Ba3 B+ 7,515,356
----------------------------------------------------------------------------
39,028,482
----------------------------------------------------------------------------
HEALTH CARE - 7.0%
2,805,000 Abbey Healthcare Group Inc.,
Sr. Note,
9.500% due 11/1/2002.......... B1 B- 2,847,075
1,350,000 ALCO Health Distributor
Corporation,
Sr. Debenture,
11.250% due 7/15/2005......... B3 B- 1,420,875
</TABLE>
6 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET
FACE RATINGS VALUE
VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
CORPORATE BONDS AND NOTES - (CONTINUED)
HEALTH CARE - (CONTINUED)
American Medical
International, Inc.,
Sr. Sub Notes:
$ 7,425,000 13.500% due 8/15/2001......... B1 B $ 8,705,813
2,850,000 9.500% due 4/15/2006.......... NR NR 2,978,250
1,000,000 Epic Healthcare Group Inc.,
Sr. Sub. Note,
10.875% due 6/1/2003.......... B3 CCC+ 1,067,500
5,850,000 Healthtrust, Inc., The
Hospital Company, Sub. Note,
10.750% due 5/1/2002.......... B1 B+ 6,566,625
3,600,000 Hillhaven Corporation, Sr.
Sub. Note,
10.125% due 9/1/2001.......... B2 B- 3,784,500
2,500,000 Hospital Corporation of
America, Debenture,
9.000% due 3/15/2016.......... Ba2 B+ 2,603,125
5,375,000 Ornada Health Corporation,
Sr. Sub. Note,
12.250% due 5/15/2002......... B3 B- 6,046,875
----------------------------------------------------------------------------
36,020,638
----------------------------------------------------------------------------
PACKAGING AND CONTAINERS - 6.5%
3,275,000 Anchor Glass Container
Corporation,
Sr. Note,
9.875% due 12/15/2008......... B2 B 3,307,750
Container Corporation of
America,
Sub. Debenture:
9,850,000 13.500% due 12/1/1999......... B2 B 10,958,125
5,190,000 14.000% due 12/1/2001......... B2 B 5,819,288
5,700,000 Silgan Holdings Inc., Sr.
Discount Debenture,
Zero Coupon due 12/15/2002.... B3 B- 4,332,000
Sweetheart Cup Inc., Sr. Sub.
Notes:
2,325,000 9.625% due 9/1/2000........... Ba3 B+ 2,441,250
2,325,000 10.500% due 9/1/2003.......... B2 B- 2,432,531
3,400,000 United States Can Company,
Sr. Sub. Note,
13.500% due 1/15/2002......... B3 B- 3,918,500
----------------------------------------------------------------------------
33,209,444
----------------------------------------------------------------------------
</TABLE>
7 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET
FACE RATINGS VALUE
VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
CORPORATE BONDS AND NOTES - (CONTINUED)
OIL AND NATURAL GAS - 4.6%
$ 5,350,000 Clark R & M Holdings Inc., Sr.
Note,
Zero Coupon due 2/15/2000..... B1 B+ $ 2,889,000
2,800,000 Giant Industries Inc.,
Guaranteed Sub. Note,
9.750% due 11/15/2003......... B2 B+ 2,856,000
4,750,000 Maxus Energy Corporation,
Note,
9.375% due 11/01/2003......... B1 BB 4,797,500
Mesa Petroleum Capital
Corporation: Sub. Note,
319,000 12.750% due 06/30/1998........ B3 CCC+ 490,463
9,000,000 Secured Discount Note,
12.750% due 6/30/1998......... B3 CCC+ 7,807,500
1,545,000 Transco Energy Company, Note,
11.250% due 7/1/1999.......... Ba3 B+ 1,761,300
3,000,000 Trident Inc., Sub. Note,
10.250% due 4/15/2003......... B1 B+ 3,217,500
----------------------------------------------------------------------------
23,819,263
----------------------------------------------------------------------------
BROADCASTING - 4.4%
Continental Cablevision, Inc.,
Sr. Notes:
2,125,000 11.000% due 6/1/2007.......... B1 BB- 2,483,594
4,275,000 9.500% due 8/1/2013........... Ba2 BB 4,755,938
3,200,000 Rogers Cablesystems Ltd.,
Sr. Secured Second Priority
Deb.,
10.125% due 9/1/2012.......... Ba1 BB+ 3,668,000
3,000,000 Rogers Communication, Inc.,
Sr. Debenture,
10.875% due 4/15/2004......... Ba3 BB- 3,345,000
6,625,000 TKR Cable Inc., Sr. Debenture,
10.500% due 10/30/2007........ Ba2 BBB- 8,231,563
----------------------------------------------------------------------------
22,484,095
----------------------------------------------------------------------------
INSURANCE COMPANIES - 4.0%
4,000,000 Bankers Life Holdings,
Sr. Sub. Note, Series B,
13.000% due 11/1/2002......... Ba3 B+ 4,770,000
</TABLE>
8 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET
FACE RATINGS VALUE
VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
CORPORATE BONDS AND NOTES - (CONTINUED)
INSURANCE COMPANIES - (CONTINUED)
$ 5,950,000 Life Partners Group Inc., Sr.
Sub. Note,
12.750% due 7/15/2002......... Ba3 BB- $ 6,946,625
Reliance Group Holdings Inc.,
Notes:
5,225,000 9.000% due 11/15/2000......... Ba3 BB+ 5,277,250
3,525,000 9.750% due 11/15/2003......... B1 BB- 3,621,936
----------------------------------------------------------------------------
20,615,811
----------------------------------------------------------------------------
METALS AND MINING - 3.9%
3,200,000 Essex Group, Inc., Sr. Note,
10.000% due 5/1/2003.......... B1 B+ 3,240,000
3,300,000 Federal Industries Ltd., Sr.
Note,
10.250% due 6/15/2000......... B3 B- 3,374,250
1,500,000 Jorgensen (Earle) Company, Sr.
Note,
10.750% due 3/1/2000.......... B2 B 1,595,625
1,600,000 Noble Drilling Corporation,
Sr. Note,
9.250% due 10/1/2003.......... Ba3 BB- 1,676,000
3,375,000 Stelco Incorporated, Canadian
Dollar Debenture Note,
Retractable,
10.400% due 11/30/2009........ NR NR 2,373,292
8,000,000 Wheeling Pittsburgh
Corporation,
Sr. Note,
9.375% due 11/15/2003......... B1 BB- 8,030,000
----------------------------------------------------------------------------
20,289,167
----------------------------------------------------------------------------
CHEMICALS - 3.9%
1,900,000 Buckeye Celluose Corporation,
Sr. Note,
10.250% due 5/15/2001......... B2 B 2,002,125
3,235,000 General Chemical Corporation,
Sr. Secured Secondary Note,
14.000% due 11/1/1998......... Ba3 BB 3,635,331
5,725,000 Harris Chemical North American
Inc., Note,
10.750% due 10/15/2003........ B3 B 5,896,750
</TABLE>
9 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET
FACE RATINGS VALUE
VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
CORPORATE BONDS AND NOTES - (CONTINUED)
CHEMICALS - (CONTINUED)
$ 3,285,000 Methanex Corporation,
Sr. Secured 2nd Note,
8.875% due 11/15/2001......... Ba3 BB $ 3,309,637
UCC Investors Holding, Inc.,
Sr. Notes:
1,900,000 10.500% due 5/1/2002.......... B2 B- 2,080,500
4,800,000 12.000% due 5/1/2005.......... B3 B- 3,132,000
----------------------------------------------------------------------------
20,056,343
----------------------------------------------------------------------------
PERSONAL CARE - 3.6%
3,800,000 MacAndrews & Forbes Group,
Sub. Note,
12.250% due 7/1/1996.......... NR NR 3,923,500
4,815,000 Revlon Consumer Products
Corporation, Sr. Note,
10.500% due 2/15/2003......... B3 NR 4,592,306
20,100,000 Revlon Worldwide Corporation,
Sr. Note,
Zero coupon due 3/15/1998..... B3 B- 10,200,750
----------------------------------------------------------------------------
18,716,556
----------------------------------------------------------------------------
FOREST PRODUCTS/PAPER - 3.6%
2,050,000 Domtar Inc., Sr. Note,
12.000% due 04/15/2001........ Ba1 BB- 2,229,375
7,500,000 Fort Howard Corporation, Sub.
Debenture,
12.625% due 11/01/2000........ B2 B 7,856,250
7,875,000 Riverwood International
Corporation,
Sr. Sub. Note,
11.250% due 6/15/2002......... B1 B 8,547,081
----------------------------------------------------------------------------
18,632,706
----------------------------------------------------------------------------
AUTOMOBILE - 3.4%
1,285,000 Allison Engine Inc., Sr. Sub.
Note,
10.000% due 12/1/2003......... NR NR 1,310,700
</TABLE>
10 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET
FACE RATINGS VALUE
VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
CORPORATE BONDS AND NOTES - (CONTINUED)
AUTOMOBILE - (CONTINUED)
Chrysler Financial
Corporation:
$ 3,250,000 Note,
13.250% due 10/15/1999........ Baa2 BBB $ 4,371,250
6,900,000 Sr. Note,
12.750% due 11/1/1999......... Baa2 BBB 9,108,000
2,450,000 Fairfield Manufacturing Inc.,
Sr. Sub. Note,
11.375% due 7/1/2001.......... Caa CCC+ 2,548,000
----------------------------------------------------------------------------
17,337,950
----------------------------------------------------------------------------
ELECTRONICS/COMPUTERS - 3.3%
3,025,000 ADT Operations Inc.,
Guaranteed Sr. Sub. Note,
9.250% due 8/1/2003........... B2 BB- 3,119,531
11,940,000 Anacomp, Inc., Sr. Sub. Note,
15.000% due 11/1/2000......... B3 CCC+ 13,760,850
----------------------------------------------------------------------------
16,880,381
----------------------------------------------------------------------------
CONSUMER NON-DURABLES - 3.1%
19,750,000 International Semi-Tech, Sr.
Note,
Zero coupon to 8/15/2000,
11.500% due 8/15/2003......... Ba2 B+ 10,344,063
9,100,000 Colman Holdings Inc., Sr.
Secured Note,
Zero coupon, due 5/27/1998+... NR B 5,812,625
----------------------------------------------------------------------------
16,156,688
----------------------------------------------------------------------------
PUBLISHING - 3.0%
10,050,000 Bell & Howell Holdings
Company, Series A,
11.500% due 3/1/2005.......... B3 B- 5,577,750
16,050,000 Marvel Holdings, Inc., Sr.
Discount Note,
Zero coupon due 4/15/1998..... B3 B 9,951,000
----------------------------------------------------------------------------
15,528,750
----------------------------------------------------------------------------
</TABLE>
11 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET
FACE RATINGS VALUE
VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
CORPORATE BONDS AND NOTES - (CONTINUED)
TRANSPORTATION - 2.0%
$ 1,725,000 Eletson Holdings Inc.,
First Preferred Mortgage,
9.250% due 11/15/2003......... Ba2 BB $ 1,727,155
USAir Inc.:
3,600,000 Guaranteed Sr. Note,
10.000% due 7/1/2003.......... Ba3 B+ 3,447,000
1,975,000 Equipment Trust Certificate,
9.625% due 9/1/2003........... Ba2 BB+ 1,967,594
3,100,000 Viking Star Shipping Inc.,
First Preferred Mortgage
Note,+
9.625% due 7/15/2003.......... Ba3 B+ 3,181,375
----------------------------------------------------------------------------
10,323,124
----------------------------------------------------------------------------
TEXTILES AND APPAREL - 1.7%
3,600,000 CMI Industries, Sr., Sub
Notes,
9.500% due 10/1/2003.......... B1 B+ 3,559,500
JPS Textile Group Inc.,
Sr. Sub. Discount Notes:
1,300,000 11.750% due 6/1/1996.......... B3 CCC 1,322,750
1,420,000 10.850% due 6/1/1999.......... Caa CCC- 1,361,425
2,375,000 10.250% due 6/1/1999.......... Caa CCC- 2,265,156
----------------------------------------------------------------------------
8,508,831
----------------------------------------------------------------------------
FINANCE/CONSUMER CREDIT - 1.7%
2,525,000 Coldwell Banker Corporation,
Note,
10.250% due 6/30/2003......... NR B+ 2,676,500
5,875,000 Lomas Mortgage USA Inc., Sr.
Note,
10.250% due 10/1/2002......... Ba1 BB 6,168,750
----------------------------------------------------------------------------
8,845,250
----------------------------------------------------------------------------
TELE-COMMUNICATIONS - 1.1%
1,650,000 Centennial Cellular
Corporation,
Sr. Note,
8.875% due 11/1/2001.......... NR B 1,643,813
</TABLE>
12 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET
FACE RATINGS VALUE
VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
CORPORATE BONDS AND NOTES - (CONTINUED)
TELE-COMMUNICATIONS - (CONTINUED)
$ 3,375,000 Mobilemedia Communication, Sr.
Sub.
Note, Step up Bond, due
12/01/2003.................... B3 CCC+ $ 2,058,750
3,500,000 Pagemart Inc., Discount Note,
Step up Bond due 11/1/2003+... NR NR 2,082,500
----------------------------------------------------------------------------
5,785,063
----------------------------------------------------------------------------
LEISURE - 0.7%
2,126,000 Gillett Holdings, Inc., Sr.
Sub. Note,
12.250% due 6/30/2002......... NR NR 2,319,998
1,275,000 Remington Arms Inc., Sr. Note,
9.500% due 12/1/2003.......... B3 B 1,278,188
----------------------------------------------------------------------------
3,598,186
----------------------------------------------------------------------------
RAIL/TRUCKING - 0.6%
Southern Pacific
Transportation Company:
1,000,000 10.500% due 7/1/1999.......... Ba1 BB 1,100,000
1,625,000 Sub. Debenture,
10.500% due 7/1/1999+......... Ba1 BB 1,787,500
----------------------------------------------------------------------------
2,887,500
----------------------------------------------------------------------------
FOOD - 0.5%
2,300,000 PMI Acquisition Corporation,
Sr. Sub. Note,
10.250% due 9/1/2003.......... B2 B 2,432,250
----------------------------------------------------------------------------
AEROSPACE - 0.4%
2,175,000 Tracor Inc., Sr. Sub. Note,
10.875% due 8/15/2001......... B2 B 2,262,000
----------------------------------------------------------------------------
</TABLE>
13 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET
FACE RATINGS VALUE
VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
CORPORATE BONDS AND NOTES - (CONTINUED)
AGRICULTURE/AGRICULTURAL SERVICES - 0.4%
$ 1,900,000 Americold Corporation,
First Mortgage, Series B,
11.500% due 3/1/2005.......... B1 B+ $ 1,928,500
----------------------------------------------------------------------------
HOME/OFFICE FURNISHINGS - 0.3%
1,600,000 Sealy Corporation, Sr. Sub.
Note,
9.500% due 5/1/2003........... B1 B+ 1,664,000
----------------------------------------------------------------------------
TOTAL CORPORATE BONDS AND NOTES
(Cost $445,581,068) 451,686,701
----------------------------------------------------------------------------
PREFERRED CONVERTIBLE - 6.6%
1,600 Dime Savings Bank New York,
Preferred,
Exchangeable 10.500%.......... 1,688,000
11,000 Geneva Steel Co., Preferred,
Series B,
Exchangeable 14.000%.......... 1,331,000
K-III Communications
Corporation:
64,000 Exchangeable Pfd. 11.500%..... 1,728,000
84,141 Series B, Exchangeable Pfd.
$11.625....................... 8,498,303
41,250 Navistar International
Corporation, Preferred, Series
G, Conv. $6.00................ 2,268,750
374,600 Unisys Corporation, Preferred,
Series A, Convertible $3.75... 18,542,700
----------------------------------------------------------------------------
TOTAL PREFERRED CONVERTIBLE
(Cost $33,185,768) 34,056,753
----------------------------------------------------------------------------
</TABLE>
14 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 1)
<S> <C> <C> <C> <C>
COMMON STOCK - 0.5%
(Cost $2,768,402)
31,385 Kendall International Inc..... $ 1,322,093
68,000 Station Casinos
Incorporated.................. 1,275,000
----------------------------------------------------------------------------
2,597,093
----------------------------------------------------------------------------
WARRANT - 0.0%
(Cost $141,163)
260 Trump Plaza Holding
Association,
Expires 1996.................. 189,800
----------------------------------------------------------------------------
<CAPTION>
FACE
VALUE
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT - 2.5%
(Cost $12,638,000)
$12,638,000 Agreement with Barclays Bank, 3.180% dated
11/30/1993, to be repurchased at $12,639,116 on
12/01/1993, collateralized by $11,135,000 U.S.
Treasury Notes, 8.125% due 7/31/1998........... 12,638,000
----------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $494,314,401)..................... 97.4 501,168,347
OTHER ASSETS AND LIABILITIES (Net)...... 2.6 13,426,292
----------------------------------------------------------------------------
NET ASSETS.............................. 100.0% $514,594,639
----------------------------------------------------------------------------
<FN>
*Aggregate cost for Federal tax purposes.
+Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
</TABLE>
15 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF BONDS BY COMBINED RATINGS
NOVEMBER 30, 1993 (Unaudited)
<TABLE>
<CAPTION>
PERCENT
TOTAL
STANDARD & CORPORATE BONDS
MOODY'S OR POOR'S AND NOTES
<S> <C> <C> <C>
Baa BBB 4.8 %
Ba BB 29.4
B B 54.0
Caa CCC 7.4
NR NR 4.4
------
100.0 %
------
------
</TABLE>
16 SEE NOTES TO PORTFOLIO OF INVESTMENTS.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1993 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Managed High Income Portfolio Inc. (the "Portfolio") was organized as a
corporation under the laws of the State of Maryland on December 24, 1992 and
is registered with the Securities and Exchange Commission as a
non-diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended. The policies described below are
followed consistently by the Portfolio in the valuation of its securities.
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, based on methods that include consideration of:
yields or prices of high income obligations of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. 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.
17
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1993 (Unaudited) (Continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
QUARTERLY RESULTS OF OPERATIONS
NET INCREASE IN
NET REALIZED AND NET ASSETS
INVESTMENT NET INVESTMENT UNREALIZED GAIN RESULTING FROM
INCOME INCOME ON INVESTMENT OPERATIONS
PER PER PER PER
QUARTER ENDED TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
May 31, 1993* $7,383,178 $ 0.18 $6,294,236 $ 0.15 $2,272,520 $ 0.06 $8,566,756 $ 0.21
August 31, 1993 12,752,722 0.30 11,200,876 0.27 10,769,274 0.26 21,970,150 0.53
November 30,
1993 13,409,679 0.32 11,792,080 0.28 1,588,864 0.04 13,380,944 0.32
-------------------------------------------------------------------------------------
<FN>
* Portfolio commenced operations on March 26, 1993.
</TABLE>
18
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Dividend Reinvestment and Cash Purchase Plan offers you an automatic
way to reinvest your dividends and capital gains distributions in shares of
the Fund. The Plan also allows participants to make optional cash
investments in Fund shares of $100 to $3,000 semi-annually through a
purchasing agent, after consultation with The Shareholder Services Group,
("TSSG"), a subsidiary of First Data Corporation, the Plan Agent. For an
enrollment form and detailed information about the Plan, please contact
Managed High Income Portfolio Inc., Dividend Reinvestment and
Cash Purchase Plan, c/o TSSG, P.O. Box 1376, Boston, Massachusetts 02104,
(800) 331-1710.
If you own shares that are held in the name of a brokerage firm, bank or
other nominee, you should contact your nominee to arrange for it to
participate on your behalf.
19
<PAGE>
- --------------------------------------------------------------------------------
MANAGED
HIGH INCOME
PORTFOLIO INC.
DIRECTORS
James J. Crisona
Paolo M. Cucchi
Allesandro C. diMontezemolo
Andrea Farace
Paul R. Hardin
George M. Pavia
Heath B. McLendon
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD
Steven Treadway
PRESIDENT
Richard P. Roelofs
EXECUTIVE VICE PRESIDENT
John C. Bianchi
VICE PRESIDENT AND
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
20
<PAGE>
A reddish square located under
the fund name showing a bunch of
leaves hanging downward, gently
flowing to the left side
in a curled up motion.
NOVEMBER 30, 1993
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