Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Managed High Income Portfolio Inc.
(Name of Registrant as Specified in its Charter)
Robert Nelson
Name of Person Filing Proxy Statement
Payment of Filing Fee (Check appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which the transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
MANAGED HIGH INCOME PORTFOLIO INC.
7 World Trade Center
New York, New York 10048
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------
To Be Held on July 26, 2001
To the Stockholders of Managed High Income Portfolio Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Managed
High Income Portfolio Inc. (the "Fund") will be held at the Fund's offices in
Conference Room A on the 40th floor at 7 World Trade Center, New York, New York,
on July 26, 2001 at 3:00 p.m. (New York Time) for the following purposes:
1. To elect two Class III directors of the Fund.
2. To consider and vote upon such other matters as may properly come
before the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on May 15, 2001 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting and any adjournments thereof.
By Order of the Board of Directors,
Christina T. Sydor
Secretary
New York, New York
June 7, 2001
------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN PERSON
OR BY PROXY; IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE PROVIDED FOR
YOUR CONVENIENCE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
should be indicated unless it is reflected in the form of registration. For
example:
Registration Valid Signature
- ------------ ---------------
Corporate Accounts
(1) ABC Corp. .................................. ABC Corp.
(2) ABC Corp. .................................. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer .................. John Doe
(4) ABC Corp. Profit Sharing Plan .............. John Doe, Trustee
Trust Accounts
(1) ABC Trust .................................. Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 ........................... Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA ............ John B. Smith
(2) Estate of John B. Smith .................... John B. Smith, Jr., Executor
MANAGED HIGH INCOME PORTFOLIO INC.
7 World Trade Center
New York, New York 10048
------------------
PROXY STATEMENT
------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 26, 2001
------------------
INTRODUCTION
This proxy statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of Managed High Income Portfolio Inc. ("the
Fund") of proxies to be voted at the Annual Meeting of Stockholders (the
"Meeting") of the Fund, to be held at the Fund's principal executive offices at
7 World Trade Center, in Conference Room A on the 40th Floor, New York, New York
10048, on July 26, 2001 at 3:00 p.m. (New York Time) and at any adjournments
thereof, for the purposes set forth in the accompanying Notice of Annual Meeting
of Stockholders (the "Notice").
Proxy solicitations will be made primarily by mail but proxy solicitations
also may be made by telephone, telegraph or personal interview conducted by
officers of the Fund, officers and regular employees of Salomon Smith Barney
Inc. ("Salomon Smith Barney"); Smith Barney Fund Management LLC ("SBFM" or the
"Manager"), the Fund's investment advisor and administrator; and/or PFPC Global
Fund Services ("PFPC"), the Fund's transfer agent. The cost of soliciting
proxies will be borne by the Fund. The Fund will also reimburse brokerage firms
and others for their expenses in forwarding solicitation materials to the
beneficial owners of shares.
The Annual Report of the Fund, including audited financial statements for
the fiscal year ended February 28, 2001 has previously been furnished to all
stockholders of the Fund. This proxy statement and form of proxy are first being
mailed to stockholders on or about June 7, 2001. The Fund will provide, without
charge, additional copies of the annual report to any stockholder upon request
by calling the Fund at 1-800-331-1710.
All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein. Unless instructions to the contrary are marked, shares
represented by the proxies will be voted "FOR" the proposal. For purposes of
determining the presence of a quorum for transacting business at the Meeting,
abstentions and broker "non-votes" (i.e. proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been
voted. Because the requisite approval of the proposal is measured by a portion
of the votes actually cast, abstentions and broker "non-votes" will have no
impact on the requisite approval of a proposal. Proposal 1 requires for approval
the affirmative vote of a plurality of the votes cast at the Meeting with a
quorum present. Any proxy may be revoked at any time prior to the exercise
thereof by submitting another proxy bearing a later date, by giving written
notice to the Secretary of the Fund at the Fund's address indicated on the prior
page, or by voting in person at the Meeting.
The Board knows of no business other than that specifically mentioned in
the Notice to be presented for consideration at the Meeting. If any other
matters are properly presented, it is the intention of the persons named in the
enclosed proxy to vote in accordance with their best judgment to the extent
permissible under applicable law.
The Board of Directors of the Fund has fixed the close of business on May
15, 2001 as the record date (the "Record Date") for the determination of
stockholders of the Fund entitled to notice of and to vote at the Meeting or any
adjournments thereof. Stockholders of the Fund on that date will be entitled to
one vote on each matter for each share held, and a fractional vote with respect
to fractional shares, with no cumulative voting rights. At the Record Date, the
Fund had outstanding 43,561,052.921 shares of Common Stock, par value $.001 per
share, the only authorized class of stock, of which 42,752,425.352 shares, or
98.14% were held in accounts, but not beneficially owned by, CEDE & CO., as
nominee for The Depository Trust Company. At the Record Date, no single
shareholder or "group" (as that term is used in Section 13(d) of the Securities
Exchange Act of 1934) to the knowledge of the Board or the Fund, owned
beneficially more than 5% of the outstanding shares of the Fund. As of the
Record Date, the officers and Board members of the Fund in the aggregate
beneficially owned less than 1% of the outstanding shares of the Fund.
In the event that a quorum is not present at the Meeting, or if a quorum
is present but sufficient votes in favor of the proposal set forth in the Notice
and this Proxy Statement are not received by the time scheduled for the Meeting,
the persons named as proxies may move for one or more adjournments of the
Meeting to permit further solicitation of proxies with respect to such proposal.
In determining whether to adjourn the Meeting, the following factors may be
considered: the nature of the proposal that is the subject of the Meeting, the
percentage of votes actually cast, the percentage of negative votes actually
cast, the nature of any further solicitation and the information to be provided
to stockholders with respect to the reasons for the solicitation. Any such
adjournment will require the affirmative vote of a majority of the shares
present at the Meeting in person or by proxy. The persons named as proxies will
vote in favor of such adjournment those shares which they are entitled to vote
and which have voted in favor of such proposal. A shareholder vote may be taken
on one of the proposals prior to such adjournment of sufficient votes have been
received and it is otherwise appropriate. Under the Fund's By-Laws a quorum is
constituted by the presence in person or by proxy of the holders of a majority
of the outstanding Shares entitled to vote at the meeting.
2
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of the Fund is currently classified into three
classes. The term of the director currently serving in Class III, Heath B.
McLendon, Chairman of the Board, President and Chief Executive Officer of the
Fund, is expiring at the Meeting and Mr. McLendon has been nominated by the
Board for re-election at the Meeting. The Board has also nominated a new
director, Dwight B. Crane, to serve as a Class III director; both nominee
directors to serve for a term of three years (until the 2004 Annual Meeting of
Stockholders) or until their successors have been duly elected and qualified.
The affirmative vote of a plurality of the votes cast at the Meeting at which a
quorum is present is sufficient to elect each nominee. It is the intention of
the persons named in the enclosed proxy to vote in favor of the election of the
persons listed below as nominees.
Each of the nominees has consented to serve if elected at the Meeting. The
Board knows of no reason why the Class III director nominees listed below will
be unable to serve, but in the event of any such unavailability, the proxies
received will be voted for such substitute nominees as the Board may recommend.
Certain information concerning the director nominees is set forth below.
One of the nominees for Class III currently serves as Director of the Fund. Any
director affiliated with the Manager or otherwise considered an "interested
person" of the Fund, as defined in the Investment Company Act of 1940, as
amended (the "1940 Act") is indicated by an asterisk (*). Information as to
beneficial ownership is based upon information furnished to the Fund by
Directors.
Persons Nominated for Election as Directors+
Number of Shares
Principal Occupations and % Beneficially
During Past Five Years, Owned as of
Name Other Directorships, and Age May 15, 2001(a)
------ ---------------------------- ------------------
CLASS III DIRECTORS
Heath B. McLendon* Managing Director of Salomon Smith Barney; Chairman 1,160.16880(b)
Director since 1993 or Co-Chairman of seventy-seven investment companies (less than 1%)
affiliated with Citigroup Inc. ("Citigroup"); President and
Director of SBFM and Travelers Investment Advisers, Inc.
("TIA"); formerly Chairman of the Board of Smith Barney
Strategy Advisers Inc.; age 67
Dwight B. Crane Professor, Harvard Business School; Director, Peer Review None
Analysts; Director/Trustee of twenty-three investment
companies affiliated with Citigroup; age 63
- ----------
+ In order to fill Classes I and II vacancies the Board, at its regularly
scheduled quarterly meeting held on May 10, 2001, elected Messrs. Allan J.
Bloostein and William R. Hutchinson, pursuant to relevant provisions of
the Maryland General Corporation Law that permit Messrs. Bloostein and
Hutchinson to fill the vacancies for the remainder of the full term of the
class of directors for which the vacancies occurred; the Board directed
the filing of Articles Supplementary providing for persons elected by the
Board to fill vacancies to sit for the remainder of the terms for which
they are elected, rather than be presented to shareholders for election at
the immediately subsequent annual meeting.
(a) For this purpose, "beneficial ownership" is defined under Section 13(d) of
the Securities Exchange Act of 1934 ("Exchange Act"). The information as
to beneficial ownership is based upon information furnished to the Fund by
the Directors.
(b) Includes Shares owned by Director's family.
3
The remainder of the Board is composed of the Class I and Class II Directors,
none of whom will stand for election at the Meeting, as their terms will expire
in 2002 and 2003, respectively.
Number of Shares
Principal Occupations and % Beneficially
During Past Five Years, Owned as of
Name Other Directorships, and Age May 15, 2001(a)
------ ---------------------------- ------------------
CLASS I DIRECTORS
Paul Hardin Professor of Law and Chancellor Emeritus at the 2,966.3131(b)
Director since 1993 University of North Carolina at Chapel Hill; Director/
Trustee of twenty investment companies affiliated
with Citigroup; formerly, Director of The Summit
Bancorporation; Chancellor of the University of
North Carolina of North Carolina at Chapel Hill; age 69
George M. Pavia Senior Partner, Pavia & Harcourt, Attorneys; Director/ None
Director since 1993 Trustee of nine investment companies affiliated with
Citigroup; age 73
Allan J. Bloostein President of Allan J. Bloostein Associates, a consulting None
Director since 2001 firm; Director/Trustee of nineteen investment companies
affiliated with Citigroup; Director of CVS
Corporation, a drugstore chain, and Taubman
Centers Inc., a real estate development
company; retired Vice Chairman and Director
of The May Department Stores Company; age 71
CLASS II DIRECTORS
Paolo M. Cucchi Dean of College of Liberal Arts at Drew University; 1,100(b)
Director since 1993 Director/Trustee of eight investment companies
affiliated with Citigroup; age 59
Robert A. Frankel Managing Partner of Robert A. Frankel Management None
Director since 2000 Consultants; Director/Trustee of ten investment companies
affiliated with Citigroup; formerly Corporate Vice President
of the Reader's Digest Association Inc.; age 73
William R. Hutchinson Group Vice President, Mergers & Acquisitions BP Amoco None
Director since 2001 p.l.c. since January 1, 1999; Director/Trustee of eight
investment companies affiliated with Citigroup; formerly
Vice President-Financial Operations AMOCO Corporation;
Director of Associated Banc-Corp.; age 58
- ----------
(a) For this purpose, "beneficial ownership" is defined under Section 13(d) of
the Exchange Act. The information as to beneficial ownership is based upon
information furnished to the Fund by the Directors.
(b) Includes Shares owned by Director's family.
Beneficial Ownership Report
Section 16(a) of the Exchange Act requires the Fund's officers and
directors, and persons who beneficially own more than ten percent of a
registered class of the Fund's equity securities, to file reports of ownership
with the Securities and Exchange Commission ("SEC"), the New York Stock Exchange
and the Fund. Based solely upon its review of the copies of such forms received
by it and repre-
4
sentations from such persons, the Fund believes that, during fiscal year ended
February 28, 2001, all filing requirements applicable to such persons were
satisfied.
Committees of the Board of Directors
The Fund has audit and nominating committees of the Board, each of which
is comprised of all of the directors who are not "interested persons" of the
Fund as defined under the 1940 Act (the "independent directors") and a pricing
committee of the Board comprised of the Chairman of the Board and one
independent director. The audit committee is charged with recommending a firm of
independent auditors to the Board and reviewing the Fund's accounting matters as
set forth in the audit committee's charter, which is attached hereto as Appendix
A. The Fund has no compensation committee of the Board, or any committee
performing similar functions.
Seven meetings of the Board were held during the fiscal year ended
February 28, 2001, four of which were regular meetings. Two audit committee
meetings and one nominating committee meeting were also held. In the last fiscal
year, no Director attended less than 75% of these meetings.
No officer, director, or employee of the Fund's investment adviser or
administrator receives any compensation from the Fund for serving as an officer
or director of the Fund. Officers of the Fund are compensated by Salomon Smith
Barney. The Fund pays each Director who is not a director, officer or employee
of the Fund's investment adviser or administrator, a fee of $5,000 per year plus
$500 per regular in-person meeting attended and $100 per telephone meeting
attended. The Fund pays each of its two Director Emeriti a fee of $2,500 per
year plus $250 per regular in-person meeting attended and $50 per telephone
meeting attended. The Fund also reimburses each Director for actual
out-of-pocket expenses relating to attendance at meetings. The aggregate
expenses paid by the Fund to such Directors (including reimbursement for travel
and out-of-pocket expenses) during the fiscal year ended February 28, 2001
amounted to $4,116.
5
COMPENSATION
The following table shows the compensation paid by the Fund to each person
who was a Director during the Fund's fiscal year ended February 28, 2001 and by
the Fund complex for the calendar year ended December 31, 2000:
Compensation Table
Aggregate Pension or Total Number of Funds
Compensation Retirement Compensation for Which Director
from Fund Benefits from Fund Serves or Served
for the Fiscal Accrued as Part Complex for the as a Board Member
Name of Year Ended of Fund CalendarYear within
Director 2/28/01+ Expenses Ended 12/31/00 Fund Complex
-------- -------------- --------------- --------------- ------------------
Paolo M. Cucchi $7,000 $0 $12,250 8
*Robert A. Frankel 5,250 0 72,850 10
Paul Hardin 7,000 0 93,150 20
**Heath B. McLendon 0 0 0 77
George M. Pavia 7,100 0 18,350 9
- ----------
* Director since May 10, 2000.
** Designates a Director who is an interested person of the Fund as defined
in the 1940 Act.
+ Upon attainment of age 80, Directors are required to change to emeritus
status. A Director Emeritus is entitled to serve for a maximum of 10
years during which time he or she is paid 50% of the annual retainer fee
and meeting fees otherwise applicable to Directors, together with
reasonable out-of-pocket expenses for each meeting attended. During the
Fund's last fiscal year, aggregate compensation paid by the fund to
Directors Emeriti totaled $6,750.
Required Vote
Election of each of the listed nominees for Director requires the
affirmative vote of a plurality of the votes cast at the Meeting in person or by
proxy.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE "INDEPENDENT" DIRECTORS,
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF THE NOMINEES TO THE
BOARD.
6
Report of the Audit Committee
Pursuant to a meeting of the audit committee on April 19, 2001, the audit
comittee reports that it: (i) reviewed and discussed the Fund's audited
financial statements with management; (ii) discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61; and (iii) received written confirmation from KPMG LLP ("KPMG") that it
is independent and disclosures regarding such independence as required by
Independence Standards Board Standard No. 1, and discussed with the auditors the
auditors' independence. Based on the review and discussions referred to in items
(i) through (iii) above, and subject to the limitations on the responsibilities
and role of the audit committee set forth in the Charter, the audit committee
recommended to the Board that the audited financial statements be included in
the Fund's annual report for the Fund's fiscal year ended February 28, 2001. The
membership of the audit committee is comprised of all of the independent
directors.
Current Officers
The names of the principal officers of the Fund are listed in the table
below together with certain additional information. Each officer will hold the
office opposite his or her name until a successor is voted upon by the Board.
Position Principal Occupations and Other
(Year First Affiliations for the
Name Elected) Past Five Years
- ---- ----------- -------------------------------
Heath B. McLendon,
age 67 ........... Chief Executive See table of directors)
Officer (1993).
Chairman of the
Board (1993) and
President (1997)
Lewis E. Daidone,
age 43 ........... Senior Vice Managing Director of Salomon
President and Smith Barney, Senior Vice
Treasurer (1994) President and Treasurer
(Chief Financial Officer) or
Executive Vice President and
Treasurer of certain other
investment companies affili-
ated with Citigroup, and
Director and Senior Vice
President of SBFM and TIA.
John C. Bianchi,
age 45 ........... Vice President Managing Director of Salomon
and Investment Smith Barney and investment
Officer (1993) officer of certain other invest-
ment companies affiliated
with Citigroup.
7
Christina T. Sydor, Secretary (1994) Managing Director of Salomon
age 50 ........... Smith Barney, General
Counsel and Secretary of
SBFM and TIS, Secretary or
Executive Vice President and
General Counsel of certain
other investment companies
associated with Citigroup.
The principal business address of each of the principal officers of the
Fund is 7 World Trade Center, New York, New York 10048, except for Lewis E.
Daidone, whose address is 125 Broad Street, New York, New York 10004.
Disclosure of Auditor Fees
Audit Fees. Audit fees billed by the Fund to KPMG in connection with the
Fund's annual audit for the year ended February 28, 2001 totaled $31,500.
Financial Information Systems Design and Implementation. KPMG was not
engaged by the Fund, its investment adviser, or any entity controlling,
controlled by, or under common control with the investment adviser that provides
services to the Fund, to provide financial information systems design or
implementation services.
All other Fees. The aggregate fees billed to the Fund for non-audit
services by KPMG and paid by the Fund, its investment adviser, or any entity
controlling, controlled by, or under common control with the investment adviser
that provides services to the Fund totaled approximately $2,600 (tax services).
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at its 2002 Annual Meeting
of Stockholders of the Fund must be received by February 26, 2002 to be included
in the proxy statement and the form of proxy relating to that meeting, as the
Fund expects that the 2002 Annual Meeting of Stockholders will be held in July
of 2002. The submission by a stockholder of a proposal for inclusion in the
proxy statement does not guarantee that it will be included. Stockholder
proposals are subject to certain regulations under the federal securities laws.
The persons named as proxies for the Annual Meeting of Stockholders for
2002 will have discretionary authority to vote on any matter presented by a
stockholder for action at that meeting unless the Fund receives notice of the
matter by April 27, 2002, in which case these persons will not have
discretionary voting authority except as provided in the SEC's rules governing
stockholder proposals.
8
OTHER MATTERS
The Manager knows of no other matters which are to be brought before the
Meeting. However, if any other matters not now known or determined properly come
before the Meeting, it is the intention of the persons named in the enclosed
form of proxy to vote such proxy in accordance with their judgment on such
matters, to the extent permissible under applicable law.
By Order of the Board of Directors,
Christina T. Sydor
Secretary
June 7, 2001
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE AND SIGN, DATE AND
RETURN THE PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
9
APPENDIX A
MANAGED HIGH INCOME PORTFOLIO INC.
AUDIT COMMITTEE CHARTER
I. Composition of the Audit Committee: The Audit Committee shall be
comprised of at least three directors, each of whom shall have no relationship
to the Company that may interfere with the exercise of their independence from
management and the Company and shall otherwise satisfy the applicable membership
requirements under the rules of the New York Stock Exchange, Inc. as such
requirements are interpreted by the Board of Directors in its business judgment.
II. Purposes of the Audit Committee: The purposes of the Audit Committee
are to assist the Board of Directors:
1. in its oversight of the Company's accounting and financial
reporting principles, policies and controls, and audit processes;
2. in its oversight of the Company's financial statements and the
independent audit thereof;
3. in selecting, evaluating and, where deemed appropriate, replacing
the outside auditors; and
4. in evaluating the independence of the outside auditors.
The function of the Audit Committee is oversight. The management of the
Company is responsible for the preparation, presentation and integrity of the
Company's financial statements. Management and the internal auditing department
are responsible for maintaining appropriate accounting and financial reporting
principles and policies and internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and regulations. The
outside auditors are responsible for planning and carrying out a proper audit of
the Company's annual financial statement in accordance with Generally Accepted
Auditing Standards. In fulfilling their responsibilities hereunder, it is
recognized that members of the Audit Committee are not full-time employees of
the Company and are not, and do not represent themselves to be, accountants or
auditors by profession or experts in the fields of accounting or auditing
including the issue of auditor independence. As such, it is not the duty or
responsibility of the Audit Committee or its members to conduct "field work" or
other types of auditing or accounting reviews or procedures or to set auditor
independence standards, and each member of the Audit Committee shall be entitled
to rely on (i) the integrity of those persons and organizations within and
outside the Company from which it receives information (ii) the accuracy of the
financial and other information provided to the Audit Committee by such persons
and organizations absent actual knowledge to the contrary (which shall be
promptly reported to the Board of Directors) and (iii) representations made by
management of the Company or of Smith Barney Fund Management LLC ("SBFM") as to
any
A-1
information technology, internal audit and other non-audit services provided by
the outside auditors of the Company to the Company, SBFM and any entity
controlling, controlled by or under common control with SBFM that provides
services to the Company ("SBFM Affiliates").
The outside auditors for the Company are ultimately accountable to the
Board of Directors (as assisted by the Audit Committee). The Board of Directors,
with the assistance of the Audit Committee, has the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the outside
auditors.
The outside auditors shall submit to the Audit Committee annually a formal
written statement delineating all relationships between the outside auditors and
the Company ("Statement as to Independence") which, in the auditor's
professional judgement may be reasonably thought to bear on independence,
addressing each non-audit service provided to the Company, SBFM and the SBFM
Affiliate and at least the matters set forth in Independence Standards Board No.
1. The Statement as to Independence shall also identify any audit, tax or
consulting services to the custodian, or other service providers to the Company,
and to other investment companies advised by the Company's investment adviser or
administered by the Company's administrator, as the Audit Committee and the
outside auditors may agree. These professional services may include those
relating to the services provided by such service providers to the Company or
any other services that the outside auditors or the Committee believe may bear
on the outside auditor independence with respect to the Company. The Audit
Committee acknowledges that the disclosure of such services provided by the
outside auditors may be limited by the Code of Professional Conduct of the
American Institute of Certified Public Accountants.
The outside auditors shall submit to the Company annually a formal written
statement of the fees billed for each of the following categories of services
rendered by the outside auditors: (i) the audit of the Company's financial
statements; (ii) information technology consulting services provided to the
Company, SSB Citi, and the SSB Citi Affiliates for the most recent fiscal year,
in the aggregate and, (iii) all other services provided to the Company, SBFM,
and the SBFM Affiliates by the outside auditors for the most recent fiscal year,
in the aggregate.
III. Meetings of the Audit Committee: The Audit Committee shall meet at
least annually with the outside auditors to discuss the annual audited financial
statements and results of their audit. The Audit Committee may request any
officer or employee of the Company or the Company's outside counsel or outside
auditors to attend a meeting of the Audit Committee or to meet with any members
of, or consultants to, the Audit Committee.
IV. Duties and Powers of the Audit Committee: To carry out its purposes,
the Audit Committee shall have the following duties and powers:
1. to provide advice to the Board of Directors in selecting,
evaluating or replacing outside auditors;
A-2
2. to review the fees charged by the outside auditors for audit and
non-audit services;
3. to ensure that the outside auditors prepare and deliver annually
a Statement as to Independence (it being understood that the outside
auditors are responsible for the accuracy and completeness of this
Statement), to discuss with the outside auditors any relationships or
services disclosed in this Statement that may impact the objectivity and
independence of the Company's outside auditors and to recommend that the
Board of Directors take appropriate action in response to this Statement
to satisfy itself of the outside auditors' independence;
4. If applicable, to consider whether the outside auditors'
provision to the Company, SBFM Affiliates of (a) information technology
consulting services relating to financial information systems design and
implementation and (b) other non-audit services is compatible with
maintaining the independence of the outside auditors; and
5. to instruct the auditors that the outside auditors are ultimately
accountable to the Board of Directors and Audit Committee;
6. to advise management and the outside auditors that they are
expected to provide to the Audit Committee a timely analysis of
significant financial reporting issues and practices;
7. to consider any reports or communications (and management's
responses thereto) submitted to the Audit Committee by the outside
auditors required by or referred to in SAS 61 (as codified by AU Section
380), as may be modified or supplemented, including reports and
communications related to:
o deficiencies noted in the audit in the design or operation of
internal controls;
o consideration of fraud in a financial statement audit;
o detection of illegal acts;
o the outside auditors' responsibility under generally accepted
auditing standards;
o significant accounting policies;
o management judgments and accounting estimates;
o adjustments arising from the audit;
o the responsibility of the outside auditors for other
information in documents containing audited financial
statements;
o disagreements with management;
o consultation by management with other accountants;
o major issues discussed with management prior to retention of
the outside auditors;
A-3
o difficulties encountered with management in performing the
audit;
o the outside auditors' judgments about the quality of the
entity's accounting principles; and
o reviews of interim financial information conducted by the
outside auditors; (not applicable) and
8. with respect to reporting and recommendations, to discuss with
the Company's General Counsel any significant legal matters that may have
a material effect on the financial statements, the Company's compliance
policies, including material notices to or inquiries received from
governmental agencies;
9. to prepare any report or other disclosures, including any
recommendation of the Audit Committee, required by the rules of the
Securities and Exchange Commission to be included in the Company's annual
proxy statement;
10. to review this Charter at least annually and recommend any
changes to the full Board of Directors; and
11. to report its activities to the full Board of Directors on a
regular basis and to make such recommendations with respect to the above
and other matters as the Audit Committee may deem necessary or
appropriate.
V. Resources and Authority of the Audit Committee: The Audit Committee
shall have the resources and authority appropriate to discharge its
responsibilities, including the authority to engage outside auditors for special
audits, reviews and other procedures and to retain special counsel and other
experts or consultants.
A-4
PROXY
MANAGED HIGH INCOME PORTFOLIO INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Managed High
Income Portfolio Inc., a Maryland corporation (the
"Portfolio"), hereby appoints Heath B. McLendon,
Christina T. Sydor and Robert M. Nelson, attorneys and
proxies for the undersigned, with full powers of
substitution and revocation, to represent the
undersigned and to vote on behalf of the undersigned all
shares of the Portfolio which the undersigned is
entitled to vote at the Annual Meeting of Shareholders
of the Portfolio to be held in Conference Room A on the
40th Floor at 7 World Trade Center, New York, New York
10048 on July 26, 2001 at 3:00 p.m., and any
adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting and
proxy Statement and hereby instructs said attorney and
proxies to vote said shares as indicated hereon. In
their discretion, the proxies are authorized to vote
upon such other business as may properly come before the
meeting. A majority of the proxies present and acting at
the Meeting in person or by substitute (or, if only one
shall be so present, then that one) shall have and may
exercise all of the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy
previously given.
SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
Please mark
X votes as in
____ this example.
The Board of Directors recommends a vote "FOR" the
following proposal. This proxy, if properly executed,
will be voted in the manner directed by the undersigned
shareholder. If no direction is made, this proxy will be
voted FOR election of each nominee as director. Please
refer to the Proxy Statement for a discussion of the
proposal.
1. ELECTION OF DIRECTORS
Class III (01) Heath B. McLendon and (02) Dwight
B. Crane
nominees: FOR WITHHOLD
________ ________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE
AND NOTE AT LEFT _______
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your
name appears on this Proxy.
If joint owners, EITHER may sign this Proxy.
When signing as attorney, executor,
administrator, trustee, guardian or corporate
officer, please give your full title.
Signature: Date: Signature:
Date: