MUNICIPAL HIGH INCOME FUND INC.
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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TO BE HELD ON FEBRUARY 14, 1996
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To the Shareholders of Municipal High Income Fund Inc.:
The Annual Meeting of Shareholders of Municipal High Income Fund Inc. (the
"Fund") will be held at the Fund's executive offices at 388 Greenwich Street,
22nd Floor, New York, New York at 9:00 a.m. on February 14, 1996 for the
following purposes:
1. To elect three Directors to the Board of Directors;
2. To ratify the selection of KPMG Peat Marwick LLP as the independent
accountants of the Fund for the current fiscal year of the Fund;
3. To consider and vote upon such other matters as may come before said
meeting or any adjournment thereof.
The close of business on December 22, 1995 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting and any adjournment thereof.
By Order of the Board of Directors
Christina T. Sydor
Secretary
January 12, 1996
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YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR HOLDINGS IN THE FUND.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE ASK THAT YOU PLEASE COMPLETE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
WHICH NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED STATES. INSTRUCTIONS
FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON THE INSIDE COVER.
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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, Executor
MUNICIPAL HIGH INCOME FUND INC.
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
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ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 14, 1996
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PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Municipal High Income Fund
Inc. (the "Fund") of proxies to be voted at the Annual Meeting of Shareholders
(the "Meeting") of the Fund to be held at the Fund's executive offices at 388
Greenwich Street, 22nd floor, New York, New York 10013, on February 14, 1996,
and at any adjournments thereof, for the purpose set forth in the accompanying
Notice of Annual Meeting of Shareholders.
The cost of soliciting proxies will be borne by the Fund. Proxy
solicitations will be made mainly by mail. In addition, certain officers,
directors and employees of the Fund; Smith Barney Inc. ("Smith Barney"), the
Fund's distributor; and/or First Data Investors Services Group, Inc., a
subsidiary of First Data Corporation ("FDIS"), the Fund's transfer agent may
solicit proxies in person or by telephone, telegraph, or mail. Smith Barney and
Smith Barney Mutual Funds Management ("SBMFM") are each located at 388 Greenwich
Street, New York, New York 10013; FDIS is located at 53 State Street, Boston,
Massachusetts 02109.
The Annual Report of the Fund, including audited financial statements for
the fiscal year ended October 31, 1995 has previously been furnished to all
shareholders of the Fund. This proxy statement and form of proxy are first being
mailed to shareholders on or about January 15, 1996. The Fund will provide
additional copies of the annual report to any shareholder upon request by
calling the Fund at 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 proxies will be voted "FOR" all the proposals. 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 be voted. For this
reason, abstentions and broker "non-votes" will have the effect of a "no" vote
for the purpose of obtaining the required approval of a proposal. Proposal 1
requires for approval the affirmative vote of a plurality of votes cast at the
Meeting with a quorum present, in person or by proxy by the shareholders of the
Fund voting on the matter. Proposal 2 requires for approval the affirmative vote
of a majority of votes cast at the Meeting with a quorum present, in person or
by proxy by the shareholders of the Fund voting on the matter. Any proxy may be
revoked at any time prior to the exercise thereof by submitting another proxy
bearing a later date or by giving written notice to the Secretary of the Fund at
the Fund's address indicated above or by voting in person at the Meeting.
The Board knows of no business other than that specifically mentioned in
the Notice of Meeting which will be presented for consideration at the Meeting.
If any other matters are properly presented, it is the intention of the person
named in the enclosed proxy to vote in accordance with their best judgment.
The Board of Directors of the Fund has fixed the close of business on
December 22, 1995 as the record date for the determination of shareholders of
the Fund to notice of and to vote at the Meeting or any adjournment thereof.
Shareholders 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 close of business on, December
22, 1995 the Fund had outstanding 19,659,883.209 shares of common stock, par
value $.001 per share, the only authorized class of stock, of which 16,744,515
were held in accounts but not beneficially owned by CEDE & Co., C/O Depository
Trust Company, Box 20 Bowling Green Station, New York, New York 10004-9998. At
the close of business on December 22, 1995, no other person (including any
"group" as that term is used in Section 13(d) of the Exchange Act of 1934) to
the knowledge of the Board of Directors or the Fund, owned beneficially owned
more than 5% of the outstanding shares of the Fund. As of Record Date, the
officers and Board members of the Fund beneficially owned less than 1% of the
outstanding shares of the Fund.
As of the record date, to the knowledge of the Fund, no shares of Smith
Barney's ultimate parent corporation, The Travelers Group Inc. ("Travelers"),
were held by Board members who are not "interested persons" of the Fund (as that
term is used in the Investment Company Act of 1940, as amended (the "1940 Act").
In the event that sufficient votes in favor of the proposal set forth in
the Notice of Meeting 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 any such proposals. In determining whether to adjourn the Meeting,
the following factors may be considered: the nature of the proposals that are
subject to the Meeting, the percentage of votes actually cast, the percentage of
negative votes cast, the nature of any further solicitation and the information
to be provided to shareholders with respect to reasons for the solicitations.
The persons named as proxies will vote in favor of such adjournments those
shares which they are entitled to vote and which have voted in favor of such
proposals.
2
In order that a shareholder's shares may be represented at the Meeting,
shareholders are required to allow sufficient time for their proxies to be
received on or before 9:00 a.m. on February 15, 1996.
PROPOSAL 1:
TO ELECT THREE (3) DIRECTORS OF THE FUND
The Board of Directors of the Fund is divided into three classes. At the
forthcoming Meeting, it is proposed that Dwight B. Crane, Charles Barber and
William R. Hutchinson be elected for a term of three years (until the Annual
Meeting in 1999) or until their respective successors are duly elected and
qualified. Mr. Crane and Mr. Barber have previously been elected by
shareholders, this will be the first opportunity Mr. Hutchinson has had to be
elected by shareholders.
The Board of Directors of the Fund knows of no reason why any of the
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 of Directors may recommend.
Certain information concerning the nominees is set forth below. All the
individuals listed are currently directors of the Fund. Mr. Crane has served in
this capacity since the Fund inception, Mr. Barber became a director in 1989 and
Mr. Hutchinson became a director in 1995. Any Director considered an "interested
person" as defined in the 1940 Act is indicated by an asterisk (*)
Number Of
The Fund's
Common Stock
Beneficially
Name, Age, Principal Occupation and Other Served as Owned As Of
Business Experience During The Past Five a Director December 22,
Years Since 1995
- ------------------------------------------- ---------- ------------
Persons Nominated for Election as Directors
Charles Barber (76) Consultant; formerly 1989 3163
Chairman of the Board, ASARCO Incorporated
Dwight B. Crane (58) Professor, Graduate 1988 550
School of Business Administration, Harvard
University
William R. Hutchison (53) Vice President 1995 0
Financial Operations AMOCO Corporation,
Director of Associated Bank since 1981,
Director of Associated Banc-Corp since
1994.
3
Number Of
The Fund's
Common Stock
Beneficially
Name, Age, Principal Occupation and Other Served as Owned As Of
Business Experience During The Past Five a Director December 22,
Years Since 1995
- ------------------------------------------- ---------- ------------
Directors Continuing in Office
Heath B. McLendon* (62) 388 Greenwich 1988 10,989
Street, 22nd Floor New York, New York 10013
Managing Director of Smith Barney Inc.,
Chairman of Smith Barney Strategy Advisers
Inc. and President SBMFM; prior to July
1993, Senior Executive Vice President of
Shearson Lehman Brothers Inc., Vice
Chairman of Asset Management Division of
Shearson Lehman Brothers Inc., Director of
PanAgora Asset Management, Inc. and
PanAgora Asset Management Limited
Robert A. Frankel (68) Managing Partner of 1994 200
Robert A. Frankel Managing Consultants.
Formerly Corporate Vice President of The
Readers Digest Assoc. Inc.
Allan J. Bloostein (64) Consultant, 199 0
formerly Vice Chairman of the Board of May
Department Stores Company; Director of
Crystals Brands, Inc., Melville Corp., R.G.
Barry Corp. and Hechinger Co.
Martin Brody (74) Vice Chairman of the 1988 101
Board of Directors of Restaurant Associates
Corp.; Director of Jaclyn, Inc. an apparel
manufacturer.
Section 16(a) of the Exchange Act requires the Fund's officers and
directors and persons who beneficially own more than ten percent of the Fund's
Common Stock, to file reports of ownership with the Securities and Exchange
Commission, the New York Stock Exchange, Inc. and the Fund. Based solely upon
its review of the copies of such forms received by it and representations from
such persons, the Fund believes that during its fiscal year ended October 31,
1995, all filing requirements applicable to such persons were complied with.
The Fund has no compensation or nominating committee of the Board of
Directors, or any committee performing similar functions. The Fund has an audit
4
committee composed of directors who are not interested persons of the Fund (the
"independent directors") which is charged with recommending a firm of
independent auditors to the Fund and reviewing the accounting matters with the
auditors.
During the Fund's last fiscal year 4 in-person meetings of the Board of
Directors of the Fund was held, all of which were regular meetings. No director
attended less than 75% of these meetings of the Board that were held in the last
fiscal year.
Only the independent directors receive remuneration from the Fund for
acting as a director. Aggregate fees of $35,000 were paid to such directors by
the Fund during the fiscal year ended on October 31, 1995. Fees for independent
directors are set at $5,000 per annum plus $500 per Board meeting attended and
$100 per telephone conference call. Officers of the Fund are compensated by
Smith Barney.
The following table show the compensation paid by the Fund to each
director, during the Fund's last fiscal year.
Number of
Total Funds for
Compensation which Director
Total from Fund Serves Within
Compensation Complex as of Portfolio
Name of Person from Fund December 31, 1995 Complex
-------------- --------- ----------------- -------
Charles Barber $7,000 $40,500 6
Martin Brody $7,000 $111,675 20
Dwight Crane $7,000 $125,975 24
Allan Bloostein $7,000 $79,000 10
Robert Frankel $7,000 $75,850 8
William R. Hutchinson* -- -- 6
Heath B. McLendon -- -- 42
The following is a list of the current executive officers of the Fund all
of whom have been elected by the directors to serve until their respective
successors are elected:
Principal Occupations and
Position other Affiliations During
Name and Age (Year First Elected) The Past Five Years
- --------------------- --------------------- ------------------------------
Heath B. McLendon, 62 Chief Executive (see table of directors above)
Officer and Chairman
of the Board (1992)
Jessica M. President (1995) Executive Vice President of
Bibliowicz, 35 Smith Barney Inc.; prior to
1994, Director of Sales and
Marketing for Prudential
Mutual Funds; prior to 1991,
First Vice President, Asset
Management Division of
Shearson Lehman Brothers Inc.
* Mr. Hutchinson was first elected to the Board of Directors on November 15,
1995.
5
Principal Occupations and
Position other Affiliations During
Name and Age (Year First Elected) The Past Five Years
- --------------------- --------------------- ------------------------------
Lewis E. Daidone, 37 Senior Vice Chief Financial Officer, and
President; Managing Senior Vice President of
Director of Smith SBMFM.
Barney Inc.; and
Treasurer (1992)
Lawrence T. Vice President and Managing Director of SBMFM;
McDermott, 46 Investment Officer Investment Officer prior to
(1989) July 1993, Managing Director
of Shearson Lehman Advisors.
Karen Mahoney- Vice President and Senior Vice President of
Malcomson, 37 Investment Officer SBMFM; prior to July 1993,
(1990) Senior Vice President of
Shearson Lehman Advisors;
prior to March 1991
Michael J. Maher, 35 Investment Officer Vice President of SBMFM, prior
to July 1993 Vice President of
Shearson Lehman Advisors
Christina T. Sydor, Secretary (1992) Managing Director of Smith
age 44 Barney Inc.; General Counsel
and Secretary of SBMFM.
The Board of Directors, including all of the independent Board members,
recommends that you vote "FOR" the election of nominees to the Board.
PROPOSAL 2
RATIFICATION OF SELECTION OF PEAT MARWICK LLP AS THE
INDEPENDENT ACCOUNTANTS FOR THE FUND FOR THE
CURRENT FISCAL YEAR
KPMG Peat Marwick LLP ("KPMG") have been selected as the independent
auditors to audit the accounts of the Fund for during the fiscal year ending
October 31, 1996 by a majority of the independent directors by a vote cast in
person subject to ratification by the Shareholders at the Meeting (the entire
Board concurred in the selection). KPMG also serves as the independent auditors
for the Fund, other investment companies associated with Smith Barney and for
Travelers. KPMG has no direct or material indirect financial interest in the
Fund, Travelers or any other investment company sponsored by Smith Barney or its
affiliates.
If the Fund receives a written request from any shareholder at least five
days prior to the Meeting stating that the shareholders will be present in
person at the Meeting and desires to ask questions of the auditors concerning
the Fund's financial statements, the Fund will arrange to have representatives
6
of KPMG present at the Meeting who will respond to appropriate questions and
have an opportunity to make a statement.
The affirmative vote of a majority of shares present and voting at the
Meeting is required to ratify the selection of KPMG. The Board of Directors,
including all of the independent Board members, recommends that the shareholders
vote "FOR" the ratification of the selection of independent auditors.
DEADLINE FOR STOCKHOLDER PROPOSALS
Shareholders proposals intended to be presented at the 1997 Annual Meeting
of the Shareholders of the Fund must be received by September 1, 1996 to be
included in this meeting.
All proxies received will be voted in favor of all the proposals, unless
otherwise directed therein.
By Order of the Board of Directors
Christina T. Sydor
Secretary
7