MUNICIPAL HIGH INCOME FUND INC.
                              388 GREENWICH STREET
                            NEW YORK, NEW YORK 10013

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                        -------------------------------
                        TO BE HELD ON FEBRUARY 14, 1996
                        -------------------------------


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

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                        MUNICIPAL HIGH INCOME FUND INC.
                              388 GREENWICH STREET
                            NEW YORK, NEW YORK 10013

                         ------------------------------
                         ANNUAL MEETING OF SHAREHOLDERS

                                FEBRUARY 14, 1996
                         ------------------------------


                                 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

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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


<PAGE>


     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


<PAGE>


                                                                      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


<PAGE>


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


<PAGE>


                                                     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


<PAGE>


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


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