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<SEC-DOCUMENT>0000091155-01-000045.txt : 20010224
<SEC-HEADER>0000091155-01-000045.hdr.sgml : 20010224
ACCESSION NUMBER:		0000091155-01-000045
CONFORMED SUBMISSION TYPE:	POS 8C
PUBLIC DOCUMENT COUNT:		4
FILED AS OF DATE:		20010220

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MUNICIPAL HIGH INCOME FUND INC
		CENTRAL INDEX KEY:			0000830487
		STANDARD INDUSTRIAL CLASSIFICATION:	UNKNOWN SIC - 0000 [0000]
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		POS 8C
		SEC ACT:		
		SEC FILE NUMBER:	033-20507
		FILM NUMBER:		1549523

	BUSINESS ADDRESS:	
		STREET 1:		2 WORLD TRADE CENTER
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10048
		BUSINESS PHONE:		6175731240

	MAIL ADDRESS:	
		STREET 1:		TWO WORLD TRADE CENTER
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10048

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	SPECIAL OPPORTUNITIES MUNICIPAL FUND INC
		DATE OF NAME CHANGE:	19881025
</SEC-HEADER>
<DOCUMENT>
<TYPE>POS 8C
<SEQUENCE>1
<FILENAME>0001.txt
<TEXT>

As filed with the Securities and Exchange Commission on February 16,
2001

Securities Act Registration		No. 33-20507
Investment Company Act Registration	No. 811-5497

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 13

and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO.     13
__________________

Municipal High Income Fund Inc.
(a Maryland Corporation)
(Exact Name of Registrant as Specified in Charter)

Seven World Trade Center
New York, New York  10048
(Address of Principal Executive Offices)

(212) 783-0693
(Registrant's Telephone Number, including Area Code)

Christina T. Sydor, Secretary
Municipal High Income Fund Inc.
Seven World Trade Center
New York, New York  10048
(Name and Address of Agent for Service)
_____________________

Copies to:
Burton M. Leibert, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York  10019
_______________

Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration
Statement.

If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the
Securities Act of 1933, other than securities offered in connection
with a dividend reinvestment plan, check the following box.  [x]

This Registration Statement relates to the registration of an
indeterminate number of shares solely for market-making transactions.
Pursuant to Rule 429, this Registration Statement relates to shares
previously registered on Form N-2 (Registration No. 33-20507).

It is proposed that this filing will become effective:
[x] when declared effective pursuant to section 8(c).

Registrant amends this Registration Statement under the Securities Act
of 1933, as amended, on such date as may be necessary to delay its
effective date until Registrant files a further amendment that
specifically states that this Registration Statement will thereafter
become effective in accordance with the provisions of Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration
Statement becomes effective on such date as the Securities and Exchange
Commission, acting pursuant to Section 8(a), may determine.

MUNICIPAL HIGH INCOME FUND INC.

Form N-2
Cross Reference Sheet

Part A
Item No. 			Prospectus Caption

1.  Outside Front Cover		Outside Front Cover of Prospectus

2.  Inside Front and Outside	Inside Front and Outside Back Cover
	 Back Cover Page	Page 	of Prospectus

3.  Fee Table and Synopsis		Prospectus Summary; Fund Expenses

4.  Financial Highlights		Financial Highlights

5.  Plan of Distribution		Prospectus Summary; The Offering

6.  Selling Shareholders		Not Applicable

7.  Use of Proceeds		Use of Proceeds

8.  General Description of the	Prospectus Summary;  The Fund;
	 Registrant		Investment Objectives and Policies;
				Risk Factors and Special Considerations;
Investment Restrictions; Description of Common
Stock; Share
				Price Data;  Certain Provisions of the
				Articles of  Incorporation and Market Discount;
Appendix.

9.  Management			Management of the Fund; Description
				of Common Stock; Custodian, Transfer
				Agent, Dividend-Paying Agent, Registrar and
Plan Agent

10.  Capital Stock, Long-Term	Taxation; Dividends and Distributions,
Dividend Reinvestment Plan;
	Debt, and Other		Description of Common Stock; Share Price
Data
	Securities

11.  Defaults and Arrears on	Not Applicable
	Senior Securities

12.  Legal Proceedings		Not Applicable

13.  Table of Contents of the	Further Information
	Statement of Additional
	Information

Part B				Statement of Additional
Item No.			Information Caption

14.  Cover Page			Cover Page

15.  Table of Contents		Cover Page

16.  General Information and	Cover Page; Description of Common
	History			Stock (see Prospectus)

17.  Investment Objective and	Investment Objective and Policies;
Investment
	Policies			Restrictions

18.  Management			Investment Manager and Administrator;
Directors and
				Executive Officers of the Fund

19.  Control Persons and		Not Applicable
	Principal Holders of
	Securities

20.  Investment Advisory and	Investment Manager and Administrator
	Other Services

21.  Brokerage Allocation and	Portfolio Transactions and Turnover
	Other Practices

22.  Tax Status			Taxes; Taxation (see Prospectus)

23.  Financial Statements		Financial Statements


Part C
Item No.

Information required to be included in Part C is set forth, under the
appropriate item so
numbered, in Part C of this Registration Statement.

PART A

- -----------------------------------------------------------------------
- ---------
Prospectus                                                     February
28, 2001
- -----------------------------------------------------------------------
- ---------

      Municipal High Income Fund Inc.
      Common Stock
            Listed on the New York Stock Exchange
            Trading symbol--MHF

      Municipal High Income Fund Inc. is a diversified, closed-end
management
investment company. The fund's investment objective is to seek high
current
income exempt from federal income tax. The fund invests primarily in
intermediate and long-term municipal debt securities issued by state
and local
governments including U.S. territories and possessions, political
subdivisions,
agencies and public authorities (municipal obligations).

      The market price of shares of closed-end funds may be less than
the net
asset value per share. For more information about this or other risks
of
investing in the fund, see "Risk Factors and Special Considerations"
beginning
on page 14.

      The prospectus contains important information about the fund. For
your
benefit and protection, please read it before you invest, and keep it
on hand
for future reference.


      The statement of additional information (SAI) provides more
detailed
information about the fund and is incorporated into this prospectus by
reference. The SAI and shareholder reports can be obtained without
charge from
your Salomon Smith Barney Financial Consultant or from the fund by
calling
1-800-331-1710 or writing to the fund at Seven World Trade Center, New
York, New
York 10048. You can review the fund's shareholder reports at the
Securities and
Exchange Commission's (the "Commission") in its Public Reference Room
in
Washington, D.C. Information about the Public Reference Room may be
obtained by
calling the Commission at 1-202-942-8090. Reports and other information
about
the fund are available on the EDGAR Database on the Commission's
Internet site
at http://www.sec.gov. Copies of this information may be obtained for a
duplicating fee by electronic request at the following E-mail address:
publicinfo@sec.gov, or by writing the Commission's Public Reference
Section,
Washington, D.C. 20549-0102.


      The Commission has not approved the fund's shares as an
investment or
determined whether this prospectus is accurate or complete. Any
statement to the
contrary is a crime.

SALOMON SMITH BARNEY INC.
SSB CITI FUND MANAGEMENT LLC
Investment Manager and Administrator


The Securities and Exchange Commission has not approved or disapproved
these
securities or determined whether this prospectus is accurate or
complete. Any
statement to the contrary is a crime.




1
<PAGE>

- -----------------------------------------------------------------------
- ---------
Table of Contents
- -----------------------------------------------------------------------
- ---------

Prospectus Summary
3
- -----------------------------------------------------------------------
- ---------
Fund Expenses
6
- -----------------------------------------------------------------------
- ---------
Financial Highlights
7
- -----------------------------------------------------------------------
- ---------
The Fund
9
- -----------------------------------------------------------------------
- ---------
The Offering
9
- -----------------------------------------------------------------------
- ---------
Use of Proceeds
9
- -----------------------------------------------------------------------
- ---------
Investment Objective and Policies
9
- -----------------------------------------------------------------------
- ---------
Risk Factors and Special Considerations
14
- -----------------------------------------------------------------------
- ---------
Investment Restrictions
17
- -----------------------------------------------------------------------
- ---------
Share Price Data
18
- -----------------------------------------------------------------------
- ---------
Management of the Fund
18
- -----------------------------------------------------------------------
- ---------
Dividends and Distributions; Dividend Reinvestment Plan
20
- -----------------------------------------------------------------------
- ---------
Taxation
22
- -----------------------------------------------------------------------
- ---------
Description of Common Stock
24
- -----------------------------------------------------------------------
- ---------
Certain Provisions of the Articles of Incorporation and
- -----------------------------------------------------------------------
- ---------
Market Discount
24
- -----------------------------------------------------------------------
- ---------
Custodian, Transfer Agent, Dividend-Paying Agent,
- -----------------------------------------------------------------------
- ---------
Registrar and Plan Agent
26
- -----------------------------------------------------------------------
- ---------
Independent Auditors
26
- -----------------------------------------------------------------------
- ---------
Further Information
26
- -----------------------------------------------------------------------
- ---------
Appendix
A-1
- -----------------------------------------------------------------------
- ---------


2
<PAGE>

- -----------------------------------------------------------------------
- ---------
Prospectus Summary
- -----------------------------------------------------------------------
- ---------

      The following is a summary of more complete information appearing
later in
the prospectus. You should read the entire prospectus because it
contains
details that are not in the summary. Cross references in the summary to
headings
in the prospectus will help you locate information.

      INVESTMENT OBJECTIVE AND PRIMARY INVESTMENTS The fund's
investment
objective is high current income exempt from federal income tax. The
fund
generally invests in intermediate and long-term municipal obligations.

      The fund's municipal obligations may have all types of interest
rate
payment and reset terms, including fixed rate, adjustable rate, zero
coupon,
payment in kind and auction rate features. See "The Fund," "Investment
Objective
and Policies" and Appendix A.

      TAX-EXEMPT INCOME The fund invests with the objective that
dividends paid
by the fund may be excluded by shareholders from their gross income
for federal
income tax purposes. A portion of the fund's dividends may be taxable.
The fund
may invest without limit in private activity bonds. Income from these
bonds may
be a special preference item for purposes of the federal alternative
minimum tax
(AMT). The fund may not be a suitable investment if you are subject to
the AMT.
See "Investment Objective and Policies" and "Taxation."

      THE OFFERING The fund's shares of common stock trade on the New
York Stock
Exchange. Salomon Smith Barney Inc. ("Salomon Smith Barney") intends to
buy and
sell the fund's shares and make a market in the common stock. Salomon
Smith
Barney is not obligated to conduct market-making activities and may
stop doing
so at any time without notice. See "The Offering" and "Use of
Proceeds."

      LISTING NYSE.

      SYMBOL MHF.


      INVESTMENT MANAGER SSB CitiFund Management LLC("SSB Citi" or the
"manager"). The manager selects and manages the fund's investments in
accordance
with the fund's investment objective and policies. SSB Citi is also the
fund's
administrator and oversees the fund's non-investment operations and its
relations with its service providers. For these services, SSB Citi
receives a
combined annual fee equal to 0.60% of the fund's average daily net
assets.


      RISK FACTORS AND SPECIAL CONSIDERATIONS The value of the
securities in the
fund's portfolio fluctuate in price and the net asset value of the fund
will go
up and down in value. This means that you could lose money on your
investment in
the fund or the fund could perform less well than other similar
investments. In
addition, the price of the shares is determined by market prices on



3
<PAGE>

- -----------------------------------------------------------------------
- ---------
Prospectus Summary (continued)
- -----------------------------------------------------------------------
- ---------

the NYSE and elsewhere, so you may receive a price that is less than
net asset
value when you sell your shares. The principal risks associated with an
investment in the fund are summarized below.

      Municipal Obligations. The fund invests primarily in municipal
obligations
and may be affected by any of the following:

      o     Interest rates rise, causing the value of the fund's
portfolio
            generally to decline.

      o     When interest rates are declining, the issuer of a security
            exercises its right to prepay principal earlier than
scheduled,
            forcing the fund to reinvest in lower yielding securities.
This is
            known as call or prepayment risk.

      o     The underlying revenue source for a municipal obligation
other than
            a general obligation bond is insufficient to pay principal
or
            interest in a timely manner.

      o     The credit rating of a security owned by the fund is
downgraded or
            the issuer defaults on its obligation to pay principal
and/or
            interest.

      o     The manager's judgment about the attractiveness, value or
income
            potential of a particular bond proves to be incorrect.

      o     Municipal obligations fall out of favor with investors.

      o     Unfavorable legislation affects the tax-exempt status of
municipal
            obligations.

      Below investment grade securities. The fund is allowed to invest
up to
100% of its assets in securities rated below investment grade or
considered by
the manager to be of comparable quality. (Investment grade debt
securities are
defined as those rated in one of the four highest rating categories by
a
nationally recognized statistical rating organization (NRSRO)).
Investing in
below investment grade securities involves a substantial risk of loss.
These
securities are considered speculative because they have a higher risk
of
default, tend to be less liquid, and may be more difficult to value
than
investment grade securities.

      The fund may invest in securities issued by municipalities that
are in
default on their obligations to pay interest and/or principal. The fund
may lose
all of its investment in these securities.

      Restricted securities. The fund may invest in securities for
which there
are restrictions on resale. There is a less liquid market for
restricted
securities than for publicly traded securities. Although such
securities
sometimes may be resold in private transactions, the prices realized
from the
sale may be less than what the fund considers the fair value of the
securities.

      Derivatives. The fund may hold securities or use investment
techniques
that provide for payments based on or "derived" from the performance of
an
underlying asset, index or other economic benchmark.

      Even a small investment in derivative contracts can have a big
impact on
the


4
<PAGE>

- -----------------------------------------------------------------------
- ---------
Prospectus Summary (continued)
- -----------------------------------------------------------------------
- ---------

fund's interest rate exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains
when
interest rates are changing. The fund may not fully benefit from or may
lose
money on derivatives if changes in their value do not correspond
accurately to
changes in the value of the fund's holdings. The other parties to
certain
derivative contracts present the same types of default risk as issuers
of fixed
income securities. Derivatives can also make the fund less liquid and
harder to
value, especially in declining markets. Derivatives include futures and
options
transactions.

      Closed-end investment company. The fund is a closed-end
investment company
and its shares may trade on the NYSE at a price that is less than its
net asset
value.

      See "Risk Factors and Special Considerations" and "Certain
Provisions of
the Articles of Incorporation and Market Discount."

      DIVIDENDS AND DISTRIBUTIONS Any dividends from net investment
income
(income other than net realized capital gains) are paid monthly and any
distributions of net realized capital gains are paid annually. Your
dividends or
distributions may be reinvested in additional fund shares if you
participate in
the Dividend Reinvestment Plan. The number of shares issued to you by
the plan
depends on the price of the shares. The price of the shares is
determined by the
market price at the time the shares are purchased.

  Market Price of Fund Shares         Price of Fund Shares Issued by
Plan
- --------------------------------    -----------------------------------
- ---------

Greater than or equal to            Shares issued at 98% of net asset
value
98% net asset value                 or 95% of market price, whichever
is greater
Less than 98% of net asset value    Market price

      See "Dividends and Distributions -- Dividend Reinvestment Plan."

      CUSTODIAN PNC Bank, National Association (PNC Bank) is the fund's
custodian. See "Custodian, Transfer Agent, Dividend-Paying Agent,
Registrar and
Plan Agent."

      TRANSFER AGENT, DIVIDEND-PAYING AGENT, REGISTRAR AND PLAN AGENT
PFPC
Global Fund Services ("PFPC") is the fund's transfer agent, dividend-
paying
agent and registrar. See "Custodian, Transfer Agent, Dividend-Paying
Agent,
Registrar and Plan Agent."



5
<PAGE>

- -----------------------------------------------------------------------
- ---------
Fund Expenses
- -----------------------------------------------------------------------
- ---------

      The following table shows the expenses the fund pays. As a
shareholder,
you indirectly bear these expenses.

=======================================================================
=========
Annual Expenses
      (as a percentage of net assets)(1)
      Management fees ................................................
0.60%
      Other expenses(2) ..............................................
0.11%
=======================================================================
=========
Total Annual Operating Expenses ......................................
0.71%
=======================================================================
=========

(1)   See "Management of the Fund" for additional information.

(2)   "Other Expenses," as shown above, are based upon expenses for the
fiscal
      year ended October 31, 2000.

      EXAMPLE

      An investor would directly pay the following expenses on a $1,000
investment in the fund, assuming(1) a 5% annual return and (2)
reinvestment of
all dividends:


              One Year     Three Years     Five Years     Ten Years
=======================================================================
=========
                 $7            $23            $40            $88
=======================================================================
=========


      This example assumes that all dividends and other distributions
are
reinvested at net asset value and that the percentage amounts listed
under
Annual Expenses remain the same in the years shown. This example should
not be
considered a representation of future expenses of the fund. Actual
expenses may
be more or less than those shown.


6
<PAGE>

- -----------------------------------------------------------------------
- ---------
Financial Highlights
- -----------------------------------------------------------------------
- ---------


The following information for the six-year period ended October 31,
2000 has
been audited by KPMG LLP, independent auditors, whose report thereon
appears in
the fund's annual report dated October 31, 2000. The following
information for
the fiscal years ended October 31, 1991 through October 31, 1994 has
been
audited by other independent auditors. The following information should
be read
in conjunction with the financial statements and related notes that
also appear
in the fund's 2000 Annual Report, which is incorporated by reference
into this
prospectus and the Statement of Additional Information.


For a share of capital stock outstanding throughout each year:

<TABLE>
<CAPTION>
Year Ended October 31,                        2000       1999
1998        1997      1996
- -----------------------------------------------------------------------
- --------------------------
<S>                                         <C>        <C>         <C>
<C>        <C>
Net Asset Value,
  Beginning of Year                         $ 9.00     $  9.77     $
9.76     $ 9.53     $ 9.51
Income (Loss) From Operations:
  Net investment income                       0.60        0.58
0.60       0.61       0.63
  Net realized and unrealized gain (loss)    (0.16)      (0.76)
0.03       0.24         --
- -----------------------------------------------------------------------
- --------------------------
Total Income (Loss) From Operations           0.44       (0.18)
0.63       0.85       0.63
- -----------------------------------------------------------------------
- --------------------------
Less Distributions From:
  Net investment income                      (0.58)      (0.59)
(0.61)     (0.62)     (0.61)
  In excess of net investment income            --          --
(0.01)        --         --
- -----------------------------------------------------------------------
- --------------------------
Total Distributions                          (0.58)      (0.59)
(0.62)     (0.62)     (0.61)
- -----------------------------------------------------------------------
- --------------------------
Net Asset Value, End of Year                $ 8.86     $  9.00     $
9.77     $ 9.76     $ 9.53
- -----------------------------------------------------------------------
- --------------------------
Total Return, Based on Market Value           9.39%     (15.76)%
9.34%     17.22%     10.22%
- -----------------------------------------------------------------------
- --------------------------
Total Return, Based on Net Asset Value        5.97%      (1.79)%
6.75%      9.41%      7.39%
Net Assets, End of Year (millions)          $  181     $   184     $
198     $  194     $  187
- -----------------------------------------------------------------------
- --------------------------
Ratios to Average Net Assets:
  Expenses                                    0.71%       0.73%
0.74%      0.74%      0.77%
  Net investment income                       6.72        6.08
6.07       6.38       6.65
- -----------------------------------------------------------------------
- --------------------------
Portfolio Turnover Rate                         27%         27%
57%        35%        17%
=======================================================================
==========================

Market Value, End of Year                   $8.125     $ 8.000
$10.125     $9.875     $9.000

=======================================================================
==========================
</TABLE>



7
<PAGE>

- -----------------------------------------------------------------------
- ---------
Financial Highlights (continued)
- -----------------------------------------------------------------------
- ---------

For a share of capital stock outstanding throughout each year:

<TABLE>
<CAPTION>
Year Ended October 31,                      1995       1994      1993
1992      1991
- -----------------------------------------------------------------------
- --------------------
<S>                                        <C>       <C>        <C>
<C>       <C>
Net Asset Value,
  Beginning of Year                        $ 8.98    $  9.72    $ 9.49
$ 9.42    $ 9.28
- -----------------------------------------------------------------------
- --------------------
Income (Loss) From Operations:
  Net investment income                      0.64       0.65      0.67
0.70      0.74
  Net realized and unrealized gain (loss)    0.54      (0.72)     0.23
0.06      0.15

Total Income (Loss) From Operations          1.18      (0.07)     0.90
0.76      0.89

Less Distributions From:
  Net investment income                     (0.65)     (0.65)    (0.67)
(0.69)    (0.75)
  In excess of net investment income           --         --        --
- --        --
  Net realized gains                           --      (0.02)       --
- --        --
- -----------------------------------------------------------------------
- --------------------
Total Distributions                         (0.65)     (0.67)    (0.67)
(0.69)    (0.75)
- -----------------------------------------------------------------------
- --------------------
Net Asset Value, End of Year               $ 9.51    $  8.98    $ 9.72
$ 9.49    $ 9.42
- -----------------------------------------------------------------------
- --------------------
Total Return, Based on Market Value         14.17%    (10.11)%   17.07%
2.74%    17.88%
- -----------------------------------------------------------------------
- --------------------
Total Return, Based on Net Asset Value      14.00%     (0.54)%    9.87%
8.47%    10.15%
=======================================================================
====================
Net Assets, End of Year (millions)         $  187    $   176    $  188
$  179    $  173
- -----------------------------------------------------------------------
- --------------------
Ratios to Average Net Assets:
  Expenses                                   0.84%      0.84%     0.87%
0.87%     0.90%
  Net investment income                      6.87       6.98      6.89
7.31      7.90
- -----------------------------------------------------------------------
- --------------------
Portfolio Turnover Rate                        18%        17%       13%
12%       22%
=======================================================================
====================
Market Value, End of Year                  $9.000    $ 8.250    $9.875
$9.125    $ 9.50
=======================================================================
====================
</TABLE>


8
<PAGE>

- -----------------------------------------------------------------------
- ---------
The Fund
- -----------------------------------------------------------------------
- ---------


      The fund was incorporated under the laws of the State of Maryland
on March
4, 1988 and is registered under the Investment Company Act of 1940, as
amended
(the "1940 Act"). Its principal office is located at Seven World Trade
Center,
New York, New York 10048. The fund's telephone number is (800) 331-
1710.


- -----------------------------------------------------------------------
- ---------
The Offering
- -----------------------------------------------------------------------
- ---------

      Salomon Smith Barney currently makes a market in the common stock
of the
fund. This prospectus is to be used by Salomon Smith Barney in
connection with
offers and sales of the common stock in market-making transactions in
the
over-the-counter market at negotiated prices related to prevailing
market prices
at the time of the sale. Salomon Smith Barney is not required
to make a
market in the common stock and may stop doing so at any time. You
should not
rely on Salomon Smith Barney's market making activities to provide an
active or
liquid trading market for the common stock.

- -----------------------------------------------------------------------
- ---------
Use of Proceeds
- -----------------------------------------------------------------------
- ---------

      The fund will not receive any proceeds from the sale of any
common stock
offered pursuant to this prospectus. Proceeds received by Salomon Smith
Barney
as a result of its market-making in common stock will be used by
Salomon Smith
Barney in connection with its secondary market operations and for
general
corporate purposes.

- -----------------------------------------------------------------------
- ---------
Investment Objective and Policies
- -----------------------------------------------------------------------
- ---------

      The fund's investment objective is high tax-exempt current
income. The
fund's investment objective may be changed only by the affirmative vote
of the
holders of a "majority of the fund's outstanding voting securities," as
defined
in the 1940 Act. To achieve this objective, the fund seeks to invest
substantially all of its assets in a diversified portfolio of long-term
municipal obligations. Under normal conditions, at least 80% of the
fund's
assets will be invested in municipal obligations. The fund may invest
up to 100%
of its assets in lower-rated municipal obligations (those that are not
"investment grade"). These securities are rated as low as Ba by Moody's
Investors Service, Inc. (Moody's), BB by Standard & Poor's Rating Group
(S&P) or
BB by Fitch IBCA (Fitch), or in unrated municipal obligations deemed to
be of
comparable quality. The fund will not invest in municipal obligations
rated
lower than Ba, MIG 1/VMIG 1 or P-2 by Moody's, BB, SP-1 or A-1 by S&P,
or BB by
Fitch. A



9
<PAGE>

- -----------------------------------------------------------------------
- ---------
Investment Objective and Policies (continued)
- -----------------------------------------------------------------------
- ---------

description of relevant Moody's, S&P and Fitch ratings is set forth in
the
Appendix to the SAI. Lower-rated bonds are judged to have speculative
elements.
Although these bonds may have some quality and protective
characteristics, these
are outweighed by large uncertainties or major risk exposure to adverse
conditions. Often, protection of principal payments may be
characteristically
unreliable over any great length of time. The fund may invest up to to
30% of
its assets in non-publicly traded securities. No assurance can be given
that the
fund will achieve its investment objective.

      Municipal obligations are debt securities, the interest from
which is, in
the opinion of bond counsel to their issuer, excluded from gross income
for
regular Federal income tax purposes. Municipal obligations may bear
fixed,
floating or variable rates of interest. Municipal obligations include
"public
purpose" obligations, which generate interest that is exempt from
regular
Federal income tax and, for individual taxpayers, is not subject to the
AMT.
Municipal obligations also include qualified "private activity bonds",
which
generate interest that is exempt from regular Federal income tax but
that is
subject to the AMT. Various types of municipal obligations in which the
fund may
invest are described in the Appendix to this prospectus.

      The yields on and values of municipal obligations are dependent
on a
variety of factors, including general economic and monetary conditions,
money
market factors, conditions in the municipal obligations market, size of
a
particular offering, maturity of the obligation and rating of the
issue.
Consequently, municipal obligations with the same maturity, coupon and
rating
may have different yields or values, while obligations of the same
maturity and
coupon with different ratings may have the same yield or value.

      Certain municipal obligations held by the fund may permit the
issuer to
call or redeem the obligations, in whole or in part, at its option. If
an issuer
were to redeem municipal obligations held by the fund during a time of
declining
interest rates, the fund might realize capital gains or losses at a
time when it
would not otherwise do so, and the fund might not be able to reinvest
the
proceeds of the redemption in municipal obligations providing as high a
level of
income as the obligations redeemed.

      Opinions relating to the validity of municipal obligations and to
the
exemption of interest thereon from regular Federal income tax (and
also, when
applicable, from the AMT) are rendered by bond counsel to the issuer at
the time
of issuance. Neither the fund nor the manager reviews the proceedings
relating
to the issuance of municipal obligations or the bases for such
opinions. Issuers
of municipal obligations may be subject to the provisions of
bankruptcy,
insolvency and other laws, such as Federal bankruptcy laws, affecting
the rights
and remedies of creditors.


10
<PAGE>

- -----------------------------------------------------------------------
- ---------
Investment Objective and Policies (continued)
- -----------------------------------------------------------------------
- ---------

      In addition, the obligations of those issuers may become subject
to laws
enacted in the future by Congress, state legislatures or referenda
extending the
time for payment of principal and/or interest, or imposing other
constraints
upon enforcement of the obligations or upon the ability of
municipalities to
levy taxes. The possibility also exists that, as a result of litigation
or other
conditions, the power or ability of any issuer to pay, when due, the
principal
of, and interest on, its obligations may be materially affected.

      Under normal conditions, the fund may hold up to 20% of its
assets in cash
or money market instruments, including taxable money market instruments
(taxable
investments). When the manager believes that long-term municipal
obligations
consistent with the fund's investment objective are unavailable, the
fund may
take a temporary defensive posture and invest without limitation in
short-term
municipal obligations and Taxable Investments. To the extent the fund
holds
taxable investments and, under certain market conditions, short-term
municipal
obligations, the fund may not fully achieve its investment objective.

      INVESTMENT TECHNIQUES

      The fund may employ, among others, the investment techniques
described
below, which may give rise to taxable income or gain.

      When-Issued Securities. New issues of municipal obligations
usually are
offered on a when-issued basis, which means that delivery and payment
for the
municipal obligations normally take place within 45 days after the date
of the
commitment to purchase. The payment obligation and the interest rate
that will
be received on the municipal obligations are fixed at the time the
buyer enters
into the commitment. The fund will make commitments to purchase when-
issued
municipal obligations only with the intention of acquiring the
securities, but
may sell these securities before the settlement date if the manager
deems it
advisable. Any gain realized on the sale would be taxable.

      Stand-By Commitments. The fund may acquire "stand-by commitments"
with
respect to municipal obligations held in its portfolio. Under a stand-
by
commitment, a dealer is obligated to repurchase at the fund's option
specified
securities at a specified price and, in this way, stand-by commitments
are
comparable to put options. The exercise of a stand-by commitment,
therefore, is
subject to the ability of the counterparty to make payment on demand.
The fund
will acquire stand-by commitments solely to facilitate portfolio
liquidity and
does not intend to exercise its rights thereunder for trading purposes.

      Financial Futures and Options Transactions. To protect against a
decline
in the value of municipal obligations it owns or an increase in the
price of
municipal obligations it proposes to purchase in the future, the fund
may engage
in financial futures and options transactions. The futures contracts or
options
on futures contracts



11
<PAGE>

- -----------------------------------------------------------------------
- ---------
Investment Objective and Policies (continued)
- -----------------------------------------------------------------------
- ---------

that may be entered into by the fund will be restricted to those that
are either
based on an index of long-term municipal obligations or relate to debt
securities the prices of which are anticipated by the manager to
correlate with
the prices of the municipal obligations owned or to be purchased by the
fund.
Regulations by the Commodities Futures Trading Commission (the "CFTC")
applicable to the fund require that the fund's transactions in futures
and
options be engaged in for "bona fide hedging" purposes or other
permitted
purposes, provided that aggregate initial margin deposits and premiums
required
to establish positions other than those considered by the CFTC to be
"bona fide
hedging" will not exceed 5% of the fund's net asset value, after taking
into
account unrealized profits and unrealized losses on any such contracts.

      An interest rate futures contract provides for the future sale by
one
party and the purchase by the other party of a certain amount of a
specific debt
security at a specified price, date, time and place. The fund may enter
into
interest rate futures contracts in order to protect against the adverse
effect
of changing interest rates on its portfolio securities or those to be
purchased
by the fund.

      The fund may purchase and sell call and put options on interest
rate
futures contracts that are traded on a United States exchange or board
of trade.
Unlike the direct investment in a futures contract, an option on an
interest
rate futures contract gives the purchaser the right, in return for the
premium
paid, to assume a position in an interest rate futures contract at a
specified
exercise price at any time prior to the expiration date of the option.
Upon
exercise of an option, the delivery of the futures position by the
writer of the
option to the holder of the option will be accompanied by delivery of
the
accumulated balance in the writer's futures margin account, which
represents the
amount by which the market price of the futures contract exceeds, in
the case of
a call, or is less than, in the case of a put, the exercise price of
the option
on the futures contract. The potential loss related to the purchase of
an option
on interest rate futures contracts is limited to the premium paid for
the option
(plus transaction costs). The value of the option may change daily and
that
change would be reflected in the net asset value of the fund. The fund
may
purchase options on interest rate futures contracts to hedge its
portfolio
securities against the risk of adverse changes in interest rates. The
fund may
sell options on interest rate futures contracts as part of closing
purchase
transactions to terminate its options positions.

      The fund anticipates utilizing municipal bond index futures to
protect
against changes in the market value of the municipal obligations in its
portfolio or that it intends to acquire. Municipal bond index futures
contracts
are based on an index of long-term municipal obligations. The index
assigns
relative values to the municipal obligations included in the index, and
fluctuates with changes in the market value of the municipal
obligations. The
contract is an agreement pursuant to which two parties agree to take or
make
delivery of an amount of cash based upon the difference between the
value of the
index at the close of the last trading day of the contract and


12
<PAGE>

- -----------------------------------------------------------------------
- ---------
Investment Objective and Policies (continued)
- -----------------------------------------------------------------------
- ---------

the price at which the index contract was originally written. The
acquisition or
sale of a municipal bond index futures contract enables the fund to
protect its
assets from fluctuations in the value of tax-exempt securities without
actually
buying or selling the securities. The fund may purchase and sell put
and call
options on municipal bond indexes and municipal bond index futures and
enter
into closing transactions with respect to those options.

      Lending Portfolio Securities. The fund is authorized to lend
securities it
holds to brokers, dealers and other financial organizations, but it
will not
lend securities to any affiliate of the manager unless the fund applies
for and
receives specific authority to do so from the SEC. Loans of the fund's
securities, if and when made, may not exceed 33 1/3% of the fund's
assets taken
at value. The fund's loans of securities will be collateralized by
cash, letters
of credit or U.S. Government securities that will be maintained at all
times in
a segregated account with the fund's custodian in an amount at least
equal to
100% of the current market value of the loaned securities.


      Repurchase Agreements. The fund may enter into repurchase
agreement
transactions with member banks of the Federal Reserve System or with
certain
dealers listed on the Federal Reserve Bank of New York's list of
reporting
dealers. A repurchase agreement is a contract under which the buyer of
a
security simultaneously commits to resell the security to the seller at
an
agreed-upon price on an agreed-upon date. Under the terms of a typical
repurchase agreement, the fund would acquire an underlying debt
obligation for a
relatively short period (usually not more than seven days) subject to
an
obligation of the seller to repurchase, and the fund to resell, the
obligation
at an agreed-upon price and time, thereby determining the yield during
the
fund's holding period. This arrangement results in a fixed rate of
return that
is not subject to market fluctuations during the fund's holding period.
Under
each repurchase agreement, the selling institution will be required to
maintain
the value of the securities subject to the repurchase agreement at not
less than
their repurchase price.




13
<PAGE>

- -----------------------------------------------------------------------
- ---------
Risk Factors and Special Considerations
- -----------------------------------------------------------------------
- ---------

      There are various risks associated with an investment in the
fund. You
should consider whether the fund is an appropriate investment for you.
The fund
invests substantially all of its assets in municipal obligations, and
circumstances or events that affect the value of municipal obligations
will
affect the fund's net asset value. The fund may invest primarily in
lower-rated
securities. An investment in these securities has speculative
characteristics
and may involve a substantial risk of loss. While certain risks are
discussed
elsewhere in this prospectus, the following is intended to provide a
summary of
the principal risks of an investment in the fund.

Interest rate sensitivity

      o Municipal obligations are fixed-income securities which are
sensitive to
changes in interest rates. Generally, when interest rates are rising,
the value
of the fund's fixed-income securities can be expected to decrease. When
interest
rates are declining, the value of the fund's fixed-income securities
can be
expected to increase. The fund's net asset value will fluctuate in
response to
the increasing or decreasing value of the fund's fixed-income
securities.

Less liquid markets for some municipal obligations

      o The market for municipal obligations, in particular those that
are rated
below investment grade or are unrated, may be less liquid than for
corporate
bonds. Less liquid markets tend to be more volatile and react more
negatively to
adverse publicity and investor perception than more liquid markets.

Call or prepayment risk

      o Municipal obligations frequently permit their issuers to
prepay, call or
repurchase the securities from their holders, such as the fund. As a
result of
declining interest rates, the issuer of a municipal obligation may
exercise its
prepayment, call or repurchase right on the security, forcing the fund
to
replace the security with a lower yielding security. This would
decrease the
return to the fund.


14
<PAGE>

- -----------------------------------------------------------------------
- ---------
Risk Factors and Special Considerations (continued)
- -----------------------------------------------------------------------
- ---------

      o If the fund purchased a municipal obligation at a premium, it
would
experience a loss of that premium if the issuer of that security
exercises its
prepayment, call or repurchase right.

Issuer of a municipal obligation defaults or rating is downgraded

      o The issuer of a municipal obligation may not be able to make
timely
payments of interest and principal because of general economic
downturns or
adverse allocation of government cost burdens. This could result in a
decrease
in the fund's net asset value. This risk of default may be greater for
private
activity bonds or other municipal obligations whose payments are
dependent upon
a specific source of revenue. Adverse changes in the issuer's financial
condition may negatively affect the credit rating of its securities.
These
developments would adversely affect the market value of the issuer's
obligations.

Below investment grade securities

      o The risk of default is greater for lower-rated securities than
for
investment grade securities. Issuers of below investment grade
securities may
have difficulty servicing their debt, especially during prolonged
economic
recessions or periods of rising interest rates. The prices of these
securities
are volatile and may go down due to market perceptions of deteriorating
issuer
creditworthiness or economic conditions. Below investment grade
securities may
become illiquid and hard to value in down markets.

      o Even if the issuer does not actually default, adverse changes
in the
issuer's financial condition may negatively affect its credit rating
presumed
creditworthiness. The market value of lower-rated securities is more
sensitive
to changes in the issuer's financial condition and changes in economic
conditions than is the market value of investment grade securities.

      o The issuer of a below investment grade security might declare
bankruptcy
and the fund could experience loss or delays collecting interest and
principal.
To enforce its rights to collect principal and interest payments, the
fund might
be required to incur additional expenses which would reduce its net
asset value.
The fund may lose some or all of its investment in below investment
grade
securities upon default or bankruptcy because these securities are
generally not
secured by collateral.

Issuer of a municipal obligation declares bankruptcy

      o The issuer of a municipal obligation might declare bankruptcy.
To
enforce its rights to principal and interest, the fund might be
required to take
possession of and manage the assets securing the issuer's obligation.
This may
increase the fund's expenses and reduce its net asset value and
increase the
amount of the fund's distributions that are taxable.



15
<PAGE>

- -----------------------------------------------------------------------
- ---------
Risk Factors and Special Considerations (continued)
- -----------------------------------------------------------------------
- ---------

Adverse governmental action

      o The U.S. government has enacted laws that have eliminated,
restricted or
diminished the income tax exemption on some municipal obligations and
it may do
so again in the future. This could result in taxable income for
shareholders.

Other

      o The issuer of a municipal obligation may be obligated to redeem
the
security at face value, but if the fund paid more than face value for
the
security, the fund may lose money on the security when it is sold.

      o There may be less extensive information available about the
financial
condition of issuers of municipal obligations than for corporate
issuers with
publicly traded securities.

When-Issued and Delayed Delivery Transactions

      The fund may use when-issued and delayed delivery transactions to
purchase
securities. The value of securities purchased in these transactions may
decrease
before they are delivered to the fund. Also, the yield on securities
purchased
in these transactions may be higher in the market when the delivery
takes place.

Financial Futures and Options

      The fund may use financial futures contracts and options on these
contracts to protect the fund from a decline in the price of municipal
obligations it owns or an increase in the price of a municipal
obligation it
plans to buy. There are risks associated with futures and options
transaction.

      o Because it is not possible to correlate perfectly the price of
the
securities being hedged with the price movement in a futures or option
contract,
it is not possible to provide a perfect offset to losses on the
securities.
Losses on the fund's securities may be greater than gains on the
futures or
option contract, or losses on the futures or option contract may be
greater than
gains on the securities subject to the hedge.

      o To compensate for imperfect correlation, the fund may over-
hedge or
under-hedge by entering into futures contracts or options on futures
contracts
in dollar amounts greater or lesser than the dollar amounts of the
securities
being hedged. If market movements are not as anticipated, the fund
could lose
money from these positions.

      o If the fund hedges against an increase in interest rates, and
rates
decline instead, the fund will lose all or part of the benefit of the
increase
in value of the securities it hedged because it will have offsetting
losses in
its futures or options positions. Also, in order to meet margin
requirements,
the fund may have to sell securities at a time it would not normally
choose.


16
<PAGE>

- -----------------------------------------------------------------------
- ---------
Investment Restrictions
- -----------------------------------------------------------------------
- ---------

      The fund has adopted certain fundamental investment restrictions
that may
be changed only with the prior approval of the holders of a majority of
the
fund's outstanding voting securities. A "majority of the fund's
outstanding
voting securities" for this purpose means the lesser of (a) 67% or more
of the
shares of the Fund's common stock present at a meeting of shareholders,
if the
holders of 50% of the outstanding shares are present or represented by
proxy at
the meeting or (b) more than 50% of the outstanding shares. For a
complete
listing of the investment restrictions applicable to the fund, see
"Investment
Restrictions" in the SAI.

      The following are several of the restrictions applicable to the
fund. Any
percentage limits apply only at the time of initial investment. The
fund is not
required to sell securities if the limits are exceeded after the
investment is
completed. The fund may not:

      o     Borrow money, except for temporary or emergency purposes,
and then
            not in amounts that are greater than 15% of total assets
(including
            the amount borrowed).

      o     Buy more securities if the fund has borrowed money in
amounts
            greater than 5% of net assets.

      o     Invest more than 25% of total assets in securities of
issuers in a
            single industry. This restriction does not apply to the
fund's
            investments in municipal obligations and U.S. government
securities.



17
<PAGE>

- -----------------------------------------------------------------------
- ---------
Share Price Data
- -----------------------------------------------------------------------
- ---------

      The fund's common stock is listed on the NYSE under the symbol
"MHF."
Salomon Smith Barney intends to buy and sell the fund's shares in order
to make
a market in the common stock.

      The following table sets forth the high and low sales prices for
the
fund's common stock, the net asset value per share and the discount or
premium
to net asset value represented by the quotation for each quarterly
period for
the two most recent fiscal years and each full fiscal quarter since
then.

<TABLE>
<CAPTION>
                     Quarterly High Price
Quarterly Low Price
                     --------------------                      --------
- -----------
                                         Premium
Premium
             Net Asset       NYSE      (Discount)     Net Asset
NYSE       (Discount)
               Value        Price        to NAV         Value
Price         to NAV
=======================================================================
====================
<S>             <C>        <C>          <C>              <C>
<C>          <C>
01/31/01        8.85         8.875         0.28%         8.76
7.8125       (10.18)%
10/31/00        8.91         8.625       (3.20)%         8.86
7.9375       (10.44)%
7/31/00         8.82          8.25       (6.46)%         8.65
7.3125       (15.46)%
4/30/00         8.82         7.575       (6.38)%         8.66
7.9375        (8.34)%
1/31/00         9.10        8.1875      (10.03)%         8.64
7.0625       (18.26)%
10/31/99        9.43        8.8750       (5.89)%         8.98
7.6250       (13.11)%
7/31/99         9.64        9.6875         0.49%         9.42
8.8125        (6.45)%
4/30/99         9.75        9.9375         3.85%         9.64
9.4375        (2.10)%
1/31/99         9.76       10.4375         6.94%         9.71
9.375        (3.45)%
=======================================================================
====================
</TABLE>

      As of February 9, 2001, the price per share of common stock as
quoted on
the NYSE was $8.92, representing a 1.25% premium to the common stock's
net asset
value calculated on that day.

      Since the fund's commencement of operations, the fund's common
stock has
traded in the market at prices that were generally below net asset
value.

- -----------------------------------------------------------------------
- ---------
Management of the Fund
- -----------------------------------------------------------------------
- ---------

      BOARD OF DIRECTORS

      Overall responsibility for management and supervision of the fund
rests
with the fund's Board of Directors (Board). The Board approves all
significant
agreements between the fund and the companies that furnish services to
the fund,
including agreements with the fund's investment adviser, administrator,
custodian and transfer agent. The day-to-day operations of the fund are
delegated to the manager. The SAI contains background information
regarding each
Director and executive officer of the fund.


18
<PAGE>

- -----------------------------------------------------------------------
- ---------
Management of the Fund (continued)
- -----------------------------------------------------------------------
- ---------

      INVESTMENT MANAGER AND ADMINISTRATOR

      SSB Citi, located at Seven World Trade Center, New York, New York
10048,
serves as the fund's investment manager. SSB Citi, through its
predecessors, has
been in the investment counseling business since 1968 and is a
registered
investment adviser. SSB Citi renders investment advice to a wide
variety of
individual, institutional and investment company clients that, as of
January 31,
2001, had aggregate assets under management in excess of $146 billion.
The
manager and Salomon Smith Barney are subsidiaries of Citigroup Inc
("Citigroup"). Citigroup businesses produce a broad range of financial
services--asset management, banking and consumer finance, credit and
charge
cards, insurance, investments, investment banking and trading--and use
diverse
channels to make them available to consumer and corporate customers
around the
world.

      Subject to the supervision and direction of the fund's Board, SSB
Citi
manages the fund's portfolio in accordance with the fund's investment
objective
and policies, places orders to purchase and sell securities and employs
professional portfolio managers and securities analysts who provide
research
services to the fund. For its services, SSB Citi is paid a management
fee at an
annual rate of 0.40% of the value of the fund's average daily net
assets. In
addition, SSB Citi serves as the fund's administrator and is paid an
administration fee by the fund that is computed daily and paid monthly
at an
annual rate of 0.20% of the value of its average daily net assets.

      Transactions on behalf of the fund are allocated to various
dealers by SSB
Citi in its best judgment. The primary consideration is prompt and
effective
execution of orders at the most favorable price. Subject to that
primary
consideration, dealers may be selected for research, statistical or
other
services that enable SSB Citi to supplement its own research and
analysis with
the views and information of other securities firms. The fund may
utilize
Salomon Smith Barney or a Salomon Smith Barney-affiliated broker-dealer
in
connection with a purchase or sale of securities when SSB Citi believes
that the
charge for the transaction does not exceed usual and customary levels.
The same
standard applies to the use of Salomon Smith Barney in connection with
entering
into options and futures contracts. The fund paid no brokerage
commissions in
the last fiscal year.

      PORTFOLIO MANAGEMENT

      Peter Coffey is a Vice President and Investment Officer of the
fund and
has served the fund in this capacity since 1999. He manages the day-to-
day
investment operations of the fund, including making all investment
decisions.
Mr. Coffey is a Managing Director of Salomon Smith Barney and is the
senior
asset manager for a number of investment companies and other accounts
investing
in tax-exempt securities.



19
<PAGE>

- -----------------------------------------------------------------------
- ---------
Dividends and Distributions; Dividend Reinvestment Plan
- -----------------------------------------------------------------------
- ---------

      The fund expects to pay monthly dividends of substantially all
net
investment income to the holders of the common stock. Net investment
income is
income (including tax-exempt income and accrued original issue discount
income)
other than net realized capital gains. Under the fund's current policy,
which
may be changed at any time by its Board, the fund's monthly dividends
will be
paid at a level that reflects the past and projected performance of the
fund,
which policy over time will result in the distribution of all net
investment
income of the fund. From time to time, when the fund makes a capital
gains
distribution, it may do so in lieu of paying its regular monthly
dividend. Net
income of the fund consists of all interest income accrued on the
fund's assets
less all expenses of the fund. Expenses of the fund are accrued each
day. Net
realized capital gains, if any, will be distributed to the shareholders
at least
once per year.

      Under the fund's Dividend Reinvestment Plan (plan), a shareholder
whose
shares of common stock are registered in his own name will have all
distributions from the fund reinvested automatically by PFPC as
purchasing agent
under the plan, unless the shareholder elects to receive cash.
Distributions
with respect to shares registered in the name of a broker-dealer or
other
nominee (that is, in street name) will be reinvested by the broker or
nominee in
additional shares under the plan, unless the service is not provided by
the
broker or nominee or the shareholder elects to receive distributions in
cash.
Investors who own common stock registered in street name should consult
their
broker-dealers for details regarding reinvestment. All distributions to
shareholders who do not participate in the plan will be paid by check
mailed
directly to the record holder by or under the direction of PFPC as
dividend
paying agent.

      The number of shares of common stock distributed to participants
in the
plan in lieu of a cash dividend is determined in the following manner.
When the
market price of the common stock is equal to or exceeds 98% of the net
asset
value per share of the common stock on the determination date
(generally, the
record date for the distribution), plan participants will be issued
shares of
common stock by the fund at a price equal to the greater of 98% of the
net asset
value determined as described below under "Net Asset Value" or 95% of
the market
price of the common stock.

      If the market price of the common stock is less than 98% of the
net asset
value of the common stock at the time of valuation (which is the close
of
business on the determination date), or if the fund declares a dividend
or
capital gains distribution payable only in cash, PFPC will buy common
stock in
the open market, on the NYSE or elsewhere, for the participants'
accounts. If
following the commencement of the purchases and before PFPC has
completed its
purchases, the market price exceeds 98% of the net asset value of the
common
stock as of the valuation time, PFPC will attempt to terminate
purchases in the
open market and cause the fund to


20
<PAGE>

- -----------------------------------------------------------------------
- ---------
Dividends and Distributions; Dividend Reinvestment Plan (continued)
- -----------------------------------------------------------------------
- ---------

issue the remaining portion of the dividend or distribution in shares
at a price
equal to the greater of (a) 98% of the net asset value as of the
valuation time
or (b) 95% of the then current market price. In this case, the number
of shares
received by a plan participant will be based on the weighted average of
prices
paid for shares purchased in the open market and the price at which the
fund
issues the remaining shares. To the extent PFPC is unable to stop open
market
purchases and cause the fund to issue the remaining shares, the average
per
share purchase price paid by PFPC may exceed 98% of the net asset value
of the
common stock as of the valuation time, resulting in the acquisition of
fewer
shares than if the dividend or capital gains distribution had been paid
in
common stock issued by the fund at 98% of net asset value. PFPC will
begin to
purchase common stock on the open market as soon as practicable after
the
determination date for the dividend or capital gains distribution, but
in no
event shall such purchases continue later than 30 days after the
payment date
for such dividend or distribution, or the record date for a succeeding
dividend
or distribution, except when necessary to comply with applicable
provisions of
the federal securities laws.

      PFPC maintains all shareholder accounts in the plan and furnishes
written
confirmations of all transactions in each account, including
information needed
by a shareholder for personal and tax records. The automatic
reinvestment of
dividends and capital gains distributions will not relieve plan
participants of
any income tax that may be payable on the dividends or capital gains
distributions. Common stock in the account of each plan participant
will be held
by PFPC in uncertificated form in the name of the plan participant.

      Plan participants are subject to no charge for reinvesting
dividends and
capital gains distributions under the plan. PFPC's fees for handling
the
reinvestment of dividends and capital gains distributions will be paid
by the
fund. No brokerage charges apply with respect to shares of common stock
issued
directly by the fund under the plan. Each plan participant will,
however, bear a
proportionate share of any brokerage commissions actually incurred with
respect
to any open market purchases made under the plan.


      Experience under the plan may indicate that changes to it are
desirable.
The fund reserves the right to amend or terminate the plan as applied
to any
dividend or capital gains distribution paid subsequent to written
notice of the
change sent to participants at least 30 days before the record date for
the
dividend or capital gains distribution. The plan also may be amended or
terminated by PFPC, with the fund's prior written consent, on at least
30 days'
written notice to plan participants. All correspondence concerning the
plan
should be directed by mail to PFPC Global Fund Services, P.O. Box 9699,
Providence, Rhode Island 02940-9699 or by telephone at 1-800-331-1710.




21
<PAGE>

- -----------------------------------------------------------------------
- ---------
Dividends and Distributions; Dividend Reinvestment Plan (continued)
- -----------------------------------------------------------------------
- ---------

      The fund's net asset value will be calculated as of the close of
regular
trading on the NYSE, currently 4:00 p.m. New York time, on the last day
on which
the NYSE is open for trading of each week and month. Net asset value is
calculated by dividing the value of the fund's net assets (the value of
its
assets less its liabilities, exclusive of capital stock and surplus) by
the
total number of shares of common stock outstanding. Investments in U.S.
government securities having a maturity of 60 days or less are valued
at
amortized cost. All other securities and assets are taken at fair value
as
determined in good faith by or under the direction of the fund's Board.

      The valuation of the fund's assets is made by SSB Citi after
consultation
with an independent pricing service approved by the Board. 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 quotation
is
available (which may constitute a majority of the fund's portfolio
securities),
are carried at fair value as determined by the service. The service may
use
electronic data processing techniques and/or a matrix system to
determine
valuations. The procedures of the service are reviewed periodically by
the
officers of the fund under the general supervision and responsibility
of the
Board, which may replace the service at any time if it determines it to
be in
the best interests of the fund to do so.

- -----------------------------------------------------------------------
- ---------
Taxation
- -----------------------------------------------------------------------
- ---------

      The following is a summary of the material federal tax
considerations
affecting the fund and fund shareholders; please refer to the SAI for
further
discussion. In addition to the considerations described below and in
the SAI,
there may be other Federal, state, local or foreign tax applications to
consider. Because taxes are a complex matter, you are urged to consult
your tax
adviser for more detailed information with respect to the tax
consequences of
any investment.

      The fund has qualified and intends to qualify, so long as such
qualification is in the best interests of its shareholders, under
subchapter M
of the Internal Revenue Code (the "Code") for tax treatment as a
regulated
investment company. In each taxable year that the fund qualifies, the
fund will
pay no Federal income tax on its net investment income and short-term
and
long-term capital gains that are distributed to shareholders. The fund
also
intends to satisfy conditions that will enable it to pay "exempt-
interest
dividends" to shareholders. Exempt-interest dividends are generally not
subject
to regular Federal income taxes but may be considered taxable for state
and
local income tax purposes, and shares of the fund may also be subject
to state
and local intangible property taxes.


22
<PAGE>

- -----------------------------------------------------------------------
- ---------
Taxation (continued)
- -----------------------------------------------------------------------
- ---------

      Exempt-interest dividends attributable to interest received by
the fund on
certain private activity bonds will be treated as a specific tax
preference item
to be included in a shareholder's Federal AMT computation. Under the
AMT,
corporate shareholders must include 75% of tax-exempt interest as an
adjustment
("the current earnings adjustment") in computing corporate minimum
taxable
income. Exempt-interest dividends derived from the interest earned on
private
activity bonds will not be exempt from Federal income tax for those
shareholders
who are "substantial users" (or persons related to "substantial users")
of the
facilities financed by these bonds.

      Shareholders who receive social security or equivalent railroad
retirement
benefits should note that exempt-interest dividends are one of the
items taken
into consideration in determining the amount of these benefits that may
be
subject to federal income tax.

      The interest expense incurred by a shareholder on borrowings
made to
purchase or carry fund shares are not deductible for Federal income tax
purposes
to the extent related to the exempt-interest dividends received on such
shares.

      Dividends paid by the fund from interest income on taxable
investments,
net realized short-term capital gains, and all or a portion of any
gains
realized from the sale or other disposition of certain market discount
bonds are
subject to Federal income tax as ordinary income.

      Distributions, if any, from net realized long-term capital gains
are
taxable as long-term capital gains, regardless of the length of time a
shareholder has owned fund shares.

      Shareholders are required to pay tax on all taxable distributions
even if
those distributions are automatically reinvested in additional fund
shares. None
of the dividends paid by the fund will qualify for the corporate
dividends
received deduction. The fund will inform shareholders of the source and
tax
status of all distributions promptly after the close of each calendar
year.

      The fund is required to withhold ("backup withholding") 31% of
all taxable
dividends, capital gain distributions, and the proceeds of any
repurchase,
regardless of whether gain or loss is realized upon the repurchase, for
shareholders who do not provide the fund with a correct taxpayer
identification
number (social security or employer identification number). Withholding
from the
repurchase proceeds and from taxable dividends and capital gain
distributions
also is required for shareholders who otherwise are subject to backup
withholding. Any tax withheld as a result of backup withholding does
not
constitute an additional tax, and may be claimed as a credit on the
shareholders' Federal income tax return.



23
<PAGE>

- -----------------------------------------------------------------------
- ---------
Description of Common Stock
- -----------------------------------------------------------------------
- ---------


                                                                 Amount

Outstanding
                                                           Exclusive of
Shares
                                         Amount Held      Held by Fund
for its
                         Amount        by Fund for its         Own
Account
   Title of Class      Authorized        Own Account      as of February
14, 2001
=======================================================================
=========
       Common          500,000,000            0
20,482,327.044
        Stock            Shares
=======================================================================
=========


      No shares of common stock, other than those currently
outstanding, are
offered for sale pursuant to this prospectus. All shares of common
stock are
equal as to earnings, assets, dividends and voting privileges and, when
issued,
will be fully paid and non-assessable. Shares of common stock are
subject to no
conversion, preemptive or other subscription rights. In the event of
liquidation, each share of common stock is entitled to its proportion
of the
fund's assets after debts and expenses. Shareholders are entitled to
one vote
per share and do not have cumulative voting rights. A majority of the
votes cast
at any meeting of shareholders is sufficient to take or authorize
action, except
for election of Directors or as otherwise provided in the fund's
Articles of
Incorporation as described under "Certain Provisions of the Articles of
Incorporation and Market Discount."

      Under the rules of the NYSE applicable to listed companies, the
fund is
required to hold an annual meeting of shareholders in each year. If the
fund's
shares are no longer listed on the NYSE (or any other national
securities
exchange the rules of which require annual meetings of shareholders),
the fund
may decide not to hold annual meetings of shareholders. See "Certain
Provisions
of the Articles of Incorporation and Market Discount."

      The fund has no current intention of offering additional shares,
except
that additional shares may be issued under the plan. See "Dividends and
Distributions; Dividend Reinvestment Plan." Other offerings of shares,
if made,
will require approval of the fund's Board and will be subject to the
requirement
of the 1940 Act that shares may not be sold at a price below the then-
current
net asset value (exclusive of underwriting discounts and commissions)
except in
connection with an offering to existing shareholders or with the
consent of a
majority of the fund's outstanding shares.

- -----------------------------------------------------------------------
- ---------
Certain Provisions of the Articles of Incorporation and Market Discount
- -----------------------------------------------------------------------
- ---------

      The fund's Articles of Incorporation include provisions that
could have
the effect of limiting the ability of other entities or persons to
acquire
control of the fund or to change the composition of its Board and could
have the
effect of depriving shareholders of an opportunity to sell their shares
at a
premium over prevailing market


24
<PAGE>

- -----------------------------------------------------------------------
- ---------
Certain Provisions of the Articles of Incorporation and Market Discount
(continued)
- -----------------------------------------------------------------------
- ---------

prices by discouraging a third party from seeking to obtain control of
the fund.
The Board is divided into three classes, each having a term of three
years. At
the annual meeting of shareholders in each year, the term of one class
expires.
This provision could delay for up to two years the replacement of a
majority of
Directors. The Articles of Incorporation specify the maximum number of
Directors. A Director may be removed from office or the maximum number
of
Directors increased only by vote of the holders of at least 75% of the
shares of
the fund entitled to be voted on the matter.

      The Articles of Incorporation require the favorable vote of the
holders of
at least 75% of the shares of the fund then entitled to be voted to
approve,
adopt or authorize the following:

      (i)   merger or consolidation or statutory share exchange of the
fund with
            or into another corporation;

      (ii)  sale of all or substantially all of the fund's assets
(other than in
            the regular course of the fund's investment activities); or

      (iii) liquidation of the fund;

unless the action has been approved, adopted or authorized by the
affirmative
vote of two-thirds of the total number of Directors fixed in accordance
with the
fund's By-Laws, in which case the affirmative vote of a majority of the
outstanding shares is required. Conversion of the fund to an open-end
investment
company would require an amendment to the Articles of Incorporation.
Such an
amendment would require the affirmative vote of the holders of a
majority of the
shares entitled to vote on the matter. Such a vote also would satisfy a
separate
requirement in the 1940 Act that the change be approved by the
shareholders. At
any time, the amendment would have to be declared advisable by the
Board prior
to its submission to shareholders. Shareholders of an open-end
investment
company may require the company to redeem their shares at any time
(except in
certain circumstances as authorized by or under the 1940 Act) at their
net asset
value, less any redemption charges that might be in effect at the time
of a
redemption.

      The Board has determined that the 75% voting requirements
described above,
which are greater than the minimum requirements under Maryland law or
the 1940
Act and can only be changed by a similar 75% vote, are in the best
interests of
shareholders generally. Reference should be made to the Articles of
Incorporation on file with the SEC for the full text of these
provisions.

      MARKET DISCOUNT

      Shares of common stock of closed-end investment companies
frequently trade
at a discount from net asset value, or in some cases trade at a
premium. Shares
of closed-end investment companies investing primarily in fixed-income
securities



25
<PAGE>

- -----------------------------------------------------------------------
- ---------
Certain Provisions of the Articles of Incorporation and Market Discount
(continued)
- -----------------------------------------------------------------------
- ---------

tend to trade on the basis of income yield on the market price of the
shares and
the market price may also be affected by trading volume, general market
conditions and economic conditions and other factors beyond the control
of the
fund. As a result, the market price of the fund's shares may be greater
or less
than the net asset value. Since the commencement of the fund's
operations, the
fund's shares have traded in the market at prices that were at times
equal to,
but generally were below, net asset value.

      Some closed-end investment companies have taken certain actions,
including
the repurchase of common stock in the market at market prices and the
making of
one or more tender offers for common stock at net asset value, in an
effort to
reduce or mitigate the discount, and others have converted to an open-
end
investment company, the shares of which are redeemable at net asset
value.

      The fund's Board of Directors has seen no reason to adopt any of
the steps
specified above, which some other closed-end funds have used to address
the
discount. The experience of many closed-end funds suggests that the
effect of
many of these steps (other than open-ending) on the discount may be
temporary or
insignificant. Accordingly, there can be no assurance that any of these
actions
will be taken or, if undertaken, will cause the fund's shares to trade
at a
price equal to their net asset value. The manager may voluntarily waive
its fees
from time to time in order to increase the fund's dividend yield in an
effort to
reduce the discount. Any such waiver may be terminated at any time, and
there
can be no assurance that such actions would be successful at reducing
the
discount.

- -----------------------------------------------------------------------
- ---------
Custodian, Transfer Agent, Dividend-Paying Agent, Registrar and Plan
- -----------------------------------------------------------------------
- ---------


      PFPC Trust Company, located at 8800 Tinicum Blvd., Philadelphia,
Pennsylvania 19153, acts as custodian of the fund's investments.


      PFPC, One Exchange Place, Boston, Massachusetts 02109, acts as
the fund's
transfer agent, dividend paying agent, registrar and as agent under the
Plan.

- -----------------------------------------------------------------------
- ---------
Independent Auditors
- -----------------------------------------------------------------------
- ---------

      The audited financial statements have been incorporated by
reference in
the SAI in reliance upon the report of KPMG LLP, independent auditors.

- -----------------------------------------------------------------------
- ---------
Further Information
- -----------------------------------------------------------------------
- ---------

      Further information concerning the common stock and the fund may
be found
in the Registration Statement, of which this prospectus and the SAI
constitute a
part, on file with the Commission.


26
<PAGE>

- -----------------------------------------------------------------------
- ---------
Appendix
- -----------------------------------------------------------------------
- ---------

      TYPES OF MUNICIPAL OBLIGATIONS

      The fund may invest in the following types of municipal
obligations and in
such other types of municipal obligations as become available in the
market from
time to time.

      MUNICIPAL BONDS

      Municipal bonds are debt obligations issued to obtain funds for
various
public purposes. The two principal classifications of municipal bonds
are
"general obligation" and "revenue" bonds. General obligation bonds are
secured
by the issuer's pledge of its full faith, credit and taxing power for
the
payment of principal and interest. Revenue bonds are payable only from
the
revenues derived from a particular facility or class of facilities or,
in some
cases, from the proceeds of a special excise tax or from another
specific
source, such as the user of the facility being financed. Certain
municipal bonds
are "moral obligation" issues, which normally are issued by special
purpose
public authorities. In the case of such issues, an express or implied
"moral
obligation" of a related government unit is pledged to the payment of
the debt
service but is usually subject to annual budget appropriations.

      INDUSTRIAL DEVELOPMENT AND PRIVATE ACTIVITY BONDS

      Industrial development bonds ("IDBs") and private activity bonds
("PABs")
are municipal bonds issued by or on behalf of public authorities to
finance
various privately operated facilities, such as airports or pollution
control
facilities. IDBs and PABs are generally revenue bonds and thus are not
payable
from the unrestricted revenue of the issuer. The credit quality of IDBs
and PABs
is usually directly related to the credit standing of the user of the
facilities
being financed.

      MUNICIPAL LEASE OBLIGATIONS

      Municipal lease obligations are municipal obligations that may
take the
form of leases, installment purchase contracts or conditional sales
contracts,
or certificates of participation with respect to such contracts or
leases.
Municipal lease obligations are issued by state and local governments
and
authorities to purchase land or various types of equipment and
facilities.
Although municipal lease obligations do not constitute general
obligations of
the municipality for which the municipality's taxing power is pledged,
they
ordinarily are backed by the municipality's covenant to budget for,
appropriate
and make the payments due under the lease obligation. The leases
underlying
certain municipal obligations, however, provide that lease payments are
subject
to partial or full abatement if, because of material damage or
destruction of
the leased property, there is substantial interference with the
lessee's use or
occupancy of such property. This "abatement risk" may be reduced by the
existence of insurance covering the leased property, the maintenance by
the
lessee of reserve funds or the provision of credit enhancements such as
letters
of credit.



A1
<PAGE>

- -----------------------------------------------------------------------
- ---------
Appendix (continued)
- -----------------------------------------------------------------------
- ---------

      The liquidity of municipal lease obligations varies. Certain
municipal
lease obligations contain "non-appropriation" clauses which provide
that the
municipality has no obligation to make lease or installment purchase
payments in
future years unless money is appropriated for such purpose on a yearly
basis. In
the case of a "non-appropriation" lease, the fund's ability to recover
under the
lease in the event of non-appropriation or default will be limited
solely to the
repossession of the leased property, without recourse to the general
credit of
the lessee, and disposition of the property in the event of foreclosure
might
prove difficult. The fund will not invest more than 10% of its assets
in such
"non-appropriation" municipal lease obligations. There is no limitation
on the
fund's ability to invest in other municipal lease obligations.

      ZERO COUPON OBLIGATIONS

      The fund may invest up to 25% of its total assets in zero coupon
municipal
obligations. Such obligations include "pure zero" obligations, which
pay no
interest for their entire life (either because they bear no stated rate
of
interest or because their stated rate of interest is not payable until
maturity), and "zero/fixed" obligations, which pay no interest for an
initial
period and thereafter pay interest currently. Zero coupon obligations
also
include securities representing the principal-only components of
municipal
obligations from which the interest components have been stripped and
sold
separately by the holders of the underlying municipal obligations. Zero
coupon
securities usually trade at a deep discount from their face or par
value and
will be subject to greater fluctuations in market value in response to
changing
rates than obligations of comparable maturities that make current
distributions
of interest. While zero coupon municipal obligations will not
contribute to the
cash available to the fund for purposes of paying dividends to
stockholders, SSB
Citi believes that limited investments in such securities may
facilitate the
fund's ability to preserve capital while generating tax-free income
through the
accrual of original issue discount. Zero coupon municipal obligations
generally
are liquid, although such liquidity may be reduced from time to time
due to
interest rate volatility and other factors.

      FLOATING-RATE OBLIGATIONS

      The fund also may purchase floating- and variable-rate municipal
notes and
bonds, which frequently permit the holder to demand payment of
principal at any
time, or at specified intervals, and permit the issuer to prepay
principal, plus
accrued interest, at its discretion after a specified notice period.
The
issuer's obligations under the demand feature of such notes and bonds
generally
are secured by bank letters of credit or other credit support
arrangements.
There frequently will be no secondary market for variable- and
floating-rate
obligations held by the fund, although the fund may be able to obtain
payment of
principal at face value by exercising the demand feature of the
obligation.


A2
<PAGE>

- -----------------------------------------------------------------------
- ---------
Appendix (continued)
- -----------------------------------------------------------------------
- ---------

      PARTICIPATION INTERESTS

      The fund may invest in participation interests in municipal
bonds,
including IDBs, PABs and floating- and variable-rate securities. A
participation
interest gives the fund an undivided interest in a municipal bond owned
by a
bank. The fund has the right to sell the instrument back to the bank.
Such right
is generally backed by the bank's irrevocable letter of credit or
guarantee and
permits the fund to draw on the letter of credit on demand, after
specified
notice, for all or any part of the principal amount of the fund's
participation
interest plus accrued interest. Generally, the fund intends to exercise
demand
under the letters of credit or other guarantees only upon a default
under the
terms of the underlying bond, or to maintain the fund's portfolio in
accordance
with its investment objective and policies. The ability of a bank to
fulfill its
obligations under a letter of credit or guarantee might be affected by
possible
financial difficulties of its borrowers, adverse interest rate or
economic
conditions, regulatory limitations or other factors. SSB Citi will
monitor the
pricing, quality and liquidity of the participation interests held by
the fund,
and the credit standing of banks issuing letters of credit or
guarantees
supporting such participation interests on the basis of published
financial
information reports of rating services and bank analytical services.

      CUSTODIAL RECEIPTS

      The fund may acquire custodial receipts or certificates
underwritten by
securities dealers or banks that evidence ownership of future interest
payments,
principal payments or both on certain municipal obligations. The
underwriter of
these certificates or receipts typically purchases municipal
obligations and
deposits the obligations in an irrevocable trust or custodial account
with a
custodian bank, which then issues receipts or certificates that
evidence
ownership of the periodic unmatured coupon payments and the final
principal
payment on the obligations. Custodial receipts evidencing specific
coupon or
principal payments have the same economic attributes as zero coupon
municipal
obligations described herein. Although under the terms of a custodial
receipt
the fund would be typically authorized to assert its rights directly
against the
issuer of the underlying obligation, the fund could be required to
assert
through the custodian bank those rights that may exist against the
underlying
issuer. Thus, if the underlying issuer fails to pay principal or
interest when
due, the fund may be subject to delays, expenses and risks that are
greater than
those that would have been involved if the fund had purchased a direct
obligation of the issuer. In addition, if that the trust or custodial
account in
which the underlying security has been deposited is determined to be an
association taxable as a corporation, instead of a non-taxable entity,
the yield
on the underlying security would be reduced in recognition of any taxes
paid,
and income earned by the fund could be taxable.



A3
<PAGE>

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<PAGE>

                    (This page is intentionally left blank.)

<PAGE>

                                                            SALOMON
SMITH BARNEY
                                                            -----------
- ---------
                                                     A member of
citigroup[LOGO]

                                                        Municipal
                                                        High
                                                        Income
                                                        Fund Inc.

                                                        Seven World
Trade Center
                                                        New York, New
York 10048

                                                        Common Stock

                                                        (Investment
Company
                                                        Act File No.
811-5497)


                                                        FD 01257
2/01


All dealers effecting transactions in the fund's securities, whether or
not
participating in this distribution, may be required to give investors a
prospectus.

If someone makes a statement about the fund that is not in this
prospectus, you
should not rely upon that information. This prospectus does not offer
any
security other than the fund's shares of common stock. Neither the fund
nor
Salomon Smith Barney is offering to sell shares of the fund to any
person to
whom the fund may not lawfully sell its shares.

The fund will publish a supplement to the prospectus if there are any
material
changes in its business after the date of this prospectus.

PART B
MUNICIPAL HIGH INCOME FUND

Seven World Trade Center
New York, New York  10048
(800) 331-1710

STATEMENT OF ADDITIONAL INFORMATION
February 28, 2001

	Municipal High Income Fund Inc. (the "fund") is a diversified,
closed-end management investment company.  The fund's investment
objective is to achieve high tax-exempt current income by investing
primarily in a variety of obligations issued by or on behalf of states,
territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and
instrumentalities or multi-state agencies or authorities ("municipal
obligations"). No assurance can be given that the fund will be able to
achieve its investment objective. SSB Citi Fund Management LLC ("SSB
Citi"). serves as investment manager of the fund.

This Statement of Additional Information ("SAI") is not a
prospectus and should be read only in conjunction with the fund's
Prospectus, dated February 28, 2001 (the "Prospectus").  A copy of the
Prospectus may be obtained by calling any Salomon Smith Barney
Financial
Consultant or by writing or calling the fund at the address or
telephone
number set forth above. This SAI, although not itself a prospectus, is
incorporated by reference into the Prospectus in its entirety.

	No person has been authorized to give any information or to make
any representations not contained in the Prospectus or this SAI and, if
given or made, such information or representations must not be relied
upon as having been authorized by the fund or the fund's investment
adviser.  The Prospectus and this SAI do not constitute an offer to
sell
or a solicitation of an offer to buy any security other than the shares
of common stock.  The Prospectus and this SAI do not constitute an
offer
to sell or a solicitation of an offer to buy the shares of common stock
by anyone in any jurisdiction in which such offer or solicitation would
be unlawful.  Neither the delivery of the Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the fund since the date
hereof.  If any material change occurs while the Prospectus is required
by law to be delivered, however, the Prospectus or this SAI will be
supplemented or amended accordingly.
CONTENTS
Investment Objective and Policies (see in the Prospectus
"Appendix")
2
Directors and Officers (see in the Prospectus "Management of the
Fund")
11
Investment Manager and Administrator
14
Portfolio Transactions and Turnover
15
Valuation of Shares (see in the Prospectus "Net Asset Value")
16
Stock Purchases and Tenders (see in the Prospectus "Certain
Provisions of the Articles of Incorporation and Market Discount"
 and "Description of
Common Stock")

17
Taxes (see in the Prospectus "Taxation")
17
Additional Information
21
Financial Statements
22
Appendix
A-1
INVESTMENT OBJECTIVE AND POLICIES
General
	The Prospectus discusses the fund's investment objective and the
policies it employs to achieve that objective.  The following
discussion
supplements the description of the fund's investment policies in the
Prospectus.  The fund's investment objective is high tax-exempt current
income.  The fund's investment objective may not be changed without the
affirmative vote of the holders of a "majority of the fund's
outstanding
voting securities", as defined in the Investment Company Act of 1940,
as
amended (the "1940 Act").  No assurance can be given that the fund's
investment objective will be achieved.  As described in the Prospectus,
the fund will seek to invest substantially all of its assets in
municipal obligations and, under normal conditions, at least 80% of the
fund's assets will be invested in municipal obligations.  In
determining
whether the fund should invest in particular municipal obligations, SSB
Citi will consider factors such as: the price, coupon and yield to
maturity; SSB Citi's assessment of the credit quality of the issuer;
the
issuer's available cash flow and the related coverage ratios; the
property, if any, securing the obligation; and the terms of the
municipal obligations, including the subordination, default, sinking
fund and early redemption provisions, if any.  SSB Citi will also
review, in considering particular securities for investment by the
fund,
the ratings, if any, assigned to the securities by Moody's, S&P, Fitch
or other nationally recognized statistical rating organizations
("NRSROs").  The ratings of Moody's, S&P, Fitch and other NRSROs
represent their opinions as to the quality of the municipal obligations
that they undertake to rate; the ratings are relative and subjective
and
are not absolute standards of quality.  SSB Citi's judgment as to
credit
quality of a municipal obligation may, thus, differ from that suggested
by the ratings published by an NRSRO.  The Appendix to this SAI
contains
information concerning the ratings of Moody's, S&P and Fitch and their
significance.

	The fund will not invest in municipal obligations that are rated
lower than Ba, MIG 1/VMIG 1 or P-2 by Moody's or BB, SP-1 or A-1 by S&P
or BB by Fitch.  The fund may invest in unrated municipal obligations
that, in the judgment of SSB Citi, are of comparable quality to rated
securities in which the fund may invest.  The fund is not subject to
any
limit on the amount of assets that it may invest in municipal
obligations rated Ba by Moody's or BB by S&P or in unrated municipal
obligations that are of comparable quality.  Municipal obligations
rated
Ba by Moody's are regarded as having speculative elements while
municipal obligations rated BB by S&P are regarded as having
predominantly speculative characteristics with respect of capacity to
pay interest and repay principal.  Special risks associated with these
low-rated and unrated securities are described below (and in the
Prospectus) under "Risk Factors and Special Considerations."

	The fund will generally invest in long-term municipal
obligations.
Thus, under normal market conditions, the weighted average maturity of
the fund's portfolio is expected to exceed ten years.  The fund may
invest without limit in municipal obligations that are repayable out of
revenue streams generated from economically related projects or
facilities.  Sizable investments in those obligations could involve an
increased risk to the fund should any of the related projects or
facilities experience financial difficulties.

Illiquid and Non-Public Securities

	The fund is not restricted in its ability to purchase securities
as to which a liquid trading market does not exist.  These illiquid
securities may include securities for which market quotations are not
readily available, certain municipal leases, time deposits and
repurchase agreements maturing in more than seven days, options traded
in the over-the-counter market and securities used to cover these
options.  Special risks associated with investing in illiquid
securities
are described below under "Risk Factors and Special Considerations."

	The fund may invest up to 30% of its assets in non-publicly
traded
municipal obligations. SSB Citi believes that these securities, which
may be considered speculative, often provide attractive high yields.
Investment in non-publicly traded securities involves certain risks,
which are described below under "Risk Factors and Special
Considerations."

The fund may invest without limit in municipal obligations that
are tax-exempt "private activity bonds," as defined in the Internal
Revenue Code of 1986 (the "Code"), which are in most cases revenue
bonds
and generally do not carry the pledge of the credit of the issuing
municipality, but are guaranteed by or payable from funds provided by
the corporate entity on whose behalf they are issued.  Interest income
on certain types of private activity bonds issued after August 7, 1986
to finance non-governmental activities is a specific tax preference
item
for purposes of the Federal individual and corporate alternative
minimum
taxes. Individual and corporate shareholders may be subject to a
Federal
alternative minimum tax to the extent the Fund's dividends are derived
from interest on these bonds, and a corporate shareholder's liability
for alternative minimum tax may also be increased by tax-exempt
dividends derived from interest on the fund's tax-exempt obligations
that are not private activity bonds.  See "Taxes." Private activity
bonds held by the fund are included in the term "municipal obligations"
for purposes of determining compliance with the 80% limitation
described
above.

Municipal Leases and Zero Coupon Securities

	Among the municipal obligations in which the fund may invest are
municipal leases and zero coupon securities.  Municipal leases, which
are generally participations in intermediate- and short-term
obligations
issued by municipalities consisting of leases or installment purchase
contracts for property or equipment, are subject to special risks
described below under "Risk Factors and Special Considerations." The
fund may invest up to 25% of its assets in zero coupon municipal
obligations.  A zero coupon Municipal Obligation is an obligation that
does not pay interest currently for its entire life (a "Pure Zero
Coupon
Municipal Obligation") or for some initial period, following which
interest is paid currently (a "Zero/Fixed Interest Municipal
Obligation").  In the case of a Pure Zero Coupon Municipal Obligation,
the failure to pay interest currently may result from the obligation's
having no stated interest rate, in which case the municipal obligation
pays only principal at maturity and is sold at a discount. The value to
the investor of a Zero Coupon Municipal Obligation consists of the
economic accretion either of the difference between the purchase price
and the nominal principal amount (if no interest is stated to accrue)
or
of accrued, unpaid interest during the municipal obligation's life or
payment deferral period.

Floating and Variable Rate Demand Notes

	The fund may purchase floating and variable rate demand notes,
which are tax-exempt obligations normally having a stated maturity in
excess of one year, but which permit the holder to demand payment of
principal at any time, or at specified intervals.  The issuer of these
notes normally has a corresponding right, after a given period, to
prepay at its discretion the outstanding principal amount of the notes
plus accrued interest upon a specified number of days' notice to the
noteholders.  The interest rate on a floating rate demand note is based
on a known lending rate, such as a bank's prime rate, and is adjusted
automatically each time the rate is adjusted.  The interest rate on a
variable rate demand note is adjusted automatically at specified
intervals.  Frequently, floating and variable rate obligations are
secured by letters of credit or other credit support arrangements
provided by banks.  Use of letters of credit or other credit support
arrangements will not adversely affect the tax-exempt status of these
obligations.  Because they are direct lending arrangements between the
lender and borrower, floating and variable rate notes will generally
not
be traded.  In addition, no secondary market generally exists for these
notes, although they are putable at face value.  For these reasons,
when
floating and variable rate notes held by the fund are not secured by
letters of credit or other credit support arrangements, the fund's
right
to demand payment is dependent on the ability of the borrower to pay
principal and interest on demand.  SSB Citi, on behalf of the fund,
will
consider the creditworthiness of the issuers of floating and variable
rate demand notes in the fund's portfolio on an ongoing basis. The fund
may purchase from financial institutions tax-exempt participation
interests in municipal obligations (such as private activity bonds and
municipal lease/purchase agreements).  A participation interest gives
the fund an undivided interest in the municipal obligation in the
proportion that the fund's participation interest bears to the total
amount of the municipal obligation.  These instruments may have
floating
or variable rates of interest.  If the participation interest is
unrated, it will be backed by an irrevocable letter of credit or
guarantee of a bank that the fund's Board of Directors (the "Board")
has
determined meets certain quality standards or the payment obligation
otherwise will be collateralized by obligations of the United States
government and its agencies and instrumentalities ("Government
Securities").  For certain participation interests, the fund will have
the right to demand payment, on a specified number of days' notice, for
all or any part of the fund's participation interest in the municipal
obligation, plus accrued interest.  The fund intends to exercise its
right with respect to these instruments to demand payment only upon a
default under the terms of the municipal obligation or to maintain or
improve the quality of the investment portfolio.

Taxable Investments
	Under normal conditions, the fund may hold up to 20% of its
assets
in cash or money market instruments, including taxable money market
instruments (collectively, "Taxable Investments").

	Money market instruments in which the fund may invest include:
Government Securities; bank obligations (including certificates of
deposit, time deposits and bankers' acceptances of domestic or foreign
banks, domestic savings and loan associations and similar
institutions);
commercial paper rated no lower than A-1 by S&P or P-2 by Moody's or
the
equivalent from another NRSRO or, if unrated, of an issuer having an
outstanding, unsecured debt issue then rated within the three highest
rating categories; and repurchase agreements.

	The fund will invest in an obligation of a foreign bank or
foreign
branch of a United States bank only if SSB Citi determines that the
obligation presents minimal credit risks.  Obligations of foreign banks
or foreign branches of United States banks in which the fund will
invest
may be traded in the United States or outside the United States, but
denominated in United States dollars.  These obligations entail risks
that are different from those of investments in obligations of United
States banks. These risks include foreign economic and political
developments, foreign governmental restrictions that may adversely
affect payment of principal and interest on the obligations, foreign
exchange controls and foreign withholding or other taxes on income.
Foreign branches of domestic banks are not necessarily subject to the
same or similar regulatory requirements that apply to domestic banks,
such as mandatory reserve requirements, loan limitations, and
accounting, auditing and financial record-keeping requirements.  In
addition, less information may be publicly available about a foreign
branch of a domestic bank than about a domestic bank.

	Government Securities in which the fund may invest include direct
obligations of the United States Treasury and obligations issued by
United States government agencies and instrumentalities.  Included
among
direct obligations of the United States are Treasury Bills, Treasury
Notes and Treasury Bonds, which differ principally in terms of their
maturities.  Included among the securities issued by those agencies and
instrumentalities are: securities that are supported by the full faith
and credit of the United States (such as Government National Mortgage
Association certificates); securities that are supported by the right
of
the issuer to borrow from the United States Treasury (such as
securities
of Federal Home Loan Banks); and securities that are supported by the
credit of the instrumentality (such as Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation bonds). The fund
may enter into repurchase agreement transactions with member banks of
the Federal Reserve System or with certain dealers listed on the
Federal
Reserve Bank of New York's list of reporting dealers.  A repurchase
agreement is a contract under which the buyer of a security
simultaneously commits to resell the security to the seller at an
agreed-upon price on an agreed-upon date.  Under the terms of a typical
repurchase agreement, the fund would acquire an underlying debt
obligation for a relatively short period (usually not more than seven
days) subject to an obligation of the seller to repurchase, and the
fund
to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the fund's holding period.  This
arrangement results in a fixed rate of return that is not subject to
market fluctuations during the fund's holding period.  Under each
repurchase agreement, the selling institution will be required to
maintain the value of the securities subject to the repurchase
agreement
at not less than their repurchase price.

Investment Techniques
	The fund may employ, among others, the investment techniques
described below, which may give rise to taxable income or gain.

	When-Issued Securities.  New issues of municipal obligations
usually are offered on a when-issued basis, which means that delivery
and payment for the municipal obligations normally take place within 45
days after the date of the commitment to purchase.  The payment
obligation and the interest rate that will be received on the municipal
obligations are fixed at the time the buyer enters into the commitment.
The fund will make commitments to purchase when-issued municipal
obligations only with the intention of acquiring the securities, but
may
sell these securities before the settlement date, if SSB Citi deems it
advisable.  Any gain realized on the sale would be taxable.

	Stand-By Commitments.  The fund may acquire "stand-by
commitments"
with respect to municipal obligations held in its portfolio.  Under a
stand-by commitment, a dealer is obligated to repurchase at the fund's
option specified securities at a specified price and, in this way,
stand-by commitments are comparable to put options.  The exercise of a
stand-by commitment, therefore, is subject to the ability of the seller
to make payment on demand.  The fund will acquire stand-by commitments
solely to facilitate portfolio liquidity and does not intend to
exercise
its rights thereunder for trading purposes.  The fund anticipates that
stand-by commitments will be available from brokers, dealers and banks
without the payment of any direct or indirect consideration. The fund
may pay for stand-by commitments if payment were deemed necessary,
thus,
increasing to a degree the cost of the underlying Municipal Obligation
and similarly decreasing the security's yield to investors.

	Financial Futures and Options Transactions.  To protect against a
decline in the value of municipal obligations it owns or an increase in
the price of municipal obligations it proposes to purchase in the
future, the fund may engage in financial futures and options
transactions.  The futures contracts or options on futures contracts
that may be entered into by the fund will be restricted to those that
are either based on an index of long-term municipal obligations or
relate to debt securities the prices of which are anticipated by SSB
Citi to correlate with the prices of the municipal obligations owned or
to be purchased by the fund.

	In entering into a futures contract, the fund will be required to
deposit with the broker an amount of cash or cash equivalents equal to
approximately 5% of the contract amount.  This amount is subject to
change by the exchange or board of trade on which the contract is
traded
and members of the exchange or board of trade may charge a higher
amount.  This amount is known as "initial margin" and is in the nature
of a performance bond or good faith deposit on the contract that is
returned to the fund upon termination of the futures contract, assuming
all contractual obligations have been satisfied. In accordance with a
process known as "marking-to-market," subsequent payments, known as
"variation margin," to and from the broker will be made daily as the
price of the index or securities underlying the futures contract
fluctuates, making the long and short positions in the futures contract
more or less valuable.  At any time prior to the expiration of a
futures
contract, the fund may elect to close the position by taking an
opposite
position, which will operate to terminate the fund's existing position
in the contract. An interest rate futures contract provides for the
future sale by one party and the purchase by the other party of a
certain amount of a specific debt security at a specified price, date,
time and place.  The fund may enter into interest rate futures
contracts
in order to protect against the adverse effect of changing interest
rates on its portfolio securities or those to be purchased by the fund.

	The fund may purchase and sell call and put options on interest
rate futures contracts that are traded on a United States exchange or
board of trade.  Unlike the direct investment in a futures contract, an
option on an interest rate futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in an
interest rate futures contract at a specified exercise price at any
time
prior to the expiration date of the option.  Upon exercise of an
option,
the delivery of the futures position by the writer of the option to the
holder of the option will be accompanied by delivery of the accumulated
balance in the writer's futures margin account, which represents the
amount by which the market price of the futures contract exceeds, in
the
case of a call, or is less than, in the case of a put, the exercise
price of the option on the futures contract.  The potential loss
related
to the purchase of an option on interest rate futures contracts is
limited to the premium paid for the option (plus transaction costs).
The value of the option may change daily and that change would be
reflected in the net asset value of the fund.  The fund may purchase
options on interest rate futures contracts to hedge its portfolio
securities against the risk of adverse changes in interest rates.  The
fund will sell options on interest rate futures contracts as part of
closing purchase transactions to terminate its options positions.

The fund anticipates utilizing municipal bond index futures to
protect against changes in the market value of the municipal
obligations
in its portfolio or that it intends to acquire.  Municipal bond index
futures contracts are based on an index of long-term municipal
obligations.  The index assigns relative values to the municipal
obligations included in the index, and fluctuates with changes in the
market value of the municipal obligations.  The contract is an
agreement
pursuant to which two parties agree to take or make delivery of an
amount of cash based upon the difference between the value of the index
at the close of the last trading day of the contract and the price at
which the index contract was originally written.  The acquisition or
sale of a municipal bond index futures contract enables the fund to
protect its assets from fluctuations in the value of tax-exempt
securities without actually buying or selling the securities.  The fund
may purchase and sell put and call options on municipal bond indexes
and
municipal bond index futures and enter into closing transactions with
respect to those options.

	Regulations of the Commodity Futures Trading Commission (the
"CFTC") applicable to the fund require that its transactions in futures
and options on futures be engaged in for "bona fide hedging" purposes
or
other permitted purposes, provided that the aggregate initial margin
deposits and premiums required to establish positions other than those
considered by the CFTC to be "bona fide hedging" will not exceed 5% of
the fund's net asset value, after taking into account unrealized
profits
and unrealized losses on any such contracts.  In addition, the fund
will
maintain cash and cash equivalents in a segregated account in an amount
at least equal to the commodity value of each long futures or options
position less any accrued profit on those positions held by a futures
commission merchant.  The fund's ability to trade in futures and
options
on futures may be limited to some extent by the requirements of the
Code
applicable to a regulated investment company described below under
"Taxes."

	Lending Portfolio Securities.  The fund is authorized to lend
securities it holds to brokers, dealers and other financial
organizations, but it will not lend securities to any affiliate of SSB
Citi unless the fund applies for and receives specific authority to do
so from the Securities and Exchange Commission ("SEC").  Loans of the
fund's securities, if and when made, may not exceed 33 1/3% of the
fund's assets taken at value.  The fund's loans of securities will be
collateralized by cash, letters of credit or Government Securities that
will be maintained at all times in a segregated account with the fund's
custodian in an amount at least equal to the current market value of
the
loaned securities.  From time to time, the fund may pay a part of the
interest earned from the investment of collateral received for
securities loaned to the borrower and/or a third party that is
unaffiliated with the fund and that is acting as a "finder."

	By lending its portfolio securities, the fund can increase its
income by continuing to receive interest on the loaned securities as
well as by investing the cash collateral in short-term instruments or
by
obtaining yield in the form of interest paid by the borrower when
Government Securities are used as collateral.  The fund will adhere to
the following conditions whenever it lends its securities: (1) the fund
must receive at least 100% cash collateral or equivalent securities
from
the borrower, which will be maintained by daily marking-to-market; (2)
the borrower must increase the collateral whenever the market value of
the securities loaned rises above the level of the collateral; (3) the
fund must be able to terminate the loan at any time; (4) the fund must
receive reasonable interest on the loan, as well as any dividends,
interest or other distributions on the loaned securities, and any
increase in market value; (5) the fund may pay only reasonable
custodian
fees in connection with the loan; and (6) voting rights on the loaned
securities may pass to the borrower, except that, if a material event
adversely affecting the investment in the loaned securities occurs, the
fund must terminate the loan and regain the fund's right to vote the
securities.

Risk Factors and Special Considerations
	Investment in the fund involves risk factors and special
considerations, such as those described below:

	Municipal Obligations.  Even though interest-bearing securities
are investments that promise a stable stream of income, their prices
are
inversely affected by changes in interest rates and, therefore, are
subject to the risk of market price fluctuations.  The values of
municipal obligations with longer remaining maturities typically
fluctuate more than those of similarly rated municipal obligations with
shorter remaining maturities.  The values of fixed income securities
also may be affected by changes in the rating or financial condition of
the issuing entities.

	Low-rated and Unrated Municipal Obligations.  Although they may
offer higher current yields than do higher rated securities, low-rated
and unrated securities generally involve greater volatility of price
and
risk of principal and income, including the possibility of default by,
or bankruptcy of, the issuers of the securities; the fund may incur
additional expenses to the extent it is required to seek recovery upon
a
default in the payment of principal or interest on its portfolio
holdings.  Lower-rated and unrated securities held by the fund may be
subordinated to the prior payment of senior indebtedness and traded in
markets that may be relatively less liquid than the market for higher
rated securities.  Moreover, because dealers may not maintain daily
markets in municipal obligations, retail secondary markets for many of
these securities may not exist.  The fund anticipates that, if a
secondary market for securities it wished to sell did not exist, the
fund could sell the securities only to institutional investors.  The
existence of limited markets for particular securities may diminish the
fund's ability to sell low-rated or unrated municipal obligations at
fair value to respond to changes in the economy or in the financial
markets.

	Municipal Leases.  Municipal leases in which the fund may invest
have special risks not normally associated with municipal obligations.
These obligations frequently contain "non-appropriation" clauses that
provide that the governmental issuer of the obligation has no
obligation
to make future payments under the lease or contract unless money is
appropriated for that purpose by the legislative body on a yearly or
other periodic basis.  Moreover, although a municipal lease will be
secured by financed equipment, the disposition of the equipment in the
event of foreclosure might prove difficult.  In order to limit the
risks, the fund will purchase either: (a) municipal leases rated in the
four highest categories by Moody's or S&P or (b) unrated municipal
leases purchased principally from domestic banks or other responsible
third parties that have entered into an agreement with the fund
providing the seller will either remarket or repurchase the municipal
leases within a short period after demand by the fund.  The fund will
not invest more than 10% of its assets in lease obligations that
contain
"non-appropriation" clauses and will purchase those "non-appropriation"
lease obligations only when the lease payments will commence
amortization of principal at an early date resulting in an average life
of seven years or less for the lease obligation.

	Non-Publicly Traded Securities.  The sale of securities that are
not traded publicly is typically restricted under the Federal
securities
laws.  As a result, the fund may be forced to sell these securities at
less than fair market value or may not be able to sell when SSB Citi
believes it desirable to do so.

	Illiquid Securities.  The fund's investments in illiquid
securities are subject to the risk that should the fund desire to sell
any of these securities when a ready buyer is not available at a price
the fund deems representative of their value, the value of the fund's
net assets could be adversely affected.

	Potential Legislation.  In past years, the Federal government has
enacted various laws that have restricted or diminished the income tax
exemption on various types of municipal obligations and may enact other
similar laws in the future.  If any such laws were enacted that would
reduce the availability of municipal obligations for investment by the
fund so as to affect fund shareholders adversely, the fund would
reevaluate its investment objective and policies and might submit
possible changes in the fund's structure to shareholders for their
consideration.  If legislation were enacted that would treat a type of
municipal obligation as taxable for Federal income tax purposes, the
fund would treat the security as a permissible Taxable Investment
within
the applicable limits set forth in the Prospectus and this SAI.

	Organization of the fund.  The fund is a closed-end investment
company.  Shares of closed-end investment companies frequently trade at
a discount from net asset value.  Since the fund's commencement of
operations, the fund's common stock has generally traded at a slight
discount from its net asset value per share.  The market value of
municipal obligations (and, accordingly, the fund's net asset value)
generally increases when interest rates decline and decreases when
interest rates rise.  Whether investors will realize gains or losses
upon the sale of common stock will not depend upon the fund's net asset
value, but will depend entirely upon whether the market price of the
common stock at the time of sale is above or below the original
purchase
price for the shares.  Since the market price of the fund's common
stock
will be determined by such factors as relative demand for and supply of
such shares in the market, general market and economic conditions and
other factors beyond the control of the fund, the fund cannot predict
whether the common stock will trade at, below or above net asset value.
For that reason, shares of the fund's common stock are designed
primarily for long-term investors, and investors in the fund's common
stock should not view the fund as a vehicle for trading purposes.

	Repurchase Agreements.  Repurchase agreements could involve
certain risks in the event of default or insolvency of the seller,
including possible delays or restrictions upon the fund's ability to
dispose of the underlying securities.  In evaluating these potential
risks, SSB Citi, acting under the supervision of the fund's Board of
Directors, and on an ongoing basis, monitors (1) the value of the
collateral underlying each repurchase agreement of the fund to ensure
that the value is at least equal to the total amount of the purchase
obligation, including interest, and (2) the creditworthiness of the
banks and dealers with which the fund enters into repurchase
agreements.

	When-Issued Securities.  Municipal obligations purchased on a
when-issued basis and the securities held in the fund's portfolio are
generally subject to changes in value (both generally changing in the
same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates.  Municipal obligations
purchased on a when-issued basis may expose the fund to risk because
they may experience these fluctuations prior to their actual delivery.
The fund will not accrue income with respect to a when-issued security
prior to its stated delivery rate.  Purchasing municipal obligations on
a when-issued basis can involve the additional risk that the yield
available in the market when the delivery takes place actually may be
higher than that obtained in the transaction itself.  A segregated
account of the fund consisting of cash or liquid securities equal at
all
times to the amount of the when-issued commitments will be established
and maintained with the fund's custodian.

	Financial Futures and Options.  Although the fund intends to
enter
into futures or options contracts only if an active market exists for
the contracts, no assurance can be given that an active market will
exist for the contracts at any particular time.  If it is not possible
to close a futures position in anticipation of adverse price movements,
the fund  would be required to make daily cash payments of variation
margin.  In those circumstances, an increase in the value of the
portion
of the portfolio being hedged, if any, may offset partially or
completely losses on the futures contract. No assurance can be given,
however, that the price of the securities being hedged will correlate
with the price movements in a futures contract and, thus, provide an
offset to losses on the futures contract or option on the futures
contract.  In addition, in light of the risk of an imperfect
correlation
between securities in the fund's portfolio that are the subject of a
hedging transaction and the futures or options contract used as a
hedging device, the hedge may not be fully effective because, for
example, losses on the portfolio securities may be in excess of gains
on
the futures contract or losses on the futures contract may be in excess
of gains on the portfolio securities that were the subject of the
hedge.
In an effort to compensate for the imperfect correlation of movements
in
the price of the securities being hedged and movements in the price of
futures contracts, the fund may enter into futures contracts or options
on futures contracts in a greater or lesser dollar amount than the
dollar amount of the securities being hedged if the historical
volatility of the futures contract has been less or greater than that
of
the securities.  This "over hedging" or "under hedging" may adversely
affect the fund's net investment results if market movements are not as
anticipated when the hedge is established.

	If the fund has hedged against the possibility of an increase in
interest rates adversely affecting the value of securities held in its
portfolio and rates decrease instead, the fund will lose part or all of
the benefit of the increased value of securities that it has hedged
because it will have offsetting losses in its futures or options
positions.  In addition, in those situations, if the fund has
insufficient cash, it may have to sell securities to meet daily
variation margin requirements on the futures contracts at a time when
it
may be disadvantageous to do so.  These sales of securities may, but
will not necessarily, be at increased prices that reflect the decline
in
interest rates.

Investment Restrictions
	The fund has adopted certain fundamental investment restrictions
that may not be changed without the prior approval of the holders of a
majority of the fund's outstanding voting securities.  A "majority of
the fund's outstanding voting securities" for this purpose means the
lesser of (a) 67% or more of the shares of the fund's common stock
present at a meeting of shareholders, if the holders of 50% of the
outstanding shares are present or represented by proxy at the meeting
or
(b) more than 50% of the outstanding shares.  For purposes of the
restrictions listed below, all percentage limitations apply immediately
after a purchase or initial investment, and any subsequent change in
any
applicable percentage resulting from market fluctuations does not
require elimination of any security from the fund's portfolio.

	Under its fundamental restrictions, the fund may not:

1.	Purchase securities other than municipal obligations and
Taxable Investments as those terms are described in the
Prospectus.

2.	Purchase securities (other than Government Securities) of any
issuer if as a result of the purchase more than 5% of the value
of the fund's total assets would be invested in the securities
of the issuer, except that up to 25% of the value of the fund's
total assets may be invested without regard to this 5%
limitation.

3.	Purchase more than 10% of the voting securities of any one
issuer, except that this limitation is not applicable to the
fund's investments in Government Securities.

4.	Borrow money, except for temporary or emergency purposes, or
for clearance of transactions, in amounts not exceeding 15% of
its total assets (not including the amount borrowed) and as
otherwise described in the Prospectus.  When the fund's
borrowings exceed 5% of the value of its total assets, the fund
will not make any additional investments.

5.	Sell securities short or purchase securities on margin, except
for such short-term credits as are necessary for the clearance
of transactions, but the fund may make margin deposits in
connection with transactions in options, futures and options on
futures.

6.	Underwrite any issue of securities, except to the extent that
the purchase of municipal obligations may be deemed to be an
underwriting.

7.	Purchase, hold or deal in real estate or oil and gas interests,
except that the fund may invest in municipal obligations
secured by real estate or interests in real estate.

8.	Invest in commodities, except that the fund may enter into
futures contracts, including those relating to indexes, and
options on futures contracts or indexes, as described in the
Prospectus.

9.	Lend any funds or other assets, except through purchasing
municipal obligations or Taxable Investments, lending portfolio
securities and entering into repurchase agreements consistent
with the fund's investment objective.

10.	Issue senior securities.

11.	Invest more than 25% of its total assets in the
securities of issuers in any single industry, except that this
limitation will not be applicable to the purchase of municipal
obligations and Government Securities.  For purposes of this
restriction, industrial development bonds, with respect to
which the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are
grouped together as an "industry."

12.	Make any investments for the purpose of exercising
control or management of any company.

DIRECTORS AND OFFICERS
	The overall management of the business and affairs of the fund is
vested in its Board of Directors.  The Board of Directors approves all
significant agreements between the fund and persons or companies
furnishing services to it, including the fund's agreements with SSB
Citi, the fund's custodian, transfer agent, dividend paying agent,
registrar and plan agent.  The day-to-day operations of the fund are
delegated to its officers and to SSB Citi, subject always to investment
objective and policies of the fund and to general supervision by the
fund's Board of Directors. The directors and officers of the fund,
their
addresses and their principal occupations for at least the past five
years are set forth below:



Name and Address
Position Held
with the fund
Principal Occupations
During the Past Five Years
*+Heath B. McLendon
(67)
7 World Trade Center
     45th Floor
New York NY 10048

Chairman of
the Board,
Chief
Executive
Officer and
President
Managing Director of Salomon
Smith Barney Inc.; President and
Chairman of 77 investment
companies affiliated with
Citigroup; President and
Director of SSB Citi; President
and Director of Travelers
Advisers, Inc. ("TIA").

+Martin Brody (79)
c/o HMK Associates
30 Columbia Turnpike
Florham Park, NJ
07932

Director
Consultant, HMK Associates;
Retired Vice Chairman of the
Board of Restaurant Associates
Corp.
+Allan J. Bloostein
(71)
717 Fifth Avenue
21st Floor
New York, NY 10022

Director
President, Allan J. Bloostein
Associates; retired Vice
Chairman of the Board of May
Department Stores Company;
Director of Taubman Centers,
Inc. and CVS Corporation.

+Dwight B. Crane (63)
Harvard Business
School
Soldiers Field Road
Boston, MA 02163

Director
Professor, Harvard Business
School; Director of Peer Review
Analysis.

+Robert A. Frankel
(73)
102 Grand Street
Croton-on-Hudson,
New York, NY 10520

Director
Managing Partner of Robert A.
Frankel Management Consultants;
formerly Corporate Vice
President of The Reader's Digest
Association, Inc.

+William R. Hutchinson
(58)
Amoco Corp.
200 East Randolph
Drive
Chicago, IL  60601

Director
Group Vice President, Mergers &
Acquitisions BP Amoco plc since
1/1/99; formerly Vice President,
Financial Operations of Amoco
Corp.; Director of Associated
Banks and Associated Bank Corp.

Peter M. Coffey (56)
Seven World Trade
Center
New York, New York
10013

Vice
President and
Investment
Officer
Managing Director of Salomon
Smith Barney Inc.; Vice
President of SSB Citi and
certain other investment
companies associated with
Citigroup.

Lewis E. Daidone (43)
125 Broad Street
New York, NY 10004

Senior Vice
President and
Treasurer
Managing Director of Salomon
Smith Barney; Senior Vice
President and Treasurer or
Executive Vice President and
Treasurer of 88 investment
companies affiliated with
Citgroup; Director and Senior
Vice President of SSB Citi and
TIA.
Christina T. Sydor
(50)
Seven World Trade
Center
New York, NY 10048
Secretary
Managing Director of Salomon
Smith Barney; Secretary of 60
investment companies associated
with Citigroup; General Counsel
and Secretary of SSB Citi and
TIA.

*	"Interested person" of the fund (as defined in the 1940 Act).
+	Director and/or trustee of other registered investment companies
with
which Salomon Smith Barney is affiliated.

	The fund pays each of its directors who is not a director,
officer
or employee of SSB Citi or any of its affiliates an annual fee of
$5,000
plus $500 for each Board of Directors meeting attended, and $100 for
each Board meeting held via telephone.  In addition, the fund will
reimburse these directors for travel and out-of-pocket expenses
incurred
in connection with Board of Directors meetings.  For the fiscal year
ended October 31, 2000, such expenses totaled $2,953.





Name
Aggregate
Compensati
on from
fund for
the fiscal
year ended
10/31/00
Pension or
Retirement
Benefits
Accrued as
part of fund
Expenses
Compensation
from fund
and fund
Complex for
the year
ended
12/31/00
Total Number
of funds for
Which
Director
Serves
Within fund
Complex





Martin Brody
$5,250
0
$138,600
20
Dwight Crane
$5,750
0
$155,363
23
Allan Bloostein
$5,250
0
$112,483
19
Robert Frankel
$5,750
0
$79,450
9
William R.
Hutchinson
$5,250
0
$49,350
7
*Heath B.
McLendon
0
0
0
77

Upon attainment of age 80, fund Directors are required to change to
emeritus status.  Directors Emeritus are entitled to serve in emeritus
status for a maximum of 10 years, during which time they are paid 50%
of the annual retainer fee and meeting fees otherwise applicable to
fund Directors, together with reasonable out-of-pocket expenses for
each meeting attended.  During the fund's last fiscal year $2,375 was
paid by the fund to Directors Emeritus.

*"Interested person" of the fund (as defined in the 1940 Act).

Principal Stockholders
	There are no persons known to the fund to be control persons of
the fund, as such term is defined in Section 2(a)(9) of the 1940 Act.
There is no person known to the fund to hold beneficially more than 5%
of the outstanding shares of the common stock.  The following person is
the only person holding of record more than 5% of the outstanding
shares
of common stock as of January 14, 2001:

Name and Address
of Record Owner
Amount of
Record Ownership
Percent of Common
Stock Outstanding
Cede & Co., as Nominee
for The Depository
Trust Company
P.O. Box 20
Bowling Green Station
New York, New York
10004
18,432,802.000
90.01%

	7,302,800 of the shares held of record by Cede & Co.,
representing
35.70% of the outstanding shares of common stock, were held by The
Depository Trust Company as nominee for Salomon Smith Barney,
representing accounts for which Salomon Smith Barney has discretionary
and non-discretionary authority. As of January 3, 2001, the directors
and officers of the fund, as a group, beneficially owned less than 1%
of
the fund's outstanding shares of common stock.



INVESTMENT MANAGER AND ADMINISTRATOR

	SSB Citi serves as the fund's investment adviser pursuant to a
written agreement dated December 31, 1994 (the "Advisory Agreement").
Subject to the supervision and direction of the fund's Board of
Directors, SSB Citi manages the fund's portfolio in accordance with the
fund's stated investment objective and policies, makes investment
decisions for the fund, places orders to purchase and sell securities
and employs professional portfolio managers and securities analysts who
provide research services to the fund.  SSB Citi bears all expenses in
connection with the performance of its services and pays the salaries
of
all officers or employees who are employed by both it and the fund.

	As compensation for SSB Citi's services rendered to the fund, the
fund pays a fee computed and paid monthly at an annual rate of 0.40% of
the value of the fund's average daily net assets.  For the fiscal years
ended October 31, 1998, 1999 and 2000 the fund paid SSB Citi  $786,802,
$776,676 and $725,096 respectively, in investment advisory fees.

	The Advisory Agreement was initially approved by the fund's Board
and by a majority of the directors who are not "interested persons" of
the fund ("Non-Interested Directors") on April 7, 1993 and by its
shareholders on June 9, 1993. The Advisory Agreement was last approved
on August 23, 2000 and, unless sooner terminated, will continue for
successive annual periods provided that such continuance is
specifically
approved at least annually: (1) by a majority vote of the Non-
Interested
Directors cast in person at a meeting called for the purpose of voting
on such approval; and (2) by the Board or by vote of a majority of the
outstanding voting securities (i.e., the holders of the common stock).

	Under the Advisory Agreement, SSB Citi will not be liable for any
error of judgment or mistake of law or for any loss suffered by the
fund
in connection with the Advisory Agreement, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of SSB
Citi in the performance of its duties or from reckless disregard of its
duties and obligations under the Advisory Agreement.  The Advisory
Agreement is terminable by vote of the Board or by the holders of a
majority of the common stock, at any time without penalty, on 60 days'
written notice to the Investment Manager.  The Advisory Agreement may
also be terminated by SSB Citi on 90 days' written notice to the fund.
The Advisory Agreement terminates automatically upon its assignment.

	SSB Citi also serves as administrator to the fund pursuant to a
written agreement dated June 1, 1994 (the "Administration Agreement").
SSB Citi calculates the net asset value of the fund's shares and
generally assists in all aspects of the fund's administration and
operation.  In addition, SSB Citi pays the salaries of all officers and
employees who are employed both by it and the fund, maintains office
facilities for the fund, furnishes the fund with statistical and
research data, clerical help and accounting, data processing,
bookkeeping, internal auditing and legal services and certain other
services required by the fund, prepares reports to the fund's
shareholders and prepares tax returns and reports to and filings with
the SEC and state blue sky authorities.  SSB Citi bears all expenses in
connection with the performance of its services.   As compensation for
SSB Citi's administration services rendered to the fund, the fund pays
a
fee computed and paid monthly at an annual rate of 0.20% of the value
of
the fund's average daily net assets.   For the 1998, 1999 and 2000
fiscal years, the fund paid SSB Citi $393,401, $388,338  and $362,548,
respectively, in administration fees.

	Pursuant to the Administration Agreement, SSB Citi will exercise
its best judgment in rendering the services listed above.  SSB Citi
will
not be liable for any error of judgment or mistake of law or for any
loss suffered by the fund in connection with the matters to which the
Administration Agreement relates except by reason of SSB Citi's willful
misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of SSB Citi's reckless disregard
of its obligations and duties under the Administration Agreement.  The
Administration Agreement will continue automatically for successive
annual periods provided that such continuance is specifically approved
at least annually by the Board including a majority of the Non-
Interested Directors, by vote cast in person at a meeting called for
the
purpose of voting such approval.   The Administration Agreement is
terminable, without penalty, on 60 days' written notice, by the Board
or
by vote of holders of a majority of the fund's shares, or upon 90 days'
written notice, by SSB Citi.

Code of Ethics.  Pursuant to Rule 17j-1 of the 1940 Act, the funds,
their investment advisers and principal underwriter have adopted codes
of ethics that permit personnel to invest in securities for their own
accounts, including securities that may be purchased or held by the
funds.  All personnel must place the interest of clients first and
avoid
activities, interests and relationships that might interfere with the
duty to make decisions in the best interests of the clients.  All
personal securities transactions by employees must adhere to the
requirements of the codes and must be conducted in such a manner as to
avoid any actual or potential conflict of interest, the appearance of
such a conflict, or the abuse of an employee's position of trust and
responsibility.

PORTFOLIO TRANSACTIONS AND TURNOVER
Portfolio Transactions
	Portfolio securities transactions for the fund are placed on
behalf of the fund by SSB Citi. In selecting brokers or dealers to
execute portfolio transactions for the fund, SSB Citi seeks the best
overall terms available. The Advisory Agreement provides that, in
assessing the best overall terms available for any transaction, SSB
Citi
will consider the factors it deems relevant, including the breadth of
the market in the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, for the specific transaction and on a continuing
basis.   In addition, the Advisory Agreement authorizes SSB Citi, in
selecting brokers or dealers, to execute a particular transaction, and,
in evaluating the best overall terms available, to consider the
brokerage and research services provided to the fund and/or other
accounts over which SSB Citi or an affiliate exercises investment
discretion.  SSB Citi's fee under the Advisory Agreement is not reduced
by reason of its receiving such brokerage and research services.

	The fund's portfolio securities ordinarily are purchased from and
sold to parties acting as either principal or agent.  Newly-issued
securities ordinarily are purchased directly from the issuer or from an
underwriter; other purchases and sales usually are placed with those
dealers from which it appears that the best price or execution will be
obtained.  Usually no brokerage commissions, as such, are paid by the
fund for such purchases and sales, although the price paid usually
includes an undisclosed compensation to the dealer acting as agent.
The
prices paid to underwriters of newly-issued securities usually include
a
concession paid by the issuer to the underwriter, and purchases of
after-market securities from dealers ordinarily are executed at a price
between the bid and asked price.  The fund has paid no brokerage
commissions since commencement of its operations.

	Although investment decisions for the fund are made independently
from those of other accounts managed by SSB Citi, investments of the
type the fund may make may also be made by those other accounts.  When
the fund and one or more other accounts managed by SSB Citi are
prepared
to invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by SSB Citi to be equitable to each.  In some cases, this
procedure may adversely affect the size of the position obtained for or
disposed of by the fund or the price paid or received by the fund.  The
fund may, from time to time, in accordance with an exemptive order
granted by the SEC, enter into principal transactions involving certain
money market instruments with dealers affiliated with SSB Citi.

	The fund's Board of Directors will review periodically the
commissions paid by the fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the
benefits inuring to the fund.

Portfolio Turnover
	The fund cannot accurately predict its portfolio turnover rate,
but anticipates that its annual turnover rate will not exceed 100%.
Portfolio turnover rate is calculated by dividing the lesser of the
fund's annual sales or purchases of portfolio securities by the monthly
average value of securities in the portfolio during the year, excluding
any portfolio security the maturity of which at the time of acquisition
was one year or less.  Higher portfolio turnover rates can result in
corresponding increases in brokerage commissions.  The fund will not
consider turnover rate a limiting factor in making investment decisions
consistent with its investment objective and policies.  For the 1998,
1999 and 2000 fiscal years, the fund's portfolio turnover rates were
57%,  27% and 27%, respectively.

VALUATION OF SHARES
	The fund's net asset value will be calculated as of the close of
regular trading on the New York Stock Exchange, Inc.  ("NYSE"),
currently 4:00 p.m., New York time, on the last day on which the NYSE
is
open for trading of each week and month.  Net asset value is calculated
by dividing the value of the fund's net assets (the value of its assets
less its liabilities, exclusive of capital stock and surplus) by the
total number of shares of common stock outstanding.  Investments in
Government Securities having a maturity of 60 days or less are valued
at
amortized cost.  All other securities and assets are taken at fair
value
as determined in good faith by or under the direction of the Board.

	The valuation of the fund's assets is made by SSB Citi after
consultation with an independent pricing service (the "Service").
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 quotation is available (which may
constitute a majority of the fund's portfolio securities), are carried
at fair value as determined by the Service.  The Service may use
electronic data processing techniques and/or a matrix system to
determine valuations. The procedures of the Service are reviewed
periodically by the officers of the fund under the general supervision
and responsibility of the Board, which may replace the Service at any
time if it determines it to be in the best interests of the fund to do
so.

STOCK PURCHASES AND TENDERS
	The fund may repurchase shares of its common stock in the open
market or in privately negotiated transactions when the fund can do so
at prices below their then current net asset value per share on terms
that the Board believes represent a favorable investment opportunity,
but has no obligation to do so.

	The market prices of the fund's shares will, among other things,
be determined by the relative demand for and supply of the shares in
the
market, the fund's investment performance, the fund's dividends and
yield and investor perception of the fund's overall attractiveness as
an
investment as compared with other investment alternatives.  Any
acquisition of common stock will decrease the total assets of the fund
and therefore have the effect of increasing the fund's expense ratio.
The fund may borrow money to finance the repurchase of shares subject
to
the limitations described in the Prospectus and this SAI.  Any interest
on the borrowings will reduce the fund's net income.

	If a tender offer is authorized to be made by the Portfolio's
Board, it will be an offer to purchase at a price equal to the net
asset
value of all (but not less than all) of the shares owned by the
shareholder (or attributed to him or her for Federal income tax
purposes
under Sections 318(a) and 302(c) of the Code).  A shareholder who
tenders all of the shares actually and constructively owned by that
shareholder will realize a taxable gain or loss depending upon the
amount of cash received and his or her basis in his or her shares.

TAXES
	As described above and in the Prospectus, the fund is designed to
provide investors with current income which is excluded from gross
income for Federal income tax purposes. The fund is not intended to
constitute a balanced investment program and is not designed for
investors seeking capital gains or maximum tax-exempt income
irrespective of fluctuations in principal. Investment in the fund would
not be suitable for tax-exempt institutions, qualified retirement
plans,
H.R. 10 plans and individual retirement accounts because such investors
would not gain any additional tax benefit from the receipt of tax-
exempt
income.

	The following is a summary of selected Federal income tax
considerations that may affect the fund and its shareholders. The
summary does not address all of the potential federal income tax
consequences that may be applicable to the fund or to all categories of
investors, some of which may be subject to special tax rules.  The
summary is not intended as a substitute for individual tax advice and
investors are urged to consult their own tax advisors as to the tax
consequences of an investment in the fund.

Taxation of the fund and its Investments
	The fund has qualified and intends to continue to qualify as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In addition, the fund
intends to satisfy conditions contained in the Code that will enable
interest from municipal obligations, excluded from gross income for
Federal income tax purposes with respect to the fund, to retain that
tax-exempt status when distributed to the shareholders of the fund
(that
is, to be classified as "exempt- interest" dividends of the fund).

	If it qualifies as a regulated investment company, the fund will
pay no Federal income taxes on its taxable net investment income (that
is, taxable income other than net realized capital gains) and its net
realized capital gains that are distributed to shareholders. To qualify
under Subchapter M of the Code, the fund must among other things: (1)
distribute to its shareholders at least 90% of its taxable net
investment income (for this purpose consisting of taxable net
investment
income and any net realized short-term capital gain in excess of net
realized long-term capital loss) and 90% of its tax-exempt net
investment income (reduced by certain expenses); (2) derive at least
90%
of its gross income from dividends, interest, payments with respect to
loans of securities, gains from the sale or other disposition of
securities, or other income (including, but not limited to, gains from
options, futures, and forward contracts) derived with respect to the
fund's business of investing in securities; and (3) diversify its
holdings so that at the end of each fiscal quarter of the fund (a) at
least 50% of the market value of the fund's assets is represented by
cash, U.S. government securities, securities of other regulated
investment companies and other securities, with those other securities
limited with respect to any one issuer, to an amount no greater than 5%
of the fund's assets and (b) not more than 25% of the market value of
the fund's assets is invested in the securities of any one issuer
(other
than U.S. government securities or securities of other regulated
investment companies) or of two or more issuers that the fund controls
and that are determined to be in the same or similar trades or
businesses or related trades or businesses.  As a regulated investment
company, the fund will be subject to a 4% non-deductible excise tax
measured with respect to certain undistributed amounts of ordinary
income and capital gain. The fund expects to pay dividends and
distributions necessary to avoid the application of this excise tax.

The fund may acquire securities which do not pay interest
currently, such as zero coupon or delayed interest securities.  As the
holder of such a security, the fund is required to include in taxable
or
tax-exempt income an amount of deemed interest known as "original issue
discount" that accrues on the security for the taxable year under
federal income tax law, even if the fund receives no payment on the
security during the year.  Because the fund must distribute annually
substantially all of its net taxable income and tax-exempt income,
including any accrued original issue discount, in order to qualify as a
regulated investment company and to avoid imposition of income tax and
the 4% excise tax, the fund may be required in a particular year to
distribute dividends in an amount that is greater than the total amount
the fund actually receives in interest or other distributions on the
securities it owns.  Those distributions will be made from the fund's
cash assets or from the proceeds of sales of portfolio securities, if
necessary.  The fund may realize capital gains or losses from those
sales, which would increase or decrease the fund's taxable income or
net
realized capital gains.

As described above in this SAI and in the Prospectus, the fund may
invest in financial futures contracts and options on financial futures
contracts that are traded on a U.S. exchange or board of trade. The
fund
anticipates that these investment activities will not prevent the fund
from qualifying as a regulated investment company. As a general rule,
these investment activities will increase or decrease the amount of
long-term and short-term capital gains or losses realized by the fund
and, thus, will affect the amount of capital gains distributed to the
fund shareholders.

	For Federal income tax purposes, gain or loss on the futures and
options described above (collectively referred to as "Section 1256
Contracts") would, as a general rule, be taxed pursuant to a special
"mark-to-market system." Under the mark-to-market system, the fund may
be treated as realizing a greater or lesser amount of gains or losses
than actually realized. As a general rule gain or loss on Section 1256
Contracts is treated as 60% long term capital gain or loss and 40%
short-term capital gain or loss, and as a result, the mark-to-market
system will generally affect the amount of capital gains or losses
taxable to the fund and the amount of distributions taxable to a
shareholder. Moreover, if the fund invests in both Section 1256
Contracts and offsetting positions to those contracts, then the fund
might not be able to receive the benefit of certain realized losses for
an indeterminate period of time. The fund expects that its activities
with respect to Section 1256 Contracts and offsetting positions to
those
Contracts (1) will not cause it or its shareholders to be treated as
receiving a materially greater amount of capital gains or distributions
than actually realized or received and (2) will permit it to use
substantially all of its losses for the fiscal years in which the
losses
actually occur (to the extent it realizes corresponding gains in such
year).

Any capital losses resulting from the disposition of securities or
other transactions can be used only to offset capital gains and cannot
be used to reduce the fund's ordinary taxable or tax-exempt income.
Any
unused capital losses may be carried forward by the fund for eight
years.

Taxation of the fund's Shareholders
	The fund anticipates that all dividends it pays, other than
dividends from Taxable Investments and market discount on municipal
obligations and from income or gain derived from securities
transactions
and from the use of certain of the investment techniques described
under
"Investment Objective and Policies" will be derived from interest on
municipal obligations and thus will be exempt-interest dividends that
may be excluded by shareholders from their gross income for Federal
income tax purposes if the fund satisfies certain asset percentage
requirements.  Distributions of the fund's net realized short-term
capital gains are taxable to shareholders of the fund as ordinary
income, and distributions of net realized long-term capital gains are
taxable to shareholders as long-term capital gains, regardless of the
length of time shareholders have held shares of common stock and
whether
the  distributions are received in cash or reinvested in additional
shares.  As a general rule, a shareholder's gain or loss on a sale of
his or her shares of common stock will be a long-term gain or loss if
he
or she has held his or her shares for more than one year and will be a
short-term capital gain or loss if he or she has held his or her shares
for one year or less.  Dividends and distributions paid by the fund
will
not qualify for the Federal dividends-received deduction for
corporations.

Dividends and other distributions by the fund are generally
treated under the Code as received by the shareholders at the time the
dividend or distribution is made.  However, any dividends or other
distributions declared by the fund in October, November or December and
made payable to shareholders of record in such a month would be treated
under the Code as if received by shareholders on December 31 of the
year
in which they are declared if they are paid in the following January.

If a shareholder purchases shares of common stock at a cost that
reflects an anticipated taxable dividend or distribution, such dividend
or distribution will be taxable even though it represents economically
in whole or in part a return of the purchase price.  Investors should
consider the tax implications of buying shares shortly prior to a
dividend distribution (other than an exempt-interest dividend).

Any allowable loss recognized by a shareholder on the sale of
shares held six months or less will be treated as long-term capital
loss
to the extent of any capital gain dividends received by the shareholder
with respect to the shares that are sold.  Certain losses may be
disallowed to the extent of exempt-interest dividends received, as
described below.  In addition, any loss realized on a sale of shares of
common stock may be disallowed under "wash sale" rules to the extent
the
shares disposed of are replaced with shares of the fund within a 61-day
period beginning 30 days before and ending 30 days after the
disposition
of the shares.  In such a case, the basis of the shares acquired will
be
adjusted to reflect the disallowed loss.  Any gain or loss realized
upon
a sale of shares (other than to the fund, which sales are discussed
below) by a shareholder who is not a dealer in securities will be
treated as capital gain or loss.

An amount received by a shareholder from the fund in exchange for
shares of the fund (pursuant to a repurchase of shares or a tender
offer
or otherwise) may be treated as a payment in exchange for the shares
tendered, which would result in taxable gain or loss as described
above.
However, if the amount received by a shareholder from the fund exceeds
the fair market value of the shares tendered, or if a shareholder does
not sell to the fund all of the shares of the fund owned or deemed to
be
owned by the shareholder, all or a portion of the amount received may
be
treated as a dividend taxable as ordinary income or as a return of
capital.  In addition, if a tender offer is made, any shareholders who
do not tender their shares could be deemed, under certain
circumstances,
to have received a taxable distribution of shares of the fund as a
result of their increased proportionate interest in the fund.

Exempt-Interest Dividends

Interest on indebtedness incurred by a shareholder to purchase or
carry shares of common stock is not deductible for Federal income tax
purposes to the extent it is deemed related to exempt-interest
dividends. If a shareholder receives exempt-interest dividends with
respect to any share of common stock and if the share is held by the
shareholder for six months or less, then any loss on the sale of the
share may, to the extent of the exempt-interest dividends, be
disallowed. The Code may also require a shareholder if he or she
receives exempt-interest dividends to treat as taxable income a portion
of certain otherwise non-taxable social security and railroad
retirement
benefit payments.  In addition, the portion of any exempt-interest
dividend paid by the fund that represents income derived from private
activity bonds held by the fund may not retain its tax-exempt status in
the hands of a shareholder who is a "substantial user" of a facility
financed by the bonds, or a "related person" of the substantial user.
Although the fund's exempt-interest dividends may be excluded by
shareholders from their gross income for Federal income tax purposes,
some or all of the fund's exempt-interest dividends may be a specific
preference item, or a component of an adjustment item, for purposes of
the Federal individual and corporate alternative minimum taxes.  The
receipt of dividends and distributions from the fund may affect a
foreign corporate shareholder's Federal "branch profits" tax liability
and the Federal "excess net passive income" tax liability of a
shareholder of an S corporation. Shareholders should consult their own
tax advisors to determine whether they are (1) "substantial users" with
respect to a facility or "related" to those users within the meaning of
the Code or (2) subject to a Federal alternative minimum tax, the
Federal "branch profits" tax, or the Federal "excess net passive
income"
tax.

Dividend Reinvestment Plan
	A shareholder of the fund receiving dividends or
distributions in additional shares purchased in the open market
pursuant
to the dividend reinvestment plan should be treated for Federal income
tax purposes as receiving a distribution in an amount equal to the
amount of money that a shareholder receiving cash dividends or
distributions receives and should have a cost basis in the shares
received equal to that amount.  With respect to distributions issued in
shares of the fund the amount of the distribution for tax purposes is
the amount of cash the shareholder would otherwise have received, and
the shareholder's tax basis in each such share received is such cash
amount.

Statements and Notices
	Statements as to the tax status of the dividends and
distributions received by shareholders of the fund are mailed annually.
These statements show the dollar amount of income excluded from Federal
income taxes and the dollar amount, if any, subject to Federal income
taxes.  The statements will also designate the amount of exempt
interest
dividends that are a specific preference item for purposes of the
Federal individual and corporate alternative minimum taxes.  The fund
will notify shareholders annually as to the interest excluded from
Federal income taxes earned by the fund with respect to those states
and
possessions in which the fund has or had investments. The dollar amount
of dividends paid by the fund that is excluded from Federal income
taxation and the dollar amount of dividends paid by the fund that is
subject to Federal income taxation, if any, will vary for each
shareholder depending upon the size and duration of the shareholder's
investment in the fund. To the extent that the fund earns taxable net
investment income, it intends to designate as taxable dividends the
same
percentage of each day's dividend as its taxable net investment income
bears to its total net investment income earned on that day. Therefore,
the percentage of each day's dividend designated as taxable, if any,
may
vary from day to day.

Backup Withholding
	If a shareholder fails to furnish a correct taxpayer
identification number, fails to report fully dividend or interest
income, or fails to certify that he has provided a correct taxpayer
identification number and that he is not subject to "backup
withholding," the shareholder may be subject to a 31% "backup
withholding" tax with respect to (1) taxable dividends and
distributions
and (2) the proceeds of any sales or repurchases of shares of common
stock. An individual's taxpayer identification number is his or her
social security number. The 31% backup withholding tax is not an
additional tax and may be credited against a taxpayer's Federal income
tax liability.

ADDITIONAL INFORMATION
Legal Matters
	Willkie Farr & Gallagher serves as counsel to the fund.  The
Directors who are not "interested persons" of the fund have selected
Stroock & Stroock & Lavan LLP as their counsel.

Independent Public Accountants
	KPMG LLP, 757 Third Avenue, New York, New York 10017, has
been selected to serve as the fund's independent auditor to examine and
report on the fund's financial statements and highlights for the fiscal
year ending October 31, 2001.

Custodian
	PFPC Trust Company is located at 8800 Tinicum Blvd.,
Philadelphia, Pennsylvania 19153, and serves as the fund's custodian
pursuant to a custody agreement.  Under the custody agreement, PNC Bank
holds the fund's portfolio securities and keeps all necessary accounts
and records.  The assets of the fund are held under bank custodianship
in compliance with the 1940 Act.



Transfer Agent

	PFPC Global Fund Services ("PFPC") is located at 101 Federal
Street, Boston, Massachusetts 02110, and pursuant to a transfer agency
agreement serves as the fund's transfer agent.  Under the transfer
agency agreement, PFPC maintains the shareholder account records for
the
fund, handles certain communications between shareholders and the fund,
and distributes dividends and distributions payable by the fund.

FINANCIAL STATEMENTS
	The fund will send unaudited quarterly and semi-annual
financial statements and audited annual financial statements of the
fund
to shareholders, including a list of the portfolio of investments held
by the fund.

	The audited financial statements for the fiscal year ended
October 31, 2000 are incorporated by reference into this SAI from the
fund's 2000 Annual Report.  Copies of the Annual Report may be obtained
from any Salomon Smith Barney Financial Consultant or by calling or
writing to the fund at the telephone number or address set forth on the
cover page of this SAI.


APPENDIX
DESCRIPTION OF MOODY'S, S&P AND FITCH RATINGS
Description of Moody's Municipal Bond Ratings:
	Aaa - Bonds that are rated Aaa are judged to be of the best
quality,
carry the smallest degree of investment risk and are generally referred
to as
"gilt edge." Interest payments with respect to these bonds are
protected by a
large or by an exceptionally stable margin, and principal is secure.
Although
the various protective elements applicable to these bonds are likely to
change, those changes are most unlikely to impair the fundamentally
strong
position of these bonds.

	Aa - Bonds that are rated Aa are judged to be of high quality by
all
standards and together with the Aaa group comprise what are generally
known as
high grade bonds.  They are rated lower than the best bonds because
margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or other elements may
be
present that make the long-term risks appear somewhat larger than in
Aaa
securities.

	A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest with respect to these
bonds
are considered adequate, but elements may be present that suggest a
susceptibility to impairment sometime in the future.

	Baa - Bonds rated Baa are considered to be medium grade
obligations,
that is they are neither highly protected nor poorly secured.  Interest
payment and principal security appear adequate for the present but
certain
protective elements may be lacking or may be characteristically
unreliable
over any great length of time.  These bonds lack outstanding investment
characteristics and may have speculative characteristics as well.

	Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured.  Often the
protection of interest and principal payments may be very moderate and
thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

	Moody's applies the numerical modifiers 1, 2 and 3 in each
generic
rating classification from Aa through B.  The modifier 1 indicates that
the
security ranks in the higher end of its generic rating category; the
modifier
2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue
ranks in the lower end of its generic rating category.

Description of Moody's Municipal Note Ratings:
	Moody's ratings for state and municipal notes and other short-
term
loans are designated Moody's Investment Grade (MIG) and for variable
demand
obligations are designated Variable Moody's Investment Grade (VMIG).
This
distinction recognizes the differences between short-term credit risk
and
long-term risk.  Loans bearing the designation MIG 1/VMIG 1 are of the
best
quality, enjoying strong protection from established cash flows of
funds for
their servicing or from established and broad-based access to the
market for
refinancing, or both.  Loans bearing the designation MIG 2/VMIG 2 are
of high
quality, with margins of protection ample, although not as large as the
preceding group.  Loans bearing the designation MIG 3/VMIG 3 are of
favorable
quality, with all security elements accounted for but lacking the
undeniable
strength of the preceding grades.  Market access for refinancing, in
particular, is likely to be less well established.

Description of Moody's Commercial Paper Ratings:
	The rating Prime-1 is the highest commercial paper rating
assigned by
Moody's.  Issuers rated Prime-1 (or related supporting institutions)
are
considered to have a superior capacity for repayment of short-term
promissory
obligations.

	Issuers rated Prime-2 (or related supporting institutions) are
considered to have a strong capacity for repayment of short-term
promissory
obligations normally evidenced by many of the characteristics of
issuers rated
P-1 but to a lesser degree.  Earnings trends and coverage ratios, while
sound,
will be more subject to variation.  Capitalization characteristics,
while
still appropriate, may be more affected by external conditions.  Ample
alternative liquidity is maintained.

Description of S&P Municipal Bond Ratings:
	AAA - These bonds are the obligations of the highest quality and
have
the strongest capacity for timely payment of debt service.

	General Obligation Bonds Rated AAA - In a period of economic
stress,
the issuers of these bonds will suffer the smallest declines in income
and
will be least susceptible to autonomous decline.  Debt burden is
moderate.  A
strong revenue structure appears more than adequate to meet future
expenditure
requirements.  Quality of management appears superior.

	Revenue Bonds Rated AAA - Debt service coverage with respect to
these
bonds has been, and is expected to remain, substantial.  Stability of
the
pledged revenues is also exceptionally strong due to the competitive
position
of the municipal enterprise or to the nature of the revenues.  Basic
security
provisions (including rate covenant, earnings test for issuance of
additional
bonds, debt service reserve requirements) are rigorous.  There is
evidence of
superior management.

	AA - The investment characteristics of bonds in this group are
only
slightly less marked than those of the prime quality issues.  Bonds
rated AA
have the second strongest capacity for payment of debt service.

	A - Principal and interest payments on bonds in this category are
regarded as safe although the bonds are somewhat more susceptible to
the
adverse effects of changes in circumstances and economic conditions
than bonds
in higher rated categories.  This rating describes the strongest
capacity for
payment of debt service.

	General Obligation Bonds Rated A - There is some weakness, either
in
the local economic base, in debt burden, in the balance between
revenues and
expenditures, or in quality of management.  Under certain adverse
circumstances, any one such weakness might impair the ability of the
issuer to
meet debt obligations at future date.

	Revenue Bonds Rated A - Debt service is good, but not
exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues.  Basic
security
provisions, while satisfactory, are less stringent.  Management
performance
appearance appears adequate.

	BBB - The bonds in this group are regarded as having an adequate
capacity to pay interest and repay principal.  Whereas bonds in this
group
normally exhibit adequate protection parameters, adverse economic
conditions
or changing circumstances are more likely to lead to a weakened
capacity to
pay interest and repay principal for debt in this category than in
higher
rated categories.  Bonds rated BBB have the fourth strongest capacity
for
payment of debt service.

	BB - Bonds rated BB are regarded, on balance, as predominately
speculative with respect to capacity to pay interest and repay
principal in
accordance with the terms of the obligation.  BB indicates the lowest
degree
of speculation.  While such bonds will likely have some quality and
protective
characteristics, these are outweighed by large uncertainties or major
risk
exposures to adverse conditions. S&P's letter ratings may be modified
by the
addition of a plus or minus sign, which is used to show relative
standing
within the major rating categories, except in the AAA category.

Description of S&P Municipal Note Ratings:
	Municipal notes with maturities of three years or less are
usually
given note ratings (designated SP-1, -2 or -3) to distinguish more
clearly the
credit quality of notes as compared to bonds.  Notes rated SP-1 have a
very
strong or strong capacity to pay principal and interest.  Those issues
determined to possess overwhelming safety characteristics are given the
designation of SP-1+.  Notes rated SP-2 have a satisfactory capacity to
pay
principal and interest.

Description of S&P Commercial Paper Ratings:
	Commercial paper rated A-1 by S&P indicates that the degree of
safety
regarding timely payment is either overwhelming or very strong.  Those
issues
determined to possess overwhelming safety characteristics are denoted
A-1+.
Capacity for timely payment on commercial paper rated A-2 is strong,
but the
relative degree of safety is not as high as for issues designated A-1.

Description of Fitch Municipal Bond Ratings:
	AAA - Bonds rated AAA by Fitch have the lowest expectation of
credit
risk.  The obligor has an exceptionally strong capacity for timely
payment of
financial commitments which is highly unlikely to be adversely affected
by
foreseeable events.

	AA - Bonds rated AA by Fitch have a very low expectation of
credit
risk.  They indicate very strong capacity for timely payment of
financial
commitment.  This capacity is not significantly vulnerable to
foreseeable
events.

	A - Bonds rated A by Fitch are considered to have a low
expectation
of credit risk.  The capacity for timely payment of financial
commitments is
considered to be strong, but may be more vulnerable to changes in
economic
conditions and circumstances than bonds with higher ratings.

	BBB - Bonds rated BBB by Fitch currently have a low expectation
of
credit risk.  The capacity for timely payment of financial commitments
is
considered to be adequate.  Adverse changes in economic conditions and
circumstances, however, are more likely to impair this capacity .  This
is the
lowest investment grade category assigned by Fitch.

	Plus and minus signs are used by Fitch to indicate the relative
position of a credit within a rating category.  Plus and minus signs
however,
are not used in the AAA category

Description of Fitch Short-Term Ratings:
	Fitch's short-term ratings apply to debt obligations that are
payable
on demand or have original maturities of generally up to three years,
including commercial paper, certificates of deposit, medium-term notes,
and
municipal and investment notes.

	The short-term rating places greater emphasis than a long-term
rating
on the existence of liquidity necessary to meet financial commitment in
a
timely manner.

	Fitch's short-term ratings are as follows:

	F1+ - Issues assigned this rating are regarded as having the
strongest capacity for timely payments of financial commitments.  The
"+"
denotes an exceptionally strong credit feature.

	F1 - Issues assigned this rating are regarded as having the
strongest
capacity for timely payment of financial commitments.

	F2 - Issues assigned this rating have a satisfactory capacity for
timely payment of financial commitments, but the margin of safety is
not as
great as in the case of the higher ratings.

	F3 - The capacity for the timely payment of financial commitments
is
adequate; however, near-term adverse changes could result in a
reduction to
non-investment grade.




1
G:\SB Fund Accounting\Fund Accounting\Legal\FUNDS\#MHF\2001\Secdocs\SAI
 2001.doc


A-4



PART C - OTHER INFORMATION

Item 24. Financial Statements and Exhibits


(1)	Financial Statements:

Included in Part A:

*Financial Highlights

- - Included in Part B:

*The Registrant's Annual Report for the fiscal year ended
October 31, 2000 and Report of Independent Accountants dated
December 11, 2000 are incorporated by reference to the
definitive N-30D filed on January 5, 2001, Accession
#0001005477-01-000060.


(2)	Exhibits:

(a)(i)	Articles of Incorporation are incorporated by
reference to the Registrant's Registration Statement,
Registration No.33-20507, filed on March 8, 1988 (the
"Registration Statement").

(ii)	First Amendment to Articles of Incorporation is
incorporated by reference to Amendment No. 2 to the
Registration Statement, filed on October 24, 1988.

(iii)	Second Amendment to Articles of Incorporation is
incorporated by reference to Amendment No. 3 to the
Registration Statement, filed on November 17, 1988.

(b)(i)	Amended Bylaws of Registrant are incorporated by
reference to Amendment No. 3 to the Registration Statement,
filed on November 17, 1988.

(ii)	Amendment to the Amended Bylaws of Registrant are
incorporated by reference to Amendment No. 4 to the
Registration Statement, filed on March 1, 1990.

(c)	Not Applicable.

(d)	Specimen Certificate of Common Stock, par value $.01 per
share is incorporated by reference to Amendment No. 3 to
the Registration Statement, filed on November 17, 1988.

(e) Dividend Reinvestment Plan is incorporated by reference to
Amendment No. 11 to
Registration Statement, filed on January 15, 1999.

(f)	Not Applicable.

(g)(i)	Form of Investment Advisory Agreement between
Registrant and Greenwich Street Advisors (SSB Citi Fund
Management LLC).

(h)	Form of Distribution Agreement between Registrant and Smith
Barney Shearson.

(i)	Not Applicable.

(j)	Form of Custody Agreement between Registrant and PNC Bank,
National Association is incorporated by reference to Post-
Effective Amendment No. 9 to the Registration Statement,
filed on January 13, 1997.

(k)(i)	Form of Administration Agreement between Registrant
and Smith Barney Mutual Funds Management Inc. is
incorporated by reference to Post-Effective Amendment No. 9
to the Registration Statement, filed on January 13, 1997.

(l)	Opinion and Consent of Counsel is incorporated by reference
to Pre-Effective Amendment No.1 to the Registration
Statement.

(m)	Not Applicable.

(n)	Consent of  Independent Auditors (filed herewith).

(o)	Not Applicable.

(p)(i)	Subscription Agreement between Registrant and
Shearson incorporated by reference to Amendment No. 3 to
the Registration Statement, filed on November 17, 1988.

(p)(ii)	Code of Ethics of SSB Citi (filed herewith)

(q)	Not Applicable.

(r)	Financial Data Schedule for Registrant as of October 31,
2000 (filed herewith).

Item 25.	Marketing Arrangements

None.

Item 26.	Other Expenses of Issuance and Distribution

The following table sets forth the expenses to be incurred in
connection with the offering described in this Registration
Statement:

Securities and Exchange Commission Fees	$0
Printing and Engraving Expenses		$9000
Legal Fees				$0
Accounting Expenses			$0
Miscellaneous Expenses			$0

Item 27.	Persons Controlled by or Under Common Control

None

Item 28.	Number of Holders of Securities

				Number of Record Stockholders
Title of Class			as of February 14, 2001

20,482.327.044
Shares of Common Stock,
par value $0.01 per share	1,223




Item 29.	Indemnification

Under Article VII of Registrant's Articles of Incorporation, any
past or present director or officer of Registrant is indemnified to
the fullest extent permitted by law against liability and all
expenses reasonably incurred by him in connection with any action,
suit or proceeding to which he may be a party or otherwise involved
by reason or his being or having been a director or officer of
Registrant.  This provision does not authorize indemnification when
it is determined that the director or officer would otherwise be
liable to Registrant or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
his duties.  Expenses may be paid by Registrant in advance of the
final disposition of any action, suit or proceeding upon receipt of
an undertaking by a director or officer to repay those expenses to
Registrant in the event that it is ultimately determined that
indemnification of the expenses is not authorized under Registrant's
Articles of Incorporation.

Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "Securities Act"), may be
permitted to Directors, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise,
Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.

Item 30.	Business and Other Connections of Investment Adviser

See "Management of the Fund" in the Prospectus.



SSB Citi Fund Management LLC ("SSB Citi") a New York corporation, is
a registered investment adviser and is wholly owned by Salomon Smith
Barney Holdings Inc., which in turn is wholly owned by Citigroup,
Inc.  SSB Citi is primarily engaged in the investment advisory
business. Information as to executive officers and directors of
Funds Management is included in its Form ADV filed with the
Securities and Exchange Commission (Registration number 801-3387)
and is incorporated herein by reference.


Item 31.	Location of Accounts and Records


SSB Citi Fund Management LLC
Seven World Trade Center
New York, New York 10048


PFPC Global Fund Services
101 Federal Street
Boston, Massachusetts 02109

PFPC Trust Company
8800 Tinicum Boulevard
Philadelphia, Pennsylvania 19153

Item 32.	Management Services

None.

Item33.	Undertakings

1.	Not Applicable.

2.	Not Applicable.

3.	Not Applicable.

4.	The Fund hereby undertakes:

(a)	To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:

(1)	to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "Act");

(2)	to reflect in the Prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
Registration Statement; and

(3)	to include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.

(b)	For the purpose of determining any liability under the Act,
each post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(c)	Not Applicable.

5.	Not Applicable

6.	The Fund undertakes to send by first class mail or other means
designed to ensure equally prompt delivery, within two business
days of receipt of a written or oral request, any Statement of
Additional Information.


SIGNATURES

	Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant, MUNICIPAL HIGH INCOME FUND INC., has duly caused this
Amendment to the Registration Statement on Form N-2 to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City
of New York, State of New York on the    16th     day of February,
2001.

MUNICIPAL HIGH INCOME FUND INC.



By: /s/ Heath B. McLendon
Heath B. McLendon
Chief Executive Officer


WITNESS our hands on the date set forth below.

	Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement and the above
Power of Attorney has been signed below by the following persons in the
capacities and on the dates indicated.

Signature			Title			Date


 /s/ Heath B. McLendon
Heath B. McLendon		Chairman of the Board
				Chief Executive Officer	2/16/2001
/s/ Lewis E. Daidone
Lewis E. Daidone			Treasurer (Chief Financial
				and Accounting Officer)	2/16/2001



/s/ Allan J. Bloostein*
Allan J. Bloostein			Director			2/16/2001


/s/ Martin Brody*
Martin Brody			Director			2/16/2001


/s/ Dwight B. Crane*
Dwight B. Crane			Director			2/16/2001


/s/ Robert A. Frankel*
Robert A. Frankel		Director			2/16/2001


/s/ William R. Hutchinson*
William Hutchinson		Director			2/16/2001


*Signed by Heath B. McLendon, their duly authorized attorney-in-fact,
pursuant to power-of-attorney dated December 3, 1996.

EXHIBIT INDEX

2(n)	Auditors' Consent

2(p)	Code of Ethics of SSB Citi

2(r)	Financial Data Schedule


</TEXT>
</DOCUMENT>
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<FILENAME>0002.txt
<TEXT>








Independent Auditors' Consent



To the Shareholders and Board of Directors of
Managed Municipals Portfolio II Inc.:

We consent to the incorporation by reference, in this Prospectus and
Statement of Additional Information, of our report dated October 15,
2000, on the statement of assets and liabilities for the Managed
Municipals Portfolio II Inc. as of August 31, 2000 and the related
statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period
then ended and the financial highlights for each of the years in the
five-year period then ended.  These financial statements and financial
highlights and our report thereon are included in the Annual Report of
the Fund as filed on Form N-30D.

We also consent to the references to our firm under the headings
"Financial Highlights" and "Independent Auditors" in the Prospectus
and "Independent Public Accountants" in the Statement of Additional
Information.



			KPMG LLP


New York, New York
November 22, 2000


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<TEXT>

PERSONAL INVESTMENT POLICY
FOR
SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA
AND CERTAIN REGISTERED INVESTMENT COMPANIES
SSB Citi Asset Management Group ("SSB Citi") , and those U.S.-
registered investment companies advised or managed by SSB Citi
that have adopted this policy ("Funds"), have adopted this policy
on securities transactions in order to accomplish two goals:
first, to minimize conflicts and potential conflicts of interest
between employees of SSB Citi and SSB Citi's clients (including
the Funds), and between Fund directors or trustees and their
Funds, and second, to provide policies and procedures consistent
with applicable law, including Rule 17j-1 under the Investment
Company Act of 1940, to prevent fraudulent or manipulative
practices with respect to purchases or sales of securities held
or to be acquired by client accounts. All U.S. employees of SSB
Citi, including employees who serve as Fund officers or
directors, and all directors or trustees ("directors") of each
Fund, are Covered Persons under this policy.  Other Covered
Persons are described in Section II below.
I.	Statement of Principles - All SSB Citi employees owe a
fiduciary duty to SSB Citi's clients when conducting their
personal investment transactions.  Employees must place the
interests of clients first and avoid activities, interests
and relationships that might interfere with the duty to
make decisions in the best interests of the clients.  All
Fund directors owe a fiduciary duty to each Fund of which
they are a director and to that Fund's shareholders when
conducting their personal investment transactions.  At all
times and in all matters Fund directors shall place the
interests of their Funds before their personal interests.
The fundamental standard to be followed in personal
securities transactions is that Covered Persons may not
take inappropriate advantage of their positions.
All personal securities transactions by Covered Persons
shall adhere to the requirements of this policy and shall
be conducted in such a manner as to avoid any actual or
potential conflict of interest, the appearance of such a
conflict, or the abuse of the person's position of trust
and responsibility.  While this policy is designed to
address both identified conflicts and potential conflicts,
it cannot possibly be written broadly enough to cover all
potential situations.  In this regard, Covered Persons are
expected to adhere not only to the letter, but also the
spirit of the policies contained herein.
Employees are reminded that they also are subject to other
Citigroup policies, including policies on insider trading,
the purchase and sale of securities listed on any
applicable SSB Citi restricted list, the receipt of gifts
and service as a director of a publicly traded company.
Employees must never trade in a security or commodity while
in possession of material, non-public information about the
issuer or the market for those securities or commodities,
even if the employee has satisfied all other requirements
of this policy.
The reputation of SSB Citi and its employees for
straightforward practices and integrity is a priceless
asset, and all employees have the duty and obligation to
support and maintain it when conducting their personal
securities transactions.

II.	Applicability - SSB Citi Employees - This policy applies to
all U.S. employees of SSB Citi, including part-time
employees. Each employee, including employees who serve as
Fund officers or directors, must comply with all of the
provisions of the policy applicable to SSB Citi employees
unless otherwise indicated. Certain employees are
considered to be "investment personnel" (i.e., portfolio
managers, traders and research analysts (and each of their
assistants)), and as such, are subject to certain
additional restrictions outlined in the policy. All other
employees of SSB Citi are considered to be "advisory
personnel."
Generally, temporary personnel and consultants working in
any SSB Citi business are subject to the same provisions of
the policy as full-time employees, and their adherence to
specific requirements will be addressed on a case-by-case
basis.
The personal investment policies, procedures and
restrictions referred to herein also apply to an employee's
spouse and minor children. The policies also apply to any
other account over which the employee is deemed to have
beneficial ownership. This includes: accounts of any
immediate family members sharing the same household as the
employee; accounts of persons or other third parties for
whom the employee exercises investment discretion or gives
investment advice; a legal vehicle in which the employee
has a direct or indirect beneficial interest and has power
over investment decisions; accounts for the benefit of a
third party (e.g., a charity) which may be directed by the
employee (other than in the capacity of an employee); and
any account over which the employee may be deemed to have
control. For a more detailed description of beneficial
ownership, see Exhibit A attached hereto.
These policies place certain restrictions on the ability of
an employee to purchase or sell securities that are being
or have been purchased or sold by an SSB Citi managed fund
or client account.  The restrictions also apply to
securities that are "related" to a security being purchased
or sold by an SSB Citi managed fund or client account.  A
"related security" is one whose value is derived from the
value of another security (e.g., a warrant, option or an
indexed instrument).
Fund Directors - This policy applies to all directors of
Funds that have adopted this policy.  The personal
investment policies, procedures and restrictions that
specifically apply to Fund directors apply to all accounts
and securities in which the director has direct or indirect
beneficial ownership.  See Exhibit A attached hereto for a
more detailed description of beneficial ownership.
Securities are defined as stocks, notes, bonds, closed-end
mutual funds, debentures, and other evidences of
indebtedness, including senior debt, subordinated debt,
investment contracts, commodity contracts, futures and all
derivative instruments such as options, warrants and
indexed instruments, or, in general, any interest or
instrument commonly known as a "security."
III.	Enforcement - It is the responsibility of each Covered
Person to act in accordance with a high standard of conduct
and to comply with the policies and procedures set forth in
this document.  SSB Citi takes seriously its obligation to
monitor the personal investment activities of its
employees.  Any violation of this policy by employees will
be considered serious, and may result in disciplinary
action, which may include the unwinding of trades,
disgorgement of profits, monetary fine or censure, and
suspension or termination of employment.  Any violation of
this policy by a Fund director will be reported to the
Board of Directors of the applicable Fund, which may impose
such sanctions as it deems appropriate.
IV. Opening and Maintaining Employee Accounts - All employee
brokerage accounts, including spouse accounts, accounts for
which the employee is deemed to have beneficial ownership,
and any other accounts over which the employee and/or
spouse exercise control, must be maintained either at
Salomon Smith Barney ("SSB") or at Citicorp Investment
Services ("CIS").   For spouses or other persons who, by
reason of their employment, are required to conduct their
securities, commodities or other financial transactions in
a manner inconsistent with this policy, or in other
exceptional circumstances, employees may submit a written
request for an exemption to the Compliance Department.  If
approval is granted, copies of trade confirmations and
monthly statements must be sent to the Compliance
Department.  In addition, all other provisions of this
policy will apply.
V.  Excluded Accounts and Transactions - The following types of
accounts/transactions need not be maintained at SSB or CIS,
nor are they subject to the other restrictions of this
policy:
1. Accounts at outside mutual funds that hold only
shares of open-end funds purchased directly from
that fund company. Note: transactions relating to
closed-end funds are subject to the pre-clearance,
blackout period and other restrictions of this
policy;
2. Estate or trust accounts in which an employee or
related person has a beneficial interest, but no
power to affect investment decisions.  There must
be no communication between the account(s) and the
employee with regard to investment decisions prior
to execution.  The employee must direct the
trustee/bank to furnish copies of confirmations
and statements to the Compliance Department;
3. Fully discretionary accounts managed by either an
internal or external registered investment adviser
are permitted and may be custodied away from SSB
and CIS if (i) the employee receives permission
from the Regional Director of Compliance and the
unit's Chief Investment Officer, and (ii) there is
no communication between the manager and the
employee with regard to investment decisions prior
to execution.  The employee must designate that
copies of trade confirmations and monthly
statements be sent to the Compliance Department;
4. Employees may participate in direct investment
programs which allow the purchase of securities
directly from the issuer without the
intermediation of a broker/dealer provided that
the timing and size of the purchases are
established by a pre-arranged, regularized
schedule (e.g., dividend reinvestment plans).
Employees must pre-clear the transaction at the
time that the dividend reinvestment plan is being
set up.  Employees also must provide documentation
of these arrangements and direct periodic (monthly
or quarterly) statements to the Compliance
Department; and
5. In addition to the foregoing, the following types
of securities are exempted from pre-clearance,
blackout periods, reporting and short-term trading
requirements: open-ended mutual funds; open-end
unit investment trusts; U.S. Treasury bills, bonds
and notes; mortgage pass-throughs (e.g. Ginnie
Maes) that are direct obligations of the U.S.
government; bankers acceptances; bank certificates
of deposit; commercial paper; and high quality
short-term debt instruments (meaning any
instrument that has a maturity at issuance of less
than 366 days and that is rated in one of the two
highest rating categories by a nationally
recognized statistical rating organization, such
as S&P or Moody's), including repurchase
agreements.
VI.	Securities Holding Period/Short-Term Trading - Securities
transactions must be for investment purposes rather than
for speculation.  Consequently, employees may not profit
from the purchase and sale, or sale and purchase, of the
same or equivalent securities within sixty (60) calendar
days, calculated on a First In, First Out (FIFO) basis
(i.e., the security may be sold on the 61st  day). Citigroup
securities received as part of an employee's compensation
are not subject to the 60-day holding period.  All profits
from short-term trades are subject to disgorgement.
However, with the prior written approval of both a Chief
Investment Officer and the Regional Director of Compliance,
and only in rare and/or unusual circumstances, an employee
may execute a short-term trade that results in a
significant loss or in break-even status.
VII.	Pre-Clearance - All SSB Citi employees must pre-clear all
personal securities transactions (see Section V for a
listing of accounts, transactions and securities that do
not require pre-clearance). A copy of the pre-clearance
form is attached as Exhibit B.  In addition, employees are
prohibited from engaging in more than twenty (20)
transactions in any calendar month, except with prior
written approval from their Chief Investment Officer, or
designee.  A transaction must not be executed until the
employee has received the necessary approval.  Pre-
clearance is valid only on the day it is given.  If a
transaction is not executed on the day pre-clearance is
granted, it is required that pre-clearance be sought again
on a subsequent day (i.e., open orders, such as limit
orders, good until cancelled orders and stop-loss orders,
must be pre-cleared each day until the transaction is
effected).  In connection with obtaining approval for any
personal securities transaction, employees must describe in
detail any factors which might be relevant to an analysis
of the possibility of a conflict of interest.  Any trade
that violates the pre-clearance process may be unwound at
the employee's expense, and the employee will be required
to absorb any resulting loss and to disgorge any resulting
profit.
In addition to the foregoing, the CGAM NA Director of
Global Equity Research, or his designate, must approve all
personal securities transactions for members of the CGAM
Research Department prior to pre-clearance from the
Compliance Department as set forth in this section.  Pre-
approval by the Director of Research, or his designate, is
in addition to and does not replace the requirement for the
pre-clearance of all personal securities transactions.
VIII.	Blackout Periods - No Covered Person shall purchase or
sell, directly or indirectly, any security in which he/she
has, or by reason of the transaction acquires, any direct
or indirect beneficial ownership if he/she has knowledge at
the time of such transaction that the security is being
purchased or sold, or is being considered for purchase or
sale, by a managed fund or client account or in the case of
a Fund director, by the director's Fund. In addition, the
following Blackout Periods apply to the categories of SSB
Citi employees listed below:
1. Portfolio Managers and Portfolio Manager Assistants -
may not buy or sell any securities for personal
accounts seven (7) calendar days before or after
managed funds or client accounts he/she manages trade
in that security.
2. Traders and Trader Assistants - may not buy or sell
any securities for personal accounts three (3)
calendar days before or seven (7) calendar days after
managed funds or client accounts he/she executes
trades for trade in that security.
3. Research Analysts and Research Assistants - may not
buy or sell any securities for personal accounts:
seven (7) calendar days before or after the issuance
of or a change in any recommendation; or seven (7)
calendar days before or after any managed fund or
client account about which the employee is likely to
have trading or portfolio information (as determined
by the Compliance Department) trades in that security.
4. Advisory Personnel (see Section II for details) - may
not buy or sell any securities for personal accounts
on the same day that a managed fund or client account
about which the employee is likely to have trading or
portfolio information (as determined by the Compliance
Department) trades in that security.
5. Unit Trust Personnel - all employees assigned to the
Unit Trust Department are prohibited from transacting
in any security when a SSB Citi-sponsored Unit Trust
portfolio is buying the same (or a related) security,
until seven business days after the later of the
completion of the accumulation period or the public
announcement of the trust portfolio.  Similarly, all
UIT employees are prohibited from transacting in any
security held in a UIT (or a related security) seven
business days prior to the liquidation period of the
trust.
Employees in the above categories may also be considered
Advisory Personnel for other accounts about which the
employee is likely to have trading or portfolio
information (as determined by the Compliance
Department).
Any violation of the foregoing provisions will require
the employee's trade to be unwound, with the employee
absorbing any resulting loss and disgorging any
resulting profit.  Advisory personnel are subject to the
unwinding of the trade provision; however, they may not
be required to absorb any resulting loss (at the
discretion of the Compliance Department and the
employee's supervisor).  Please be reminded that,
regardless of the provisions set forth above, all
employees are always prohibited from effecting personal
securities transactions based on material, non-public
information.
Blackout period requirements shall not apply to any
purchase or sale, or series of related transactions
involving the same or related securities, involving 500
or fewer shares in the aggregate if the issuer has a
market capitalization (outstanding shares multiplied by
the current price per share) greater than $10 billion
and is listed on a U.S. Stock Exchange or NASDAQ. Note:
Pre-clearance is still required. Under certain
circumstances, the Compliance Department may determine
that an employee may not rely upon this "Large Cap/De
Minimis" exemption. In such a case, the employee will be
notified prior to or at the time the pre-clearance
request is made.
IX.	Prohibited Transactions - The following transactions by SSB
Citi employees are prohibited without the prior written
approval from the Chief Investment Officer, or designee,
and the Regional Compliance Director:
1. The purchase of private placements; and
2. The acquisition of any securities in an initial
public offering (new issues of municipal debt
securities may be acquired subject to the other
requirements of this policy (e.g., pre-clearance).)
X.	Transactions in Options and Futures - SSB Citi employees
may buy or sell derivative instruments such as individual
stock options, options and futures on indexes and options
and futures on fixed-income securities, and may buy or sell
physical commodities and futures and forwards on such
commodities.  These transactions must comply with all of
the policies and restrictions described in this policy,
including pre-clearance, blackout periods, transactions in
Citigroup securities and the 60-day holding period.
However, the 60-day holding period does not apply to
individual stock options that are part of a hedged position
where the underlying stock has been held for more than 60
days and the entire position (including the underlying
security) is closed out.
XI.	Prohibited Recommendations - No Covered Person shall
recommend or execute any securities transaction by any
managed fund or client account, or, in the case of a Fund
director, by the director's Fund, without having disclosed,
in writing, to the Chief Investment Officer, or designee,
any direct or indirect interest in such securities or
issuers, except for those securities purchased pursuant to
the "Large Cap/De Minimis" exemption described in Section
VIII above.  Prior written approval of such recommendation
or execution also must be received from the Chief
Investment Officer, or designee. The interest in personal
accounts could be in the form of:
1. Any direct or indirect beneficial ownership of any
securities of such issuer;
2. Any contemplated transaction by the person in such
securities;
3. Any position with such issuer or its affiliates;
or
4. Any present or proposed business relationship
between such issuer or its affiliates and the
person or any party in which such person has a
significant interest.
XII.	Transactions in Citigroup Securities - Unless an SSB Citi
employee is a member of a designated group subject to more
restrictive provisions, or is otherwise notified to the
contrary, the employee may trade in Citigroup securities
without restriction (other than the pre-clearance and other
requirements of this policy), subject to the limitations
set forth below.
Employees whose jobs are such that they know about
Citigroup's quarterly earnings prior to release may
not engage in any transactions in Citigroup
securities during the "blackout periods" beginning on
the first day of a calendar quarter and ending on the
second business day following the release of earnings
for the prior quarter.  Members of the SSB Citi
Executive Committee and certain other senior SSB Citi
employees are subject to these blackout periods.
Stock option exercises are permitted during a
blackout period (but the simultaneous exercise of an
option and sale of the underlying stock is
prohibited).  With regard to exchange traded options,
no transactions in Citigroup options are permitted
except to close or roll an option position that
expires during a blackout period.  Charitable
contributions of Citigroup securities may be made
during the blackout period, but an individual's
private foundation may not sell donated Citigroup
common stock during the blackout period.  "Good 'til
cancelled" orders on Citigroup stock must be
cancelled before entering a blackout period and no
such orders may be entered during a blackout period.
No employee may engage at any time in any personal
transactions in Citigroup securities while in
possession of material non-public information.
Investments in Citigroup securities must be made with
a long-term orientation rather than for speculation
or for the generation of short-term trading profits.
In addition, please note that employees may not
engage in the following transactions:
? Short sales of Citigroup securities;
? Purchases or sales of options ("puts" or "calls") on
Citigroup securities, except writing a covered
call at a time when the securities could have been
sold under this policy;
? Purchases or sales of futures on Citigroup
securities; or
? Any transactions relating to Citigroup securities
that might reasonably appear speculative.
The number of Citigroup shares an employee is
entitled to in the Citigroup Stock Purchase Plan is
not treated as a long stock position until such time
as the employee has given instructions to purchase
the shares of Citigroup.  Thus, employees are not
permitted to use options to hedge their financial
interest in the Citigroup Stock Purchase Plan.
Contributions into the firm's 401(k) Plan are not
subject to the restrictions and prohibitions
described in this policy.
XIII.	Acknowledgement and Reporting Requirements - SSB Citi
Employees - All new SSB Citi employees must certify that
they have received a copy of this policy, and have read and
understood its provisions.  In addition, all SSB Citi
employees must:
1. Acknowledge receipt of the policy and any
modifications thereof, in writing (see Exhibit C
for the form of Acknowledgement);
2. Within 10 days of becoming an SSB Citi employee,
disclose in writing all information with respect
to all securities beneficially owned and any
existing personal brokerage relationships
(employees must also disclose any new brokerage
relationships whenever established).  Such
information should be provided on the form
attached as Exhibit D;
3. Direct their brokers to supply, on a timely basis,
duplicate copies of confirmations of all personal
securities transactions (Note: this requirement
may be satisfied through the transmission of
automated feeds);
4. Within 10 days after the end of each calendar
quarter, provide information relating to
securities transactions executed during the
previous quarter for all securities accounts
(Note:  this requirement may be satisfied through
the transmission of automated feeds);
5. Submit an annual holdings report containing
similar information that must be current as of a
date no more than 30 days before the report is
submitted, and confirm at least annually all
brokerage relationships and any and all outside
business affiliations  (Note: this requirement may
be satisfied through the transmission of automated
feeds or the regular receipt of monthly brokerage
statements); and
6. Certify on an annual basis that he/she has read
and understood the policy, complied with the
requirements of the policy and that he/she has
pre-cleared and disclosed or reported all personal
securities transactions and securities accounts
required to be disclosed or reported pursuant to
the requirements of the policy.
Fund Directors - Fund Directors shall deliver the
information required by Items 1 through 6 of the
immediately preceding paragraph, except that a Fund
director who is not an "interested person" of the Fund
within the meaning of Section 2(a)(19) of the Investment
Company Act of 1940, and who would be required to make
reports solely by reason of being a Fund Director, is not
required to make the initial and annual holdings reports
required by Items 2 and 5.  Also, a "non-interested" Fund
Director need not supply duplicate copies of confirmations
of personal securities transactions required by Item 3, and
need only make the quarterly transactions reports required
by Item 4 as to any security if at the time of a
transaction by the Director in that security, he/she knew
or in the ordinary course of fulfilling his/her official
duties as a Fund Director should have known that, during
the 15-day period immediately preceding or following the
date of that transaction, that security is or was purchased
or sold by that Director's Fund or was being considered for
purchase or sale by that Director's Fund.
Disclaimer of Beneficial Ownership - The reports described
in Items 4 and 5 above may contain a statement that the
reports shall not be construed as an admission by the
person making the reports that he/she has any direct or
indirect beneficial ownership in the securities to which
the reports relate.
XIV.	Handling of Disgorged Profits - Any amounts that are
paid/disgorged by an employee under this policy shall be
donated by SSB Citi to one or more charities.  Amounts
donated may be aggregated by SSB Citi and paid to such
charity or charities at the end of each year.
XV.	Confidentiality - All information obtained from any Covered
Person pursuant to this policy shall be kept in strict
confidence, except that such information will be made
available to the Securities and Exchange Commission or any
other regulatory or self-regulatory organization or to the
Fund Boards of Directors to the extent required by law,
regulation or this policy.
XVI.	Other Laws, Rules and Statements of Policy - Nothing
contained in this policy shall be interpreted as relieving
any person subject to the policy from acting in accordance
with the provision of any applicable law, rule or
regulation or, in the case of SSB Citi employees, any
statement of policy or procedure governing the conduct of
such person adopted by Citigroup, its affiliates and
subsidiaries.
XVII.	Retention of Records - All records relating to personal
securities transactions hereunder and other records meeting
the requirements of applicable law, including a copy of
this policy and any other policies covering the subject
matter hereof, shall be maintained in the manner and to the
extent required by applicable law, including Rule 17j-1
under the 1940 Act. The Compliance Department shall have
the responsibility for maintaining records created under
this policy.
XVIII.	Monitoring - SSB Citi takes seriously its obligation
to monitor the personal investment activities of its
employees and to review the periodic reports of all Covered
Persons.  Employee personal investment transaction activity
will be monitored by the Compliance Department.  All noted
deviations from the policy requirements will be referred
back to the employee for follow-up and resolution (with a
copy to be supplied to the employee's supervisor).  Any
noted deviations by Fund directors will be reported to the
Board of Directors of the applicable Fund for consideration
and follow-up as contemplated by Section III hereof.
XIX.	Exceptions to the Policy - Any exceptions to this policy
must have the prior written approval of both the Chief
Investment Officer and the Regional Director of Compliance.
Any questions about this policy should be directed to the
Compliance Department.
XX.	Board Review - Fund management and SSB Citi shall provide
to the Board of Directors of each Fund, on a quarterly
basis, a written report of all material violations of this
policy, and at least annually, a written report and
certification meeting the requirements of Rule 17j-1 under
the 1940 Act.
XXI.	Other Codes of Ethics - To the extent that any officer of
any Fund is not a Covered Person hereunder, or an
investment subadviser of or principal underwriter for any
Fund and their respective access persons (as defined in
Rule 17j-1) are not Covered Persons hereunder, those
persons must be covered by separate codes of ethics which
are approved in accordance with applicable law.
XXII.	 Amendments - SSB Citi Employees - Unless otherwise noted
herein, this policy shall become effective as to all SSB
Citi employees on March 30, 2000.  This policy may be
amended as to SSB Citi employees from time to time by the
Compliance Department.  Any material amendment of this
policy shall be submitted to the Board of Directors of each
Fund for approval in accordance with Rule 17j-1 under the
1940 Act.
	Fund Directors - This policy shall become effective as to a
Fund upon the approval and adoption of this policy by the
Board of Directors of that Fund in accordance with Rule
17j-1 under the 1940 Act or at such earlier date as
determined by the Secretary of the Fund.  Any material
amendment of this policy that applies to the directors of a
Fund shall become effective as to the directors of that
Fund only when the Board of Directors of that Fund has
approved the amendment in accordance with Rule 17j-1 or at
such earlier date as determined by the Secretary of the
Fund.




March 15, 2000


EXHIBIT A

EXPLANATION OF BENEFICIAL OWNERSHIP

You are considered to have "Beneficial Ownership" of Securities
if you have or share a direct or indirect "Pecuniary Interest"
in the Securities.

You have a "Pecuniary Interest" in Securities if you have the
opportunity, directly or indirectly, to profit or share in any
profit derived from a transaction in the Securities.

The following are examples of an indirect Pecuniary Interest in
Securities:

1. Securities held by members of your immediate family
sharing the same household; however, this presumption
may be rebutted by convincing evidence that profits
derived from transactions in these Securities will not
provide you with any economic benefit.

"Immediate family" means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, and
includes any adoptive relationship.

2. Your interest as a general partner in Securities held
by a general or limited partnership.

3. Your interest as a manager-member in the Securities
held by a limited liability company.

You do not have an indirect Pecuniary Interest in Securities
held by a corporation, partnership, limited liability company
or other entity in which you hold an equity interest, unless
you are a controlling equityholder or you have or share
investment control over the Securities held by the entity.

The following circumstances constitute Beneficial Ownership by
you of Securities held by a trust:

1. Your ownership of Securities as a trustee where either
you or members of your immediate family have a vested
interest in the principal or income of the trust.

2. Your ownership of a vested interest in a trust.

3. Your status as a settlor of a trust, unless the
consent of all of the beneficiaries is required in
order for you to revoke the trust.

The foregoing is a summary of the meaning of "beneficial
ownership".  For purposes of the attached policy, "beneficial
ownership" shall be interpreted in the same manner as it would
be in determining whether a person is subject to the provisions
of Section 16 of the Securities Exchange Act of 1934 and the
rules and regulations thereunder
  	The investment advisory entities of SSB Citi covered by this policy
include: Salomon Brothers Asset Management Inc.; SSB Citi Fund Management LLC;
Smith Barney Asset Management Division of Salomon Smith Barney Inc.; Travelers
Investment Management Company; and the Citibank Global Asset Management
Division of Citibank, N.A. and Citicorp Trust, N.A.-California.
This requirement will become effective as to all employees on a date to be
determined by the Compliance Department and may be subject to a phase-in
implementation process.








</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>4
<FILENAME>0004.txt
<FLAWED>
<TEXT>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<TABLE> <S> <C>

ARTICLE 6
CIK   0000830487
NAME   Municipal High Income Fund Inc.
TABLE
S                             C
PERIOD-TYPE                    1 Year
FISCAL-YEAR-END                                 Oct-31-2001
PERIOD-END                                      Oct-31-2000
INVESTMENTS-AT-COST                             182,900,012
INVESTMENTS-AT-VALUE                            177,550,033
RECEIVABLES                                       4,074,171
ASSETS-OTHER                                         24,010
OTHER-ITEMS-ASSETS                                        0
TOTAL-ASSETS                                    181,648,214
PAYABLE-FOR-SECURITIES                                    0
SENIOR-LONG-TERM-DEBT                                     0
OTHER-ITEMS-LIABILITIES                             322,379
TOTAL-LIABILITIES                                   322,379
SENIOR-EQUITY                                             0
PAID-IN-CAPITAL-COMMON                          190,178,675
SHARES-COMMON-STOCK                              20,455,083
SHARES-COMMON-PRIOR                              20,455,083
ACCUMULATED-NII-CURRENT                             103,670
OVERDISTRIBUTION-NII                                      0
ACCUMULATED-NET-GAINS                            (3,606,531)
OVERDISTRIBUTION-GAINS                                    0
ACCUM-APPREC-OR-DEPREC                           (5,349,979)
NET-ASSETS                                      181,325,835
DIVIDEND-INCOME                                           0
INTEREST-INCOME                                  13,472,713
OTHER-INCOME                                              0
EXPENSES-NET                                      1,285,202
NET-INVESTMENT-INCOME                            12,187,511
REALIZED-GAINS-CURRENT                             (747,050)
APPREC-INCREASE-CURRENT                          (2,294,875)
NET-CHANGE-FROM-OPS                               9,145,586
EQUALIZATION                                              0
DISTRIBUTIONS-OF-INCOME                          11,904,853
DISTRIBUTIONS-OF-GAINS                                    0
DISTRIBUTIONS-OTHER                                       0
NUMBER-OF-SHARES-SOLD                                     0
NUMBER-OF-SHARES-REDEEMED                                 0
SHARES-REINVESTED                                         0
NET-CHANGE-IN-ASSETS                             (2,759,267)
ACCUMULATED-NII-PRIOR                              (178,988)
ACCUMULATED-GAINS-PRIOR                          (2,859,481)
OVERDISTRIB-NII-PRIOR                                     0
OVERDIST-NET-GAINS-PRIOR                                  0
GROSS-ADVISORY-FEES                                 725,096
INTEREST-EXPENSE                                          0
GROSS-EXPENSE                                     1,285,202
AVERAGE-NET-ASSETS                              180,256,340
PER-SHARE-NAV-BEGIN                                   9.000
PER-SHARE-NII                                         0.600
PER-SHARE-GAIN-APPREC                                (0.160)
PER-SHARE-DIVIDEND                                    0.580
PER-SHARE-DISTRIBUTIONS                               0.000
RETURNS-OF-CAPITAL                                    0.000
PER-SHARE-NAV-END                                     8.860
EXPENSE-RATIO                                          0.71
/TABLE


</TABLE>
</TEXT>
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