Western Asset Municipal High Income Fund Inc. (MHF)

N-CSRS 1 d132286dncsrs.htm WESTERN ASSET MUNICIPAL HIGH INCOME FUND INC. (MHF) Western Asset Municipal High Income Fund Inc. (MHF)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-05497

Western Asset Municipal High Income Fund Inc.

(Exact name of registrant as specified in charter)

620 Eighth Avenue, 47^th Floor, New York, NY 10018

(Address of principal executive offices) (Zip code)

George P. Hoyt.

Franklin Templeton

100 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

Registrant’s telephone number, including area code: (888) 777-0102

Date of fiscal year end: October 31

Date of reporting period: April 30, 2021

ITEM 1.

REPORT TO STOCKHOLDERS.

The Semi-Annual Report to Stockholders is filed herewith.

LOGO


Semi-Annual Report		April 30, 2021

WESTERN ASSET

MUNICIPAL HIGH INCOME FUND INC. (MHF)

The Fund intends to no longer mail paper copies of the Fund’s shareholder reports like this one, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary (such as a broker-dealer or bank). Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you invest through a financial intermediary and you already elected to receive shareholder reports electronically (“e-delivery”), you will not be affected by this change and you need not take any action. If you have not already elected e-delivery, you may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary.

You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. That election will apply to all Legg Mason Funds held in your account at that financial intermediary. If you are a direct shareholder with the Fund, you can call the Fund at 1-888-888-0151, or write to the Fund by regular mail at P.O. Box 505000, Louisville, KY 40233 or by overnight delivery to Computershare, 462 South 4th Street, Suite 1600, Louisville, KY 40202 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. That election will apply to all Legg Mason Funds held in your account held directly with the fund complex.

LOGO

INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE


What’s inside
Letter from the chairman			II
Performance review			III
Fund at a glance			1
Schedule of investments			2
Statement of assets and liabilities			18
Statement of operations			19
Statements of changes in net assets			20
Financial highlights			21
Notes to financial statements			22
Additional shareholder information			32
Dividend reinvestment plan			33

Fund objective

The Fund seeks high current income exempt from federal income taxes.

The Fund seeks to achieve its investment objective by investing primarily in intermediate- and long-term municipal debt securities issued by state and local governments. However, the Fund may invest in municipal obligations of any maturity.

Letter from the chairman

LOGO

Dear Shareholder,

We are pleased to provide the semi-annual report of Western Asset Municipal High Income Fund Inc. for the six-month reporting period ended April 30, 2021. Please read on for Fund performance information during the Fund’s reporting period.

As always, we remain committed to providing you with excellent service and a full spectrum of investment choices. We also remain committed to supplementing the support you receive from your financial advisor. One way we accomplish this is through our website, www.lmcef.com. Here you can gain immediate access to market and investment information, including:

•

Fund prices and performance,

•

Market insights and commentaries from our portfolio managers, and

•

A host of educational resources.

We look forward to helping you meet your financial goals.

Sincerely,

LOGO

Jane Trust, CFA

Chairman, President and Chief Executive Officer

May 28, 2021


II		Western Asset Municipal High Income Fund Inc.

Performance review

For the six-months ended April 30, 2021, Western Asset Municipal High Income Fund Inc. returned 4.87% based on its net asset value (“NAV”)ⁱ and 10.21% based on its New York Stock Exchange (“NYSE”) market price per share. The Fund’s unmanaged benchmark, the Bloomberg Barclays Municipal Bond Indexii, returned 2.62% for the same period. The Lipper High Yield Municipal Debt Closed-End Funds Category Averageiii returned 7.44% over the same time frame. Please note that Lipper performance returns are based on each fund’s NAV.

Certain investors may be subject to the federal alternative minimum tax, and state and local taxes will apply. Capital gains, if any, are fully taxable. Please consult your personal tax or legal adviser.

During this six-month period, the Fund made distributions to shareholders totaling $0.13 per share. As of April 30, 2021, the Fund estimates that 99% of the distributions were sourced from net investment income and 1% constituted a return of capital.* The performance table shows the Fund’s six-month total return based on its NAV and market price as of April 30, 2021. Past performance is no guarantee of future results.


Performance Snapshot as of April 30, 2021 (unaudited)
Price Per Share	6-Month Total Return**
$8.11 (NAV)		4.87	%†
$7.79 (Market Price)		10.21	%‡

All figures represent past performance and are not a guarantee of future results. Performance figures for periods shorter than one year represent cumulative figures and are not annualized.

** Total returns are based on changes in NAV or market price, respectively. Returns reflect the deduction of all Fund expenses, including management fees, operating expenses, and other Fund expenses. Returns do not reflect the deduction of brokerage commissions or taxes that investors may pay on distributions or the sale of shares.

† Total return assumes the reinvestment of all distributions, including returns of capital, if any, at NAV.

‡ Total return assumes the reinvestment of all distributions, including returns of capital, if any, in additional shares in accordance with the Fund’s Dividend Reinvestment Plan.

These estimates are not for tax purposes. The Fund will issue a Form 1099 with final composition of the distributions for tax purposes after year-end. A return of capital is not taxable and results in a reduction in the tax basis of a shareholder’s investment. For more information about a distribution’s composition, please refer to the Fund’s distribution press release or, if applicable, the Section 19 notice located in the press release section of our website, www.lmcef.com (click on the name of the Fund).


Western Asset Municipal High Income Fund Inc.		III

Performance review (cont’d)

Looking for additional information?

The Fund is traded under the symbol “MHF” and its closing market price is available in most newspapers under the NYSE listings. The daily NAV is available online under the symbol “XMHFX” on most financial websites. Barron’s and The Wall Street Journal’s Monday edition both carry closed-end fund tables that provide additional information. In addition, the Fund issues a quarterly press release that can be found on most major financial websites as well as www.lmcef.com (click on the name of the Fund).

In a continuing effort to provide information concerning the Fund, shareholders may call 1-888-777-0102 (toll free), Monday through Friday from 8:00 a.m. to 5:30 p.m. Eastern Time, for the Fund’s current NAV, market price and other information.

Thank you for your investment in Western Asset Municipal High Income Fund Inc. As always, we appreciate that you have chosen us to manage your assets and we remain focused on achieving the Fund’s investment goals.

Sincerely,

LOGO

Jane Trust, CFA

Chairman, President and Chief Executive Officer

May 28, 2021

RISKS: The Fund is a diversified closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. The Fund is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance that the Fund will achieve its investment objective. The Fund’s common stock is traded on the New York Stock Exchange. Similar to stocks, the Fund’s share price will fluctuate with market conditions and, at the time of sale, may be worth more or less than the original investment. Shares of closed-end funds often trade at a discount to their net asset value. Diversification does not assure against market loss. The Fund’s investments are subject to a number of risks, such as credit risk, inflation risk and interest rate risk. High-yield bonds, known as “junk bonds,” involve greater credit and liquidity risks than investment grade bonds. As interest rates rise, bond prices fall, reducing the value of the Fund’s holdings. Municipal securities purchased by the Fund may be adversely affected by changes in the financial condition of municipal issuers and insurers, regulatory and political developments, uncertainties and public perceptions, and other factors. The Fund may invest in securities of other investment companies. To the extent it does, Fund stockholders will indirectly pay a portion of the operating costs of such companies, in addition to the expenses that the Fund bears directly in connection with its own operation. Investing in securities issued by other investment companies, including exchange-traded funds (“ETFs”) that invest primarily in municipal securities, involves risks


IV		Western Asset Municipal High Income Fund Inc.

similar to those of investing directly in the securities in which those investment companies invest. The Fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Fund performance. The Fund may also invest in money market funds, including funds affiliated with the Fund’s manager and subadviser.

All investments are subject to risk including the possible loss of principal. Past performance is no guarantee of future results. All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

Net asset value (“NAV”) is calculated by subtracting total liabilities, including liabilities associated with financial leverage (if any), from the closing value of all securities held by the Fund (plus all other assets) and dividing the result (total net assets) by the total number of the common shares outstanding. The NAV fluctuates with changes in the market prices of securities in which the Fund has invested. However, the price at which an investor may buy or sell shares of the Fund is the Fund’s market price as determined by supply of and demand for the Fund’s shares.

ii	The Bloomberg Barclays Municipal Bond Index is a market value weighted index of investment grade municipal bonds with maturities of one year or more.

iii

Lipper, Inc., a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments. Returns are based on the six-month period ended April 30, 2021, including the reinvestment of all distributions, including returns of capital, if any, calculated among the 12 funds in the Fund’s Lipper category.


Western Asset Municipal High Income Fund Inc.		V

Fund at a glance^† (unaudited)

Investment breakdown (%) as a percent of total investments

LOGO

†	The bar graph above represents the composition of the Fund’s investments as of April 30, 2021 and October 31, 2020 and does not include derivatives such as futures contracts. The Fund is actively managed. As a result, the composition of the Fund’s investments is subject to change at any time.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Schedule of investments (unaudited)

April 30, 2021

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
Municipal Bonds — 98.2%
Alabama — 4.8%
Jefferson County, AL, Sewer Revenue:
Convertible CAB, Subordinated Lien, Warrants, Step bond, Series F, Refunding (0.000% to 10/1/23 then 7.900%)		0.000	%		10/1/50	$	3,020,000	$	3,097,613
Senior Lien, Warrants, Series A, Refunding, AGM		5.500	%		10/1/53		400,000		450,892
Subordinated Lien, Warrants, Series D, Refunding		6.000	%		10/1/42		1,120,000		1,308,167
Subordinated Lien, Warrants, Series D, Refunding		6.500	%		10/1/53		3,000,000		3,540,064
Total Alabama									8,396,736
Alaska — 0.2%
Anchorage, AK, Port Revenue, Series A		5.000	%		12/1/50		250,000		299,709	^(a)
Arizona — 3.7%
La Paz County, AZ, IDA Revenue, Charter School Solutions, Harmony Public School Project, Series A		5.000	%		2/15/36		1,000,000		1,130,288	^(b)
Maricopa County, AZ, IDA Revenue, Legacy Traditional Schools Project, Series 2019, Refunding		5.000	%		7/1/49		500,000		570,706	^(b)
Navajo Nation, AZ, Revenue, Series A, Refunding		5.500	%		12/1/30		190,000		215,298	^(b)
Phoenix, AZ, IDA Revenue:
Basis School Inc., Refunding		5.000	%		7/1/35		1,000,000		1,103,116	^(b)
Great Hearts Academies, Refunding		5.000	%		7/1/41		1,200,000		1,322,823
Salt Verde, AZ, Financial Corp., Natural Gas Revenue, Series 2007		5.000	%		12/1/37		1,500,000		2,110,926
Total Arizona									6,453,157
California — 10.3%
Alameda, CA, Corridor Transportation Authority Revenue, Second Subordinated Lien, Series B, Refunding		5.000	%		10/1/34		500,000		593,122
Anaheim, CA, Public Financing Authority Lease Revenue, Series A, Refunding		5.000	%		5/1/46		2,000,000		2,181,060
California State Community Housing Agency, Essential Housing Revenue, Stoneridge Apartments, Series A		4.000	%		2/1/56		500,000		532,369	^(b)(c)
California State CSCDA Community Improvement Authority, Essential Housing Revenue, Series A		4.000	%		8/1/56		500,000		537,655

See Notes to Financial Statements.


2				Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
California — continued
California State MFA Revenue:
Senior Lien, LINXS APM Project, Series A		5.000	%		12/31/43	$	500,000	$	604,453	^(a)
Senior Lien, LINXS APM Project, Series A		5.000	%		12/31/47		200,000		240,634	^(a)
California State PCFA Water Furnishing Revenue, San Diego County Water Authority Desalination Project, Refunding		5.000	%		7/1/39		700,000		846,199	^(b)
California Statewide CDA Revenue:
Provident Group-Pomona Properties LLC, Series A		5.600	%		1/15/36		500,000		522,601	^(b)
Provident Group-Pomona Properties LLC, Series A		5.750	%		1/15/45		360,000		375,332	^(b)
Golden State, CA, Tobacco Securitization Corp. Revenue, Tobacco Settlement Funded, Series A-1, Refunding		5.250	%		6/1/47		700,000		725,359
Inland Valley, CA, Development Agency, Successor Agency Tax Allocation Revenue, Series A, Refunding		5.000	%		9/1/44		500,000		546,934
Mountain House Public Financing Authority, CA, Utility Systems Revenue, Green Bond, Series A, BAM		4.000	%		12/1/50		750,000		859,945
M-S-R Energy Authority, CA, Natural Gas
Revenue:
Series B		6.500	%		11/1/39		1,000,000		1,639,131
Series C		7.000	%		11/1/34		2,000,000		3,160,746
Series C		6.500	%		11/1/39		2,000,000		3,278,263
Redding, CA, Redevelopment Agency, Tax Allocation, Shastec Redevelopment Project		5.000	%		9/1/29		600,000		601,886
River Islands, CA, Public Financing Authority, Special Tax Revenue, Community Facilities District No. 2003-1, Refunding		5.500	%		9/1/45		620,000		654,937
Tobacco Securitization Authority of Southern California Revenue, Asset Backed Refunding, San Diego County Tobacco Asset Securitization Corporation, Class 1, Series A		5.000	%		6/1/48		200,000		247,594
Total California									18,148,220
Colorado — 3.3%
Aristation Metropolitan District, CO, GO, Convertible Unlimited & Special Revenue, Refunding and Improvements		5.000	%		12/1/38		500,000		540,234

See Notes to Financial Statements.


Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report					3

Schedule of investments (unaudited) (cont’d)

April 30, 2021

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
Colorado — continued
Colorado State Health Facilities Authority Revenue, Commonspirit Health Project, Series A-2		4.000	%		8/1/49	$	500,000	$	564,310
Colorado State High Performance Transportation Enterprise Revenue, C-470 Express Lanes		5.000	%		12/31/51		150,000		172,123
North Range, CO, Metropolitan District #2, GO, Series A, Refunding		5.625	%		12/1/37		500,000		533,905
Public Authority for Colorado Energy, Natural Gas Purchase Revenue, Series 2008		6.125	%		11/15/23		2,625,000		2,850,400
Solaris, CO, Metropolitan District #3, GO, Subordinate Limited Tax, Series B		7.000	%		12/15/46		500,000		519,123
Village Metropolitan District, CO, Limited &
Special Revenue, Series 2020, Refunding and Improvements		5.000	%		12/1/40		500,000		555,172
Total Colorado									5,735,267
Connecticut — 1.2%
Connecticut State Special Tax Revenue:
Transportation Infrastructure, Series A		5.000	%		1/1/37		500,000		616,313
Transportation Infrastructure, Series A		5.000	%		5/1/38		550,000		708,335
Connecticut State, GO, Series A		4.000	%		4/15/37		600,000		707,589
Total Connecticut									2,032,237
District of Columbia — 1.2%
District of Columbia Revenue, Friendship Public Charter School Inc.		5.000	%		6/1/42		2,000,000		2,149,234	^(d)
Florida — 3.4%
Broward County, FL, Port Facilities Revenue:
Senior Bonds, Series B		4.000	%		9/1/44		1,250,000		1,416,398	^(a)
Senior Bonds, Series B		4.000	%		9/1/49		500,000		563,237	^(a)
Florida State Development Finance Corp.,
Educational Facilities Revenue:
Mater Academy Projects, Series A		5.000	%		6/15/40		650,000		745,499
Renaissance Charter School Inc. Projects, Series A		6.000	%		6/15/35		250,000		284,522	^(b)
Renaissance Charter School Inc. Projects, Series A		6.125	%		6/15/46		215,000		242,258	^(b)
Florida State Mid-Bay Bridge Authority Revenue, Series A, Refunding		5.000	%		10/1/28		500,000		583,049
Miami-Dade County, FL, Aviation Revenue, Series A, Refunding		5.000	%		10/1/49		650,000		794,504	^(a)

See Notes to Financial Statements.


4				Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
Florida — continued
Palm Beach County, FL, Health Facilities Authority Revenue:
Sinai Residences Boca Raton Project, Series A		7.500	%		6/1/49	$	400,000	$	429,085
Toby & Leon Cooperman Sinai Residences of Boca Raton Expansion, Series A		5.000	%		6/1/55		350,000		372,259
Reunion, FL, East Community Development District, Special Assessment Bond, Series A-2		7.375	%		5/1/33		285,000		3	*^(e)
Santa Rosa, FL, Bay Bridge Authority Revenue		6.250	%		7/1/28		657,252		578,381	^*^(e)
Total Florida									6,009,195
Georgia — 0.3%
Georgia State Municipal Electric Authority Power Revenue, Project One Subordinated, Series A		5.000	%		1/1/45		250,000		314,093
Main Street Natural Gas Inc., GA, Gas Project Revenue, Series A		5.000	%		5/15/43		150,000		179,806
Total Georgia									493,899
Illinois — 15.1%
Chicago, IL, Board of Education, Dedicated Capital Improvement, Special Tax Revenue, Series 2018		5.000	%		4/1/42		1,000,000		1,170,950
Chicago, IL, Board of Education, GO, Series C, Refunding, AGM		5.000	%		12/1/32		250,000		307,924
Chicago, IL, GO:
Series A		5.000	%		1/1/44		500,000		589,304
Series A, Refunding		5.000	%		1/1/28		500,000		608,166
Series A, Refunding		6.000	%		1/1/38		300,000		364,067
Series C, Refunding		5.000	%		1/1/25		500,000		570,855
Series D, Refunding		5.500	%		1/1/34		1,250,000		1,406,667
Chicago, IL, Motor Fuel Tax Revenue, Refunding, AGM		5.000	%		1/1/32		1,000,000		1,076,493
Chicago, IL, O’Hare International Airport Revenue:
Senior Lien, Series G		5.000	%		1/1/42		500,000		590,223	^(a)
Series A, Refunding		5.000	%		1/1/31		1,500,000		1,721,381	^(a)
Chicago, IL, Transit Authority, Sales Tax Receipts Revenue:
Second Lien		5.000	%		12/1/51		1,000,000		1,189,642
Second Lien, Series A, Refunding		5.000	%		12/1/55		500,000		612,936

See Notes to Financial Statements.


Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report					5

Schedule of investments (unaudited) (cont’d)

April 30, 2021

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
Illinois — continued
Chicago, IL, Wastewater Transmission Revenue, Second Lien, Series B, Refunding		5.000	%		1/1/38	$	500,000	$	601,363
Chicago, IL, Waterworks Revenue:
Second Lien, Series 2017, Refunding		5.000	%		11/1/29		500,000		628,645
Second Lien, Series 2017-2, Refunding, AGM		5.000	%		11/1/32		1,260,000		1,571,559
Illinois State Finance Authority, Revenue, Franciscan Communities Inc.:
Series A, Refunding		5.250	%		5/15/47		130,000		143,101	^(d)
Series A, Refunding		5.250	%		5/15/47		870,000		909,500
Illinois State Sports Facilities Authority Revenue, State Tax Supported, Series 2019, Refunding, BAM		5.000	%		6/15/30		250,000		315,153
Illinois State University, Auxiliary Facilities System Revenue, Series A, Refunding, AGM		5.000	%		4/1/28		100,000		125,091
Illinois State, GO:
Series 2006		5.500	%		1/1/30		300,000		391,791
Series 2016, Refunding		5.000	%		2/1/26		250,000		296,457
Series 2016, Refunding		5.000	%		2/1/29		300,000		356,730
Series A		5.000	%		3/1/37		1,250,000		1,572,796
Series A		5.000	%		3/1/46		500,000		614,700
Series A, Refunding		5.000	%		10/1/29		1,100,000		1,355,346
Series A, Refunding		5.000	%		10/1/30		550,000		673,606
Series B, Refunding		5.000	%		9/1/27		400,000		488,843
Series D		5.000	%		11/1/27		1,400,000		1,698,157
Metropolitan Pier & Exposition Authority, IL, Revenue:
McCormick Place Expansion Project, Series A		5.000	%		6/15/57		350,000		412,365
McCormick Place Expansion Project, Series A, Refunding		4.000	%		6/15/50		1,000,000		1,122,993
McCormick Place Expansion Project, Series A, Refunding		5.000	%		6/15/50		250,000		300,740
McCormick Place Expansion Project, Series B, Refunding		5.000	%		6/15/42		1,250,000		1,546,879
Regional Transportation Authority, IL, GO, Series A, Refunding, NATL		6.000	%		7/1/29		930,000		1,202,132
Total Illinois									26,536,555

See Notes to Financial Statements.


6				Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
Indiana — 1.7%
Indiana State Finance Authority Revenue:
Marion General Hospital, Series A		4.000	%		7/1/45	$	200,000	$	230,027
Private Activity Ohio River Bridges East End Crossing Project, Series A		5.000	%		7/1/48		2,000,000		2,173,919	^(a)
Valparaiso, IN, Exempt Facilities Revenue, Pratt Paper LLC Project		7.000	%		1/1/44		500,000		562,727	^(a)
Total Indiana									2,966,673
Iowa — 0.3%
Iowa Tobacco Settlement Authority Revenue:
Series A-2, Refunding		4.000	%		6/1/49		250,000		285,605
Series B-1, Refunding		4.000	%		6/1/49		250,000		287,053
Total Iowa									572,658
Kentucky — 1.9%
Kentucky State PEA, Gas Supply Revenue:
Series A		4.000	%		6/1/26		1,500,000		1,733,066	^(c)(f)
Series C		4.000	%		6/1/25		1,400,000		1,578,623	^(c)(f)
Total Kentucky									3,311,689
Louisiana — 1.2%
Louisiana State PFA, Lease Revenue:
Provident Group, Flagship Properties		5.000	%		7/1/42		700,000		823,309
Provident Group, Flagship Properties, Series A		4.000	%		7/1/49		500,000		561,306
St. John the Baptist Parish, LA, State Revenue:
Marathon Oil Corp. Project, Refunding		2.200	%		7/1/26		250,000		259,664	^(c)(f)
Marathon Oil Corp. Project, Series B-2, Refunding		2.375	%		7/1/26		400,000		418,932	^(c)(f)
Total Louisiana									2,063,211
Maryland — 2.4%
Maryland State EDC Revenue:
Morgan State University Project		4.250	%		7/1/50		350,000		392,841
Seagirt Marine Terminal Project, Series A		5.000	%		6/1/44		400,000		461,012	^(a)
Maryland State Health & Higher EFA Revenue:
Frederick Health System		4.000	%		7/1/40		300,000		346,911
Mercy Medical Center, Refunding		6.250	%		7/1/31		3,000,000		3,028,708
Total Maryland									4,229,472
Massachusetts — 0.5%
Massachusetts State DFA Revenue:
Wellforce Issue, Series A, Refunding		5.000	%		7/1/36		500,000		618,207
Wellforce Issue, Series A, Refunding		5.000	%		7/1/44		250,000		302,358
Total Massachusetts									920,565

See Notes to Financial Statements.


Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report					7

Schedule of investments (unaudited) (cont’d)

April 30, 2021

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
Michigan — 1.0%
Detroit, MI, Downtown Development Authority Revenue, Catalyst Development, Series A, Refunding, AGM		5.000	%		7/1/43	$	250,000	$	281,603
Michigan State Finance Authority Limited Obligation Revenue:
Higher Education, Thomas M Cooley Law School Project, Refunding		6.000	%		7/1/24		210,000		218,958	^(b)
Higher Education, Thomas M Cooley Law School Project, Refunding		6.750	%		7/1/44		230,000		243,701	^(b)
Michigan State Finance Authority Revenue:
Henry Ford Health System, Series A		4.000	%		11/15/50		400,000		453,982
Tobacco Settlement Asset Backed Senior Bonds, Series A, Refunding		4.000	%		6/1/49		100,000		113,981
Tobacco Settlement Asset Backed Senior Bonds, Series B-1, Refunding		5.000	%		6/1/49		100,000		119,944
Michigan State Strategic Fund Limited Obligation Revenue, I-75 Improvement Project		5.000	%		12/31/43		250,000		302,664	^(a)
Total Michigan									1,734,833
Missouri — 1.7%
Missouri State HEFA Revenue, Senior Living Facilities, Lutheran Senior Services, Refunding		5.000	%		2/1/44		750,000		803,480
St. Louis County, MO, IDA, Senior Living Facilities Revenue, Friendship Village of Sunset Hills, Series A		5.875	%		9/1/43		2,000,000		2,158,060
Total Missouri									2,961,540
Nebraska — 2.0%
Central Plains Energy Project, NE, Gas Project Revenue, Project #3, Series A, Refunding		5.000	%		9/1/42		3,340,000		3,550,182
Nevada — 0.5%
State of Nevada Department of Business & Industry Revenue:
Charter School Lease Revenue, Somerset Academy, Series A		5.000	%		12/15/35		300,000		334,562	^(b)
Charter School Lease Revenue, Somerset Academy, Series A		5.125	%		12/15/45		500,000		550,201	^(b)
Total Nevada									884,763
New Jersey — 9.2%
Gloucester County, NJ, PCFA Revenue, Keystone Urban Renewal, Logan Generating, Series A, Refunding		5.000	%		12/1/24		350,000		367,110	^(a)

See Notes to Financial Statements.


8				Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
New Jersey — continued
New Jersey State EDA Revenue:
Private Activity-The Goethals Bridge Replacement Project		5.375	%		1/1/43	$	1,500,000	$	1,680,128	^(a)
Transit Transportation Project, Series A		5.000	%		11/1/32		1,500,000		1,898,950
New Jersey State EDA, Special Facility Revenue, Port Newark Container Terminal LLC Project, Refunding		5.000	%		10/1/37		125,000		146,381	^(a)
New Jersey State Health Care Facilities Financing Authority Revenue, Hackensack Meridian Health, Series A, Refunding		5.000	%		7/1/38		100,000		120,171
New Jersey State Higher Education, Student Assistance Authority Revenue, Subordinated, Series 1B		5.000	%		12/1/44		640,000		677,902	^(a)
New Jersey State Transportation Trust Fund Authority Revenue:
Transportation Program, Series AA		5.250	%		6/15/32		4,720,000		5,464,164
Transportation Program, Series AA		5.000	%		6/15/46		1,000,000		1,210,466
Transportation System, Series A, Refunding		5.000	%		12/15/28		1,000,000		1,270,949
New Jersey State, GO, COVID-19 Emergency, Series A		5.000	%		6/1/29		1,250,000		1,629,016
Salem County, NJ, PCFA Revenue, Chambers Project, Series A, Refunding		5.000	%		12/1/23		1,445,000		1,528,105	^(a)
Tobacco Settlement Financing Corp., NJ, Revenue, Series A, Refunding		5.250	%		6/1/46		150,000		181,460
Total New Jersey									16,174,802
New Mexico — 0.4%
Santa Fe, NM, Retirement Facilities Revenue:
EL Castillo Retirement Residences Project, Series A		5.000	%		5/15/49		250,000		275,664
EL Castillo Retirement Residences Project, Series B		2.625	%		5/15/25		400,000		401,290
Total New Mexico									676,954
New York — 5.9%
Brookhaven, NY, Local Development Corp.,
Long Island Community Hospital Project, Series A		5.000	%		10/1/34		735,000		931,098
MTA, NY, Transportation Revenue:
Green Bonds, Series A-2		5.000	%		11/15/24		100,000		116,112
Green Bonds, Series A-2		5.000	%		5/15/30		400,000		516,328	^(c)(f)
Green Bonds, Series D-1		5.000	%		11/15/43		250,000		312,219
Green Bonds, Series D-3		4.000	%		11/15/49		250,000		284,572

See Notes to Financial Statements.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Schedule of investments (unaudited) (cont’d)

April 30, 2021


Security	Rate			Maturity Date		Face Amount		Value
New York — continued
Green Bonds, Series E, Refunding		5.000	%		11/15/30	$	250,000	$	329,514
Green Bonds, Series E, Refunding		4.000	%		11/15/45		250,000		285,668
New York City, NY, GO, Series F-1		4.000	%		3/1/47		750,000		877,711
New York City, NY, Industrial Development Agency Revenue, Yankee Stadium Project, Refunding		4.000	%		3/1/45		300,000		341,376
New York State Liberty Development Corp., Liberty Revenue, 3 World Trade Center Project, Class 1, Refunding		5.000	%		11/15/44		1,205,000		1,319,001	^(b)
New York State Thruway Authority General Revenue, Junior Indebtedness Obligations, Subordinated, Series B, Refunding		4.000	%		1/1/50		750,000		853,022
New York State Transportation Development Corp., Special Facilities Revenue:
Delta Air Lines Inc., LaGuardia Airport Terminals C and D Redevelopment Project		5.000	%		1/1/33		750,000		912,410	^(a)
Delta Air Lines Inc., LaGuardia Airport Terminals C and D Redevelopment Project		4.375	%		10/1/45		250,000		293,011	^(a)
John F. Kennedy Terminal 4 International Airport Project, Series C, Refunding		4.000	%		12/1/42		500,000		586,969
LaGuardia Airport Terminal B Redevelopment Project, Series A		5.000	%		7/1/41		300,000		338,530	^(a)
LaGuardia Airport Terminal B Redevelopment Project, Series A		5.250	%		1/1/50		500,000		565,977	^(a)
Port Authority of New York & New Jersey Revenue, Series 221		4.000	%		7/15/55		750,000		850,271	^(a)
Troy Capital Resource Corp., NY, Revenue, Rensselaer Polytechnic Institute Project, Series A, Refunding		4.000	%		9/1/40		500,000		586,592
Total New York									10,300,381
North Carolina — 0.3%
North Carolina State Turnpike Authority, Monroe Expressway Toll Revenue, Series A, Refunding		5.000	%		7/1/47		500,000		571,602
Ohio — 1.3%
Buckeye, OH, Tobacco Settlement Financing Authority Revenue:
Senior Bonds, Series A-2, Refunding		4.000	%		6/1/48		250,000		282,659
Senior Bonds, Series B-2, Refunding		5.000	%		6/1/55		800,000		899,342

See Notes to Financial Statements.


10				Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
Ohio — continued
Ohio State Air Quality Development Authority Revenue, American Electric Company Project, Series B, Refunding		2.500	%		10/1/29	$	350,000	$	385,907	^(a)(c)(f)
Ohio State Private Activity Revenue, Portsmouth Bypass Project		5.000	%		6/30/53		700,000		790,788	^(a)
Total Ohio									2,358,696
Oklahoma — 0.3%
Payne County, OK, EDA Revenue, Epworth Living at The Ranch, Series A		6.250	%		11/1/31		143,075		0	*^(e)(g)(h)(i)
Tulsa County, OK, Industrial Authority, Senior Living Community Revenue, Montereau Inc. Project, Refunding		5.250	%		11/15/37		500,000		554,481
Total Oklahoma									554,481
Oregon — 0.7%
Clackamas County, OR, Hospital Facility Authority Revenue, Senior Living, Willamette View Project, Refunding		5.000	%		11/15/37		500,000		552,825
Yamhill County, OR, Hospital Authority Revenue, Friendsview Retirement Community, Series A, Refunding		5.000	%		11/15/51		725,000		766,921
Total Oregon									1,319,746
Pennsylvania — 4.7%
Allegheny County, PA, HDA Revenue, University Pittsburgh Medical Center, Series A, Refunding		4.000	%		7/15/38		350,000		411,526
Commonwealth Financing Authority, PA, Tobacco Master Settlement Payment Revenue Bonds, Series 2018		5.000	%		6/1/33		200,000		246,389
Cumberland County, PA, Municipal Authority Revenue:
Diakon Lutheran Social Ministries 2015, Refunding		5.000	%		1/1/28		45,000		52,385	^(d)
Diakon Lutheran Social Ministries 2015, Refunding		5.000	%		1/1/28		305,000		343,321
Erie County, PA, Convention Center Authority Guaranteed Hotel Revenue, County Guaranty, Refunding		5.000	%		1/15/36		750,000		866,140
Lancaster, PA, IDA Revenue, Willow Valley Communities Project		5.000	%		12/1/49		500,000		577,183
Pennsylvania State Turnpike Commission Revenue, Subordinated, Series B, Refunding		5.000	%		6/1/39		3,170,000		3,765,877

See Notes to Financial Statements.


Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report					11

Schedule of investments (unaudited) (cont’d)

April 30, 2021

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
Pennsylvania — continued
Philadelphia, PA, Authority for IDR:
Charter School Revenue, A String Theory Charter School Project		5.000	%		6/15/40	$	400,000	$	467,346
City Service Agreement Revenue, Rebuild Project		5.000	%		5/1/38		500,000		615,871
Discovery Charter School Project		6.250	%		4/1/37		500,000		515,395
Lease Revenue, Series 2019, Refunding		5.000	%		10/1/30		250,000		318,537
Total Pennsylvania									8,179,970
Puerto Rico — 2.4%
Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue:
CAB, Restructured, Series A-1		0.000	%		7/1/27		240,000		214,134
CAB, Restructured, Series A-1		0.000	%		7/1/46		210,000		66,632
CAB, Restructured, Series A-1		0.000	%		7/1/51		2,100,000		482,972
Restructured, Series A-1		4.550	%		7/1/40		50,000		55,491
Restructured, Series A-1		5.000	%		7/1/58		1,400,000		1,580,684
Restructured, Series A-2		4.329	%		7/1/40		330,000		361,543
Restructured, Series A-2A		4.550	%		7/1/40		1,380,000		1,531,557
Total Puerto Rico									4,293,013
Tennessee — 0.4%
Knox County, TN, Health, Educational & Housing Facility Board Revenue, University Health System Inc., Series A		5.000	%		9/1/30		250,000		310,910
Tennessee State Energy Acquisition Corp., Natural Gas Revenue, Series 2018		4.000	%		11/1/25		400,000		455,706	^(c)(f)
Total Tennessee									766,616
Texas — 8.7%
Arlington, TX, Higher Education Finance Corp., Education Revenue, Uplift Education, Series A		5.000	%		12/1/46		200,000		226,625
Arlington, TX, Special Tax Revenue, Subordinated Lien, Series C, BAM		5.000	%		2/15/41		500,000		562,384
Central Texas Regional Mobility Authority Revenue, Senior Lien, Series E		4.000	%		1/1/50		500,000		575,902
City of Austin, TX, Airport System Revenue, Series B		5.000	%		11/15/37		500,000		626,886	^(a)
Gulf Coast, TX, IDA, Solid Waste Disposal Revenue, Citgo Petroleum Corp. Project		4.875	%		5/1/25		1,000,000		1,024,249	^(a)
Love Field, TX, Airport Modernization Corp., General Airport Revenue:
Series 2017		5.000	%		11/1/33		20,000		23,784	^(a)

See Notes to Financial Statements.


12				Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
Texas — continued
Series 2017		5.000	%		11/1/36	$	20,000	$	23,689	^(a)
Love Field, TX, Airport Modernization Corp., Special Facilities Revenue, Southwest Airlines Co. Project		5.250	%		11/1/40		5,000,000		5,104,206
New Hope Cultural Education Facilities Finance Corp., TX, Senior Living Revenue:
Cardinal Bay Inc., Village on the Park Carriage Inn Project, Series A		5.000	%		7/1/46		100,000		103,858
Cardinal Bay Inc., Village on the Park Carriage Inn Project, Series A		5.000	%		7/1/51		150,000		155,083
Cardinal Bay Inc., Village on the Park Carriage Inn Project, Series B		5.000	%		7/1/46		150,000		109,828
New Hope, Cultural Education Facilities Finance Corp., TX, Retirement Facility Revenue:
MRC Crestview, Refunding		5.000	%		11/15/36		550,000		585,764
Westminster Manor Project, Refunding		5.000	%		11/1/40		1,000,000		1,103,917
New Hope, Cultural Education Facilities Finance Corp., TX, Student Housing Revenue, Collegiate Housing Stephenville II LLC, Tartleton State University Project, Series A		5.000	%		4/1/39		1,165,000		1,312,202	^(d)
Tarrant County, TX, Cultural Education Facilities Finance Corp., Retirement Facility Revenue, Buckner Retirement Services Inc. Project, Refunding		5.000	%		11/15/37		700,000		829,831
Texas State Municipal Gas Acquisition & Supply Corp. I, Gas Supply Revenue, Senior Lien, Series D		6.250	%		12/15/26		760,000		893,066
Texas State Private Activity Bond Surface Transportation Corp. Revenue:
Senior Lien, Blueridge Transportation Group LLC		5.000	%		12/31/40		1,000,000		1,137,052	^(a)
Senior Lien, Blueridge Transportation Group LLC		5.000	%		12/31/50		500,000		563,366	^(a)
Willacy County, TX, Jail Public Facilities Corp. Project Revenue		7.500	%		11/1/25		290,000		263,057
Total Texas									15,224,749
U.S. Virgin Islands — 1.4%
Virgin Islands Public Finance Authority Revenue, Subordinated, Matching Fund Loan, Diageo Project, Series A		6.750	%		10/1/37		2,400,000		2,419,550

See Notes to Financial Statements.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Schedule of investments (unaudited) (cont’d)

April 30, 2021

Western Asset Municipal High Income Fund Inc.


Security	Rate			Maturity Date		Face Amount		Value
Utah — 0.8%
Utah Infrastructure Agency, Telecommunication Revenue, Series A		5.250	%		10/15/33	$	550,000	$	668,542
Utah State Charter School Finance Authority, Charter School Revenue:
Summit Academy Inc., Series A, Refunding, UT CSCE		5.000	%		4/15/39		350,000		421,940
Syracuse Arts Academy Project, UT CSCE		5.000	%		4/15/42		250,000		284,805
Total Utah									1,375,287
Virginia — 2.6%
Virginia State Port Authority, Port Facilities Revenue:
Series B, Refunding		5.000	%		7/1/41		250,000		294,314	^(a)
Series B, Refunding		5.000	%		7/1/45		300,000		350,410	^(a)
Virginia State Small Business Financing Authority Revenue:
Bon Secours Mercy Health, Series A, Refunding		4.000	%		12/1/49		400,000		464,145
National Senior Campuses, Inc., Series A, Refunding		5.000	%		1/1/34		200,000		243,638
Senior Lien, Elizabeth River Crossing OpCo LLC Project		5.250	%		1/1/32		1,000,000		1,051,433	^(a)
Senior Lien, Elizabeth River Crossing OpCo LLC Project		5.500	%		1/1/42		2,000,000		2,106,228	^(a)
Total Virginia									4,510,168
Washington — 0.6%
Washington State Health Care Facilities Authority Revenue:
Commonspirit Health, Series B, Refunding		5.000	%		8/1/26		250,000		299,801	^(c)(f)
Seattle Cancer Care Alliance		4.000	%		12/1/40		370,000		439,238
Seattle Cancer Care Alliance, Refunding		5.000	%		9/1/50		250,000		316,334
Total Washington									1,055,373
Wisconsin — 1.8%
Public Finance Authority, WI, Limited Obligation Pilot Revenue, American Dream @ Meadowlands Project, Series 2017		7.000	%		12/1/50		250,000		288,756	^(b)
Public Finance Authority, WI, Revenue:
Carmelite System Inc., Obligated Group, Series 2020		5.000	%		1/1/40		100,000		119,108
Celanese Project, Series B, Refunding		5.000	%		12/1/25		550,000		641,163	^(a)

See Notes to Financial Statements.


14				Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Western Asset Municipal High Income Fund Inc.

Security

Rate

Maturity
Date

Face
Amount

Value

Wisconsin — continued

Church Home of Hartford Inc. Project, Refunding

5.000

9/1/38

250,000

268,489

^(b)

Public Finance Authority, WI, Student Housing Revenue:

Appalachian State University Project, Series A, AGM

4.000

7/1/45

600,000

674,020

CHF Wilmington LLC, University of North Carolina at Wilmington Project, AGM

5.000

7/1/53

1,000,000

1,172,723

Total Wisconsin

3,164,259

Total Municipal Bonds (Cost — $155,321,883)

172,395,442

Municipal Bonds Deposited in Tender Option Bond Trust ^(j)—1.2%

New York — 1.2%

New York State Urban Development Corp. Revenue, State Personal Income Tax Revenue Bonds, Bidding Group 3, Series E, Refunding (Cost — $2,053,724)

4.000

3/15/41

1,740,000

2,038,653

Total Investments before Short-Term Investments (Cost — $157,375,607)

174,434,095

Short-Term Investments — 0.2%

Municipal Bonds — 0.2%

New Jersey — 0.1%

New Jersey State Health Care Facilities Financing Authority Revenue, Series D, LOC - TD Bank N.A.

0.030

7/1/43

100,000

100,000

^(k)(l)

New York — 0.1%

New York State HFA Revenue, 363 West 30th Street, Series A, LIQ - FHLMC, LOC - FHLMC

0.050

11/1/32

200,000

200,000

^(a)(k)(l)

Total Municipal Bonds (Cost — $300,000)

300,000

Money Market Funds — 0.0%††

Dreyfus Government Cash Management, Institutional Shares (Cost — $37,170)

0.030

37,170

Total Short-Term Investments (Cost — $337,170)

337,170

Total Investments — 99.6% (Cost — $157,712,777)

174,771,265

TOB Floating Rate Notes — (0.7)%

(1,305,000

)

Other Assets in Excess of Other Liabilities — 1.1%

1,983,514

Total Net Assets — 100.0%

175,449,779

See Notes to Financial Statements.


Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report					15

Schedule of investments (unaudited) (cont’d)

April 30, 2021

Western Asset Municipal High Income Fund Inc.

††	Represents less than 0.1%.

*	Non-income producing security.

(a)	Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax (“AMT”).

(b)

Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid pursuant to guidelines approved by the Board of Directors.

(c)	Maturity date shown represents the mandatory tender date.

(d)	Pre-Refunded bonds are generally escrowed with U.S. government obligations and/or U.S. government agency securities.

(e)	The coupon payment on this security is currently in default as of April 30, 2021.

(f)

Variable rate security. Interest rate disclosed is as of the most recent information available. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description above.

(g)	Security is valued in good faith in accordance with procedures approved by the Board of Directors (Note 1).

(h)	Security is valued using significant unobservable inputs (Note 1).

(i)	Value is less than $1.

(j)	Represents securities deposited into a special purpose entity, referred to as a Tender Option Bond (“TOB”) trust (Note 1).

(k)

Variable rate demand obligations (“VRDOs”) have a demand feature under which the Fund can tender them back to the issuer or liquidity provider on no more than 7 days notice. The interest rate generally resets on a daily or weekly basis and is determined on the specific interest rate reset date by the Remarketing Agent, pursuant to a formula specified in official documents for the VRDO, or set at the highest rate allowable as specified in official documents for the VRDO. VRDOs are benchmarked to the Securities Industry and Financial Markets Association (“SIFMA”) Municipal Swap Index. The SIFMA Municipal Swap Index is compiled from weekly interest rate resets of tax-exempt VRDOs reported to the Municipal Securities Rulemaking Board’s Short-term Obligation Rate Transparency System.

(l)	Maturity date shown is the final maturity date. The security may be sold back to the issuer before final maturity.

See Notes to Financial Statements.


16				Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Western Asset Municipal High Income Fund Inc.


Abbreviation(s) used in this schedule:
AGM		— Assured Guaranty Municipal Corporation — Insured Bonds
BAM		— Build America Mutual — Insured Bonds
CAB		— Capital Appreciation Bonds
CDA		— Communities Development Authority
CSCE		— Charter School Credit Enhancement
DFA		— Development Finance Agency
EDA		— Economic Development Authority
EDC		— Economic Development Corporation
EFA		— Educational Facilities Authority
FHLMC		— Federal Home Loan Mortgage Corporation
GO		— General Obligation
HDA		— Housing Development Authority
HEFA		— Health & Educational Facilities Authority
HFA		— Housing Finance Agency
IDA		— Industrial Development Authority
IDR		— Industrial Development Revenue
LIQ		— Liquidity Facility
LOC		— Letter of Credit
MFA		— Municipal Finance Authority
MTA		— Metropolitan Transportation Authority
NATL		— National Public Finance Guarantee Corporation — Insured Bonds
PCFA		— Pollution Control Financing Authority
PEA		— Public Energy Authority
PFA		— Public Facilities Authority

See Notes to Financial Statements.


Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report					17

Statement of assets and liabilities (unaudited)

April 30, 2021



Assets:
Investments, at value (Cost — $157,712,777)	$	174,771,265
Interest receivable		2,582,029
Prepaid expenses		9,425
*Total Assets*		*177,362,719*

Liabilities:
TOB Floating Rate Notes (Note 1)		1,305,000
Distributions payable		471,598
Investment management fee payable		79,139
Directors’ fees payable		1,405
Interest expense payable		981
Accrued expenses		54,817
*Total Liabilities*		*1,912,940*
Total Net Assets	$	175,449,779

Net Assets:
Par value ($0.01 par value; 21,632,934 shares issued and outstanding; 500,000,000 shares authorized)	$	216,329
Paid-in capital in excess of par value		163,455,699
Total distributable earnings (loss)		11,777,751
Total Net Assets	$	175,449,779

Shares Outstanding		21,632,934

Net Asset Value	$	8.11

See Notes to Financial Statements.


18				Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Statement of operations (unaudited)

For the Six Months Ended April 30, 2021



Investment Income:
*Interest*	$	*3,427,853*

Expenses:
Investment management fee (Note 2)		474,914
Directors’ fees		30,338
Transfer agent fees		29,544
Audit and tax fees		23,462
Legal fees		18,662
Fund accounting fees		12,707
Shareholder reports		10,358
Stock exchange listing fees		6,193
Interest expense (Note 1)		3,179
Insurance		1,522
Custody fees		1,325
Miscellaneous expenses		2,229
*Total Expenses*		*614,433*
Net Investment Income		2,813,420

Realized and Unrealized Gain (Loss) on Investments and Futures Contracts (Notes 1, 3 and 4):
Net Realized Gain (Loss) From:
Investment transactions		(136,685)
Futures contracts		64,150
*Net Realized Loss*		*(72,535)*
Change in Net Unrealized Appreciation (Depreciation) From:
Investments		5,609,371
Futures contracts		(18,340)
*Change in Net Unrealized Appreciation (Depreciation)*		*5,591,031*
Net Gain on Investments and Futures Contracts		5,518,496
Increase in Net Assets From Operations	$	8,331,916

See Notes to Financial Statements.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Statements of changes in net assets


For the Six Months Ended April 30, 2021 (unaudited) and the Year Ended October 31, 2020	2021		2020

Operations:
Net investment income	$	2,813,420	$	5,834,221
Net realized loss		(72,535)		(1,141,727)
Change in net unrealized appreciation (depreciation)		5,591,031		(2,400,168)
*Increase in Net Assets From Operations*		*8,331,916*		*2,292,326*

Distributions to Shareholders From (Note 1) :
Total distributable earnings		(2,829,588)		(6,225,959)
*Decrease in Net Assets From Distributions to Shareholders*		*(2,829,588)*		*(6,225,959)*
*Increase (Decrease) in Net Assets*		*5,502,328*		*(3,933,633)*

Net Assets:
Beginning of period		169,947,451		173,881,084
End of period	$	175,449,779	$	169,947,451

See Notes to Financial Statements.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Financial highlights


For a share of capital stock outstanding throughout each year ended October 31, unless otherwise noted:
	2021^1,2			2020¹			2019¹			2018¹			2017¹			2016¹

Net asset value, beginning of period		$7.86			$8.04			$7.66			$7.93			$8.09			$7.97

Income (loss) from operations:
Net investment income		0.13			0.27			0.30			0.32			0.32			0.31
Net realized and unrealized gain (loss)		0.25			(0.16)			0.39			(0.28)			(0.17)			0.14
*Total income from operations*		*0.38*			*0.11*			*0.69*			*0.04*			*0.15*			*0.45*

Less distributions from:
Net investment income		(0.13)	³		(0.29)			(0.31)			(0.31)			(0.31)			(0.33)
*Total distributions*		*(0.13)*			*(0.29)*			*(0.31)*			*(0.31)*			*(0.31)*			*(0.33)*

Net asset value, end of period		$8.11			$7.86			$8.04			$7.66			$7.93			$8.09

Market price, end of period		$7.79			$7.19			$7.64			$6.91			$7.49			$7.53
*Total return, based on NAV^4,5*		*4.87*	%		*1.43*	%		*9.12*	%		*0.45*	%		*1.92*	%		*5.71*	%
*Total return, based on Market Price⁶*		*10.21*	%		*(2.15)*	%		*15.20*	%		*(3.76)*	%		*3.67*	%		*5.09*	%

Net assets, end of period (millions)		$175			$170			$174			$166			$171			$175

Ratios to average net assets:
Gross expenses		0.71	%⁷		0.71	%		0.68	%		0.68	%		0.69	%		0.71	%
Net expenses		0.71	⁷		0.71	⁸		0.68			0.68			0.69			0.71
Net investment income		3.26	⁷		3.43			3.86			4.09			4.06			3.87

Portfolio turnover rate		9	%		27	%		16	%		13	%		11	%		17	%

¹	Per share amounts have been calculated using the average shares method.

²	For the six months ended April 30, 2021 (unaudited).

³	The actual source of the Fund’s current fiscal year distributions may be from net investment income, return of capital or a combination of both. Shareholders will be informed of the tax characteristics of the distributions after the close of the fiscal year.

⁴

Performance figures may reflect compensating balance arrangements, fee waivers and/or expense reimbursements. In the absence of compensating balance arrangements, fee waivers and/or expense reimbursements, the total return would have been lower. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.

⁵	The total return calculation assumes that distributions are reinvested at NAV. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.

⁶	The total return calculation assumes that distributions are reinvested in accordance with the Fund’s dividend reinvestment plan. Past performance is no guarantee of future results. Total returns for periods of less than one year are not annualized.

⁷	Annualized.

⁸	Reflects fee waivers and/or expense reimbursements.

See Notes to Financial Statements.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Notes to financial statements (unaudited)

1. Organization and significant accounting policies

Western Asset Municipal High Income Fund Inc. (the “Fund”) was incorporated in Maryland and is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund seeks high current income exempt from federal income taxes. The Fund seeks to achieve its investment objective by investing primarily in intermediate and long-term municipal debt securities issued by state and local governments. However, the Fund may invest in municipal obligations of any maturity. The Fund may invest up to 100% of its assets in municipal obligations rated below investment grade (commonly referred to as “junk bonds”). Investment grade securities are those rated in the Baa/BBB categories or above by at least one National Recognized Statistical Rating Organization that provides such a rating or unrated securities that the subadviser determined to be of comparable credit quality. For credit ratings purposes, pre-refunded bonds are deemed to be unrated. The subadviser determines the credit quality of pre-refunded bonds based on the quality of the escrowed collateral and such other factors as the subadviser deems appropriate.

The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”). Estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ. Subsequent events have been evaluated through the date the financial statements were issued.

(a) Investment valuation. The valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services typically use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Investments in open-end funds are valued at the closing net asset value per share of each fund on the day of valuation. Futures contracts are valued daily at the settlement price established by the board of trade or exchange on which they are traded. If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund values these securities as determined in accordance with procedures approved by the Fund’s Board of Directors.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

The Board of Directors is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Global Fund Valuation Committee (formerly known as Legg Mason North Atlantic Fund Valuation Committee prior to March 1, 2021) (the “Valuation Committee”). The Valuation Committee, pursuant to the policies adopted by the Board of Directors, is responsible for making fair value determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to the Board of Directors. When determining the reliability of third party pricing information for investments owned by the Fund, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among market participants.

The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer’s financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts’ research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.

For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Directors, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Directors quarterly.

The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Notes to financial statements (unaudited) (cont’d)

GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:

•

Level 1 — quoted prices in active markets for identical investments

•

Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

•

Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used in valuing the Fund’s assets carried at fair value:


ASSETS
Description	Quoted Prices (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total
Long-Term Investments:
Municipal Bonds†		—	$	172,395,442	$	0	*	$	172,395,442	*
Municipal Bonds Deposited in Tender Option Bond Trust		—		2,038,653		—			2,038,653
Total Long-Term Investments		—		174,434,095		0	*		174,434,095
Short-Term Investments†:
Municipal Bonds		—		300,000		—			300,000
Money Market Funds	$	37,170		—		—			37,170
Total Short-Term Investments		37,170		300,000		—			337,170
Total Investments	$	37,170	$	174,734,095	$	0	*	$	174,771,265

†	See Schedule of Investments for additional detailed categorizations.

*	Amount represents less than $1.

(b) Tender option bonds. The Fund may enter into tender option bond (“TOB”) transactions and may invest in inverse floating rate instruments (“Inverse Floaters”) issued in TOB transactions. The Fund may participate either in structuring an Inverse Floater or purchasing an Inverse Floater in the secondary market. When structuring an Inverse Floater, the Fund deposits securities (typically municipal bonds or other municipal securities) (the “Underlying Bonds”) into a special purpose entity, referred to as a TOB trust. The TOB trust generally issues floating rate notes (“Floaters”) to third parties and residual interest, Inverse Floaters, to the Fund. The Floaters issued by the TOB trust have interest rates which reset weekly and provide the holders of the Floaters the option to tender their notes back to the TOB trust for redemption at par at each reset date. The net proceeds of the sale of the Floaters, after

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

expenses, are received by the Fund and may be invested in additional securities. The Inverse Floaters are inverse floating rate debt instruments, as the return on those bonds is inversely related to changes in a specified interest rate. Distributions on any Inverse Floaters paid to the Fund will be reduced or, in the extreme, eliminated as short-term interest rates rise and will increase when such interest rates fall. Floaters issued by a TOB trust may be senior to the Inverse Floaters held by the Fund. The value and market for Inverse Floaters can be volatile, and Inverse Floaters can have limited liquidity.

An investment in an Inverse Floater structured by the Fund is accounted for as a secured borrowing. The Underlying Bonds deposited into the TOB trust are included in the Fund’s Schedule of Investments and a liability for Floaters (TOB floating rate notes) issued by the TOB trust is recognized in the Fund’s Statement of Assets and Liabilities. The carrying amount of the TOB trust’s floating rate note obligations as reported on the Statement of Assets and Liabilities approximates its fair value. Interest income, including amortization, on the Underlying Bonds is recognized in the Fund’s Statements of Operations. Interest paid to holders of the Floaters, as well as other expenses related to administration, liquidity, remarketing and trustee services of the TOB trust, are recognized in Interest expense in the Fund’s Statement of Operations.

(c) Futures contracts. The Fund uses futures contracts generally to gain exposure to, or hedge against, changes in interest rates or gain exposure to, or hedge against, changes in certain asset classes. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.

Upon entering into a futures contract, the Fund is required to deposit cash or securities with a broker in an amount equal to a certain percentage of the contract amount. This is known as the ‘‘initial margin’’ and subsequent payments (‘‘variation margin’’) are made or received by the Fund each day, depending on the daily fluctuation in the value of the contract. For certain futures, including foreign denominated futures, variation margin is not settled daily, but is recorded as a net variation margin payable or receivable. The daily changes in contract value are recorded as unrealized gains or losses in the Statement of Operations and the Fund recognizes a realized gain or loss when the contract is closed.

Futures contracts involve, to varying degrees, risk of loss in excess of the amounts reflected in the financial statements. In addition, there is the risk that the Fund may not be able to enter into a closing transaction because of an illiquid secondary market.

(d) Credit and market risk. The Fund invests in high-yield instruments that are subject to certain credit and market risks. The yields of high-yield obligations reflect, among other things, perceived credit and market risks. The Fund’s investments in securities rated below investment grade typically involve risks not associated with higher rated securities including, among others, greater risk related to timely and ultimate payment of interest and principal, greater market price volatility and less liquid secondary market trading.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Notes to financial statements (unaudited) (cont’d)

(e) Counterparty risk and credit-risk-related contingent features of derivative instruments. The Fund may invest in certain securities or engage in other transactions where the Fund is exposed to counterparty credit risk in addition to broader market risks. The Fund may invest in securities of issuers, which may also be considered counterparties as trading partners in other transactions. This may increase the risk of loss in the event of default or bankruptcy by the counterparty or if the counterparty otherwise fails to meet its contractual obligations. The Fund’s subadviser attempts to mitigate counterparty risk by (i) periodically assessing the creditworthiness of its trading partners, (ii) monitoring and/or limiting the amount of its net exposure to each individual counterparty based on its assessment and (iii) requiring collateral from the counterparty for certain transactions. Market events and changes in overall economic conditions may impact the assessment of such counterparty risk by the subadviser. In addition, declines in the values of underlying collateral received may expose the Fund to increased risk of loss.

With exchange traded and centrally cleared derivatives, there is less counterparty risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default of the clearing broker or clearinghouse.

The Fund has entered into master agreements, such as an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement, with certain of its derivative counterparties that govern over-the-counter (“OTC”) derivatives and provide for general obligations, representations, agreements, collateral posting terms, netting provisions in the event of default or termination and credit related contingent features. The credit related contingent features include, but are not limited to, a percentage decrease in the Fund’s net assets or net asset value per share over a specified period of time. If these credit related contingent features were triggered, the derivatives counterparty could terminate the positions and demand payment or require additional collateral.

Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. However, absent an event of default by the counterparty or a termination of the agreement, the terms of the ISDA Master Agreements do not result in an offset of reported amounts of financial assets and financial liabilities in the Statement of Assets and Liabilities across transactions between the Fund and the applicable counterparty. The enforceability of the right to offset may vary by jurisdiction.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Collateral requirements differ by type of derivative. Collateral or margin requirements are set by the broker or exchange clearinghouse for exchange traded derivatives while collateral terms are contract specific for OTC traded derivatives. Cash collateral that has been pledged to cover obligations of the Fund under derivative contracts, if any, will be reported separately in the Statement of Assets and Liabilities. Securities pledged as collateral, if any, for the same purpose are noted in the Schedule of Investments.

As of April 30, 2021, the Fund did not have any open OTC derivative transactions with credit related contingent features in a net liability position.

(f) Security transactions and investment income. Security transactions are accounted for on a trade date basis. Interest income (including interest income from payment-in-kind securities), adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults or a credit event occurs that impacts the issuer, the Fund may halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default or credit event.

(g) Distributions to shareholders. Distributions from net investment income of the Fund, if any, are declared quarterly and paid on a monthly basis. The actual source of the Fund’s monthly distributions may be from net investment income, return of capital or a combination of both. Shareholders will be informed of the tax characteristics of the distributions after the close of the fiscal year. The Fund intends to satisfy conditions that will enable interest from municipal securities, which is exempt from federal and certain state income taxes, to retain such tax-exempt status when distributed to the shareholders of the Fund. Distributions of net realized gains, if any, are taxable and are declared at least annually. Distributions to shareholders of the Fund are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.

(h) Compensating balance arrangements. The Fund has an arrangement with its custodian bank whereby a portion of the custodian’s fees is paid indirectly by credits earned on the Fund’s cash on deposit with the bank.

(i) Federal and other taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986 (the “Code”), as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute its taxable income and net realized gains, if any, to shareholders in accordance with timing requirements imposed by the Code. Therefore, no federal or state income tax provision is required in the Fund’s financial statements.

Management has analyzed the Fund’s tax positions taken on income tax returns for all open tax years and has concluded that as of October 31, 2020, no provision for income tax is required in the Fund’s financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Notes to financial statements (unaudited) (cont’d)

(j) Reclassification. GAAP requires that certain components of net assets be reclassified to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share.

2. Investment management agreement and other transactions with affiliates

Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Fund’s investment manager and Western Asset Management Company, LLC (“Western Asset”) is the Fund’s subadviser. LMPFA and Western Asset are indirect, wholly-owned subsidiaries of Franklin Resources, Inc. (“Franklin Resources”).

LMPFA provides administrative and certain oversight services to the Fund. The Fund pays an investment management fee, calculated daily and paid monthly, at an annual rate of 0.55% of the Fund’s average daily net assets.

LMPFA delegates to Western Asset the day-to-day portfolio management of the Fund. For its services, LMPFA pays Western Asset monthly 70% of the net management fee it receives from the Fund.

During the six months ended April 30, 2021, there are no fees waived and/or expenses reimbursed.

All officers and one Director of the Fund are employees of Franklin Resources or its affiliates and do not receive compensation from the Fund.

The Fund is permitted to purchase or sell securities, typically short-term variable rate demand obligations, from or to certain other affiliated funds or portfolios under specified conditions outlined in procedures adopted by the Board of Directors. The procedures have been designed to provide assurance that any purchase or sale of securities by the Fund from or to another fund or portfolio that is, or could be considered, an affiliate by virtue of having a common investment manager or subadviser (or affiliated investment manager or subadviser), common Directors and/or common officers complies with Rule 17a-7 under the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. For the six months ended April 30, 2021, such purchase and sale transactions (excluding accrued interest) were $4,184,150 and $8,410,000, respectively.

3. Investments

During the six months ended April 30, 2021, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:


Purchases	$	15,768,051
Sales		16,011,093

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

At April 30, 2021, the aggregate cost of investments and the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were substantially as follows:


	Cost*		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Net Unrealized Appreciation
Securities	$	156,407,777	$	17,462,614	$	(404,126)	$	17,058,488

*	Cost of investments for federal income tax purposes includes the value of Inverse Floaters issued in TOB transactions (Note 1).

4. Derivative instruments and hedging activities

At April 30, 2021, the Fund did not have any derivative instruments outstanding.

The following tables provide information about the effect of derivatives and hedging activities on the Fund’s Statement of Operations for the six months ended April 30, 2021. The first table provides additional detail about the amounts and sources of gains (losses) realized on derivatives during the period. The second table provides additional information about the change in unrealized appreciation (depreciation) resulting from the Fund’s derivatives and hedging activities during the period.


AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED
	Interest Rate Risk
Futures contracts	$	64,150

CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED
	Interest Rate Risk
Futures contracts	$	(18,340)

During the six months ended April 30, 2021, the volume of derivative activity for the Fund was as follows:


	Average Market Value
Futures contracts (to sell)†	$	296,679

†	At April 30, 2021, there were no open positions held in this derivative.

5. Distributions subsequent to April 30, 2021

The following distributions have been declared by the Fund’s Board of Directors and are payable subsequent to the period end of this report:


Record Date	Payable Date		Amount
4/23/2021		5/3/2021	$	0.0218
5/21/2021		6/1/2021	$	0.0218

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Notes to financial statements (unaudited) (cont’d)


Record Date	Payable Date		Amount
6/23/2021		7/1/2021	$	0.0218
7/23/2021		8/2/2021	$	0.0218
8/24/2021		9/1/2021	$	0.0218

6. Stock repurchase program

On November 16, 2015, the Fund announced that the Fund’s Board of Directors (the “Board”) had authorized the Fund to repurchase in the open market up to approximately 10% of the Fund’s outstanding common stock when the Fund’s shares are trading at a discount to net asset value. The Board has directed management of the Fund to repurchase shares of common stock at such times and in such amounts as management reasonably believes may enhance stockholder value. The Fund is under no obligation to purchase shares at any specific discount levels or in any specific amounts. During the six months ended April 30, 2021, the Fund did not repurchase any shares.

7. Deferred capital losses

As of October 31, 2020, the Fund had deferred capital losses of $4,968,564, which have no expiration date, that will be available to offset future taxable capital gains.

8. Recent accounting pronouncement

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (the “ASU”). The amendments in the ASU provide optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the London Interbank Offered Rate and other interbank-offered based reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management has reviewed the requirements and believes the adoption of this ASU will not have a material impact on the financial statements.

9. Other matters

The outbreak of the respiratory illness COVID-19 (commonly referred to as “coronavirus”) has continued to rapidly spread around the world, causing considerable uncertainty for the global economy and financial markets. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. The COVID-19 pandemic could adversely affect the value and liquidity of the Fund’s investments and negatively impact the Fund’s performance. In addition, the outbreak of COVID-19, and measures taken to mitigate its effects, could result in disruptions to the services provided to the Fund by its service providers.

***

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

The Fund’s investments, payment obligations, and financing terms may be based on floating rates, such as the London Interbank Offered Rate, or “LIBOR,” which is the offered rate for short-term Eurodollar deposits between major international banks. On March 5, 2021, the ICE Benchmark Administration, the administrator of LIBOR, stated that it will cease the publication of (i) the overnight and one-, three-, six- and twelve-month USD LIBOR settings immediately following the LIBOR publication on Friday, June 30, 2023 and (ii) all other LIBOR settings, including the one-week and two-month USD LIBOR settings, immediately following the LIBOR publication on Friday, December 31, 2021. There remains uncertainty regarding the nature of any replacement rate and the impact of the transition from LIBOR on the Fund’s transactions and the financial markets generally. As such, the potential effect of a transition away from LIBOR on the Fund or the Fund’s investments cannot yet be determined.

Western Asset Municipal High Income Fund Inc. 2021 Semi-Annual Report

Additional shareholder information (unaudited)

Results of annual meeting of shareholders

The Annual Meeting of Shareholders of Western Asset Municipal High Income Fund Inc. was held on April 9, 2021 for the purpose of considering and voting upon the proposals presented at the Meeting. The following table provides information concerning the matters voted upon at the Meeting:

Election of directors


Nominees	Votes For		Votes Withheld		Abstain
Carol L. Colman		14,706,017		3,282,856		295,833
Jane Trust		17,624,336		439,408		220,962

At April 30, 2021, in addition to Carol L. Colman and Jane Trust, the other Directors of the Fund were as follows:

Robert D. Agdern

Daniel P. Cronin

Paolo M. Cucchi

William R. Hutchinson

Eileen A. Kamerick

Nisha Kumar

Ratification of Selection of Independent Registered Public Accountants

To ratify the selection of PricewaterhouseCoopers LLP (“PwC”) as independent registered public accountants of the Fund for the fiscal year ended October 31, 2021.


For	Against	Abstain
17,887,165	208,361	189,180


32				Western Asset Municipal High Income Fund Inc.

Dividend reinvestment plan (unaudited)

Unless you elect to receive distributions in cash (i.e., opt-out), all dividends, including any capital gain dividends and return of capital distributions, on your Common Stock will be automatically reinvested by Computershare Trust Company, N.A., as agent for the stockholders (the “Plan Agent”), in additional shares of Common Stock under the Fund’s Dividend Reinvestment Plan (the “Plan”). You may elect not to participate in the Plan by contacting the Plan Agent. If you do not participate, you will receive all cash distributions paid by check mailed directly to you by Computershare Trust Company, N.A., as dividend paying agent.

If you participate in the Plan, the number of shares of Common Stock you will receive will be determined as follows:

(1) If the market price of the Common Stock (plus $0.03 per share commission) on the payment date (or, if the payment date is not a NYSE trading day, the immediately preceding trading day) is equal to or exceeds the net asset value per share of the Common Stock at the close of trading on the NYSE on the payment date, the Fund will issue new Common Stock at a price equal to the greater of (a) the net asset value per share at the close of trading on the NYSE on the payment date or (b) 95% of the market price per share of the Common Stock on the payment date.

(2) If the net asset value per share of the Common Stock exceeds the market price of the Common Stock (plus $0.03 per share commission) at the close of trading on the NYSE on the payment date, the Plan Agent will receive the dividend or distribution in cash and will buy Common Stock in the open market, on the NYSE or elsewhere, for your account as soon as practicable commencing on the trading day following the payment date and terminating no later than the earlier of (a) 30 days after the dividend or distribution payment date, or (b) the payment date for the next succeeding dividend or distribution to be made to the stockholders; except when necessary to comply with applicable provisions of the federal securities laws. If during this period: (i) the market price (plus $0.03 per share commission) rises so that it equals or exceeds the net asset value per share of the Common Stock at the close of trading on the NYSE on the payment date before the Plan Agent has completed the open market purchases or (ii) if the Plan Agent is unable to invest the full amount eligible to be reinvested in open market purchases, the Plan Agent will cease purchasing Common Stock in the open market and the Fund shall issue the remaining Common Stock at a price per share equal to the greater of (a) the net asset value per share at the close of trading on the NYSE on the day prior to the issuance of shares for reinvestment or (b) 95% of the then current market price per share.

Common Stock in your account will be held by the Plan Agent in non-certificated form. Any proxy you receive will include all shares of Common Stock you have received under the Plan. You may withdraw from the Plan (i.e., opt-out) by notifying the Plan Agent in writing at 462 South 4th Street, Suite 1600, Louisville, KY 40202 or by calling the Plan Agent at 1-888-888-0151. Such withdrawal will be effective immediately if notice is received by the Plan Agent not less than ten business days prior to any dividend or distribution record date;


Western Asset Municipal High Income Fund Inc.					33

Dividend reinvestment plan (unaudited) (cont’d)

otherwise such withdrawal will be effective as soon as practicable after the Plan Agent’s investment of the most recently declared dividend or distribution on the Common Stock.

Plan participants who sell their shares will be charged a service charge (currently $5.00 per transaction) and the Plan Agent is authorized to deduct brokerage charges actually incurred from the proceeds (currently $0.05 per share commission). There is no service charge for reinvestment of your dividends or distributions in Common Stock. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases. Because all dividends and distributions will be automatically reinvested in additional shares of Common Stock, this allows you to add to your investment through dollar cost averaging, which may lower the average cost of your Common Stock over time. Dollar cost averaging is a technique for lowering the average cost per share over time if the Fund’s net asset value declines. While dollar cost averaging has definite advantages, it cannot assure profit or protect against loss in declining markets.

Automatically reinvesting dividends and distributions does not mean that you do not have to pay income taxes due upon receiving dividends and distributions. Investors will be subject to income tax on amounts reinvested under the Plan.

The Fund reserves the right to amend or terminate the Plan if, in the judgment of the Board of Directors, the change is warranted. The Plan may be terminated, amended or supplemented by the Fund upon notice in writing mailed to stockholders at least 30 days prior to the record date for the payment of any dividend or distribution by the Fund for which the termination or amendment is to be effective. Upon any termination, you will be sent cash for any fractional share of Common Stock in your account. You may elect to notify the Plan Agent in advance of such termination to have the Plan Agent sell part or all of your Common Stock on your behalf. Additional information about the Plan and your account may be obtained from the Plan Agent at 462 South 4th Street, Suite 1600, Louisville, KY 40202 or by calling the Plan Agent at 1-888-888-0151.


34				Western Asset Municipal High Income Fund Inc.

Western Asset

Municipal High Income Fund Inc.

Directors

Robert D. Agdern

Carol L. Colman

Daniel P. Cronin

Paolo M. Cucchi

William R. Hutchinson

Eileen A. Kamerick

Nisha Kumar

Jane Trust

Chairman

Officers

Jane Trust

President and Chief Executive Officer

Christopher Berarducci

Treasurer and Principal Financial Officer

Fred Jensen

Chief Compliance Officer

Jenna Bailey

Identity Theft Prevention Officer

George P. Hoyt

Secretary and Chief Legal Officer

Thomas C. Mandia

Assistant Secretary

Jeanne M. Kelly

Senior Vice President

Western Asset Municipal High Income Fund Inc.

620 Eighth Avenue

47th Floor

New York, NY 10018

Investment manager

Legg Mason Partners Fund Advisor, LLC

Subadviser

Western Asset Management Company, LLC

Custodian

The Bank of New York Mellon

Transfer agent

Computershare Inc.

462 South 4th Street, Suite 1600

Louisville, KY 40202

Independent registered public accounting firm

PricewaterhouseCoopers LLP

Baltimore, MD

Legal counsel

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

New York Stock Exchange Symbol

MHF

Legg Mason Funds Privacy and Security Notice

Your Privacy and the Security of Your Personal Information is Very Important to the Legg Mason Funds

This Privacy and Security Notice (the “Privacy Notice”) addresses the Legg Mason Funds’ privacy and data protection practices with respect to nonpublic personal information the Funds receive. The Legg Mason Funds include any funds sold by the Funds’ distributor, Legg Mason Investor Services, LLC, as well as Legg Mason-sponsored closed-end funds. The provisions of this Privacy Notice apply to your information both while you are a shareholder and after you are no longer invested with the Funds.

The Type of Nonpublic Personal Information the Funds Collect About You

The Funds collect and maintain nonpublic personal information about you in connection with your shareholder account. Such information may include, but is not limited to:

•

Personal information included on applications or other forms;

•

Account balances, transactions, and mutual fund holdings and positions;

•

Bank account information, legal documents, and identity verification documentation;

•

Online account access user IDs, passwords, security challenge question responses; and

•

Information received from consumer reporting agencies regarding credit history and creditworthiness (such as the amount of an individual’s total debt, payment history, etc.).

How the Funds Use Nonpublic Personal Information About You

The Funds do not sell or share your nonpublic personal information with third parties or with affiliates for their marketing purposes, or with other financial institutions or affiliates for joint marketing purposes, unless you have authorized the Funds to do so. The Funds do not disclose any nonpublic personal information about you except as may be required to perform transactions or services you have authorized or as permitted or required by law.

The Funds may disclose information about you to:

•

Employees, agents, and affiliates on a “need to know” basis to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;

•

Service providers, including the Funds’ affiliates, who assist the Funds as part of the ordinary course of business (such as printing, mailing services, or processing or servicing your account with us) or otherwise perform services on the Funds’ behalf, including companies that may perform statistical analysis, market research and marketing services solely for the Funds;

•

Permit access to transfer, whether in the United States or countries outside of the United States to such Funds’ employees, agents and affiliates and service providers as required to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;

•

The Funds’ representatives such as legal counsel, accountants and auditors to enable the Funds to conduct ordinary business, or to comply with obligations to government regulators;

•

Fiduciaries or representatives acting on your behalf, such as an IRA custodian or trustee of a grantor trust.

NOT PART OF THE SEMI-ANNUAL REPORT

Legg Mason Funds Privacy and Security Notice (cont’d)

Except as otherwise permitted by applicable law, companies acting on the Funds’ behalf, including those outside the United States, are contractually obligated to keep nonpublic personal information the Funds provide to them confidential and to use the information the Funds share only to provide the services the Funds ask them to perform. The Funds may disclose nonpublic personal information about you when necessary to enforce their rights or protect against fraud, or as permitted or required by applicable law, such as in connection with a law enforcement or regulatory request, subpoena, or similar legal process. In the event of a corporate action or in the event a Fund service provider changes, the Funds may be required to disclose your nonpublic personal information to third parties. While it is the Funds’ practice to obtain protections for disclosed information in these types of transactions, the Funds cannot guarantee their privacy policy will remain unchanged.

Keeping You Informed of the Funds’ Privacy and Security Practices

The Funds will notify you annually of their privacy policy as required by federal law. While the Funds reserve the right to modify this policy at any time they will notify you promptly if this privacy policy changes.

The Funds’ Security Practices

The Funds maintain appropriate physical, electronic and procedural safeguards designed to guard your nonpublic personal information. The Funds’ internal data security policies restrict access to your nonpublic personal information to authorized employees, who may use your nonpublic personal information for Fund business purposes only.

Although the Funds strive to protect your nonpublic personal information, they cannot ensure or warrant the security of any information you provide or transmit to them, and you do so at your own risk. In the event of a breach of the confidentiality or security of your nonpublic personal information, the Funds will attempt to notify you as necessary, so you can take appropriate protective steps. If you have consented to the Funds using electronic communications or electronic delivery of statements, they may notify you under such circumstances using the most current email address you have on record with them.

In order for the Funds to provide effective service to you, keeping your account information accurate is very important. If you believe that your account information is incomplete, not accurate or not current, if you have questions about the Funds’ privacy practices, or our use of your nonpublic personal information, write the Funds using the contact information on your account statements, email the Funds by clicking on the Contact Us section of the Funds’ website at www.leggmason.com, or contact the Fund at 1-888-777-0102.

Revised April 2018

Legg Mason California Consumer Privacy Act Policy

Although much of the personal information we collect is “nonpublic personal information” subject to federal law, residents of California may, in certain circumstances, have additional rights under the California Consumer Privacy Act (“CCPA”). For example, if you are a broker,

NOT PART OF THE SEMI-ANNUAL REPORT

Legg Mason Funds Privacy and Security Notice (cont’d)

dealer, agent, fiduciary, or representative acting by or on behalf of, or for, the account of any other person(s) or household, or a financial advisor, or if you have otherwise provided personal information to us separate from the relationship we have with personal investors, the provisions of this Privacy Policy apply to your personal information (as defined by the CCPA).

•

In addition to the provisions of the Legg Mason Funds Security and Privacy Notice, you may have the right to know the categories and specific pieces of personal information we have collected about you.

•

You also have the right to request the deletion of the personal information collected or maintained by the Funds.

If you wish to exercise any of the rights you have in respect of your personal information, you should advise the Funds by contacting them as set forth below. The rights noted above are subject to our other legal and regulatory obligations and any exemptions under the CCPA. You may designate an authorized agent to make a rights request on your behalf, subject to the identification process described below. We do not discriminate based on requests for information related to our use of your personal information, and you have the right not to receive discriminatory treatment related to the exercise of your privacy rights.

We may request information from you in order to verify your identity or authority in making such a request. If you have appointed an authorized agent to make a request on your behalf, or you are an authorized agent making such a request (such as a power of attorney or other written permission), this process may include providing a password/passcode, a copy of government issued identification, affidavit or other applicable documentation, i.e. written permission. We may require you to verify your identity directly even when using an authorized agent, unless a power of attorney has been provided. We reserve the right to deny a request submitted by an agent if suitable and appropriate proof is not provided.

For the 12-month period prior to the date of this Privacy Policy, the Legg Mason Funds have not sold any of your personal information; nor do we have any plans to do so in the future.

Contact Information

Address: Data Privacy Officer, 100 International Dr., Baltimore, MD 21202

Email: DataProtectionOfficer@franklintempleton.com

Phone: 1-800-396-4748

Revised October 2020

NOT PART OF THE SEMI-ANNUAL REPORT

Western Asset Municipal High Income Fund Inc.

Western Asset Municipal High Income Fund Inc.

620 Eighth Avenue

47th Floor

New York, NY 10018

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time the Fund may purchase, at market prices, shares of its stock.

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov. To obtain information on Form N-PORT, shareholders can call the Fund at 1-888-777-0102.

Information on how the Fund voted proxies relating to portfolio securities during the prior 12-month period ended June 30th of each year and a description of the policies and procedures that the Fund uses to determine how to vote proxies related to portfolio transactions are available (1) without charge, upon request, by calling 1-888-777-0102, (2) at www.lmcef.com and (3) on the SEC’s website at www.sec.gov.

This report is transmitted to the shareholders of Western Asset Municipal High Income Fund Inc. for their information. This is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report.

Computershare Inc.

462 South 4th Street, Suite 1600

Louisville, KY 40202

WAS04050 6/21 SR21-4170

ITEM 2.

CODE OF ETHICS.

Not applicable.

ITEM 3.

AUDIT COMMITTEE FINANCIAL EXPERT.

Not applicable.

ITEM 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not applicable.

ITEM 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6.

SCHEDULE OF INVESTMENTS.

Included herein under Item 1.

ITEM 7.

DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8.

INVESTMENT PROFESSIONALS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9.

PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

ITEM 11.

CONTROLS AND PROCEDURES.

(a)

The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

ITEM 12.

DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 13.

EXHIBITS.

(a) (1) Not applicable.

Exhibit 99.CODE ETH

(a) (2) Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 attached hereto.

Exhibit 99.CERT

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto.

Exhibit 99.906CERT

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized.


Western Asset Municipal High Income Fund Inc.

By:		/s/ Jane Trust
		Jane Trust
		Chief Executive Officer

Date:		June 25, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



By:		/s/ Jane Trust
		Jane Trust
		Chief Executive Officer

Date:		June 25, 2021



By:		/s/ Christopher Berarducci
		Christopher Berarducci
		Principal Financial Officer

Date:		June 25, 2021