Regulatory Filings • Jun 25, 2025
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Download Source FileN-CSRS 1 wamhif-efp16169_ncsrs.htm WESTERN ASSET MUNICIPAL HIGH INCOME FUND INC - N-CSRS
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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)
One Madison Avenue, 17 th Floor, New York, NY 10010
(Address of principal executive offices) (Zip code)
Marc A. De Oliveira
Franklin Templeton
100 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-888-777-0102
Date of fiscal year end: October 31
Date of reporting period: April 30, 2025
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ITEM 1. REPORT TO STOCKHOLDERS
(a) The Report to Shareholders is filed herewith
Semi-Annual Report April 30, 2025
WESTERN ASSET MUNICIPAL HIGH INCOME FUND INC. (MHF)
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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 (“municipal obligations”). 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”).
What’s inside
| Letter from the president | III |
|---|---|
| Performance review | IV |
| Fund at a glance | 1 |
| Schedule of investments | 2 |
| Statement of assets and liabilities | 20 |
| Statement of operations | 21 |
| Statements of changes in net assets | 22 |
| Financial highlights | 23 |
| Notes to financial statements | 24 |
| Additional shareholder information | 34 |
| Dividend reinvestment plan | 35 |
II
Western Asset Municipal High Income Fund Inc.
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Letter from the president
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, 2025. 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.franklintempleton.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,
Jane Trust, CFA President and Chief Executive Officer
May 30, 2025
Western Asset Municipal High Income Fund Inc.
III
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Performance review
For the six months ended April 30, 2025, Western Asset Municipal High Income Fund Inc. returned -1.50% based on its net asset value (NAV) i and 5.86% based on its New York Stock Exchange (NYSE) market price per share. The Fund’s unmanaged benchmark, the Bloomberg Municipal Bond Index ii , returned -0.78% for the same period.
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.
The Fund has a practice of seeking to maintain a relatively stable level of distributions to shareholders. This practice has no impact on the Fund’s investment strategy and may reduce the Fund’s NAV. The Fund’s manager believes the practice helps maintain the Fund’s competitiveness and may benefit the Fund’s market price and premium/discount to the Fund’s NAV.
During this six-month period, the Fund made distributions to shareholders totaling $0.20 per share. As of April 30, 2025, the Fund estimates that 61% of the distributions were sourced from net investment income and 39% 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, 2025. Past performance is no guarantee of future results.
| Performance Snapshot as of April 30, 2025 (unaudited) | |
|---|---|
| Price Per Share | 6-Month Total Return** |
| $6.92 (NAV) | -1.50 %† |
| $7.20 (Market Price) | 5.86 %‡ |
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 of 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.franklintempleton.com.
IV
Western Asset Municipal High Income Fund Inc.
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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.franklintempleton.com.
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 the 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,
Jane Trust, CFA President and Chief Executive Officer
May 30, 2025
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 similar to those of investing directly in the securities in which those investment companies
Western Asset Municipal High Income Fund Inc.
V
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Performance review (cont’d)
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 market values of securities or other assets will fluctuate, sometimes sharply and unpredictably, due to changes in general market conditions, overall economic trends or events, governmental actions or intervention, actions taken by the U.S. Federal Reserve or foreign central banks, market disruptions caused by trade disputes or other factors, political developments, armed conflicts, economic sanctions and countermeasures in response to sanctions, major cybersecurity events, investor sentiment, the global and domestic effects of a pandemic, and other factors that may or may not be related to the issuer of the security or other asset. 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.
i
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 Municipal Bond Index is a market value weighted index of investment grade municipal bonds with maturities of one year or more.
Important data provider notices and terms available at www.franklintempletondatasources.com.
VI
Western Asset Municipal High Income Fund Inc.
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Fund at a glance † (unaudited)
Investment breakdown (%) as a percent of total investments
†
The bar graph above represents the composition of the Fund’s investments as of April 30, 2025, and October 31, 2024, 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. 2025 Semi-Annual Report
1
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Schedule of investments (unaudited)
April 30, 2025
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Municipal Bonds — 93.6% | ||||
| Alabama — 4.1% | ||||
| Black Belt Energy Gas District, AL, Gas Project Revenue Bonds, Series D-1, Refunding | 5.500% | 2/1/29 | $ 200,000 | $ 209,233 (a)(b) |
| Jefferson County, AL, Sewer Revenue: | ||||
| Warrants, Series 2024, Refunding | 5.250% | 10/1/45 | 1,500,000 | 1,539,151 |
| Warrants, Series 2024, Refunding | 5.250% | 10/1/49 | 2,000,000 | 2,017,967 |
| Warrants, Series 2024, Refunding | 5.500% | 10/1/53 | 1,000,000 | 1,024,201 |
| Mobile County, AL, IDA Revenue: | ||||
| Solid Waste Disposal Facility, Calvert LLC Project, Series A | 5.000% | 6/1/54 | 290,000 | 275,510 (c) |
| Solid Waste Disposal Facility, Calvert LLC Project, Series B | 4.750% | 12/1/54 | 250,000 | 228,177 (c) |
| Southeast Alabama Gas Supply District, Gas Supply Revenue, Project No 1, Series A, Refunding | 5.000% | 4/1/32 | 350,000 | 369,954 |
| Southeast Energy Authority, AL, Cooperative District, Energy Supply Revenue, Series B | 5.250% | 1/1/33 | 525,000 | 554,189 (a)(b) |
| Total Alabama | 6,218,382 | |||
| Alaska — 0.7% | ||||
| Anchorage, AK, Port Revenue, Series A | 5.000% | 12/1/50 | 250,000 | 242,088 (c) |
| Northern Tobacco Securitization Corp., AK, Tobacco Settlement Revenue: | ||||
| Asset Backed Senior Bonds, Class 1, Series A, Refunding | 4.000% | 6/1/36 | 400,000 | 389,152 |
| Asset Backed Senior Bonds, Class 1, Series A, Refunding | 4.000% | 6/1/50 | 250,000 | 211,316 |
| Asset Backed Senior Bonds, Class 2, Series B-1, Refunding | 4.000% | 6/1/50 | 275,000 | 261,845 |
| Total Alaska | 1,104,401 | |||
| Arizona — 5.0% | ||||
| Arizona, AZ, IDA Revenue, Doral Academy Of Northern Nevada Project, Series A, Refunding | 4.000% | 7/15/51 | 500,000 | 393,094 (d) |
| Chandler, AZ, IDA Revenue: | ||||
| Intel Corp. Project | 3.800% | 6/15/28 | 800,000 | 802,687 (a)(b) |
| Intel Corp. Project | 4.100% | 6/15/28 | 250,000 | 249,979 (a)(b)(c) |
| Intel Corp. Project | 4.000% | 6/1/29 | 600,000 | 596,880 (a)(b)(c) |
| La Paz County, AZ, IDA Revenue, Charter School Solutions, Harmony Public School Project, Series A | 5.000% | 2/15/36 | 1,000,000 | 1,000,029 (d) |
See Notes to Financial Statements.
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Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
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Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Arizona — continued | ||||
| Maricopa County, AZ, IDA Revenue, Legacy Traditional Schools Project, Series 2019, Refunding | 5.000% | 7/1/49 | $ 500,000 | $ 472,052 (d) |
| Navajo Nation, AZ, Revenue, Series A, Refunding | 5.500% | 12/1/30 | 190,000 | 191,075 (d) |
| Phoenix, AZ, IDA Revenue: | ||||
| Basis School Inc., Refunding | 5.000% | 7/1/35 | 1,000,000 | 1,000,336 (d) |
| Great Hearts Academies, Refunding | 5.000% | 7/1/41 | 1,200,000 | 1,181,564 |
| Salt Verde, AZ, Financial Corp., Natural Gas Revenue, Series 2007 | 5.000% | 12/1/37 | 1,500,000 | 1,560,635 |
| Total Arizona | 7,448,331 | |||
| California — 11.1% | ||||
| Alameda, CA, Corridor Transportation Authority Revenue: | ||||
| Convertible CAB, Series C, AGM | 5.000% | 10/1/52 | 600,000 | 619,197 |
| Second Subordinated Lien, Series B, Refunding | 5.000% | 10/1/34 | 500,000 | 506,586 |
| California State Community Choice Financing Authority Revenue: | ||||
| Clean Energy Project, Green Bonds, Series B | 5.000% | 12/1/32 | 1,500,000 | 1,547,953 (a)(b) |
| Clean Energy Project, Green Bonds, Series B-1 | 5.000% | 8/1/29 | 500,000 | 518,790 (a)(b) |
| Clean Energy Project, Green Bonds, Series C | 5.000% | 10/1/32 | 250,000 | 262,182 (a)(b) |
| Clean Energy Project, Green Bonds, Series E | 5.000% | 9/1/32 | 1,300,000 | 1,370,255 (a)(b) |
| Clean Energy Project, Green Bonds, Series H | 5.000% | 8/1/33 | 500,000 | 535,275 (a)(b) |
| California State Community Housing Agency, Essential Housing Revenue, Stoneridge Apartments, Series A | 4.000% | 2/1/56 | 500,000 | 378,665 (d) |
| California State MFA Revenue, Senior Lien, LINXS APM Project, Series A | 5.000% | 12/31/43 | 700,000 | 700,115 (c) |
| California State PCFA Water Furnishing Revenue, San Diego County Water Authority Desalination Project, Refunding | 5.000% | 7/1/39 | 700,000 | 710,832 (d) |
| California State Public Finance Authority, Senior Living Revenue, Enso Village Project, Green Bond, Series A | 5.000% | 11/15/36 | 250,000 | 250,399 |
| Inland Valley, CA, Development Agency, Successor Agency Tax Allocation Revenue, Series A, Refunding | 5.000% | 9/1/44 | 500,000 | 503,751 |
| Mountain House Public Financing Authority, CA, Utility Systems Revenue, Green Bonds, Series A, BAM | 4.000% | 12/1/45 | 750,000 | 725,956 |
See Notes to Financial Statements.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
3
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Schedule of investments (unaudited) (cont’d)
April 30, 2025
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| California — continued | ||||
| M-S-R Energy Authority, CA, Natural Gas Revenue: | ||||
| Series B | 6.500% | 11/1/39 | $ 1,000,000 | $ 1,188,486 |
| Series C | 7.000% | 11/1/34 | 2,000,000 | 2,364,636 |
| Series C | 6.500% | 11/1/39 | 2,000,000 | 2,376,972 |
| River Islands, CA, Public Financing Authority, Special Tax Revenue: | ||||
| Community Facilities District No 2003-1, Series A-1, Refunding, AGM | 5.250% | 9/1/52 | 300,000 | 305,135 |
| Community Facilities District No 2023-1 | 5.625% | 9/1/53 | 530,000 | 546,209 |
| San Francisco, CA, City & County Airport Commission, International Airport Revenue, Second Series A, Unrefunded | 5.000% | 5/1/47 | 1,000,000 | 997,055 (c) |
| 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 | 200,241 |
| Total California | 16,608,690 | |||
| Colorado — 0.9% | ||||
| Colorado State Health Facilities Authority Revenue, Commonspirit Health Initiatives, Series B-2 | 5.000% | 8/1/26 | 250,000 | 252,009 (a)(b) |
| Colorado State High Performance Transportation Enterprise Revenue, C-470 Express Lanes | 5.000% | 12/31/51 | 150,000 | 146,401 |
| North Range, CO, Metropolitan District No 2, GO, Series A, Refunding | 5.625% | 12/1/37 | 500,000 | 487,040 |
| Village Metropolitan District, CO, Limited & Special Revenue, Series 2020, Refunding and Improvements | 5.000% | 12/1/40 | 500,000 | 488,308 |
| Total Colorado | 1,373,758 | |||
| Connecticut — 0.7% | ||||
| Connecticut State Special Tax Revenue, Transportation Infrastructure, Series A | 5.000% | 1/1/37 | 500,000 | 512,077 |
| Connecticut State, GO, Series A | 4.000% | 4/15/37 | 600,000 | 599,253 |
| Total Connecticut | 1,111,330 | |||
| District of Columbia — 0.4% | ||||
| Metropolitan Washington, DC, Airports Authority Aviation Revenue, Series A, Refunding | 5.000% | 10/1/30 | 600,000 | 637,446 (c) |
See Notes to Financial Statements.
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Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
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Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Florida — 6.8% | ||||
| Broward County, FL, Port Facilities Revenue: | ||||
| Senior Bonds, Series B | 4.000% | 9/1/49 | $ 2,500,000 | $ 2,182,690 (c) |
| Series 2022 | 5.500% | 9/1/52 | 1,000,000 | 1,031,703 (c) |
| Florida State Development Finance Corp., Educational Facilities Revenue: | ||||
| Mater Academy Projects, Series A | 5.000% | 6/15/40 | 650,000 | 650,995 |
| Renaissance Charter School Inc. Projects, Series A | 6.000% | 6/15/35 | 250,000 | 250,156 (d) |
| Renaissance Charter School Inc. Projects, Series A | 6.125% | 6/15/46 | 215,000 | 215,028 (d) |
| Florida State Development Finance Corp., Revenue, Brightline Passenger Rail Project, Refunding, AGM | 5.250% | 7/1/53 | 1,400,000 | 1,406,742 (c) |
| Florida State Mid-Bay Bridge Authority Revenue, Series A, Refunding | 5.000% | 10/1/28 | 500,000 | 501,466 |
| Fort Pierce, FL, Utilities Authority Revenue, Series A, Refunding, AGM | 4.000% | 10/1/52 | 150,000 | 135,039 |
| Miami-Dade County, FL, Seaport Revenue, Senior Bonds, Series A, Refunding | 5.250% | 10/1/52 | 750,000 | 757,881 (c) |
| Orange County, FL, Health Facilities Authority Revenue: | ||||
| Orlando Health Inc., Series A | 5.000% | 10/1/53 | 250,000 | 251,496 |
| Orlando Health Inc., Series A, Refunding | 4.500% | 10/1/56 | 200,000 | 190,086 |
| Palm Beach County, FL, Health Facilities Authority Hospital Revenue: | ||||
| Jupiter Medical Center Project, Series A | 5.000% | 11/1/39 | 350,000 | 357,163 |
| Jupiter Medical Center Project, Series A | 5.000% | 11/1/47 | 1,515,000 | 1,486,459 |
| Palm Beach County, FL, Health Facilities Authority Revenue: | ||||
| Toby & Leon Cooperman Sinai Residences of Boca Raton Expansion, Refunding | 4.000% | 6/1/41 | 100,000 | 87,929 |
| Toby & Leon Cooperman Sinai Residences of Boca Raton Expansion, Series A | 5.000% | 6/1/55 | 350,000 | 323,075 |
| Reunion, FL, East Community Development District, Special Assessment Bond, Series A-2 | 7.375% | 5/1/33 | 285,000 | 3 * (e) |
| Wildwood, FL, Village Community Development District No 15, Special Assessment Revenue | 5.000% | 5/1/43 | 350,000 | 350,141 (d) |
| Total Florida | 10,178,052 |
See Notes to Financial Statements.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
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Schedule of investments (unaudited) (cont’d)
April 30, 2025
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Georgia — 1.0% | ||||
| Georgia State Municipal Electric Authority, Power Revenue: | ||||
| Plant Vogtle Units 3&4, Project M, Series A | 5.250% | 7/1/64 | $ 350,000 | $ 360,949 |
| Plant Vogtle Units 3&4, Project P, Series A | 5.500% | 7/1/64 | 250,000 | 257,746 |
| Plant Vogtle Units 3&4, Project P, Series A, Refunding | 5.000% | 1/1/56 | 250,000 | 245,853 |
| Project One, Subordinated, Series A, Refunding | 5.000% | 1/1/45 | 250,000 | 255,226 |
| Main Street Natural Gas Inc., GA, Gas Project Revenue: | ||||
| Series A | 5.000% | 5/15/43 | 150,000 | 151,569 |
| Series C | 5.000% | 9/1/30 | 250,000 | 261,499 (a)(b) |
| Total Georgia | 1,532,842 | |||
| Hawaii — 0.3% | ||||
| Honolulu, HI, City & County Wastewater System Revenue: | ||||
| First Senior Bond Resolution, Series A | 3.000% | 7/1/41 | 350,000 | 280,030 |
| First Senior Bond Resolution, Series A, Refunding | 5.000% | 7/1/38 | 150,000 | 165,909 |
| Total Hawaii | 445,939 | |||
| Illinois — 14.5% | ||||
| Chicago, IL, Board of Education, Dedicated Capital Improvement, Special Tax Revenue, Series 2018 | 5.000% | 4/1/42 | 1,000,000 | 1,004,921 |
| Chicago, IL, Board of Education, GO: | ||||
| Dedicated, Series H | 5.000% | 12/1/46 | 1,000,000 | 930,292 |
| Series A | 5.000% | 12/1/39 | 1,250,000 | 1,247,004 |
| Series C, Refunding, AGM | 5.000% | 12/1/32 | 1,750,000 | 1,799,380 |
| Chicago, IL, GO: | ||||
| Chicago Works, Series A | 5.500% | 1/1/39 | 550,000 | 574,936 |
| Series A | 5.000% | 1/1/44 | 500,000 | 472,857 |
| Series A, Refunding | 5.000% | 1/1/28 | 500,000 | 514,017 |
| Chicago, IL, O’Hare International Airport Revenue: | ||||
| General Senior Lien, Series C, Refunding | 5.000% | 1/1/44 | 500,000 | 502,520 (c) |
| Senior Lien, Series G | 5.000% | 1/1/42 | 500,000 | 500,489 (c) |
| Chicago, IL, Transit Authority, Sales Tax Receipts Revenue: | ||||
| Second Lien | 5.000% | 12/1/51 | 1,000,000 | 977,384 |
| Second Lien, Series A, Refunding | 5.000% | 12/1/45 | 500,000 | 500,254 |
See Notes to Financial Statements.
6
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
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Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Illinois — continued | ||||
| Chicago, IL, Wastewater Transmission Revenue: | ||||
| Second Lien, Series A | 5.000% | 1/1/47 | $ 300,000 | $ 300,973 |
| Second Lien, Series B, Refunding | 5.000% | 1/1/38 | 500,000 | 505,716 |
| Chicago, IL, Waterworks Revenue, Second Lien, Series 2017-2, Refunding, AGM | 5.000% | 11/1/32 | 1,260,000 | 1,298,859 |
| Illinois State Finance Authority Revenue: | ||||
| Navy Pier Inc., Series B, Refunding | 5.000% | 10/1/34 | 250,000 | 255,286 |
| Navy Pier Inc., Series B, Refunding | 5.000% | 10/1/49 | 250,000 | 235,652 |
| Illinois State Sports Facilities Authority Revenue, Sport Facilities Project, Series 2019, Refunding, BAM | 5.000% | 6/15/29 | 250,000 | 262,894 |
| Illinois State University, Auxiliary Facilities System Revenue, Series A, Refunding, AGM | 5.000% | 4/1/28 | 100,000 | 104,801 |
| Illinois State, GO: | ||||
| Series 2016, Refunding | 5.000% | 2/1/29 | 300,000 | 306,782 |
| Series A | 5.000% | 3/1/37 | 1,250,000 | 1,298,368 |
| Series A | 5.000% | 3/1/46 | 500,000 | 501,434 |
| Series A, Refunding | 5.000% | 10/1/29 | 1,100,000 | 1,145,718 |
| Series A, Refunding | 5.000% | 10/1/30 | 550,000 | 571,957 |
| Series B, Refunding | 5.000% | 9/1/27 | 400,000 | 413,168 |
| Series D | 5.000% | 11/1/27 | 1,150,000 | 1,189,910 |
| Metropolitan Pier & Exposition Authority, IL, Revenue: | ||||
| McCormick Place Expansion Project, Series A | 5.000% | 6/15/57 | 350,000 | 340,855 |
| McCormick Place Expansion Project, Series A, Refunding | 4.000% | 12/15/42 | 750,000 | 664,895 |
| McCormick Place Expansion Project, Series A, Refunding | 4.000% | 12/15/47 | 1,000,000 | 835,317 |
| McCormick Place Expansion Project, Series A, Refunding | 5.000% | 6/15/50 | 250,000 | 248,218 |
| McCormick Place Expansion Project, Series B, Refunding | 5.000% | 6/15/42 | 1,250,000 | 1,268,030 |
| Regional Transportation Authority, IL, GO, Series A, Refunding, NATL | 6.000% | 7/1/29 | 930,000 | 989,690 |
| Total Illinois | 21,762,577 | |||
| Indiana — 1.9% | ||||
| Indiana State Finance Authority Revenue: | ||||
| BHI Senior Living Inc., Series A, Refunding | 4.000% | 11/15/41 | 500,000 | 442,792 |
| Marion General Hospital, Series A | 4.000% | 7/1/45 | 200,000 | 179,592 |
See Notes to Financial Statements.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
7
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Schedule of investments (unaudited) (cont’d)
April 30, 2025
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Indiana — continued | ||||
| Midwestern Disaster Relief, Ohio Valley Electric Corp. Project, Series A | 4.250% | 11/1/30 | $ 200,000 | $ 202,015 |
| Wastewater Utility, First Lien, CWA Authority Project, Series A, Refunding | 5.000% | 10/1/45 | 1,000,000 | 1,039,109 |
| Valparaiso, IN, Exempt Facilities Revenue, Pratt Paper LLC Project, Refunding | 5.000% | 1/1/54 | 1,100,000 | 1,052,524 (c) |
| Total Indiana | 2,916,032 | |||
| Iowa — 0.1% | ||||
| Iowa State Tobacco Settlement Authority Revenue, Asset Backed Senior Bonds, Class 1, Series A-2, Refunding | 4.000% | 6/1/49 | 150,000 | 129,316 |
| Kentucky — 2.1% | ||||
| Kentucky State PEA, Gas Supply Revenue: | ||||
| Series A | 4.000% | 6/1/26 | 1,500,000 | 1,504,223 (a)(b) |
| Series A, Refunding | 5.250% | 12/1/29 | 200,000 | 210,050 (a)(b) |
| Series C | 4.000% | 6/1/25 | 1,400,000 | 1,400,511 (a)(b) |
| Total Kentucky | 3,114,784 | |||
| Louisiana — 1.5% | ||||
| Louisiana State PFA, Lease Revenue: | ||||
| Provident Group, Flagship Properties | 5.000% | 7/1/42 | 700,000 | 703,890 |
| Provident Group, Flagship Properties, Series A | 4.000% | 7/1/49 | 500,000 | 440,713 |
| St. John the Baptist Parish, LA, State Revenue: | ||||
| Marathon Oil Corp. Project, Series A-3, Refunding | 2.200% | 7/1/26 | 400,000 | 392,550 (a)(b) |
| Marathon Oil Corp. Project, Series B-2, Refunding | 2.375% | 7/1/26 | 250,000 | 245,838 (a)(b) |
| Marathon Oil Corp. Project, Series C, Refunding | 3.300% | 7/3/28 | 500,000 | 491,905 (a)(b) |
| Total Louisiana | 2,274,896 | |||
| Maryland — 0.7% | ||||
| Maryland State EDC Revenue: | ||||
| Morgan State University Project | 4.250% | 7/1/50 | 350,000 | 302,722 |
| Seagirt Marine Terminal Project, Series A | 5.000% | 6/1/44 | 400,000 | 398,558 (c) |
| Maryland State Health & Higher EFA Revenue, Frederick Health System, Refunding | 4.000% | 7/1/40 | 300,000 | 275,238 |
| Total Maryland | 976,518 | |||
| Massachusetts — 0.7% | ||||
| Massachusetts State DFA Revenue: | ||||
| Boston Medical Center, Sustainability Bonds, Series G, Refunding | 5.250% | 7/1/52 | 500,000 | 500,046 |
See Notes to Financial Statements.
8
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
PAGE BREAK
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Massachusetts — continued | ||||
| Northeastern University Issue, Refunding | 5.000% | 10/1/44 | $ 500,000 | $ 520,250 |
| Total Massachusetts | 1,020,296 | |||
| Michigan — 1.1% | ||||
| Detroit, MI, GO, Unlimited Tax, Series C | 6.000% | 5/1/43 | 700,000 | 762,428 |
| Michigan State Finance Authority Revenue: | ||||
| Henry Ford Health System, Series A | 4.000% | 11/15/50 | 400,000 | 343,469 |
| The Henry Ford Health Detroit South Campus Central Utility Plant Project, Green Bonds, Series 2024 | 4.375% | 2/28/54 | 250,000 | 230,668 |
| Tobacco Settlement Asset Backed Senior Bonds, Series B-1, Refunding | 5.000% | 6/1/49 | 35,000 | 35,185 |
| Michigan State Strategic Fund Ltd. Obligation Revenue, I-75 Improvement Project | 5.000% | 12/31/43 | 250,000 | 250,215 (c) |
| Total Michigan | 1,621,965 | |||
| Missouri — 1.8% | ||||
| Missouri State HEFA Revenue, Series A, Refunding | 5.250% | 2/1/44 | 700,000 | 709,617 |
| St. Louis County, MO, IDA, Senior Living Facilities Revenue, Friendship Village of Sunset Hills, Series A | 5.875% | 9/1/43 | 2,000,000 | 2,000,085 |
| Total Missouri | 2,709,702 | |||
| Nebraska — 0.3% | ||||
| Omaha, NE, Public Power District, Electric System Revenue, Series B, Refunding | 4.000% | 2/1/46 | 500,000 | 457,789 |
| 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 | 300,208 (d) |
| Charter School Lease Revenue, Somerset Academy, Series A | 5.125% | 12/15/45 | 500,000 | 481,275 (d) |
| Total Nevada | 781,483 | |||
| New Hampshire — 0.2% | ||||
| National Finance Authority, NH, Revenue, Presbyterian Senior Living Project, Series A | 5.250% | 7/1/48 | 350,000 | 352,916 |
| New Jersey — 5.5% | ||||
| New Jersey State EDA Revenue: | ||||
| Private Activity-The Goethals Bridge Replacement Project | 5.375% | 1/1/43 | 1,500,000 | 1,500,376 (c) |
See Notes to Financial Statements.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
9
PAGE BREAK
Schedule of investments (unaudited) (cont’d)
April 30, 2025
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| New Jersey — continued | ||||
| Special Facility, Port Newark Container Terminal LLC Project, Refunding | 5.000% | 10/1/37 | $ 650,000 | $ 656,131 (c) |
| New Jersey State Transportation Trust Fund Authority Revenue: | ||||
| Transportation Program, Series AA, Refunding | 5.000% | 6/15/42 | 4,000,000 | 4,176,096 |
| Transportation Program, Series BB | 5.000% | 6/15/44 | 1,000,000 | 1,012,254 |
| New Jersey State Turnpike Authority Revenue, Series C, Refunding | 5.000% | 1/1/44 | 700,000 | 733,875 |
| Tobacco Settlement Financing Corp., NJ, Revenue, Series A, Refunding | 5.250% | 6/1/46 | 150,000 | 150,628 |
| Total New Jersey | 8,229,360 | |||
| New Mexico — 0.4% | ||||
| New Mexico State Municipal Energy Acquisition Authority Gas Supply Revenue, Series 2025, Refunding | 5.000% | 11/1/30 | 400,000 | 419,234 (a)(b) |
| Santa Fe, NM, Retirement Facilities Revenue, EL Castillo Retirement Residences Project, Series A | 5.000% | 5/15/49 | 250,000 | 230,062 |
| Total New Mexico | 649,296 | |||
| New York — 10.9% | ||||
| Brookhaven, NY, Local Development Corp., Long Island Community Hospital Project, Series A, Refunding | 5.000% | 10/1/34 | 735,000 | 774,789 |
| Build NYC Resource Corp., NY, Revenue, East Harlem Scholars Academy Charter School Project | 5.750% | 6/1/62 | 300,000 | 292,481 (d) |
| MTA, NY, Transportation Revenue: | ||||
| Green Bonds, Series E, Refunding | 5.000% | 11/15/30 | 250,000 | 268,993 |
| Green Bonds, Series E, Refunding | 4.000% | 11/15/45 | 250,000 | 220,698 |
| Series A-2 | 5.000% | 5/15/30 | 400,000 | 419,280 (a)(b) |
| New York City, NY, GO, Subseries A-1 | 4.000% | 8/1/40 | 750,000 | 713,459 |
| New York City, NY, Industrial Development Agency Revenue, Yankee Stadium Project, Refunding | 4.000% | 3/1/45 | 300,000 | 267,988 |
| New York City, NY, TFA, Future Tax Secured Revenue, Subordinated, Series F, Subseries F-1 | 5.000% | 2/1/47 | 2,250,000 | 2,319,491 |
| New York State Dormitory Authority Revenue, Non-State Supported Debt, Memorial Sloan- Kettering Cancer Center, Series B-1 | 4.000% | 7/1/51 | 500,000 | 449,226 |
| New York State Liberty Development Corp., Liberty Revenue, 7 World Trade Center Project, Class 3, Refunding | 3.500% | 9/15/52 | 700,000 | 542,671 |
See Notes to Financial Statements.
10
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
PAGE BREAK
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| New York — continued | ||||
| New York State Liberty Development Corp., Revenue, 3 World Trade Center Project, Class 1, Refunding | 5.000% | 11/15/44 | $ 1,205,000 | $ 1,199,808 (d) |
| New York State Thruway Authority General Revenue, Junior Indebtedness Obligations, Junior Lien, Series B, Refunding | 4.000% | 1/1/45 | 750,000 | 680,342 |
| 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 | 757,605 (c) |
| Delta Air Lines Inc., LaGuardia Airport Terminals C and D Redevelopment Project | 6.000% | 4/1/35 | 400,000 | 436,701 (c) |
| Delta Air Lines Inc., LaGuardia Airport Terminals C and D Redevelopment Project | 5.625% | 4/1/40 | 300,000 | 310,729 (c) |
| Delta Air Lines Inc., LaGuardia Airport Terminals C and D Redevelopment Project | 4.375% | 10/1/45 | 250,000 | 226,572 (c) |
| John F. Kennedy International Airport New Terminal One Project, Green Bonds | 5.375% | 6/30/60 | 3,250,000 | 3,259,513 (c) |
| John F. Kennedy International Airport Terminal 4 Project, Series C, Refunding | 4.000% | 12/1/42 | 500,000 | 453,177 |
| John F. Kennedy International Airport Terminal Six Redevelopment Project, Green Bonds, Series A, Refunding | 5.500% | 12/31/54 | 150,000 | 152,610 (c) |
| John F. Kennedy International Airport Terminal Six Redevelopment Project, Green Bonds, Series A, Refunding, AGC | 4.500% | 12/31/54 | 350,000 | 322,715 (c) |
| John F. Kennedy International Airport Terminal Six Redevelopment Project, Green Bonds, Series B, Refunding, AGC, Step bond (0.000% to 12/31/34 then 5.000%) | 0.000% | 12/31/54 | 150,000 | 92,106 (c) |
| LaGuardia Airport Terminal B Redevelopment Project, Series A | 5.000% | 7/1/41 | 300,000 | 300,024 (c) |
| LaGuardia Airport Terminal B Redevelopment Project, Series A | 5.000% | 7/1/46 | 500,000 | 489,855 (c) |
| Port Authority of New York & New Jersey Revenue, Consolidated Series 221 | 4.000% | 7/15/45 | 1,000,000 | 907,868 (c) |
| Troy Capital Resource Corp., NY, Revenue, Rensselaer Polytechnic Institute Project, Series A, Refunding | 4.000% | 9/1/40 | 500,000 | 459,448 |
| Total New York | 16,318,149 |
See Notes to Financial Statements.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
11
PAGE BREAK
Schedule of investments (unaudited) (cont’d)
April 30, 2025
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| North Carolina — 0.3% | ||||
| North Carolina State Turnpike Authority, Monroe Expressway Toll Revenue, Series A, Refunding | 5.000% | 7/1/47 | $ 500,000 | $ 495,188 |
| North Dakota — 0.3% | ||||
| Grand Forks, ND, Health Care System Revenue, Altru Health System, Refunding, AGM | 3.000% | 12/1/46 | 600,000 | 442,123 |
| Ohio — 1.2% | ||||
| Buckeye, OH, Tobacco Settlement Financing Authority Revenue, Senior Bonds, Series B-2, Refunding | 5.000% | 6/1/55 | 800,000 | 699,148 |
| Ohio State Air Quality Development Authority Revenue: | ||||
| American Electric Co. Project, Series B | 2.500% | 10/1/29 | 350,000 | 323,933 (a)(b)(c) |
| American Electric Co. Project, Series D, Refunding | 3.700% | 10/1/28 | 140,000 | 137,218 (c) |
| Ohio State Private Activity Revenue, Portsmouth Bypass Project | 5.000% | 6/30/53 | 700,000 | 679,632 (c) |
| Total Ohio | 1,839,931 | |||
| Oklahoma — 0.3% | ||||
| Tulsa County, OK, Industrial Authority, Senior Living Community Revenue, Montereau Inc. Project, Refunding | 5.250% | 11/15/37 | 500,000 | 502,167 |
| Oregon — 0.3% | ||||
| Clackamas County, OR, Hospital Facility Authority Revenue, Senior Living, Willamette View Project, Refunding | 5.000% | 11/15/37 | 500,000 | 498,380 |
| Pennsylvania — 3.7% | ||||
| Allegheny County, PA, HDA Revenue, University of Pittsburgh Medical Center, Series A, Refunding | 4.000% | 7/15/39 | 350,000 | 330,855 |
| Cumberland County, PA, Municipal Authority Revenue, Diakon Lutheran Social Ministries Project, Unrefunded | 5.000% | 1/1/28 | 135,000 | 135,023 |
| Lancaster County, PA, IDA Revenue, Willow Valley Communities Project | 5.000% | 12/1/49 | 500,000 | 472,481 |
| Lancaster County, PA, Convention Center Authority Revenue, Hotel Room Rental Tax, Series B, Refunding, County GTD | 4.750% | 5/1/57 | 500,000 | 487,379 |
| Pennsylvania State Economic Development Financing Authority Revenue: | ||||
| Tax-Exempt Private Activity, The Penndot Major Bridges Package One Project | 5.000% | 12/31/32 | 565,000 | 599,668 (c) |
See Notes to Financial Statements.
12
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
PAGE BREAK
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Pennsylvania — continued | ||||
| Tax-Exempt Private Activity, The Penndot Major Bridges Package One Project | 5.250% | 6/30/53 | $ 2,600,000 | $ 2,578,081 (c) |
| Philadelphia, PA, Authority for IDR: | ||||
| Charter School Revenue, A String Theory Charter School Project, Refunding | 5.000% | 6/15/40 | 400,000 | 387,370 |
| City Service Agreement Revenue, Rebuild Project | 5.000% | 5/1/38 | 500,000 | 510,826 |
| Total Pennsylvania | 5,501,683 | |||
| Puerto Rico — 4.1% | ||||
| Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue: | ||||
| CAB, Restructured, Series A-1 | 0.000% | 7/1/27 | 240,000 | 219,544 |
| CAB, Restructured, Series A-1 | 0.000% | 7/1/46 | 1,220,000 | 393,824 |
| Restructured, Series A-1 | 4.550% | 7/1/40 | 50,000 | 47,265 |
| Restructured, Series A-1 | 4.750% | 7/1/53 | 3,020,000 | 2,807,752 |
| Restructured, Series A-1 | 5.000% | 7/1/58 | 880,000 | 841,928 |
| Restructured, Series A-2 | 4.329% | 7/1/40 | 530,000 | 498,350 |
| Restructured, Series A-2A | 4.550% | 7/1/40 | 1,380,000 | 1,304,514 |
| Total Puerto Rico | 6,113,177 | |||
| South Carolina — 0.3% | ||||
| South Carolina State Jobs-EDA Hospital Facilities Revenue, Bon Secours Mercy Health Inc., Series A, Refunding | 4.000% | 12/1/44 | 400,000 | 368,423 |
| Tennessee — 0.8% | ||||
| Clarksville, TN, Water, Sewer & Gas Revenue, Series A | 4.000% | 2/1/51 | 500,000 | 451,738 |
| Metropolitan Government of Nashville & Davidson County, TN, Sports Authority Revenue, Series A, AGM | 5.250% | 7/1/53 | 350,000 | 365,134 |
| Tennessee State Energy Acquisition Corp., Natural Gas Revenue, Series 2018 | 4.000% | 11/1/25 | 400,000 | 400,163 (a)(b) |
| Total Tennessee | 1,217,035 | |||
| Texas — 3.2% | ||||
| Arlington, TX, Higher Education Finance Corp., Education Revenue, Uplift Education, Series A, Refunding | 5.000% | 12/1/46 | 200,000 | 194,634 |
| Arlington, TX, Special Tax Revenue, Subordinated Lien, Series C, BAM | 5.000% | 2/15/41 | 500,000 | 484,351 |
| Austin, TX, Airport System Revenue: | ||||
| Series 2022 | 5.000% | 11/15/52 | 300,000 | 298,773 (c) |
See Notes to Financial Statements.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
13
PAGE BREAK
Schedule of investments (unaudited) (cont’d)
April 30, 2025
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Texas — continued | ||||
| Series B | 5.000% | 11/15/39 | $ 600,000 | $ 606,113 (c) |
| Central Texas Regional Mobility Authority Revenue, Senior Lien, Series B | 4.000% | 1/1/51 | 500,000 | 443,586 |
| Galveston, TX, Wharves & Terminal Revenue, Series A | 5.250% | 8/1/38 | 750,000 | 785,619 (c) |
| Love Field, TX, Airport Modernization Corp., General Airport Revenue: | ||||
| Series 2017 | 5.000% | 11/1/33 | 20,000 | 20,224 (c) |
| Series 2017 | 5.000% | 11/1/36 | 20,000 | 20,149 (c) |
| New Hope Cultural Education Facilities Finance Corp., TX, Retirement Facility Revenue, Westminster Manor Project, Refunding | 4.000% | 11/1/49 | 400,000 | 337,435 |
| Newark, TX, Higher Education Finance Corp., Education Revenue, TLC Academy, Series A | 4.000% | 8/15/56 | 350,000 | 265,762 |
| Tarrant County, TX, Cultural Education Facilities Finance Corp., Retirement Facility Revenue, Buckner Retirement Services Inc. Project, Refunding | 5.000% | 11/15/37 | 700,000 | 702,142 |
| Texas State, Municipal Gas Acquisition & Supply Corp. I, Gas Supply Revenue, Senior Lien, Series D | 6.250% | 12/15/26 | 300,000 | 308,340 |
| Texas State Private Activity Bond Surface Transportation Corp. Revenue, Senior Lien, NTE Mobility Partners Segments 3 LLC, Refunding | 5.500% | 6/30/41 | 300,000 | 309,448 (c) |
| Total Texas | 4,776,576 | |||
| Utah — 1.5% | ||||
| Salt Lake City, UT, Airport Revenue, Salt Lake City International Airport, Series A | 5.250% | 7/1/53 | 1,000,000 | 1,010,677 (c) |
| Utah State Charter School Finance Authority, Charter School Revenue: | ||||
| Summit Academy Inc., Series A, Refunding, UT CSCE | 5.000% | 4/15/39 | 350,000 | 356,103 |
| Syracuse Arts Academy Project, UT CSCE | 5.000% | 4/15/42 | 250,000 | 250,423 |
| Utah State Infrastructure Agency, Telecommunications Revenue, Series A | 5.250% | 10/15/33 | 550,000 | 563,945 |
| Total Utah | 2,181,148 | |||
| Virginia — 1.5% | ||||
| Virginia State Port Authority, Port Facilities Revenue: | ||||
| Series B, Refunding | 5.000% | 7/1/41 | 250,000 | 250,236 (c) |
| Series B, Refunding | 5.000% | 7/1/45 | 300,000 | 295,993 (c) |
See Notes to Financial Statements.
14
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
PAGE BREAK
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Virginia — continued | ||||
| Virginia State Small Business Financing Authority Revenue: | ||||
| National Senior Campuses, Inc., Series A, Refunding | 5.000% | 1/1/34 | $ 200,000 | $ 207,985 |
| Senior Lien, 95 Express Lanes LLC Project, Refunding | 5.000% | 1/1/37 | 1,000,000 | 1,017,130 (c) |
| Senior Lien, I-495 HOT Lanes Project, Refunding | 5.000% | 12/31/47 | 500,000 | 502,423 (c) |
| Total Virginia | 2,273,767 | |||
| Washington — 0.9% | ||||
| Port of Seattle, WA, Intermediate Lien Revenue, Series 2022, Refunding | 5.000% | 8/1/41 | 500,000 | 514,535 (c) |
| Washington State Health Care Facilities Authority Revenue: | ||||
| Commonspirit Health, Series A-1, Refunding | 4.000% | 8/1/44 | 535,000 | 484,022 |
| Seattle Cancer Care Alliance, Refunding | 4.000% | 12/1/40 | 370,000 | 347,095 |
| Total Washington | 1,345,652 | |||
| Wisconsin — 2.0% | ||||
| Public Finance Authority, WI, Revenue: | ||||
| Celanese Project, Series B, Refunding | 5.000% | 12/1/25 | 550,000 | 550,387 (c) |
| Cone Health, Series A | 5.000% | 10/1/52 | 300,000 | 302,067 |
| The Carmelite System Inc. Obligated Group, Refunding | 5.000% | 1/1/45 | 100,000 | 95,997 |
| Public Finance Authority, WI, Student Housing Revenue: | ||||
| Appalachian State University Project, Series A, AGM | 4.000% | 7/1/45 | 600,000 | 545,935 |
| CHF Wilmington LLC, University of North Carolina at Wilmington Project, AGM | 5.000% | 7/1/53 | 1,000,000 | 966,596 |
| University of Hawai’i Foundation Project, Green Bonds, Series A-1 | 4.000% | 7/1/51 | 280,000 | 218,258 (d) |
| Wisconsin State HEFA Revenue, Bellin Memorial Hospital Inc., Series A | 5.500% | 12/1/52 | 250,000 | 262,178 |
| Total Wisconsin | 2,941,418 | |||
| Total Municipal Bonds (Cost — $143,757,760) | 140,470,918 |
See Notes to Financial Statements.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
15
PAGE BREAK
Schedule of investments (unaudited) (cont’d)
April 30, 2025
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Municipal Bonds Deposited in Tender Option Bond Trusts (f) — 3.3% | ||||
| New York — 3.3% | ||||
| New York City, NY, Municipal Water Finance Authority, Water & Sewer System Revenue, Second General Resolution Fiscal 2023, Subseries AA-1 | 5.250% | 6/15/52 | $ 1,440,000 | $ 1,505,287 |
| New York State Dormitory Authority, State Personal Income Tax Revenue, Series A | 4.000% | 3/15/45 | 1,740,000 | 1,613,974 |
| New York State Urban Development State Sales Revenue, Series A | 5.000% | 3/15/47 | 1,800,000 | 1,857,365 |
| Total Municipal Bonds Deposited in Tender Option Bond Trusts (Cost — $5,072,155) | 4,976,626 | |||
| Total Investments before Short-Term Investments (Cost — $148,829,915) | 145,447,544 | |||
| Short-Term Investments — 4.0% | ||||
| Municipal Bonds — 4.0% | ||||
| Arizona — 0.1% | ||||
| Arizona State IDA, Hospital Revenue, Phoenix Children’s Hospital, Series A, Refunding, LOC - TD Bank N.A. | 2.500% | 2/1/48 | 200,000 | 200,000 (g)(h) |
| Connecticut — 0.1% | ||||
| Connecticut State Housing Finance Authority Revenue, Housing Mortgage Finance, Series C, Refunding, SPA - TD Bank N.A. | 3.600% | 11/15/48 | 150,000 | 150,000 (g)(h) |
| Florida — 0.1% | ||||
| Gainesville, FL, IDR, Gainesville Hillel Inc., Series 2003, LOC - TD Bank N.A. | 2.800% | 5/1/33 | 200,000 | 200,000 (g)(h) |
| Indiana — 0.3% | ||||
| Indiana State Finance Authority Environmental Facilities Revenue, Series A-5, Refunding, LOC - Sumitomo Mitsui Banking | 2.350% | 10/1/40 | 420,000 | 420,000 (g)(h) |
| Massachusetts — 0.2% | ||||
| Massachusetts State DFA Revenue, Partners Healthcare System Inc., Series K-1, SPA - Wells Fargo Bank N.A. | 3.300% | 7/1/46 | 200,000 | 200,000 (g)(h) |
| Massachusetts State HEFA Revenue, Partners Healthcare System Inc., Series P-2, SPA - JPMorgan Chase & Co. | 2.600% | 7/1/27 | 100,000 | 100,000 (g)(h) |
| Total Massachusetts | 300,000 |
See Notes to Financial Statements.
16
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
PAGE BREAK
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Maturity Date | Face Amount | Value |
|---|---|---|---|---|
| Municipal Bonds — continued | ||||
| Michigan — 0.1% | ||||
| Grand Valley State University, MI, General Revenue, Series B, Refunding, LOC - TD Bank N.A. | 3.620% | 12/1/31 | $ 150,000 | $ 150,000 (g)(h) |
| New York — 1.6% | ||||
| Battery Park City Authority Junior Revenue, NY, Subseries D-2, Refunding, SPA - TD Bank N.A. | 2.500% | 11/1/38 | 200,000 | 200,000 (g)(h) |
| New York City, NY, HDC, MFH Revenue, Series I-3, SPA - TD Bank N.A. | 3.600% | 11/1/60 | 100,000 | 100,000 (g)(h) |
| New York City, NY, Multi-Family Rental HDC Revenue, Related-Sierra Development, Series A, LOC - FNMA | 3.410% | 3/15/33 | 100,000 | 100,000 (c)(g)(h) |
| New York City, NY, Municipal Water Finance Authority, Water & Sewer System Revenue: | ||||
| Second General Resolution Fiscal 2009, Series BB-2, Refunding, SPA - UBS AG | 2.500% | 6/15/39 | 200,000 | 200,000 (g)(h) |
| Second General Resolution Fiscal 2014, Series AA, Refunding, SPA - Mizuho Bank Ltd. | 2.500% | 6/15/48 | 600,000 | 600,000 (g)(h) |
| Second General Resolution Fiscal 2014, Series AA, Refunding, SPA - Mizuho Bank Ltd. | 2.500% | 6/15/48 | 100,000 | 100,000 (g)(h) |
| New York State HFA Revenue, 10 Liberty Street, Series A, LIQ - FHLMC, LOC - FHLMC | 3.330% | 5/1/35 | 1,065,000 | 1,065,000 (g)(h) |
| Total New York | 2,365,000 | |||
| Ohio — 0.1% | ||||
| Ohio State, GO, Common Schools, Series C | 2.750% | 6/15/26 | 100,000 | 100,000 (g)(h) |
| Oregon — 1.0% | ||||
| Oregon State Facilities Authority Revenue, Peacehealth, Series B, Refunding, LOC - TD Bank N.A. | 2.500% | 8/1/34 | 1,500,000 | 1,500,000 (g)(h) |
| Pennsylvania — 0.1% | ||||
| Pennsylvania HFA, Single Family Mortgage Revenue Bonds, Series B, SPA - TD Bank N.A. | 2.800% | 10/1/50 | 100,000 | 100,000 (g)(h) |
| Texas — 0.3% | ||||
| Tarrant County, TX, Cultural Education Facilities Finance Corp. Hospital Revenue, Baylor Health Care System Project, Series C, Refunding, LOC - TD Bank N.A. | 2.100% | 11/15/50 | 500,000 | 500,000 (g)(h) |
| Total Municipal Bonds (Cost — $5,985,000) | 5,985,000 |
See Notes to Financial Statements.
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Schedule of investments (unaudited) (cont’d)
April 30, 2025
Western Asset Municipal High Income Fund Inc.
(Percentages shown based on Fund net assets)
| Security | Rate | Shares | Value |
|---|---|---|---|
| Money Market Funds — 0.0%†† | |||
| Western Asset Premier Institutional Government Reserves, Premium Shares (Cost — $4,472) | 4.312% | 4,472 | $ 4,472 (i)(j) |
| Total Short-Term Investments (Cost — $5,989,472) | 5,989,472 | ||
| Total Investments — 100.9% (Cost — $154,819,387) | 151,437,016 | ||
| TOB Floating Rate Notes — (1.8)% | (2,730,000 ) | ||
| Other Assets in Excess of Other Liabilities — 0.9% | 1,347,204 | ||
| Total Net Assets — 100.0% | $ 150,054,220 |
| †† | Represents less than 0.1%. |
|---|---|
| * | Non-income producing security. |
| (a) | Maturity date shown represents the mandatory tender date. |
| (b) | 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. | |
| (c) | Income from this issue is considered a preference item for purposes of calculating |
| the alternative minimum tax ( “ AMT ” ). | |
| (d) | 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. | |
| (e) | The coupon payment on this security is currently in default as of April 30, 2025. |
| (f) | Represents securities deposited into a special purpose entity, referred to as a Tender |
| Option Bond ( “ TOB ” ) trust (Note 1) . | |
| (g) | 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. | |
| (h) | Maturity date shown is the final maturity date. The security may be sold back to the |
| issuer before final maturity. | |
| (i) | Rate shown is one-day yield as of the end of the reporting period. |
| (j) | In this instance, as defined in the Investment Company Act of 1940, an “ Affiliated Company ” represents Fund ownership of at least 5% of the outstanding voting securities of an issuer, or a company |
| which is under common ownership or control with the Fund. At April 30, 2025, the total market value of investments | |
| in Affiliated Companies was $4,472 and the cost was $4,472 (Note 7) . |
See Notes to Financial Statements.
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Western Asset Municipal High Income Fund Inc.
| Abbreviation(s) used in this schedule: — AGC | — | Assured Guaranty Corporation — Insured Bonds |
|---|---|---|
| AGM | — | Assured Guaranty Municipal Corporation — Insured Bonds |
| BAM | — | Build America Mutual — Insured Bonds |
| CAB | — | Capital Appreciation Bonds |
| CSCE | — | Charter School Credit Enhancement |
| CWA | — | Clean Water Act |
| DFA | — | Development Finance Agency |
| EDA | — | Economic Development Authority |
| EDC | — | Economic Development Corporation |
| EFA | — | Educational Facilities Authority |
| FHLMC | — | Federal Home Loan Mortgage Corporation |
| FNMA | — | Federal National Mortgage Association |
| GO | — | General Obligation |
| GTD | — | Guaranteed |
| HDA | — | Housing Development Authority |
| HDC | — | Housing Development Corporation |
| 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 |
| MFH | — | Multi-Family Housing |
| 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 |
| SPA | — | Standby Bond Purchase Agreement — Insured Bonds |
| TFA | — | Transitional Finance Authority |
See Notes to Financial Statements.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
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Statement of assets and liabilities (unaudited)
April 30, 2025
| Assets: | |
|---|---|
| Investments in unaffiliated securities, at value (Cost — $154,814,915) | $ 151,432,544 |
| Investments in affiliated securities, at value (Cost — $4,472) | 4,472 |
| Interest receivable | 2,243,300 |
| Dividends receivable from affiliated investments | 164 |
| Prepaid expenses | 8,520 |
| Total Assets | 153,689,000 |
| Liabilities: | |
| TOB Floating Rate Notes (Note 1) | 2,730,000 |
| Distributions payable | 736,911 |
| Investment management fee payable | 67,790 |
| Interest expense payable | 23,009 |
| Accrued expenses | 77,070 |
| Total Liabilities | 3,634,780 |
| Total Net Assets | $ 150,054,220 |
| Net Assets: | |
| Par value ($0.01 par value; 21,673,838 shares issued and outstanding; 500,000,000 | |
| shares authorized) | $ 216,738 |
| Paid-in capital in excess of par value | 162,794,314 |
| Total distributable earnings (loss) | (12,956,832 ) |
| Total Net Assets | $ 150,054,220 |
| Shares Outstanding | 21,673,838 |
| Net Asset Value | $6.92 |
See Notes to Financial Statements.
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Statement of operations (unaudited)
For the Six Months Ended April 30, 2025
| Investment Income: | |
|---|---|
| Interest | $ 3,310,708 |
| Dividends from affiliated investments | 1,182 |
| Total Investment Income | 3,311,890 |
| Expenses: | |
| Investment management fee (Note 2) | 421,668 |
| Interest expense (Note 1) | 48,975 |
| Directors’ fees | 33,027 |
| Audit and tax fees | 24,161 |
| Legal fees | 23,707 |
| Shareholder reports | 17,149 |
| Transfer agent fees | 14,570 |
| Fund accounting fees | 10,985 |
| Stock exchange listing fees | 6,198 |
| Insurance | 486 |
| Custody fees | 321 |
| Miscellaneous expenses | 4,130 |
| Total Expenses | 605,377 |
| Less: Fee waivers and/or expense reimbursements (Note 2) | (26 ) |
| Net Expenses | 605,351 |
| Net Investment Income | 2,706,539 |
| Realized and Unrealized Gain (Loss) on Investments and Futures Contracts (Notes 1, 3 and 4) : | |
| Net Realized Loss From: | |
| Investment transactions in unaffiliated securities | (303,393 ) |
| Futures contracts | (372,833 ) |
| Net Realized Loss | (676,226 ) |
| Change in Net Unrealized Appreciation (Depreciation) From: | |
| Investments in unaffiliated securities | (4,691,285 ) |
| Futures contracts | 328,323 |
| Change in Net Unrealized Appreciation (Depreciation) | (4,362,962 ) |
| Net Loss on Investments and Futures Contracts | (5,039,188 ) |
| Decrease in Net Assets From Operations | $ (2,332,649 ) |
See Notes to Financial Statements.
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Statements of changes in net assets
| For the Six Months Ended April 30, 2025 (unaudited) and the Year Ended October 31, 2024 | 2025 | 2024 |
|---|---|---|
| Operations: | ||
| Net investment income | $ 2,706,539 | $ 5,597,949 |
| Net realized gain (loss) | (676,226 ) | 1,029,583 |
| Change in net unrealized appreciation (depreciation) | (4,362,962 ) | 11,564,333 |
| Increase (Decrease) in Net Assets From Operations | (2,332,649 ) | 18,191,865 |
| Distributions to Shareholders From (Note 1) : | ||
| Total distributable earnings | (4,418,324 ) | (6,798,576 ) |
| Return of capital | — | (969,883 ) |
| Decrease in Net Assets From Distributions to Shareholders | (4,418,324 ) | (7,768,459 ) |
| Fund Share Transactions : | ||
| Reinvestment of distributions (22,615 and 0 shares issued, respectively) | 161,437 | — |
| Increase in Net Assets From Fund Share Transactions | 161,437 | — |
| Increase (Decrease) in Net Assets | (6,589,536 ) | 10,423,406 |
| Net Assets: | ||
| Beginning of period | 156,643,756 | 146,220,350 |
| End of period | $ 150,054,220 | $ 156,643,756 |
See Notes to Financial Statements.
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Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
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Financial highlights
| For a share of capital stock outstanding throughout each year ended October 31, unless otherwise noted: | 2025 1,2 | 2024 1 | 2023 1 | 2022 1 | 2021 1 | 2020 1 |
|---|---|---|---|---|---|---|
| Net asset value, beginning of period | $7.23 | $6.75 | $6.81 | $8.01 | $7.86 | $8.04 |
| Income (loss) from operations: | ||||||
| Net investment income | 0.12 | 0.26 | 0.26 | 0.26 | 0.26 | 0.27 |
| Net realized and unrealized gain (loss) | (0.23 ) | 0.58 | (0.08 ) | (1.22 ) | 0.15 | (0.16 ) |
| Total income (loss) from operations | (0.11) | 0.84 | 0.18 | (0.96) | 0.41 | 0.11 |
| Less distributions from: | ||||||
| Net investment income | (0.20 ) 3 | (0.31 ) | (0.24 ) | (0.24 ) | (0.26 ) | (0.29 ) |
| Return of capital | — | (0.05 ) | — | — | — | — |
| Total distributions | (0.20 ) | (0.36 ) | (0.24 ) | (0.24 ) | (0.26 ) | (0.29 ) |
| Net asset value, end of period | $6.92 | $7.23 | $6.75 | $6.81 | $8.01 | $7.86 |
| Market price, end of period | $7.20 | $7.00 | $6.01 | $6.26 | $8.44 | $7.19 |
| Total return, based on NAV 4,5 | (1.50 )% | 12.52 % | 2.52 % | (12.20 )% | 5.25 % | 1.43 % |
| Total return, based on Market Price 6 | 5.86 % | 22.73 % | (0.37 )% | (23.25 )% | 21.33 % | (2.15 )% |
| Net assets, end of period (millions) | $150 | $157 | $146 | $147 | $173 | $170 |
| Ratios to average net assets: | ||||||
| Gross expenses | 0.79 % 7 | 0.77 % | 0.75 % | 0.72 % | 0.71 % | 0.71 % |
| Net expenses 8,9 | 0.79 7 | 0.77 | 0.75 | 0.72 | 0.71 | 0.71 |
| Net investment income | 3.53 7 | 3.55 | 3.60 | 3.42 | 3.16 | 3.43 |
| Portfolio turnover rate | 3 % | 20 % | 14 % | 25 % | 14 % | 27 % |
| 1 | Per share amounts have been calculated using the average shares method. |
|---|---|
| 2 | For the six months ended April 30, 2025 (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 thereof. 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 | The manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund. |
| 9 | Reflects fee waivers and/or expense reimbursements. |
See Notes to Financial Statements.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
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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 Fund follows the accounting and reporting guidance in Financial Accounting Standards Board ( “ FASB ” ) Accounting Standards Codification Topic 946, Financial Services – Investment Companies ( “ ASC 946 ” ). The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”), including, but not limited to, ASC 946. 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
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asset value, the Fund values these securities as determined in accordance with procedures approved by the Fund’s Board of Directors (the “ Board ” ).
Pursuant to policies adopted by the Board, the Fund’s manager has been designated as the valuation designee and is responsible for the oversight of the daily valuation process. The Fund’s manager is assisted by the Global Fund Valuation Committee (the “ Valuation Committee ” ). The Valuation Committee is responsible for making fair value determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to the Fund’s manager and the Board. 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, 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 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.
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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 — unadjusted 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 | — | $ 140,470,918 | — | $ 140,470,918 |
| Municipal Bonds Deposited in Tender Option Bond Trusts | — | 4,976,626 | — | 4,976,626 |
| Total Long-Term Investments | — | 145,447,544 | — | 145,447,544 |
| Short-Term Investments†: | ||||
| Municipal Bonds | — | 5,985,000 | — | 5,985,000 |
| Money Market Funds | $ 4,472 | — | — | 4,472 |
| Total Short-Term Investments | 4,472 | 5,985,000 | — | 5,989,472 |
| Total Investments | $ 4,472 | $ 151,432,544 | — | $ 151,437,016 |
† See Schedule of Investments for additional detailed categorizations.
(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 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
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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. For the six months ended April 30, 2025, the average daily amount of floating rate notes outstanding was $3,348,177 and weighted average interest rate was 2.91%.
(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 appreciation or depreciation 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.
(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
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Notes to financial statements (unaudited) (cont’d)
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.
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, 2025, the Fund did not have any open OTC derivative transactions with credit related contingent features in a net liability position.
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(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) is recorded on the accrual basis. Amortization of premiums and accretion of discounts on debt securities are recorded to interest income over the lives of the respective securities, except for premiums on certain callable debt securities, which are amortized to the earliest call date. 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, 2024, 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.
(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
Franklin Templeton Fund Adviser, LLC ( “ FTFA ” ) is the Fund’s investment manager and Western Asset Management Company, LLC (“Western Asset”) is the Fund’s subadviser.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
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Notes to financial statements (unaudited) (cont’d)
FTFA and Western Asset are indirect, wholly-owned subsidiaries of Franklin Resources, Inc. (“Franklin Resources”).
FTFA 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.
FTFA delegates to Western Asset the day-to-day portfolio management of the Fund. For its services, FTFA pays Western Asset monthly 70% of the net management fee it receives from the Fund.
The manager has agreed to waive the Fund’s management fee to an extent sufficient to offset the net management fee payable in connection with any investment in an affiliated money market fund.
During the six months ended April 30, 2025, fees waived and/or expenses reimbursed amounted to $26, all of which was an affiliated money market fund waiver.
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 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. 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, 2025, such purchase and sale transactions (excluding accrued interest) were $6,915,000 and $5,600,000, respectively. There was no realized gain or loss recognized as a result of these transactions.
3. Investments
During the six months ended April 30, 2025, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:
| Purchases | $ 4,826,473 |
|---|---|
| Sales | 4,844,029 |
At April 30, 2025, 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 Depreciation | |
|---|---|---|---|---|
| Securities | $ 152,112,061 | $ 2,068,235 | $ (5,473,280) | $ (3,405,045) |
30
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
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4. Derivative instruments and hedging activities
At April 30, 2025, 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, 2025. 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 net unrealized appreciation (depreciation) resulting from the Fund’s derivatives and hedging activities during the period.
| AMOUNT OF NET REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED | |
|---|---|
| Interest Rate Risk | |
| Futures contracts | $ (372,833 ) |
| CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED | |
|---|---|
| Interest Rate Risk | |
| Futures contracts | $ 328,323 |
During the six months ended April 30, 2025, the volume of derivative activity for the Fund was as follows:
| Average Market Value | |
|---|---|
| Futures contracts (to buy)† | $ 4,103,705 |
† At April 30, 2025, there were no open positions held in this derivative.
5. Distributions subsequent to April 30, 2025
The following distributions have been declared by the Fund’s Board and are payable subsequent to the period end of this report:
| Record Date | Payable Date | Amount |
|---|---|---|
| 4/23/2025 | 5/1/2025 | $ 0.0340 |
| 5/22/2025 | 6/2/2025 | $ 0.0340 |
| 6/23/2025 | 7/1/2025 | $ 0.0340 |
| 7/24/2025 | 8/1/2025 | $ 0.0340 |
| 8/22/2025 | 9/2/2025 | $ 0.0340 |
6. Stock repurchase program
On November 16, 2015, the Fund announced that the Fund’s 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
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
31
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Notes to financial statements (unaudited) (cont’d)
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, 2025, and the year ended October 31, 2024, the Fund did not repurchase any shares.
7. Transactions with affiliated company
As defined by the 1940 Act, an affiliated company is one in which the Fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control with the Fund. The following company was considered an affiliated company for all or some portion of the six months ended April 30, 2025. The following transactions were effected in such company for the six months ended April 30, 2025.
| Affiliate Value at October 31, 2024 | Purchased — Cost | Shares | Sold — Proceeds | Shares | |
|---|---|---|---|---|---|
| Western Asset Premier Institutional Government Reserves, Premium Shares | $ 203 | $ 2,183,839 | 2,183,839 | $ 2,179,570 | 2,179,570 |
| (cont’d) | Realized Gain (Loss) | Dividend Income | Net Increase (Decrease) in Unrealized Appreciation (Depreciation) | Affiliate Value at April 30, 2025 |
|---|---|---|---|---|
| Western Asset Premier Institutional Government Reserves, Premium Shares | — | $ 1,182 | — | $ 4,472 |
8. Deferred capital losses
As of October 31, 2024, the Fund had deferred capital losses of $6,755,956, which have no expiration date, that will be available to offset future taxable capital gains.
9. Operating segments
The Fund has adopted the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures . The update is limited to disclosure requirements and does not impact the Fund’s financial position or results of operations.
The Fund operates as a single operating segment, which is an investment portfolio. The Fund’s Investment Manager serves as the Chief Operating Decision Maker (CODM), evaluating fund-wide results and performance under a unified investment strategy. The CODM uses these measures to assess fund performance and allocate resources effectively. Internal reporting provided to the CODM aligns with the accounting policies and measurement principles used in the financial statements.
32
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
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For information regarding segment assets, segment profit or loss, and significant expenses, refer to the Statement of Assets and Liabilities and the Statement of Operations, along with the related Notes to Financial Statements. The Fund’s Schedule of Investments provides details of the Fund’s investments that generate returns such as interest, dividends, and realized and unrealized gains or losses. Performance metrics, including portfolio turnover and expense ratios, are disclosed in the Financial Highlights.
Western Asset Municipal High Income Fund Inc. 2025 Semi-Annual Report
33
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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 14, 2025 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 | FOR | WITHHELD | ABSTAIN |
|---|---|---|---|
| Nisha Kumar | 17,840,598 | 604,519 | 403,859 |
| Hillary A. Sale | 18,100,558 | 356,076 | 392,342 |
At the Meeting, Mses. Kumar and Sale were each duly elected by the shareholders to serve as Class II Directors of the Fund until the 2028 Annual Meeting of Shareholders, or until their successors have been duly elected and qualified or until their resignation or are otherwise removed.
At April 30, 2025, in addition to Mses. Kumar and Sale, the other Directors of the Fund were as follows:
Robert D. Agdern Carol L. Colman Anthony Grillo Eileen A. Kamerick Peter Mason Jane Trust
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, 2025.
| FOR | AGAINST | ABSTAIN | BROKER NON-VOTES |
|---|---|---|---|
| 18,439,063 | 266,316 | 143,597 | 0 |
34
Western Asset Municipal High Income Fund Inc.
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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 stock- holders (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 P.O. Box 43006, Providence, RI 02940-3078 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; otherwise such
Western Asset Municipal High Income Fund Inc.
35
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Dividend reinvestment plan (unaudited) (cont’d)
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 P.O. Box 43006, Providence, RI 02940-3078 or by calling the Plan Agent at 1-888-888-0151.
36
Western Asset Municipal High Income Fund Inc.
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Western Asset
Municipal High Income Fund Inc.
Directors
Robert D. Agdern
Carol L. Colman
Anthony Grillo
Eileen A. Kamerick
Chair
Nisha Kumar
Peter Mason
Hillary A. Sale
Jane Trust
Officers
Jane Trust President and Chief Executive Officer
Christopher Berarducci Treasurer and Principal Financial Officer
Fred Jensen Chief Compliance Officer
Marc A. De Oliveira Secretary and Chief Legal Officer
Thomas C. Mandia Senior Vice President
Jeanne M. Kelly Senior Vice President
Western Asset Municipal High Income Fund Inc.
One Madison Avenue 17th Floor New York, NY 10010
Investment manager
Franklin Templeton Fund Adviser, LLC
Subadviser
Western Asset Management Company, LLC
Custodian
The Bank of New York Mellon
Transfer agent
Computershare Inc. P.O. Box 43006 Providence, RI 02940-3078
Independent registered public accounting firm
PricewaterhouseCoopers LLP Baltimore, MD
Legal counsel
Simpson Thacher & Bartlett LLP 900 G Street NW Washington, DC 20001
New York Stock Exchange Symbol
MHF
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Franklin Templeton Funds Privacy and Security Notice
Your Privacy and the Security of Your Personal Information is Very Important to Us
This Privacy and Security Notice (the “Privacy Notice”) addresses the Funds’ privacy and data protection practices with respect to nonpublic personal information the Fund receives. The Legg Mason Funds include the Western Asset Money Market Funds (Funds) sold by the Funds’ distributor, Franklin Distributors, 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; and
• Online account access user IDs, passwords, security challenge question responses.
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, 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.
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
NOT PART OF THE SEMI-ANNUAL REPORT
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Franklin Templeton Funds Privacy and Security Notice
(cont’d)
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.franklintempleton.com, or contact the Funds at 1-877-721-1926 for the Western Asset Money Market Funds or 1-888-777-0102 for the Legg Mason-sponsored closed-end funds. For additional information related to certain state privacy rights, please visit https://www.franklintempleton.com/help/privacy-policy.
Revised December 2023.
NOT PART OF THE SEMI-ANNUAL REPORT
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Western Asset Municipal High Income Fund Inc.
Western Asset Municipal High Income Fund Inc. One Madison Avenue 17th Floor New York, NY 10010
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.franklintempleton.com and (3) on the SEC’s website at www.sec.gov.
Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Fund may be found on Franklin Templeton’s website, which can be accessed at www.franklintempleton.com. Any reference to Franklin Templeton’s website in this report is intended to allow investors public access to information regarding the Fund and does not, and is not intended to, incorporate Franklin Templeton’s website in this report.
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. P.O. Box 43006 Providence, RI 02940-3078
90031-S 6/25
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(b) Not applicable
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.
(a) Please see schedule of investments contained in the Financial Statements and Financial Highlights included under Item 1 of this Form N-CSR.
(b) Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND FINANCIAL HIGLIGHTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PROXY DISCLOSURES FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 10. REMUNERATION PAID TO DIRECTORS, OFFICERS, AND OTHERS OF OPEN-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 11. STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY CONTRACT.
The information is disclosed as part of the Financial Statements included in Item 1 of this Form N-CSR, as applicable.
ITEM 12. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. INVESTMENT PROFESSIONALS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
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Field: /Page
ITEM 14. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 15. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 16. 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 period covered by this report that have materially affected, or are likely to materially affect the Registrant’s internal control over financial reporting.
ITEM 17. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 18. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.
(a) Not applicable.
(b) Not applicable.
ITEM 19. EXHIBITS.
(a) (1) Not applicable.
Exhibit 99.CODE ETH
(a) (3) 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
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Field: /Page
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 23, 2025 |
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 23, 2025 |
| By: | /s/ Christopher
Berarducci |
| --- | --- |
| | Christopher Berarducci |
| | Principal Financial Officer |
| Date: | June 23, 2025 |
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