MUNICIPAL PREMIUM INCOME TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
===============================================================================
We are pleased to present the semiannual report on the operations of
Municipal Premium Income Trust (NYSE Symbol: PIA) for the six months ended
November 30, 1993.
MARKET CONDITIONS
Long-term interest rates were near their lowest levels in almost 20
years for much of the period under review. The passage and signing of the
Clinton administration's Revenue Reconciliation Act during the summer made
higher marginal income tax rates a reality and strengthened demand for tax-
exempt bonds. Over the past six months, municipal bond yields, as measured by
The Bond Buyer Revenue Bond Index, fell 77 basis points from 6.48 percent to
5.71 percent.
Municipal issuers continued to take advantage of lower interest rates
by refunding older, higher-coupon debt at an unprecedented pace. A new record
for underwriting volume has already been set this year. The total of $261
billion issued during the first 11 months of 1993 surpassed the previous high
of $235 billion for all of 1992. Refundings accounted for two-thirds of total
new-issue sales. Underwriting backed by insurance represented 37 percent of the
new-issue market.
PERFORMANCE
Municipal Premium Income Trust's total returns for the six month and
trailing 12 month periods ended November 30, 1993 were 9.52 percent and 16.24
percent, respectively, based on a closing New York Stock Exchange (NYSE) market
price of $11.375 per share.
On November 30, 1993, the Fund declared a monthly dividend of $0.065
per share payable on December 23, 1993 to shareholders of record on December
10, 1993. During the first half of the fiscal year, PIA paid shareholders tax-
free income dividends of $0.39 per share. The Fund has maintained its level of
monthly dividend payments despite the persistent decline in interest rates.
Future common share dividend payments, however, could be affected by sales or
redemptions of older, high-coupon bonds with reduced call protection and by
changes in the cost yield of the preferred stock leverage.
PORTFOLIO STRUCTURE
At the end of the six-month period, the Fund's net assets totaled
approximately $412 million. The portfolio's long-term investments were
diversified among 13 municipal sectors and 83 separate issuers. The three
largest sectors were hospital, single-family mortgage and industrial develop
ment/pollution control revenue bonds, representing 56 percent of municipal bond
investments. The average maturity and call protection of long-term holdings
were 20 years and 7 years, respectively. Bonds subject to the alternative
minimum tax comprised 26 percent of the portfolio.
<PAGE>
The credit quality of the long-term portfolio was:
MOODY'S OR STANDARD & POOR'S RATINGS PERCENT
----------------------------------- -------
Aaa or AAA................................................... 39%
Aa or AA..................................................... 18
A or A....................................................... 16
Baa or BBB................................................... 25
Non-rated.................................................... 2
In addition to common shares, the Fund also has issued Auction Rate
Preferred Shares (ARPS). Throughout the six-month period, the common shares
benefited from the favorable cost of these preferred shares. The dividend rates
on the five preferred series auctions ranged from 2.00 to 3.15 percent for
maturities of 7 to 28 days.
The Fund's procedure for reinvestment of dividends and distributions is
to purchase all shares in the open market. This method helps the Fund support
the market value of its shares. In addition, the Trustees have approved a
procedure whereby the Fund may attempt to reduce or eliminate a market value
discount from net asset value by repurchasing shares in the open market or in
privately negotiated transactions.
We appreciate your support of Municipal Premium Income Trust and look
forward to continuing to serve your investment needs.
Very truly yours,
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
<TABLE>
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS November 30, 1993 (unaudited)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ----- ----- -----
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (97.1%)
GENERAL OBLIGATION (9.3%)
$ 5,000 California Various Purpose (MBIA Insured)......................... 6.00 % 10/ 1/21 $ 5,201,550
8,000 District of Columbia, Ser 1990 A (AMBAC Insured) (Prerefunded).... 7.50 6/ 1/10 9,474,800
Massachusetts,
535 Cons 1990 Ser A (FGIC Insured) (Prerefunded)..................... 7.25 3/ 1/09 625,329
865 Cons 1990 Ser A (FGIC Insured) (Prerefunded)..................... 7.25 3/ 1/09 1,013,659
New York City, New York,
1,000 1987 Ser A (Prerefunded)......................................... 8.50 11/ 1/11 1,177,720
3,985 1987 Ser A (Prerefunded)......................................... 8.50 11/ 1/12 4,693,214
155 1986 Ser D....................................................... 8.50 8/ 1/14 174,088
1,345 1986 Ser D (Prerefunded)......................................... 8.50 8/ 1/14 1,532,682
5,000 1987 Ser A (Prerefunded)......................................... 8.75 11/ 1/14 5,933,650
3,460 Philadelphia, Pennsylvania, 1987 Ser B (Secondary FGIC Insured)
(Prerefunded).................................................... 8.125 8/ 1/17 4,013,773
3,675 Puerto Rico, Public Impr Ser 1990 (Prerefunded)................... 7.70 7/ 1/20 4,426,244
-----------
38,266,709
-----------
EDUCATIONAL FACILITIES REVENUE (3.1%)
6,715 Massachusetts Health & Educational Facilities Authority,
Boston College Ser 1993 K........................................ 5.25 6/ 1/18 6,327,007
New York State Dormitory Authority, State University
4,000 Refg Ser 1993 A.................................................. 5.50 5/15/08 3,984,080
1,350 Ser 1990 B....................................................... 7.50 5/15/11 1,628,235
1,000 Pennsylvania Higher Educational Facilities Authority, Temple
University First Ser (MBIA Insured).............................. 6.50 4/ 1/21 1,086,950
-----------
13,026,272
-----------
ELECTRIC REVENUE (7.1%)
3,910 North Carolina Eastern Municipal Power Agency,
Refg 1989 Ser A (Prerefunded).................................... 7.25 1/ 1/23 4,504,359
1,500 North Carolina Municipal Power Agency #1, Catawba
1985 Ser B (Prerefunded)......................................... 8.50 1/ 1/17 1,679,070
Intermountain Power Agency, Utah,
1,270 Refg Ser 1988 B.................................................. 7.50 7/ 1/21 1,417,752
6,300 Refg Ser 1987 D.................................................. 8.625 7/ 1/21 7,204,554
12,550 Washington Public Power Supply System, Nuclear Proj #2
Refg Ser 1990 C.................................................. 7.625 7/ 1/10 14,475,798
-----------
29,281,533
-----------
HOSPITAL REVENUE (24.4%)
3,500 Colbert County--Northwest Health Care Authority, Alabama,
Helen Keller Hospital Refg Ser 1990.............................. 8.75 6/ 1/09 4,141,935
3,500 Houston County Health Care Authority, Alabama, Southeast
Alabama Medical Center Ser 1989 (Prerefunded).................... 7.25 10/ 1/19 4,082,225
1,000 California Health Facilities Financing Authority,
Alexian Brothers/San Jose Refg Ser 1990 (MBIA Insured)........... 7.125 1/ 1/16 1,123,950
1,000 Jacksonville Health Facilities Authority, Florida, Riverside
Hospital Ser 1989................................................ 7.625 10/ 1/13 1,104,510
1,750 Albany Dougherty County Hospital Authority, Georgia, Phoebe
Putney Hospital 1990 Ser B (AMBAC Insured) (Prerefunded)......... 7.50 9/ 1/20 2,081,940
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS November 30, 1993 (unaudited) (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ----- ----- -----
<C> <S> <C> <C> <C>
$ 3,750 Evergreen Park, Illinois, Little Company of Mary Hospital
Refg Ser 1988 (MBIA Insured)..................................... 7.25 % 2/15/11 $ 4,175,625
1,800 Southwestern Illinois Development Authority, Anderson Hospital
Ser 1992 A....................................................... 7.00 8/15/22 1,905,444
4,000 Indiana Health Facility Financing Authority, Hancock Memorial
Hospital Ser 1990................................................ 8.30 8/15/20 4,583,880
3,420 Kentucky Development Finance Authority, Ashland Hospital
King's Daughters Refg Ser 1987................................... 9.75 8/ 1/05 4,137,482
9,500 Boston, Massachusetts, Boston City Hospital--FHA
Insured Mtge Refg Ser B.......................................... 5.75 2/15/13 9,411,840
Massachusetts Health & Educational Facilities Authority,
500 Berkshire Health 1989 Ser A (MBIA Insured)....................... 7.60 10/ 1/14 571,650
5,000 St John's Hospital 1990 Ser B (Prerefunded)...................... 8.375 12/ 1/20 6,202,050
200 Flint Hospital Building Authority, Michigan, Hurley Medical
Center Ser 1990.................................................. 7.80 7/ 1/14 219,976
4,000 Duluth Economic Development Authority, Minnesota,
Benedictine Health/St Mary's Medical Center
Ser 1990 (Prerefunded)........................................... 8.375 2/15/20 4,874,600
Minneapolis & St Paul Housing & Redevelopment Authority,
Minnesota, Health One Oblig Grp
12,500 Ser 1990 B (Prerefunded)......................................... 8.00 8/15/14 15,136,500
2,405 Ser 1990 C (Prerefunded)......................................... 8.00 8/15/19 2,912,263
Missouri Health & Educational Facilities Authority,
4,000 Missouri Baptist Medical Center Refg Ser 1989.................... 7.625 7/ 1/18 4,406,560
1,985 Missouri Baptist Medical Center Ser 1989......................... 8.00 1/ 1/19 2,225,443
2,985 Lehigh County General Purpose Authority, Pennsylvania,
St Lukes Hospital Ser 1992 (AMBAC Insured)....................... 6.25 7/ 1/22 3,174,995
3,420 Lycoming County Authority, Pennsylvania, Divine Providence
Hospital of the Sisters of Christian Charity 1990 Ser B.......... 7.75 7/ 1/16 3,881,803
2,375 Montgomery County Higher Educational & Health Authority,
Pennsylvania, Holy Redeemer Hospital 1990 Ser A
(AMBAC Insured).................................................. 7.625 2/ 1/20 2,738,945
4,230 Greenwood County, South Carolina, Memorial Hospital
Ser 1987 A (BIG Insured) (Prerefunded)........................... 8.375 10/ 1/17 4,969,319
Sumter County, South Carolina, Tuomey Medical Center
1,405 Ser 1985 (Prerefunded)........................................... 10.00 10/ 1/04 1,596,763
95 Ser 1985 (Prerefunded)........................................... 10.00 10/ 1/04 107,966
2,750 Jefferson County Health Facilities Development Corporation,
Texas, Baptist Health Care Ser 1989.............................. 8.30 10/ 1/14 3,093,228
4,500 Midland County Hospital District, Texas, Ser 1989 (Prerefunded)... 8.375 6/ 1/02 5,282,595
2,400 Peninsula Ports Authority, Virginia, Mary Immaculate Hospital
Ser 1989......................................................... 8.375 8/ 1/04 2,690,952
-----------
100,834,439
-----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL
REVENUE (13.6%)
14,500 Pima County Industrial Development Authority, Arizona,
Tucson Electric Power Co Refg Ser 1988 A (FSA Surety)............ 7.25 7/15/10 16,485,050
10,000 Burlington, Kansas, Kansas Gas & Electric Co Refg Ser 1991
(MBIA Insured)................................................... 7.00 6/ 1/31 11,229,200
2,000 Cleveland, Ohio, Continental Airlines Inc Ser 1990 (AMT).......... 9.00 12/ 1/19 2,067,720
1,000 Ohio Water Development Authority, Toledo Edison Co
Ser 1990 A (Secondary FSA Insured)............................... 7.75 5/15/19 1,176,840
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS November 30, 1993 (unaudited) (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ----- ----- -----
<C> <S> <C> <C> <C>
$ 9,500 Montgomery County Industrial Development Authority,
Pennsylvania, Philadelphia Electric Co Refg 1991 Ser B
(MBIA Insured)................................................... 6.70 % 12/ 1/21 $ 10,522,770
13,000 Alliance Airport Authority, Texas, AMR Corp Ser 1990 (AMT)........ 7.50 12/ 1/29 13,994,630
500 Matagorda County Navigation District #1, Texas, Houston
Lighting & Power Co Collateralized Ser 1989 A (AMT).............. 7.875 2/ 1/19 556,975
-----------
56,033,185
-----------
MORTGAGE REVENUE--MULTI-FAMILY (0.3%)
1,250 Lake Charles Non-Profit Housing Development Corporation,
Louisiana, Ser 1990 A (Capital Guaranty Insured)................. 7.875 2/15/25 1,256,825
-----------
MORTGAGE REVENUE--SINGLE FAMILY (16.2%)
5,000 Alaska Housing Finance Corporation, Ser 1993 (a).................. 5.90 12/ 1/33 4,950,000
855 Colorado Housing & Finance Authority, Ser 1990 B-2................ 8.00 2/ 1/18 914,320
30,000 Pinnellas County Housing Finance Authority, Florida, Ser 1983..... 0.00 1/ 1/15 3,330,000
1,000 Idaho Housing Agency, 1988 Ser D-2 (AMT).......................... 8.25 1/ 1/20 1,162,200
3,760 Illinois Housing Development Authority, 1988 Ser C (AMT).......... 8.10 2/ 1/22 3,951,346
1,810 Indiana Housing Finance Authority, Ser 1990 A-2 (AMT)............. 8.10 1/ 1/22 1,948,375
1,680 Kansas City Leavenworth & Lenexa, Kansas, GNMA-Backed
Ser 1988 C (AMT)................................................. 8.00 11/ 1/20 1,859,962
Olathe, Kansas, GNMA Collateralized
320 Ser 1990 B....................................................... 7.50 9/ 1/10 347,491
1,280 Ser 1989 A (AMT) (MBIA Insured).................................. 8.00 11/ 1/20 1,394,790
2,075 New Orleans Home Mortgage Authority, Louisiana,
1989 Ser B-1 (AMT)............................................... 8.25 12/ 1/21 2,215,913
Maine Housing Authority,
3,540 Purchase Ser 1988 D4 (AMT)....................................... 7.55 11/15/19 3,781,322
1,000 Purchase Ser 1988 D5 (AMT)....................................... 7.55 11/15/19 1,077,960
Massachusetts State Housing Finance Agency,
5,960 1989 Ser 7 (AMT)................................................. 8.10 6/ 1/20 6,285,118
5,030 Residential Ser 1989 A (AMT)..................................... 8.20 8/ 1/15 5,291,409
5,000 Residential Ser 1987 B (AMT)..................................... 8.50 8/ 1/20 5,319,200
1,165 Mississippi Housing Finance Corporation, Purchase GNMA-
Backed Ser 1989 (AMT)............................................ 8.25 10/15/18 1,278,494
915 Muskogee County Home Finance Authority, Oklahoma,
1990 Ser A (FGIC Insured)........................................ 7.60 12/ 1/10 989,371
Pennsylvania Housing Finance Agency,
1,975 1990 Ser 27 (AMT)................................................ 8.15 10/ 1/21 2,217,412
1,470 1990 Ser X (AMT)................................................. 8.15 4/ 1/24 1,604,784
Rhode Island Housing & Mortgage Finance Corporation, Home
735 1989 Ser 1-B (AMT)............................................... 8.40 10/ 1/21 793,697
2,560 1988 Ser 1-D (AMT)............................................... 7.875 10/ 1/22 2,741,478
2,000 1989 Ser 1-B (AMT)............................................... 8.40 10/ 1/22 2,172,820
South Carolina Housing Finance & Development Authority,
Home
3,000 1988 Ser C-1 (AMT)............................................... 8.125 7/ 1/21 3,229,080
1,220 1991 Ser A (AMT)................................................. 7.40 7/ 1/23 1,297,311
2,870 El Paso Housing Finance Corporation, Texas, Ser 1989 (AMT)........ 8.20 3/ 1/21 3,018,579
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS November 30, 1993 (unaudited) (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ----- ----- -----
<C> <S> <C> <C> <C>
Utah Housing Finance Agency,
$ 930 Ser 1991 B-1..................................................... 7.50 % 7/ 1/16 $ 1,008,232
2,200 Ser 1989 B (AMT)................................................. 8.25 7/ 1/21 2,389,090
165 Wyoming Community Development Authority, Federally Insured
or Gtd 1989 Ser A................................................ 7.90 6/ 1/17 164,475
-----------
66,734,229
-----------
NURSING & HEALTH RELATED FACILITIES REVENUE (2.6%)
New York State Medical Care Facilities Finance Agency, Mental
Health
3,000 Ser 1987......................................................... 8.875 8/15/07 3,441,930
2,935 Ser 1990 (MBIA Insured).......................................... 7.75 2/15/20 3,448,889
3,500 Ser 1991 A....................................................... 7.50 2/15/21 3,985,800
-----------
10,876,619
-----------
PUBLIC FACILITIES REVENUE (2.2%)
4,000 Metropolitan Pier & Exposition Authority, Illinois, Ser 1992 A
(FGIC Insured)................................................... 0.00 6/15/07 3,445,200
New York State Urban Development Corporation,
1,000 Ser 1991......................................................... 7.60 4/ 1/03 1,139,180
1,300 Ser 1991......................................................... 7.50 4/ 1/11 1,486,121
2,500 Houston, Texas, Hotel Occupancy Tax & Parking Facility Sr Lien
Ser A 1991 (Secondary FGIC Insured).............................. 7.00 7/ 1/09 2,830,825
-----------
8,901,326
-----------
RESOURCE RECOVERY (3.0%)
11,500 Cambria County Industrial Development Authority,
Pennsylvania, Cambria Cogen Co Ser 1989 F-2 (AMT)................ 7.75 9/ 1/19 12,397,000
-----------
TRANSPORTATION REVENUE (6.0%)
Denver, Colorado, Airport
3,500 Ser 1990 A (AMT)................................................. 8.50 11/15/07 4,033,680
5,000 Ser 1990 A (AMT)................................................. 8.25 11/15/12 5,664,700
5,000 Ser 1991 A (AMT)................................................. 8.875 11/15/12 5,975,450
600 Ser 1991 A (AMT)................................................. 8.50 11/15/23 689,268
3,000 Ser 1991 A (AMT)................................................. 8.75 11/15/23 3,549,120
5,000 Puerto Rico Highway Authority, Refg Ser 1993 X.................... 5.25 7/ 1/21 4,649,400
-----------
24,561,618
-----------
WATER & SEWER REVENUE (6.6%)
2,500 Coachella, California, Ser 1992 COPs (FSA Insured)................ 6.10 3/ 1/22 2,616,075
11,000 Western Townships Utilities Authority, Michigan, Sewerage
Disposal Ser 1989 (Crossover Refunded)........................... 8.20 1/ 1/18 12,658,800
1,500 New York City Municipal Water Finance Authority, Ser 1987 B
(Secondary MBIA Insured) (Prerefunded)........................... 8.25 6/15/16 1,740,015
1,750 Bethlehem Authority, Pennsylvania, Ser 1992 (MBIA Insured)........ 6.25 11/15/21 1,834,753
1,000 Houston, Texas, Prior Lien Ser 1986 (Prerefunded)................. 8.20 12/ 1/15 1,148,400
3,500 Texas Water Resource Finance Authority, Ser 1989
(AMBAC Insured).................................................. 7.50 8/15/13 3,804,605
2,900 Loudoun County Sanitation Authority, Virginia, Ser 1989
(AMBAC Insured) (Prerefunded).................................... 7.50 1/ 1/17 3,372,207
-----------
27,174,855
-----------
OTHER REVENUE (2.7%)
2,500 Michigan Municipal Bond Authority, Local Govt Loan Refg
Ser 1991 A (FGIC Insured)........................................ 4.75 12/ 1/09 2,350,275
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS November 30, 1993 (unaudited) (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ----- ----- -----
<C> <S> <C> <C> <C>
$ 4,650 New York Local Government Assistance Corporation,
Ser 1991 A (Prerefunded)......................................... 7.25 % 4/ 1/18 $ 5,492,115
2,000 Pennsylvania Industrial Development Authority, Econ Dev
Ser A 1991....................................................... 7.00 1/ 1/11 2,198,580
1,000 Philadelphia, Pennsylvania, Gas Works Thirteenth Ser
(Prerefunded).................................................... 7.70 6/15/21 1,207,690
-----------
11,248,660
-----------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST $358,445,642)................................... 400,593,270
-----------
SHORT-TERM MUNICIPAL OBLIGATIONS (1.1%)
2,000 Massachusetts, Ser 1990 D (Tender 12/1/93)........................ 1.75* 6/ 1/95 2,000,000
2,400 Schuylkill County Industrial Development Authority,
Pennsylvania, Ser 1985 (Tender 12/1/93).......................... 1.85* 12/ 1/11 2,400,000
------------
TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS
(IDENTIFIED COST $4,400,000)........................................................... 4,400,000
------------
TOTAL INVESTMENTS
(IDENTIFIED COST $362,845,642) (B)............................... 98.2% 404,993,270
CASH AND OTHER ASSETS
IN EXCESS OF LIABILITIES......................................... 1.8 7,407,550
------ ------------
NET ASSETS ....................................................... 100.0% $412,400,820
====== ============
<FN>
- ----------
* Variable or floating rate securities. Coupon rate shown reflects current rate.
(a) Security purchased on a when issued basis.
(b) The aggregate cost for federal income tax purposes is $362,852,642; the aggregate gross unrealized appreciation is $42,615,618
and the aggregate gross unrealized depreciation is $474,990, resulting in net unrealized appreciation of $42,140,628.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL PREMIUM INCOME TRUST
FINANCIAL STATEMENTS
===============================================================================
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1993 (unaudited)
===============================================================================
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $362,845,642) (Note 1)..................... $404,993,270
Cash......................................................... 1,472,609
Receivables for:
Interest.................................................... 8,558,381
Investments sold............................................ 2,704,833
Prepaid expenses............................................. 34,955
Deferred organizational expenses (Note 1).................... 2,457
-----------
TOTAL ASSETS................................................ 417,766,505
-----------
LIABILITIES:
Payable for investments purchased............................ 4,968,333
Investment advisory fee payable (Note 2)..................... 144,963
Administration fee payable (Note 3).......................... 90,602
Accrued expenses (Note 4).................................... 161,787
-----------
TOTAL LIABILITIES......................................... 5,365,685
-----------
NET ASSETS:
Preferred shares of beneficial interest
(1,000,000 shares authorized of non-
participating $.01 par value, 1,250 shares
outstanding (Note 5))....................................... 125,000,000
-------------
Common shares of beneficial interest
(unlimited shares authorized of $.01 par value,
26,243,024 shares outstanding).............................. 243,934,937
Accumulated realized loss on
investments--net............................................ (527,465)
Unrealized appreciation on investments
--net....................................................... 42,147,628
Accumulated undistributed investment
income--net................................................. 1,845,720
-------------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS...................................... 287,400,820
-------------
TOTAL NET ASSETS.......................................... $412,400,820
=============
NET ASSET VALUE PER COMMON SHARE,
($287,400,820 divided by 26,243,024
common shares outstanding).................................. $10.95
======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===============================================================================
STATEMENT OF OPERATIONS For the six months
ended November 30, 1993 (unaudited)
===============================================================================
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME ............................................ $13,623,781
-----------
EXPENSES
Investment advisory fee (Note 2)............................ 826,836
Administration fee (Note 3)................................. 516,773
Auction commission fees..................................... 156,648
Transfer agent fees and expenses (Note 4)................... 76,860
Professional fees........................................... 53,685
Auction agent fees.......................................... 43,920
Shareholder reports and notices............................. 23,790
Registration fees........................................... 15,988
Trustees' fees and expenses (Note 4)........................ 15,261
Custodian fees.............................................. 9,150
Organizational expenses (Note 1)............................ 7,371
Other....................................................... 18,524
-----------
TOTAL EXPENSES............................................ 1,764,806
-----------
INVESTMENT INCOME--NET................................... 11,858,975
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS--NET (Note 1):
Realized loss on investments--net........................... (170,930)
Change in unrealized appreciation on
investments--net........................................... 7,583,129
-----------
NET GAIN ON INVESTMENTS................................... 7,412,199
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................... $19,271,174
===========
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
MUNICIPAL PREMIUM INCOME TRUST
FINANCIAL STATEMENTS (continued)
===================================================================================================================================
STATEMENT OF CHANGES IN NET ASSETS
===================================================================================================================================
<CAPTION>
For the six
months ended For the year
November 30, 1993 ended
(unaudited) May 31, 1993
----------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income--net......................................................... $ 11,858,975 $ 23,885,851
Realized loss on investments--net.............................................. (170,930) (621,608)
Realized gain on futures contracts--net........................................ -0- 271,790
Change in unrealized appreciation on investments--net.......................... 7,583,129 17,155,840
----------- -----------
Net increase in net assets resulting from operations.......................... 19,271,174 40,691,873
----------- -----------
Dividends to preferred shareholders from investment income--net................. (1,614,093) (3,318,478)
Dividends and distributions to common shareholders from:
Investment income--net......................................................... (10,234,779) (20,206,920)
Realized gain on investments--net.............................................. -0- (209,943)
----------- -----------
Total dividends and distributions........................................... (11,848,872) (23,735,341)
----------- -----------
Total increase.............................................................. 7,422,302 16,956,532
NET ASSETS:
Beginning of period............................................................. 404,978,518 388,021,986
----------- -----------
END OF PERIOD (including undistributed net investment income
of $1,845,720 and $1,835,617, respectively)................................... $412,400,820 $404,978,518
============ ============
See Notes to Financial Statements
</TABLE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited)
===============================================================================
1. ORGANIZATION AND ACCOUNTING POLICIES--Municipal Premium Income Trust (the
"Fund") is registered under the Investment Company Act of 1940, as amended (the
"Act"), as a diversified closed-end management investment company. It was
organized on November 16, 1988 as a Massachusetts business trust and commenced
operations on February 1, 1989.
The following is a summary of significant accounting policies:
A. Valuation of Investments--Portfolio securities are valued for the Fund by an
outside independent pricing service approved by the Fund's Trustees. The
pricing service has informed the Fund that in valuing the Fund's portfolio
securities, it uses both a computerized grid matrix of tax-exempt securities
and evaluations by its staff, in each case based on information concerning
market transactions and quotations from dealers which reflect the bid side of
the market each day. The Fund's portfolio securities are thus valued by
reference to a combination of transactions and quotations for the same or other
securities believed to be comparable in quality, coupon, maturity, type of
issue, call provisions, trading characteristics and other features deemed to be
relevant. A futures contract is valued at the last sale price as of the close
of the commodities exchange on which it trades unless the Trustees determine
that such price does not reflect its fair value, in which case it will be
valued at its fair value as determined by the Trustees.
B. Accounting for Investments--Security transactions are accounted for
on the trade date (date the order to buy or sell is executed). In computing net
investment income, the Fund amortizes premiums and original issue discounts on
securities owned. Additionally, with respect to market discount on bonds
purchased after April 30, 1993, a portion of any capital gain realized upon
disposition is recharacterized as taxable investment income. Realized gains and
losses on security transactions are determined on the identified cost method.
Interest income is accrued daily.
C. Futures Contracts--A futures contract is an agreement between two
parties to buy and sell a security at a set price on a future date. Upon
entering into such a contract the Fund pledges to the broker cash or tax-exempt
securities at least equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contract, the Fund is to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as "variation margin," and are
recorded by the Fund as unrealized gains or losses. When the contract is
closed, the Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at
the time it was closed.
D. Federal Income Tax Status--It is the Fund's policy to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable and nontaxable income
to its shareholders. Accordingly, no federal income tax provision is required.
E. Dividends and Distributions to Shareholders--The Fund records
dividends and distributions to its shareholders on the ex-dividend date.
F. Organizational Expenses--The Fund's Administrator paid the
organizational expenses of the Fund in the amount of $72,777. The Fund
reimbursed the Administrator for such expenses which are being amortized by the
straight-line method over a period not to exceed five years from the
commencement of operations.
2. INVESTMENT ADVISORY AGREEMENT--Pursuant to an Investment Advisory Agreement
(the "Advisory Agreement") with Dean Witter InterCapital Inc. (the "Investment
Adviser"), the Fund pays its Investment Adviser an advisory fee, calculated
weekly and payable monthly, by applying the annual rate of 0.40% to the Fund's
average weekly net assets.
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
===============================================================================
Under the terms of the Advisory Agreement, the Investment Adviser
manages the Fund's assets. Also, the Investment Adviser pays the salaries of
all personnel, including officers of the Fund, who are employees of the
Investment Adviser.
3. ADMINISTRATION AGREEMENT--Pursuant to an Administration Agreement (the
"Administration Agreement") with Dean Witter InterCapital Inc. (the
"Administrator"), the Fund pays its Administrator an administration fee,
calculated weekly and payable monthly, by applying the annual rate of 0.25% to
the Fund's average weekly net assets.
Under the terms of the Administration Agreement, the Administrator
maintains certain of the Fund's books and records and furnishes, at its own
expense, such office space, facilities, equipment, clerical help, bookkeeping
and certain legal services as the Fund may reasonably require in the conduct of
its business. In addition, the Administrator pays the salaries of all
personnel, including officers of the Fund, who are employees of the
Administrator.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES--The cost of
purchases and the proceeds from sales of portfolio securities for the six
months ended November 30, 1993, excluding short-term investments, aggregated
$30,466,903 and $17,383,029, respectively.
On April 1, 1991 the Fund established an unfunded noncontributory
defined benefit pension plan covering all independent Trustees of the Fund who
will have served as independent Trustees for at least five years at the time of
retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension costs for
the six months ended November 30, 1993, included in Trustees' fees and expenses
in the Statement of Operations, amounted to $5,283. At November 30, 1993 the
Fund had an accrued pension liability of $37,446 which is included in accrued
expenses in the Statement of Assets and Liabilities.
Dean Witter Trust Company, an affiliate of the Investment
Adviser/Administrator, is the Fund's transfer agent. During the six months
ended November 30, 1993, the Fund incurred transfer agent fees and expenses of
$76,860, of which $47,021 was payable at November 30, 1993.
5. PREFERRED SHARES OF BENEFICIAL INTEREST--The Fund is authorized to issue up
to 1,000,000 non-participating preferred shares of beneficial interest having a
par value of $.01 per share, in one or more series, with rights as determined
by the Trustees, without the approval of the common shareholders. The Fund has
issued 1,250 shares of Auction Rate Preferred Shares ("Preferred Shares")
consisting of 250 shares of each of five series, designated series A through E
for gross total proceeds of $125,000,000. The Preferred Shares have a
liquidation value of $100,000 per share plus any accumulated but unpaid
dividends plus the redemption premium, if any, and are redeemable (in whole or
in part) on any dividend payment date.
Dividends, which are cumulative, generally reset every 28 days (except
for Series E, which generally resets every seven days) through auction
procedures. Dividend rates ranged from 2.00% to 3.15% during the six months
ended November 30, 1993.
The Fund is subject to certain restrictions relating to the preferred
shares. Failure to comply with these restrictions could preclude the Fund from
declaring any distributions to common shareholders or repurchasing common
shares and/or could trigger the mandatory redemption of preferred shares at
liquidation value.
The preferred shares, which are entitled to one vote per share,
generally vote with the common shares but vote separately as a class to elect
two Trustees and on any matters affecting the rights of the preferred shares.
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
===============================================================================
6. COMMON SHARES OF BENEFICIAL INTEREST--There have been no transactions in
common shares of beneficial interest for the periods ended May 31, 1993 and
November 30, 1993.
<TABLE>
<CAPTION>
Capital
Par Value Paid in
of Excess of
Shares Shares Par Value
------ --------- ---------
<S> <C> <C> <C>
Balance, May 31, 1992, May 31, 1993 and
November 30, 1993.................................................... 26,243,024 $262,430 $243,672,507
========== ======== ============
</TABLE>
7. DIVIDENDS TO COMMON SHAREHOLDERS--The Fund declared the following dividends
from net investment income--
<TABLE>
<CAPTION>
Declaration Amount Record Payable
Date Per Share Date Date
---- ---------- ---- ----
<C> <S> <C> <C>
November 30, 1993 $0.065 December 10, 1993 December 23, 1993
December 28, 1993 $0.065 January 7, 1994 January 21, 1994
</TABLE>
8. FEDERAL INCOME TAX STATUS--At May 31, 1993, the Fund had net capital loss
carryovers of approximately $350,000 which will be available through May 31,
2001 to offset future capital gains to the extent provided by regulations.
Capital losses incurred after October 31, within the taxable year are deemed to
arise on the first business day of the Fund's next taxable year. The Fund
incurred and elected to defer a net capital loss of approximately $97,000
during such period in fiscal 1993. To the extent these carryover losses are
used to offset future capital gains, it is probable that the gains so offset
will not be distributed to shareholders. For the six months ended November 30,
1993, the Fund incurred approximately $171,000 of net capital losses.
9. SELECTED QUARTERLY FINANCIAL DATA--
<TABLE>
<CAPTION>
Quarters Ended*
----------------------------------
11/30/93 8/31/93
--------------- ----------------
Per Per
Common Common
Total Share Total Share
----- ------ ----- ------
<S> <C> <C> <C> <C>
Total investment income ............................................................. $6,870 $0.26 $6,754 $0.26
Investment income--net .............................................................. 5,989 0.23 5,870 0.22
Realized and unrealized gain
(loss) on investments--net.......................................................... 8,558 0.32 (1,146) (0.04)
<CAPTION>
Quarters Ended*
-------------------------------------------------------------------------
5/31/93 2/28/93 11/30/92 8/31/92
------------- --------------- -------------- ---------------
Per Per Per Per
Common Common Common Common
Total Share Total Share Total Share Total Share
----- ------ ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income ........................ $6,997 $0.27 $6,662 $0.25 $6,962 $0.26 $7,032 $0.27
Investment income--net ......................... 6,088 0.23 5,731 0.22 6,005 0.23 6,062 0.23
Realized and unrealized gain
(loss) on investments--net..................... (3,479) (0.13) 13,595 0.51 (2,070) (0.08) 8,760 0.34
<FN>
- ------------
* Totals expressed in thousands of dollars.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL PREMIUM INCOME TRUST
FINANCIAL HIGHLIGHTS (unaudited)
===================================================================================================================================
Selected data and ratios for a common share of beneficial interest outstanding throughout each period:
<CAPTION>
For the period
For the six For the year ended May 31, February 1, 1989*
months ended ----------------------------------------------------- through
November 30, 1993 1993 1992 1991 1990 May 31, 1989
----------------- ---- ---- ---- ---- ----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period.............................. $ 10.67 $ 10.02 $ 9.61 $ 9.35 $ 9.59 $ 9.40
-------- -------- -------- -------- -------- --------
Investment income--net.............. 0.45 0.91 0.95 0.96 0.71 0.21
Realized and unrealized
gain on investments--net........... 0.28 0.64 0.42 0.34 -0- 0.15
-------- -------- -------- -------- -------- --------
Total from investment operations..... 0.73 1.55 1.37 1.30 0.71 0.36
-------- -------- -------- -------- -------- --------
Less dividends, distributions
and other charges:
Dividends from net investment
income............................. (0.39) (0.77) (0.72) (0.70) (0.69) (0.15)
Distributions from net realized
gains on investments............... -0- (0.01) (0.05) (0.07) (0.11) -0-
Common share equivalent
of dividends paid
to preferred shareholders.......... (0.06) (0.12) (0.19) (0.27) (0.05) -0-
Offering costs charged
against capital.................... -0- -0- -0- -0- (0.10) (0.02)
--------- -------- -------- -------- -------- --------
Total dividends, distributions
and other charges................... (0.45) (0.90) (0.96) (1.04) (0.95) (0.17)
--------- -------- -------- -------- -------- --------
Net asset value, end of period....... $ 10.95 $ 10.67 $ 10.02 $ 9.61 $ 9.35 $ 9.59
========= ======== ======== ======== ======== ========
Market value, end of period.......... $ 11.375 $ 10.75 $ 10.375 $ 9.625 $ 9.125 $ 9.375
========= ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN+.............. 9.52%(2) 11.30% 16.44% 14.62% 5.92% (4.80%)(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)...................... $412,401 $404,979 $388,022 $373,207 $368,065 $249,581
Ratios to average net assets
of common shareholders:
Total expenses...................... 1.23%(1) 1.38% 1.44% 1.59% 1.02% 0.96%(1)
Investment income--net before
preferred stock dividends.......... 8.24%(1) 8.73% 9.67% 10.20% 7.46% 7.18%(1)
Preferred stock dividends........... 1.12%(1) 1.21% 1.90% 2.88% 0.53% --
Investment income--net available
to common shareholders............. 7.12%(1) 7.52% 7.77% 7.32% 6.93% 7.18%(1)
Asset coverage on preferred
shares at end of period............. 330% 324% 310% 299% 294% --
Portfolio turnover rate.............. 4% 7% 16% 56% 150% 106%
<FN>
- ------------
* Commencement of operations.
+ Total investment return is based upon the current market value on the first and last day of each period reported. Dividends
and distributions are assumed to be reinvested at the prices obtained under the Fund's dividend reinvestment plan. Total
investment return does not reflect sales charges or brokerage commissions.
(1) Annualized.
(2) Not annualized.
See Notes to Financial Statements
===============================================================================
The financial statements included herein have been taken from the
records of the Fund without examination by the independent accountants and
accordingly they do not express an opinion thereon.
</TABLE>
<PAGE>
TRUSTEES
Jack F. Bennett
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Albert T. Sommers
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center--Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT ADVISER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
MUNICIPAL
PREMIUM
INCOME
TRUST
SEMIANNUAL REPORT
NOVEMBER 30, 1993
