<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- - -----------------------------------------------------------------------------
When we last reported to shareholders of MUNICIPAL PREMIUM INCOME TRUST
(NYSE SYMBOL: PIA) on November 30, 1993, most economic indicators were
pointing toward a sustained recovery. Shortly after the beginning of the new
year, additional concerns surfaced regarding the potential for increased
inflationary pressure. The Federal Reserve Board responded to this scenario
by tightening monetary policy. Between February and April, the central bank
raised the federal-funds rate-the interest rates that banks charge each other
for overnight loans-from 3.00 percent to 4.25 percent in four separate moves.
In May, the discount rate-the interest rate the Federal Reserve Board charges
member banks for loans-was also increased, by 50 basis points, to 3.50
percent.
Long-term municipal bond yields, as measured by The Bond Buyer Revenue
Bond Index,* were little changed in December and January. However, in
February and March the Index rose 89 basis points to 6.39 percent as yields
reached levels not seen in over a year. Despite 15 - 20 basis point yield
swings during April and May, the municipal market began to show signs of
stability and the Index closed the period at 6.41 percent.
The municipal market is also influenced by unique supply and demand
conditions. New-issue underwriting totaled a record $290 billion in 1993. The
pace of new-issue activity in 1994 has slowed to an annual rate of $200
billion. By way of comparison, approximately $260 billion will leave the
market, as bonds mature or are called for redemption. Municipal issuance for
the first five months of 1994 totaled $73 billion, 38 percent below the level
for the comparable period of last year. This imbalance has helped municipals
outperform U.S. government securities over the past two months.
PERFORMANCE
For the 12-month period ended May 31, 1994, the Fund paid shareholders
tax-free income dividends totaling $0.76 per share. PIA's total return for
this period was -2.72 percent. This calculation is based on a change in the
Fund's New York Stock Exchange (NYSE) market price from $10.75 on May 31,
1993 to $9.75 per share on May 31, 1994 and includes the reinvestment of all
dividends and distributions. Over the same period, the Fund's net asset value
(NAV) declined by roughly 4 percent from $10.67 per share to $10.24 per
share. Although PIA is leveraged with Auction Rate Preferred Shares (as
discussed below), its NAV decline was in line with the unleveraged Revenue
Bond Index. Performance was aided by the defensive nature of the high-coupon
bonds in the portfolio, as well as the large number of refunded bonds (bonds
to be redeemed on optional call dates from refinancing proceeds held in
escrow). As of May 31, 1994, the Fund was trading on the NYSE at a 4.79
percent discount to NAV.
PORTFOLIO STRUCTURE
At the end of the period, the portfolio's long-term investments were
diversified among 13 specific municipal sectors and 77 credits. The three
largest sectors were hospital, single-family housing and industrial
development/pollution control revenue bonds, representing 50 percent of net
assets. The average maturity and call protection of the Fund's long-term
holdings were 20 years and 7 years, respectively. Bonds subject to the
alternative minimum
- - ---------------
* The Bond Buyer Revenue Bond Index is an arithmetic average of the yields
of 25 selected municipal revenue bonds with 30-year maturities. Ratings
of these bonds range from Aa1 to Baa1 by Moody's and AA+ to A- by S&P.
<PAGE>
<PAGE>
tax (AMT) comprised approximately 22 percent of net assets. At the end of the
period, the Fund's net assets exceeded $393 million. The credit quality
ratings of the long-term portfolio are summarized below:
<TABLE>
<CAPTION>
MOODY'S OR STANDARD & POOR'S RATING PERCENT
- - ----------------------------------- ---------
<S> <C>
Aaa or AAA ........................ 39.5%
Aa or AA .......................... 19.8%
A or A ............................ 16.5%
Baa or BBB ........................ 22.0%
Not rated ......................... 2.2%
</TABLE>
PREFERRED SHARE LEVERAGE
In addition to common shares, the Fund has also issued 5 AAA-rated series
of Auction Rate Preferred Shares (ARPS) totaling $125 million. Dividend and
distribution payments for preferred shares rank ahead of the common share
payments. ARPS are short-term securities with maturities normally ranging
from one week to one year. The dividend rates on tax-free ARPS are
established by an auction process, when the maturity is rolled over. The Fund
uses the proceeds from ARPS issuance to purchase long-term municipal bonds.
The common shares are impacted by the preferred shares in two ways. First,
following the payment of the dividend on the ARPS, common shares receive any
extra incremental income when the long-term portfolio yield is higher than
the cost of the ARPS (yield plus expenses). Second, the preferred shares
leverage the common shares by a factor of approximately 1.5 times, thus
multiplying any market change in NAV. Over the past six months, incremental
tax-free income from the ARPS leverage maintained common share dividends and
increased the level or cushion of undistributed net investment income. As of
May 31, 1994, an amount equivalent to $0.09 per share has been accumulated in
this cushion to help sustain the Fund's current dividend. The average ARPS
rate on the Fund's outstanding series as of May 31, 1994 was 2.52 percent,
with all resets scheduled to occur within the next month. Higher yields in
future ARPS auctions may begin to erode the Fund's cushion of undistributed
net investment income available for distribution to common shareholders. If
the cushion were to erode significantly over time, the Fund would take
appropriate action, which could include an adjustment in the common dividend
and/or a reduction of the amount of ARPS.
Leverage is usually a positive influence on the portfolio during periods
of stable to declining interest rates. However, as interest rates have risen
over the past few months, leverage has had an adverse impact on the Fund's
NAV.
LOOKING AHEAD
A continuation of diminished new-issue supply coupled with higher tax
rates and significant maturities and redemptions, should sustain investor
demand for municipal bonds. However, the overall direction of interest rates
will primarily be determined by the strength of the economy, the trend of
inflation and the Federal Reserve Board's response to economic conditions.The
effect of interest rates on portfolio bond values and the cost of the ARPS
leverage, as well as bond redemption activity are the key factors expected to
influence the Fund's future results.
The Fund's procedure for reinvestment of all dividends and distributions
on common shares is by purchase in the open market. This method helps to
support the market value of the Fund's 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 common shares in
the open market or in privately negotiated transactions. The Fund may also
utilize procedures to reduce or eliminate the amount of outstanding ARPS,
including their repurchase in the open market or in privately negotiated
transactions.
We appreciate your ongoing 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>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS May 31, 1994
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------- -------- ----------- -------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS (90.5%)
GENERAL OBLIGATION (6.1%)
$ 5,000 California, Various Purpose (MBIA Insured) .......................... 6.00 % 10/ 1/21 $ 4,849,400
8,000 District of Columbia, Ser 1990 A (AMBAC Insured)(Prerefunded) ...... 7.50 6/ 1/10 9,100,000
New York City, New York,
150 1986 Ser D ......................................................... 8.50 8/ 1/14 162,750
5,000 1987 Ser A (Prerefunded) ........................................... 8.75 11/ 1/14 5,706,900
3,675 Puerto Rico, Public Impr Ser 1990 (Prerefunded) ..................... 7.70 7/ 1/20 4,255,613
- - ------- -----------
21,825 24,074,663
- - ------- -----------
EDUCATIONAL FACILITIES REVENUE (1.6%)
New York State Dormitory Authority, State University
4,000 Refg Ser 1993 A .................................................... 5.50 5/15/08 3,823,480
1,350 Ser 1990 B (Prerefunded) ........................................... 7.50 5/15/11 1,534,005
1,000 Pennsylvania Higher Educational Facilities Authority, Temple
University First Ser (MBIA Insured) ................................ 6.50 4/ 1/21 1,022,100
- - ------- -----------
6,350 6,379,585
- - ------- -----------
ELECTRIC REVENUE (8.9%)
4,000 Kansas City, Kansas, Utility Refg & Impr Ser 1994 (FGIC Insured) ... 6.375 9/ 1/23 4,096,920
10,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 INFLOS ............ 6.37+ 2/ 1/06 8,075,000
Intermountain Power Agency, Utah,
1,270 Refg Ser 1988 B .................................................... 7.50 7/ 1/21 1,384,960
6,300 Refg Ser 1987 D .................................................... 8.625 7/ 1/21 7,056,693
12,550 Washington Public Power Supply System, Nuclear Proj #2 Refg Ser 1990
C (Prerefunded) .................................................... 7.625 7/ 1/10 14,376,025
- - ------- -----------
34,120 34,989,598
- - ------- -----------
HOSPITAL REVENUE (22.4%)
3,500 Colbert County - Northwest Health Care Authority, Alabama, Helen
Keller Hospital Refg Ser 1990 ...................................... 8.75 6/ 1/09 3,896,480
3,500 Houston County Health Care Authority, Alabama, Southeast Alabama
Medical Center Ser 1989 (Prerefunded) .............................. 7.25 10/ 1/19 3,919,860
1,000 California Health Facilities Financing Authority, Alexian Brothers/
San Jose Refg Ser 1990 (MBIA Insured) .............................. 7.125 1/ 1/16 1,059,850
1,000 Jacksonville Health Facilities Authority, Florida, Riverside
Hospital Ser 1989 .................................................. 7.625 10/ 1/13 1,048,040
3,750 Evergreen Park, Illinois, Little Company of Mary Hospital Refg Ser
1988 (MBIA Insured) ................................................ 7.25 2/15/11 4,055,775
1,800 Southwestern Illinois Development Authority, Anderson Hospital Ser
1992 A ............................................................. 7.00 8/15/22 1,795,320
4,000 Indiana Health Facility Financing Authority, Hancock Memorial
Hospital Ser 1990 .................................................. 8.30 8/15/20 4,345,440
3,420 Kentucky Development Finance Authority, Ashland Hospital King's
Daughters Refg Ser 1987 ............................................ 9.75 8/ 1/05 3,916,652
9,500 Boston, Massachusetts, Boston City Hospital - FHA Insured Mtge Refg
Ser B .............................................................. 5.75 2/15/13 8,889,910
Massachusetts Health & Educational Facilities Authority,
500 Berkshire Health 1989 Ser A (MBIA Insured) ......................... 7.60 10/ 1/14 551,715
5,000 St John's Hospital 1990 Ser B (Prerefunded) ........................ 8.375 12/ 1/20 5,956,050
200 Flint Hospital Building Authority, Michigan, Hurley Medical Center
Ser 1990 ........................................................... 7.80 7/ 1/14 210,358
4,000 Duluth Economic Development Authority, Minnesota, Benedictine
Health/St Mary's Medical Center Ser 1990 (Prerefunded) ............ 8.375 2/15/20 4,690,120
Minneapolis & St Paul Housing & Redevelopment Authority, Minnesota,
Health One Obligation Group
12,500 Ser 1990 B (Prerefunded) ........................................... 8.00 8/15/14 14,559,875
2,405 Ser 1990 C (Prerefunded) ........................................... 8.00 8/15/19 2,801,320
Missouri Health & Educational Facilities Authority,
4,000 Missouri Baptist Medical Center Refg Ser 1989 ...................... 7.625 7/ 1/18 4,173,400
1,985 Missouri Baptist Medical Center Ser 1989 ........................... 8.00 1/ 1/19 2,113,648
</TABLE>
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS May 31, 1994 (continued)
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------- -------- ----------- -------------
<S> <C> <C> <C> <C>
$ 2,985 Lehigh County General Purpose Authority, Pennsylvania, St Lukes
Hospital Ser 1992 (AMBAC Insured) .................................. 6.25 % 7/ 1/22 $ 2,984,761
3,420 Lycoming County Authority, Pennsylvania, Divine Providence Hospital
of the Sisters of Christian Charity 1990 Ser B ..................... 7.75 7/ 1/16 3,700,474
2,375 Montgomery County Higher Educational & Health Authority,
Pennsylvania, Holy Redeemer Hospital 1990 Ser A
(AMBAC Insured) .................................................... 7.625 2/ 1/20 2,641,998
2,750 Jefferson County Health Facilities Development Corporation, Texas,
Baptist Health Care Ser 1989 ....................................... 8.30 10/ 1/14 2,995,795
4,500 Midland County Hospital District, Texas, Ser 1989 (Prerefunded) .... 8.375 6/ 1/02 5,111,100
2,400 Peninsula Ports Authority, Virginia, Mary Immaculate Hospital
Ser 1989 ........................................................... 8.375 8/ 1/04 2,611,296
- - ------- -----------
80,490 88,029,237
- - ------- -----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (13.3%)
14,500 Pima County Industrial Development Authority, Arizona, Tucson
Electric Power Co Refg Ser 1988 A (FSA Surety) ..................... 7.25 7/15/10 15,401,900
10,000 Burlington, Kansas, Kansas Gas & Electric Co
Refg Ser 1991 (MBIA Insured) ....................................... 7.00 6/ 1/31 10,649,600
2,000 Cleveland, Ohio, Continental Airlines Inc Ser 1990 (AMT) ........... 9.00 12/ 1/19 2,030,360
1,000 Ohio Water Development Authority, Toledo Edison Co
Ser 1990 A (Secondary FSA Insured) ................................. 7.75 5/15/19 1,123,040
9,500 Montgomery County Industrial Development Authority, Pennsylvania,
Philadelphia Electric Co Refg 1991 Ser B (MBIA Insured) ........... 6.70 12/ 1/21 9,816,540
13,000 Alliance Airport Authority, Texas, AMR Corp Ser 1990 (AMT) ......... 7.50 12/ 1/29 12,951,900
500 Matagorda County Navigation District #1, Texas,
Houston Lighting & Power Co Collateralized Ser 1989 A (AMT). ...... 7.875 2/ 1/19 543,255
- - ------- -----------
50,500 52,516,595
- - ------- -----------
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 1,255,825
-----------
MORTGAGE REVENUE - SINGLE FAMILY (14.3%)
735 Colorado Housing & Finance Authority, Ser 1990 B-2 .................. 8.00 2/ 1/18 753,882
30,000 Pinnellas County Housing Finance Authority, Florida, Ser 1983 ...... 0.00 1/ 1/15 3,462,900
1,000 Idaho Housing Agency, 1988 Ser D-2 (AMT) ............................ 8.25 1/ 1/20 1,101,790
3,320 Illinois Housing Development Authority, 1988 Ser C (AMT) ........... 8.10 2/ 1/22 3,421,393
1,810 Indiana Housing Finance Authority, Ser 1990 A-2 (AMT) ............... 8.10 1/ 1/22 1,882,563
1,535 Kansas City, Leavenworth & Lenexa, Kansas, GNMA-Backed
Ser 1988 C (AMT) ................................................... 8.00 11/ 1/20 1,656,219
Olathe, Kansas, GNMA Collateralized
270 Ser 1990 B ......................................................... 7.50 9/ 1/10 279,788
935 Ser 1989 A (AMT) (MBIA Insured) .................................... 8.00 11/ 1/20 986,425
2,000 New Orleans Home Mortgage Authority, Louisiana,
1989 Ser B-1 (AMT) ................................................. 8.25 12/ 1/21 2,112,680
Maine Housing Authority,
3,540 Purchase Ser 1988 D4 (AMT) ......................................... 7.55 11/15/19 3,686,981
1,000 Purchase Ser 1988 D5 (AMT) ......................................... 7.55 11/15/19 1,041,520
Massachusetts Housing Finance Agency,
5,335 1989 Ser 7 (AMT) ................................................... 8.10 6/ 1/20 5,555,335
5,030 Residential Ser 1989 A (AMT) ....................................... 8.20 8/ 1/15 5,190,910
5,000 Residential Ser 1987 B (AMT) ....................................... 8.50 8/ 1/20 5,235,350
1,020 Mississippi Housing Finance Corporation,
Purchase GNMA-Backed Ser 1989 (AMT) ................................ 8.25 10/15/18 1,061,463
725 Muskogee County Home Finance Authority, Oklahoma,
1990 Ser A (FGIC Insured) .......................................... 7.60 12/ 1/10 745,735
Pennsylvania Housing Finance Agency,
1,975 1990 Ser 27 (AMT) .................................................. 8.15 10/ 1/21 2,129,741
1,470 1990 Ser X (AMT) ................................................... 8.15 4/ 1/24 1,544,941
</TABLE>
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS May 31, 1994 (continued)
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------- -------- ----------- -------------
<S> <C> <C> <C> <C>
Rhode Island Housing & Mortgage Finance Corporation, Home
$ 2,560 1988 Ser 1-D (AMT) ................................................. 7.875% 10/ 1/22 $ 2,652,314
730 1989 Ser 1-B (AMT) ................................................. 8.40 10/ 1/21 755,127
990 1989 Ser 1-B (AMT) ................................................. 8.40 10/ 1/22 1,034,213
South Carolina Housing Finance & Development Authority, Home
3,000 1988 Ser C-1 (AMT) ................................................. 8.125 7/ 1/21 3,139,020
1,220 1991 Ser A (AMT) ................................................... 7.40 7/ 1/23 1,245,718
2,870 El Paso Housing Finance Corporation, Texas, Ser 1989 (AMT) ......... 8.20 3/ 1/21 2,977,137
Utah Housing Finance Agency,
930 Ser 1991 B-1 ....................................................... 7.50 7/ 1/16 968,688
1,430 Ser 1989 B (AMT) ................................................... 8.25 7/ 1/21 1,512,111
120 Wyoming Community Development Authority, Federally Insured or Gtd
1989 Ser A ......................................................... 7.90 6/ 1/17 123,138
- - ------- ------------
80,550 56,257,082
- - ------- ------------
NURSING & HEALTH RELATED FACILITIES REVENUE (1.6%) New York State
Medical Care Facilities Finance Agency,
Mental Health
1,625 Ser 1987 ........................................................... 8.875 8/15/07 1,806,659
1,580 Ser 1990 (MBIA Insured) ............................................ 7.75 2/15/20 1,770,911
1,355 Ser 1990 (MBIA Insured) (Prerefunded) .............................. 7.75 2/15/20 1,562,315
990 Ser 1991 A ......................................................... 7.50 2/15/21 1,078,447
- - ------- ------------
5,550 6,218,332
- - ------- ------------
PUBLIC FACILITIES REVENUE (4.4%)
10,000 California Public Works Board, Corrections Ser E .................... 5.50 6/ 1/19 8,761,100
4,000 Metropolitan Pier & Exposition Authority, Illinois, Ser 1992 A
(FGIC Insured) ..................................................... 0.00 6/15/07 3,396,040
New York State Urban Development Corporation,
1,000 Ser 1991 ........................................................... 7.60 4/ 1/03 1,107,200
1,300 Ser 1991 ........................................................... 7.50 4/ 1/11 1,413,724
2,500 Houston, Texas, Hotel Occupancy Tax & Parking Facility Sr Lien Ser A
1991 (Secondary FGIC Insured) ...................................... 7.00 7/ 1/09 2,666,075
- - ------- ------------
18,800 17,344,139
- - ------- ------------
RESOURCE RECOVERY REVENUE (3.1%)
11,500 Cambria County Industrial Development Authority, Pennsylvania,
- - ------- Cambria Cogen Co Ser 1989 F-2 (AMT) ................................ 7.75 9/ 1/19 12,190,575
------------
TRANSPORTATION REVENUE (4.9%)
3,500 Atlanta, Georgia, Airport Ser 1994 B (AMT) (AMBAC Insured) ......... 6.00 1/ 1/21 3,339,140
7,000 Chicago, Illinois, Chicago Midway Airport 1994 Ser A (AMT)
(MBIA Insured) ..................................................... 6.25 1/ 1/24 6,824,580
5,000 Regional Transportation Authority, Illinois, Ser 1994 A
(AMBAC Insured) .................................................... 6.25 6/ 1/24 4,916,850
5,000 Puerto Rico Highway & Transportation Authority, Refg Ser 1993 X .... 5.25 7/ 1/21 4,264,350
- - ------- ------------
20,500 19,344,920
- - ------- ------------
WATER & SEWER REVENUE (6.8%)
3,000 Central Coast Water Authority, California, Ser 1992
(AMBAC Insured) .................................................... 6.60 10/ 1/22 3,080,970
2,500 Coachella, California, Ser 1992 COPs (FSA Insured) .................. 6.10 3/ 1/22 2,463,525
11,000 Western Townships Utilities Authority, Michigan, Sewerage Disposal
Ser 1989 (Crossover Refunded) ...................................... 8.20 1/ 1/18 12,406,130
1,750 Bethlehem Authority, Pennsylvania, Ser 1992 (MBIA Insured)
(Prerefunded) ...................................................... 6.25 11/15/21 1,872,325
3,500 Texas Water Resource Finance Authority, Ser 1989
(AMBAC Insured) .................................................... 7.50 8/15/13 3,724,875
2,900 Loudoun County Sanitation Authority, Virginia, Ser 1989
(AMBAC Insured) (Prerefunded) ...................................... 7.50 1/ 1/17 3,241,011
- - ------- ------------
24,650 26,788,836
- - ------- ------------
</TABLE>
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS May 31, 1994 (continued)
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------- -------- ----------- -------------
<S> <C> <C> <C> <C>
OTHER REVENUE (2.8%)
$ 2,500 Michigan Municipal Bond Authority, Local Govt Loan Refg
Ser 1991 A (FGIC Insured) .......................................... 4.75 % 12/ 1/09 $ 2,187,450
4,650 New York Local Government Assistance Corporation,
Ser 1991 A (Prerefunded) ........................................... 7.25 4/ 1/18 5,298,768
2,000 Pennsylvania Industrial Development Authority, Econ Dev
Ser A 1991 (Prerefunded) ........................................... 7.00 1/ 1/11 2,233,640
1,000 Philadelphia, Pennsylvania, Gas Works Thirteenth Ser (Prerefunded) . 7.70 6/15/21 1,158,410
- - -------- ------------
10,150 10,878,268
- - -------- ------------
366,235 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $336,202,427) ..................................... 356,267,655
- - -------- ------------
SHORT-TERM MUNICIPAL OBLIGATION (2.0%)
8,000 Massachusetts, Dedicated Income Tax Ser 1990 B (Tender 6/1/94) ..... 2.80* 12/ 1/97
- - -------- (Identified Cost $8,000,000) ............................................................. 8,000,000
------------
$374,235 TOTAL INVESTMENTS (IDENTIFIED COST $344,202,427) (A) .......................... 92.5% 364,267,655
======== CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................... 7.5 29,264,324
----- ------------
NET ASSETS .................................................................... 100.0% $393,531,979
===== ============
<FN>
- - ---------------
AMT -- Alternative Minimum Tax
COP -- Certificate of Participation
INFLOS -- Inverse Floating Rate Securities
* Variable or floating rate security. Coupon rate shown reflects current
rate.
+ Current coupon rate for residual interest bonds. This rate resets
periodically as the auction rate on the related short-term securities
fluctuates.
(a) The aggregate cost for federal income tax purposes is $344,209,427;
the aggregate gross unrealized appreciation is $23,908,484 and the
aggregate gross unrealized depreciation is $3,850,256, resulting in net
unrealized appreciation of $20,058,228.
See Notes to Financial Statements
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
GEOGRAPHIC SUMMARY OF INVESTMENTS
BASED ON MARKET VALUE AS A PERCENT OF NET ASSETS
MAY 31, 1994
- - -----------------------------------------------------
<C> <S>
ALABAMA.................... 2.0%
ARIZONA.................... 3.9
CALIFORNIA................. 5.1
COLORADO................... 0.2
DISTRICT OF COLUMBIA....... 2.3
FLORIDA.................... 1.1
GEORGIA .................. 0.8
IDAHO ..................... 0.3
ILLINOIS .................. 6.2
INDIANA .................. 1.6
KANSAS .................... 4.5
KENTUCKY .................. 0.9
LOUISIANA ................. 0.9
MAINE ..................... 1.2
MASSACHUSETTS ............. 10.0
MICHIGAN .................. 3.8
MINNESOTA ................. 5.6
MISSISSIPPI ............... 0.3
MISSOURI .................. 1.6
NEW YORK .................. 6.4
OHIO ...................... 0.8
OKLAHOMA .................. 0.2
PENNSYLVANIA ............. 10.5
PUERTO RICO ............... 2.2
RHODE ISLAND ............. 1.1
SOUTH CAROLINA ............ 1.1
TEXAS ..................... 9.9
UTAH ...................... 2.8
VIRGINIA .................. 1.5
WASHINGTON ................ 3.7
----
TOTAL...................... 92.5%
====
</TABLE>
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
FINANCIAL STATEMENTS
- - -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1994
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $344,202,427) (Note 1) $364,267,655
Cash .................................... 87,610
Receivable for:
Interest ............................... 8,699,364
Investments sold ....................... 29,509,362
Prepaid expenses ........................ 16,874
------------
TOTAL ASSETS .......................... 402,580,865
------------
LIABILITIES:
Payable for:
Investments purchased .................. 8,662,000
Investment advisory fee (Note 2) ...... 137,376
Administration fee (Note 3) ............ 85,860
Accrued expenses (Note 4) .............. 163,650
------------
TOTAL LIABILITIES .................... 9,048,886
------------
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, 26,211,624 shares
outstanding (Note 6)) ................. 243,528,395
Accumulated net realized gain on
investments ........................... 2,491,580
Net unrealized appreciation on
investments ........................... 20,065,228
Accumulated undistributed net
investment income ..................... 2,446,776
------------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS ................. 268,531,979
------------
TOTAL NET ASSETS ..................... $393,531,979
============
NET ASSET VALUE PER COMMON SHARE,
($268,531,979 divided by 26,211,624
common shares outstanding) ............. $10.24
=======
<CAPTION>
STATEMENT OF OPERATIONS
For the year ended May 31, 1994
- - -----------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME ..................... $27,095,834
-----------
EXPENSES
Investment advisory fee (Note 2) .. 1,636,875
Administration fee (Note 3) ....... 1,023,047
Auction commission fees ........... 312,494
Professional fees ................. 153,943
Transfer agent fees and expenses .. 122,178
Auction agent fees ................ 84,500
Shareholder reports and notices ... 44,459
Registration fees ................. 31,715
Trustees' fees and expenses (Note 4) 30,568
Organizational expenses (Note 1) .. 9,828
Custodian fees .................... 1,850
Other ............................. 34,958
-----------
TOTAL EXPENSES ................... 3,486,415
-----------
NET INVESTMENT INCOME ........... 23,609,419
-----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (Note 1):
Net realized gain on investments ... 2,848,400
Net change in unrealized
appreciation on investments ....... (14,499,271)
-----------
NET LOSS ON INVESTMENTS .......... (11,650,871)
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...... $11,958,548
===========
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED MAY 31, ENDED MAY 31,
1994 1993
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ....................................... $ 23,609,419 $ 23,885,851
Net realized gain (loss) on investments ..................... 2,848,400 (621,608)
Net realized gain on futures contracts ...................... -0- 271,790
Net change in unrealized appreciation on investments ........ (14,499,271) 17,155,840
------------ ------------
Net increase in net assets resulting from operations ...... 11,958,548 40,691,873
------------ ------------
Dividends to preferred shareholders from net investment
income .................................................... (3,158,208) (3,318,478)
Dividends and distributions to common shareholders from:
Net investment income ...................................... (19,943,950) (20,206,920)
Net realized gain on investments ........................... -0- (209,943)
------------ ------------
Total dividends and distributions ......................... (23,102,158) (23,735,341)
------------ ------------
Transactions in common shares of beneficial interest (Note 6) (302,929) -0-
------------ ------------
Total increase (decrease) ................................. (11,446,539) 16,956,532
NET ASSETS:
Beginning of period ........................................ 404,978,518 388,021,986
------------ ------------
END OF PERIOD (including undistributed net investment income
of $2,446,776 and $1,939,515, respectively) ................ $393,531,979 $404,978,518
============ ============
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
- - -----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES - Municipal Premium Income Trust (the
"Fund") is registered under the Investment Company Act of 1940, as amended,
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 fixed income securities. 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. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
are permanent in nature, such amounts are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary differences do
not require reclassifications. Dividends and distributions which exceed net
investment income and net realized capital gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of net
investment income or distributions in excess of net realized capital gains.
To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of
paid-in-capital.
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 were fully amortized as of January 31,
1994.
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.
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 - Through December 31, 1993, pursuant to an
Administration Agreement with Dean Witter InterCapital Inc. (the "Former
Administrator"), the Fund paid an administration fee, calculated weekly and
payable monthly, by applying the annual rate of 0.25% to the Fund's average
weekly net assets. On January 1, 1994, the Administration Agreement between
the Former Administrator and the Fund had been terminated and a new
Administration Agreement has been entered into between Dean Witter Services
Company Inc. (the "Administrator"), a wholly-owned subsidiary of the Former
Administrator, and the Fund. The nature and scope of the services being
provided to the Fund or any fees being paid by the Fund under the new
Agreement are identical to those of the previous Agreement.
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 year
ended May 31, 1994, excluding short-term investments, aggregated $91,390,133
and $103,879,549, 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 year ended May 31, 1994, included in Trustees' fees and expenses in
the Statement of Operations, amounted to $10,538. At May 31, 1994, the Fund
had an accrued pension liability of $42,564 which is included in accrued
expenses in the Statement of Assets and Liabilities.
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
Dean Witter Trust Company, an affiliate of the Investment Adviser and
Administrator, is the Fund's transfer agent. At May 31, 1994, the Fund had
transfer agent fees and expenses payable of approximately $14,000.
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.
On March 21, 1990, the Fund issued 1,250 shares of Auction Rate Preferred
Shares ("Preferred Shares") consisting of 250 shares each of 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, are reset through auction procedures.
<TABLE>
<CAPTION>
NEXT
SHARES SERIES RATE* RESET DATE RANGE OF DIVIDEND RATES**
- - -------- -------- ------- ------------ -------------------------
<S> <C> <C> <C> <C>
250 A 3.07% 6/07/94 2.15 % - 3.07%
250 B 3.14% 6/14/94 2.23 % - 3.14%
250 C 3.14% 6/21/94 2.249% - 3.30%
250 D 3.00% 6/28/94 2.00 % - 3.14%
250 E 3.00% 6/07/94 1.50 % - 3.21%
<FN>
- - ---------------
* As of May 31, 1994.
** For the period ended May 31, 1994.
</TABLE>
Subsequent to May 31, 1994 and up through July 8, 1994, the Fund paid
dividends to each of the Series A through E in the aggregate amount of
$438,890.
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>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
6. COMMON SHARES OF BENEFICIAL INTEREST - Transactions in common shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL PAID
PAR VALUE IN EXCESS OF
SHARES OF SHARES PAR VALUE
------------ ----------- --------------
<S> <C> <C> <C>
Balance, May 31, 1992 and May 31, 1993 26,243,024 $262,430 $243,672,507
Treasury shares purchased and retired
(weighted average discount 4.53%)* ... (31,400) (314) (302,615)
---------- -------- ------------
Balance, May 31, 1994 .................. 26,211,624 $262,116 $243,369,892
========== ======== ============
<FN>
- - ------------------
* The Trustees have voted to retire the shares repurchased.
</TABLE>
7. DIVIDENDS TO COMMON SHAREHOLDERS - The Fund declared the following
dividends from net investment income -
<TABLE>
<CAPTION>
DECLARATION AMOUNT PER
DATE SHARE RECORD DATE PAYABLE DATE
- - --------------- ----------- --------------- ---------------
<S> <C> <C> <C>
May 31, 1994 $0.06 June 10, 1994 June 24, 1994
June 28, 1994 $0.06 July 8, 1994 July 22, 1994
</TABLE>
8. FEDERAL INCOME TAX STATUS - For the year ended May 31, 1994, the Fund
utilized all of its net capital loss carryover of approximately $253,000. The
Fund had permanent book/tax differences primarily attributable to
non-deductible expenses. To reflect cumulative reclassifications arising from
permanent book/tax differences for the year ended May 31, 1993,
paid-in-capital was charged $103,613, accumulated net realized gain on
investments was charged $285 and accumulated undistributed net investment
income was credited $103,898.
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
9. SELECTED QUARTERLY FINANCIAL DATA - (unaudited)
<TABLE>
<CAPTION>
QUARTERS ENDED*
---------------------------------------------------------------------------------
5/31/94 2/28/94 11/30/93 8/31/93
-------------------- ------------------- ------------------- -----------------
PER PER PER PER
TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
---------- -------- --------- -------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income ......... $6,804 $0.26 $ 6,668 $0.25 $ 6,754 $0.26 $6,870 $0.26
Net investment income ........... 5,954 0.23 5,796 0.22 5,870 0.22 5,989 0.23
Net realized and unrealized gain
(loss) on investments .......... (15,611) (0.60) (3,452) (0.13) (1,146) (0.04) 8,558 0.32
<CAPTION>
QUARTERS ENDED*
---------------------------------------------------------------------------------
5/31/93 2/28/93 11/30/92 8/31/92
-------------------- ------------------- ------------------- -----------------
PER
TOTAL PER SHARE TOTAL PER SHARE TOTAL PER 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
Net investment income ........... 6,088 0.23 5,731 0.22 6,005 0.23 6,062 0.23
Net realized and unrealized gain
(loss) on investments .......... (3,479) (0.13) 13,595 0.51 (2,070) (0.08) 8,760 0.34
<FN>
- - ---------------
* Totals expressed in thousands of dollars.
</TABLE>
1994 FEDERAL TAX NOTICE (unaudited)
During the year ended May 31, 1994, the Fund paid $0.76 per share from net
investment income to common shareholders. All of the Fund's dividends from
net investment income to common shareholders were exempt interest dividends,
excludable from gross income for Federal income tax purposes. Additionally,
all of the Fund's dividends to preferred shareholders were exempt dividends,
excludable from gross income for Federal income tax purposes.
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
FINANCIAL HIGHLIGHTS
- - -----------------------------------------------------------------------------
Selected ratios and per share data for a common share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 1,
1989*
FOR THE YEAR ENDED MAY 31, THROUGH
------------------------------------------------- MAY 31,
1994** 1993 1992 1991 1990 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
------ ------ ------- ------ ------ ------
NET INVESTMENT INCOME ............. 0.90 0.91 0.95 0.96 0.71 0.21
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS ............ (0.45) 0.64 0.42 0.34 -0- 0.15
------ ------ ------- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS. . 0.45 1.55 1.37 1.30 0.71 0.36
------ ------ ------- ------ ------ ------
LESS DIVIDENDS, DISTRIBUTIONS AND
OTHER CHARGES:
DIVIDENDS FROM NET INVESTMENT
INCOME ........................... (0.76) (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 ..................... (0.12) (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 ..................... (0.88) (0.90) (0.96) (1.04) (0.95) (0.17)
------ ------ ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD .... $10.24 $10.67 $10.02 $ 9.61 $ 9.35 $ 9.59
====== ====== ======= ======= ======= =======
MARKET VALUE, END OF PERIOD ....... $ 9.75 $10.75 $10.375 $ 9.625 $ 9.125 $ 9.375
====== ====== ======= ======= ======= =======
TOTAL INVESTMENT RETURN+ ............ (2.72)% 11.30% 16.44% 14.62% 5.92% (4.80)%(2)
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (IN
THOUSANDS) ........................ $393,532 $404,979 $388,022 $373,207 $368,065 $249,581
RATIOS TO AVERAGE NET ASSETS OF
COMMON SHAREHOLDERS:
TOTAL EXPENSES .................... 1.23% 1.38% 1.44% 1.59% 1.02% 0.96%(1)
NET INVESTMENT INCOME BEFORE
PREFERRED STOCK DIVIDENDS ....... 8.31% 8.73% 9.67% 10.20% 7.46% 7.18%(1)
PREFERRED STOCK DIVIDENDS ........ 1.11% 1.21% 1.90% 2.88% 0.53% N/A
NET INVESTMENT INCOME
AVAILABLE TO COMMON
SHAREHOLDERS ..................... 7.20% 7.52% 7.77% 7.32% 6.93% 7.18%(1)
ASSET COVERAGE ON PREFERRED
SHARES AT END OF PERIOD ........... 314% 324% 310% 299% 294% N/A
PORTFOLIO TURNOVER RATE ............ 23% 7% 16% 56% 150% 106%
<FN>
- - ---------------
* Commencement of operations.
** The per share amounts were computed using an average number of shares
outstanding during the period.
+ Total investment return is based upon the current market value on the
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.
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
MUNICIPAL PREMIUM INCOME TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
- - -----------------------------------------------------------------------------
To the Shareholders and Trustees of Municipal Premium Income Trust
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Municipal Premium
Income Trust (the "Fund") at May 31, 1994, the results of its operations for
the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five
years in the period then ended and for the period February 1, 1989
(commencement of operations) through May 31, 1989, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities owned at
May 31, 1994 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
1177 Avenue of the Americas
New York, New York
July 8, 1994
<PAGE>
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
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
ANNUAL REPORT
MAY 31, 1994
