<PAGE> 1
Two World Trade Center, New York, New York 10048
MUNICIPAL PREMIUM INCOME TRUST
LETTER TO THE SHAREHOLDERS November 30, 1995
DEAR SHAREHOLDER:
Bonds have rallied significantly since last year. Progressive tightening of
monetary policy by the Federal Reserve Board over the 12 months through February
1995 led to slower economic growth and caused bonds to advance. The trend toward
lower long-term interest rates was aided in July and December when the Federal
Reserve Board reduced the fed funds rate banks charge each other for overnight
loans.
MUNICIPAL MARKET CONDITIONS
Long-term municipal bond yields declined from a high of 7.37 percent in November
1994 to 5.78 percent at the end of November 1995, as tracked by The Bond Buyer
Revenue Bond Index*. This 159 basis point decline in yield corresponded to a 12
percent price increase for a callable bond with a 30-year maturity. Similarly,
yields on 1-year municipal notes moved from 4.51 percent to 3.59 percent. The
yield pickup for extending maturity from 1- to 30-years was 219 basis points in
November 1995.
Tax-exempt bonds began the year by outperforming U.S. Treasury bonds. The ratio
of the Revenue Bond Index yields to the 30-year U.S. Treasury bond yield moved
from 89 percent in December 1994 to 84 percent by the end of February 1995. A
declining ratio means that municipal bond prices have been stronger than U.S.
Treasury prices. In the spring the municipal market began to discount the risk
of comprehensive changes in the tax code created by flat tax rhetoric from
Washington. This caused municipals to weaken on a relative basis. The yield
ratio reached a high of 95 percent during the summer. Over the past 10 years,
long municipal yields have averaged 89 percent of U.S. Treasury yields.
The municipal market continued to experience consolidation in 1995. Municipal
underwriting in the first 11 months of the year was down 12 percent from the
same period in 1994. This change followed a
- ---------------
*The Bond Buyer Revenue Bond Index is an arithmetic average of the yields of 25
selected municipal revenue bonds with 30-year maturities. Credit ratings of
these bonds range from Aa1 to Baa1 by Moody's Investors Service, Inc., and AA+
to A- by Standard & Poor's Corp.
<PAGE> 2
MUNICIPAL PREMIUM INCOME TRUST
LETTER TO THE SHAREHOLDERS November 30, 1995, continued
44 percent drop in volume for all of 1994. The effects of lower volume and
diminished new issue profitability were also apparent in the decision by several
major dealers to withdraw from the municipal business.
TAX REFORM
Flat-tax advocates have general increased publicity for their proposals and have
influenced the municipal market since early 1995. Most of the discussion on
proposed tax-reform measures is based on theoretical concepts, containing broad
assumptions and lacking specific details. Basically, the various plans raise
questions about the fairness of changing from a progressive tax structure. Low
flat-tax rate plans call for the elimination of deductions of mortgage interest,
charitable contributions, property taxes, and state and local income taxes.
Should politicians make tax reform a central issue in the 1996 elections, media
coverage will expand from the financial page to the front page. If that happens,
municipal bonds could come under further pressure. For example, when major tax
reform turmoil occurred in 1986, municipal yields briefly exceeded taxable
yields.
In addition to the market risk associated with the flat-tax proposals, municipal
credits would also be negatively affected. If mortgage interest and property tax
deductions were eliminated, municipalities would experience a decline in their
property tax base. The loss of state and local income tax deductions would
increase the relative economic disadvantage that high-tax states already face.
The flat tax represents an attempt to shift tax accountability from the federal
to local governments. Taxpayer recognition of the extent of change under
consideration may impede the passage of comprehensive tax reform.
PERFORMANCE
The net asset value (NAV) of Municipal Premium Income Trust (PIA) rose from
$10.36 to $10.55 per share during the six-month period ended November 30, 1995.
Based on this NAV change plus reinvestment of tax-free dividends totaling $0.35
per share, the Fund's total return was 5.53 percent. Over the same period, the
Fund's market price on the New York Stock Exchange depreciated from $9.6875 to
$9.375 per share. Based on this market price change and reinvestment of tax-free
dividends, the Fund's total return was 0.28 percent. The Fund began the period
trading at a 6.5 percent discount to NAV and closed at an 11 percent discount.
Undistributed net investment income totaled $0.026 per share on November 30,
1995 versus $0.054 per share six months ago. Since the amount of the Fund's
undistributed net investment income continued to shrink during the summer, the
Trustees voted to reduce the monthly dividend from $0.06 to $0.05 per share
beginning with the November 1995 payment. This revised dividend rate more
accurately reflects the Fund's current earnings.
<PAGE> 3
MUNICIPAL PREMIUM INCOME TRUST
LETTER TO THE SHAREHOLDERS November 30, 1995, continued
PORTFOLIO STRUCTURE
On November 30, 1995, the Fund's long-term portfolio was diversified among 14
specific long-term municipal sectors and 75 credits. The three largest
sectors -- refunded, hospital and industrial development/pollution control
revenue bonds -- represented approximately 42 percent of the portfolio. The
average maturity and call protection of the Fund's long-term holdings were 19
and 6 years, respectively. Net assets exceeded $372 million. The credit-quality
ratings of the Fund's long-term portfolio are illustrated at right.
MOODY'S OR STANDARD & POOR'S CREDIT RATING
AS OF NOVEMBER 30, 1995
(% OF TOTAL LONG-TERM INVESTMENTS)
<TABLE>
<S> <C>
NOT RATED 2.0
Baa OR BBB 17.0
A OR A 8.0
Aa OR AA 18.0
Aaa OR AAA 55.0
</TABLE>
THE IMPACT OF LEVERAGING
As discussed in previous reports, the total income available for distribution to
common shareholders includes incremental income provided by Auction Rate
Preferred Share (ARPS) leverage. ARPS dividends reflect prevailing short-term
interest rates on maturities normally ranging from one week to one year.
Incremental income to common shares depends on two factors: first, the spread
between the interest earned on the long-term bonds in the established portfolio
of investments and the ARPS auction rate plus ARPS expenses; second, the amount
of ARPS outstanding. The greater the amount of ARPS outstanding, the greater the
amount of incremental income available for distribution to common shareholders.
The profitability of ARPS declined in 1994 and the first half of 1995. ARPS
yields have moved somewhat lower since the Federal Reserve Board's initial
easing in July 1995. A reduction in the amount of ARPS outstanding -- to control
the portfolio's price volatility last year -- also diminished incremental income
to common shares. Currently, $100 million in ARPS are outstanding. This
represents 27 percent of net assets.
LOOKING AHEAD
The slower pace of economic growth in 1995 and the Federal Reserve Board's
latest interest rate moves have improved bond-market expectations. The
decreasing supply of new issues, combined with significant
<PAGE> 4
MUNICIPAL PREMIUM INCOME TRUST
LETTER TO THE SHAREHOLDERS November 30, 1995, continued
maturities and calls for redemption, should continue to be positive for the
municipal market. However, tax-reduction proposals are likely to continue to
receive publicity and may cloud the outlook for tax-exempt bonds. With long-term
municipal securities yielding more than 90 percent of the yield on U.S.
Treasuries, the market has already begun the process of discounting the risk
that a flat tax might eventually become law.
The Fund's procedure for reinvestment of all dividends and distributions on
common shares is through purchases in the open market. This method helps to
support the market value of the Fund's shares. In addition, we would like to
remind you that the Trustees have approved a procedure whereby the Fund, when
appropriate, may purchase shares in the open market or in privately negotiated
transactions at a price not above market value or net asset value, whichever is
lower at the time of purchase. During the six-month period ended November 30,
1995, the Fund purchased and retired 40,200 shares of common stock at a weighted
average market discount of 7.9 percent. The Fund may also utilize procedures to
reduce or eliminate the amount of outstanding ARPS, including their purchase 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,
/s/ CHARLES A. FIUMEFREDDO
- ----------------------------
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 5
MUNICIPAL PREMIUM INCOME TRUST
RESULTS OF ANNUAL MEETING (unaudited)
* * *
On December 20, 1995, an annual meeting of the Fund's shareholders was held for
the purpose of voting on three separate issues, the results of which were as
follows:
(1) ELECTION OF TRUSTEES BY ALL SHAREHOLDERS:
<TABLE>
<S> <C>
Edwin J. Garn
For................................................................................................ 19,635,275
Withheld........................................................................................... 269,135
Michael E. Nugent
For................................................................................................ 19,638,107
Withheld........................................................................................... 266,303
Philip J. Purcell
For................................................................................................ 19,635,850
Withheld........................................................................................... 268,560
</TABLE>
ELECTION OF TRUSTEE BY PREFERRED SHAREHOLDERS:
<TABLE>
<S> <C>
John R. Haire
For................................................................................................ 972
Withheld........................................................................................... --
</TABLE>
The following Trustees were not standing for reelection at this meeting:
Jack F. Bennett, Michael Bozic, Charles A. Fiumefreddo, Dr. Manuel H.
Johnson, Paul Kolton and John L. Schroeder.
(2) CONTINUANCE OF CURRENTLY EFFECTIVE INVESTMENT ADVISORY AGREEMENT:
<TABLE>
<S> <C>
For................................................................................................ 19,238,104
Against............................................................................................ 224,560
Abstain............................................................................................ 441,746
</TABLE>
(3) RATIFICATION OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS:
<TABLE>
<S> <C>
For................................................................................................ 19,488,398
Against............................................................................................ 125,183
Abstain............................................................................................ 290,829
</TABLE>
<PAGE> 6
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS November 30, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (97.9%)
General Obligation (4.8%)
$ 5,000 Chicago Park District, Illinois, Ser 1995............................... 6.60 % 11/15/14 $ 5,453,350
Massachusetts,
3,500 1995 Ser A (AMBAC)..................................................... 5.00 07/01/12 3,388,665
3,965 1994 Ser C (FGIC)...................................................... 6.75 11/01/12 4,445,162
4,500 Shelby County, Tennessee, Refg 1995 Ser A............................... 5.625 04/01/11 4,656,555
- -------- ----------
16,965 17,943,732
- -------- ----------
Educational Facilities Revenue (3.3%)
5,500 Oakland University, Michigan, Ser 1995 (MBIA)........................... 5.75 05/15/26 5,545,760
New York State Dormitory Authority,
4,000 State University Refg Ser 1993 A....................................... 5.50 05/15/08 3,989,200
1,350 State University Ser 1990 B............................................ 7.50 05/15/11 1,627,074
1,000 Pennsylvania Higher Educational Facilities Authority, Temple University
First Ser (MBIA)....................................................... 6.50 04/01/21 1,071,150
- -------- ----------
11,850 12,233,184
- -------- ----------
Electric Revenue (12.1%)
5,000 Sacramento Municipal Utility District, California, Refg 1994 Ser I
(MBIA)................................................................. 6.00 01/01/24 5,191,300
4,000 Kansas City, Kansas, Utility Refg & Impr Ser 1994 (FGIC)................ 6.375 09/01/23 4,348,240
7,750 South Carolina Public Service Authority, 1995 Refg Ser A (AMBAC)........ 6.25 01/01/22 8,139,670
20,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 C...................... 4.70 02/01/06 19,309,200
Intermountain Power Agency, Utah,
1,270 Refg Ser 1988 B........................................................ 7.50 07/01/21 1,377,125
6,300 Refg Ser 1987 D........................................................ 8.625 07/01/21 6,818,679
- -------- ----------
44,320 45,184,214
- -------- ----------
Hospital Revenue (14.9%)
5,000 Birmingham-Carraway Special Care Facilities Financing Authority,
Alabama, Carraway Methodist Health Systems Ser 1995 A (Connie Lee)..... 5.875 08/15/15 5,129,400
3,500 Colbert County - Northwest Health Care Authority, Alabama, Helen Keller
Hospital Refg Ser 1990................................................. 8.75 06/01/09 3,953,880
1,000 California Health Facilities Financing Authority, Alexian Brothers/San
Jose Refg Ser 1990 (MBIA).............................................. 7.125 01/01/16 1,101,760
1,000 Jacksonville Health Facilities Authority, Florida, Riverside Hospital
Ser 1989............................................................... 7.625 10/01/13 1,054,920
Hall County & Gainesville Hospital Authority, Georgia,
Northeast Georgia Healthcare
2,500 Ser 1995 (MBIA)........................................................ 5.75 10/01/17 2,525,450
3,000 Ser 1995 (MBIA)........................................................ 6.00 10/01/20 3,115,740
3,750 Evergreen Park, Illinois, Little Company of Mary Hospital Refg Ser 1988
(MBIA)................................................................. 7.25 02/15/11 4,034,587
1,800 Southwestern Illinois Development Authority, Anderson Hospital Ser 1992
A...................................................................... 7.00 08/15/22 1,842,084
4,000 Indiana Health Facility Financing Authority, Hancock Memorial Hospital
Ser 1990............................................................... 8.30 08/15/20 4,343,200
3,420 Kentucky Development Finance Authority, Ashland Hospital/King's
Daughters Refg Ser 1987................................................ 9.75 08/01/05 3,805,092
9,500 Boston, Massachusetts, Boston City Hospital - FHA Mtge Refg Ser B....... 5.75 02/15/13 9,525,270
2,985 Lehigh County General Purpose Authority, Pennsylvania, St Lukes Hospital
Ser 1992 (AMBAC)....................................................... 6.25 07/01/22 3,144,757
3,420 Lycoming County Authority, Pennsylvania, Divine Providence Hospital of
the Sisters of Christian Charity 1990 Ser B............................ 7.75 07/01/16 3,855,537
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS November 30, 1995 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,375 Montgomery County Higher Educational & Health Authority, Pennsylvania,
Holy Redeemer Hospital 1990 Ser A (AMBAC).............................. 7.625% 02/01/20 $ 2,638,839
2,750 Jefferson County Health Facilities Development Corporation, Texas,
Baptist Health Care Ser 1989........................................... 8.30 10/01/14 2,838,935
2,400 Peninsula Ports Authority, Virginia, Mary Immaculate Hospital Ser
1989................................................................... 8.375 08/01/04 2,667,192
- -------- ----------
52,400 55,576,643
- -------- ----------
Industrial Development/Pollution Control Revenue (14.2%)
14,500 Pima County Industrial Development Authority, Arizona, Tucson Electric
Power Co Refg Ser 1988 A (FSA Surety).................................. 7.25 07/15/10 16,334,105
10,000 Burlington, Kansas, Kansas Gas & Electric Co Refg Ser 1991 (MBIA)....... 7.00 06/01/31 11,243,200
1,000 Ohio Water Development Authority, Toledo Edison Co Ser 1990 A
(Secondary FSA)........................................................ 7.75 05/15/19 1,138,490
9,500 Montgomery County Industrial Development Authority, Pennsylvania,
Philadelphia Electric Co Refg 1991 Ser B (MBIA)........................ 6.70 12/01/21 10,397,275
13,000 Alliance Airport Authority, Texas, AMR Corp Ser 1990 (AMT).............. 7.50 12/01/29 13,891,670
- -------- ----------
48,000 53,004,740
- -------- ----------
Mortgage Revenue - Multi-Family (2.5%)
Massachusetts Housing Finance Agency,
2,000 Rental 1994 Ser A (AMT) (AMBAC)........................................ 6.60 07/01/14 2,083,340
4,000 Rental 1994 Ser A (AMT) (AMBAC)........................................ 6.65 07/01/19 4,172,640
3,000 Minnesota Housing Finance Agency, Rental 1995 Ser D (MBIA) (WI)......... 6.00 02/01/22 3,021,540
- -------- ----------
9,000 9,277,520
- -------- ----------
Mortgage Revenue - Single Family (10.7%)
535 Colorado Housing & Finance Authority, Ser 1990 B-2...................... 8.00 02/01/18 565,372
18,200 Pinnellas County Housing Finance Authority, Florida, Ser 1993........... 0.00 01/01/15 2,599,870
635 Idaho Housing Agency, 1988 Ser D-2 (AMT)................................ 8.25 01/01/20 680,675
2,530 Illinois Housing Development Authority, 1988 Ser C (AMT)................ 8.10 02/01/22 2,686,025
1,195 Indiana Housing Finance Authority, Ser 1990 A-2 (AMT)................... 8.10 01/01/22 1,284,541
1,325 Kansas City Leavenworth & Lenexa, Kansas, GNMA-Backed Ser 1988 C (AMT).. 8.00 11/01/20 1,404,102
Olathe, Kansas, GNMA Collateralized
195 Ser 1990 B............................................................. 7.50 09/01/10 211,078
675 Ser 1989 A (AMT) (MBIA)................................................ 8.00 11/01/20 725,051
1,250 Lake Charles Non-Profit Housing Development Corporation, Louisiana,
Ser 1990 A (CGIC)...................................................... 7.875 02/15/25 1,254,775
1,870 New Orleans Home Mortgage Authority, Louisiana, 1989 Ser B-1 (AMT)...... 8.25 12/01/21 2,008,885
Maine Housing Authority,
3,540 Purchase Ser 1988 D4 (AMT)............................................. 7.55 11/15/19 3,773,428
1,000 Purchase Ser 1988 D5 (AMT)............................................. 7.55 11/15/19 1,062,460
Massachusetts Housing Finance Agency,
1,660 Residential Ser 1989 A (AMT)........................................... 8.20 08/01/15 1,783,023
4,960 1989 Ser 7 (AMT)....................................................... 8.10 06/01/20 5,266,478
855 Mississippi Housing Finance Corporation, GNMA-Backed Ser 1989 (AMT)..... 8.25 10/15/18 917,868
460 Muskogee County Home Finance Authority, Oklahoma, 1990 Ser A (FGIC)..... 7.60 12/01/10 494,321
630 Pennsylvania Housing Finance Agency, 1990 Ser 27 (AMT).................. 8.15 10/01/21 652,611
Rhode Island Housing & Mortgage Finance Corporation, Homeownership
2,560 1988 Ser 1-D (AMT)..................................................... 7.875 10/01/22 2,725,402
990 1988 Ser 1-B (AMT)..................................................... 8.40 10/01/22 1,034,223
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS November 30, 1995 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
South Carolina Housing Finance & Development Authority, Homeownership
$ 3,000 1988 Ser C-1 (AMT)..................................................... 8.125% 07/01/21 $ 3,229,740
1,220 1991 Ser A (AMT)....................................................... 7.40 07/01/23 1,298,348
2,870 El Paso Housing Finance Corporation, Texas, Ser 1989 (AMT).............. 8.20 03/01/21 3,061,228
Utah Housing Finance Agency,
545 Ser 1991 B-1........................................................... 7.50 07/01/16 586,916
675 Ser 1989 B (AMT)....................................................... 8.25 07/01/21 706,307
- -------- ----------
53,375 40,012,727
- -------- ----------
Nursing & Health Related Facilities Revenue (1.2%)
New York State Medical Care Facilities Finance Agency, Mental Health
1,625 Ser 1987............................................................... 8.875 08/15/07 1,789,905
1,555 Ser 1990 (MBIA)........................................................ 7.75 02/15/20 1,762,157
990 Ser 1991 A............................................................. 7.50 02/15/21 1,087,752
- -------- ----------
4,170 4,639,814
- -------- ----------
Public Facilities Revenue (2.8%)
4,000 Metropolitan Pier & Exposition Authority, Illinois, Ser 1992 A (FGIC)... 0.00 06/15/07 3,932,720
Saint Paul Independent School District #625, Minnesota,
1,700 Ser 1995 C COPs........................................................ 5.45 02/01/11 1,721,896
1,800 Ser 1995 C COPs........................................................ 5.50 02/01/12 1,823,130
New York State Urban Development Corporation,
1,000 Ser 1991............................................................... 7.60 04/01/03 1,166,490
1,300 Ser 1991............................................................... 7.50 04/01/11 1,510,314
- -------- ----------
9,800 10,154,550
- -------- ----------
Resource Recovery Revenue (3.3%)
11,500 Cambria County Industrial Development Authority, Pennsylvania, Cambria
- -------- Cogen Co Ser 1989 F-2 (AMT)............................................ 7.75 09/01/19 12,302,585
----------
Transportation Facilities Revenue (6.6%)
3,500 Atlanta, Georgia, Airport Ser 1994 B (AMT) (AMBAC)...................... 6.00 01/01/21 3,603,845
7,000 Chicago, Illinois, Chicago Midway Airport 1994 Ser A (AMT) (MBIA)....... 6.25 01/01/24 7,302,750
5,000 Regional Transportation Authority, Illinois, Ser 1994 A (AMBAC)......... 6.25 06/01/24 5,283,900
8,000 Austin, Texas, Airport Prior Lien Ser 1995 A (AMT) (MBIA)............... 6.125 11/15/25 8,305,680
- -------- ----------
23,500 24,496,175
- -------- ----------
Water & Sewer Revenue (4.6%)
3,000 Central Coast Water Authority, California, Ser 1992 (AMBAC)............. 6.60 10/01/22 3,262,920
2,500 Coachella, California, Ser 1992 COPs (FSA).............................. 6.10 03/01/22 2,588,125
3,500 Chicago, Illinois, Wastewater Ser 1994 (MBIA)........................... 6.375 01/01/24 3,733,485
3,600 Rio Rancho, New Mexico, Water & Wastewater Ser 1995 A (FSA)............. 6.00 05/15/22 3,738,708
3,500 Texas Water Resource Finance Authority, Ser 1989 (AMBAC)................ 7.50 08/15/13 3,801,105
- -------- ----------
16,100 17,124,343
- -------- ----------
Other Revenue (0.6%)
2,500 Michigan Municipal Bond Authority, Local Govt Refg Ser 1991 A (FGIC).... 4.75 12/01/09 2,396,275
- -------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS November 30, 1995 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Refunded (16.3%)
$ 5,000 District of Columbia, Ser 1990 A (AMBAC)................................ 7.50 % 06/01/10 $ 5,742,350
5,000 Massachusetts Health & Educational Facilities Authority, St John's
Hospital
1990 Ser B............................................................. 8.375 12/01/20 5,922,300
11,000 Western Townships Utilities Authority, Michigan, Sewerage Disposal Ser
1989 (Crossover Refunded).............................................. 8.20 01/01/18 12,334,740
4,000 Duluth Economic Development Authority, Minnesota, Benedictine Health/ St
Mary's Medical Center Ser 1990......................................... 8.375 02/15/20 4,693,120
Missouri Health & Educational Facilities Authority,
Missouri Baptist Medical Center
2,660 Refg Ser 1989.......................................................... 7.625 07/01/18 3,005,986
1,340 Refg Ser 1989 (ETM).................................................... 7.625 07/01/18 1,722,141
1,985 Ser 1989............................................................... 8.00 01/01/19 2,270,661
4,650 New York Local Government Assistance Corporation, Ser 1991 A............ 7.25 04/01/18 5,376,470
4,500 Midland County Hospital District, Texas, Ser 1989....................... 8.375 06/01/02 4,964,310
12,550 Washington Public Power Supply System, Nuclear Proj #2 Refg Ser 1990
C...................................................................... 7.625 07/01/10 14,608,326
- -------- ----------
52,685 60,640,404
- -------- ----------
356,165 TOTAL MUNICIPAL BONDS (Identified Cost $336,828,599)............................................. 364,986,906
- --------
----------
SHORT-TERM MUNICIPAL OBLIGATIONS (0.8%)
1,300 Jasper County, Indiana, Northern Indiana Public Service Co Refg Ser 1994
B (Demand 12/01/95).................................................... 3.80* 06/01/13 1,300,000
1,800 Metropolitan Nashville Airport Authority, Tennessee, American Airlines
Inc
Refg Ser 1995 A (Demand 12/01/95)...................................... 3.85* 10/01/12 1,800,000
- -------- ----------
3,100 TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS (Identified Cost $3,100,000).............................. 3,100,000
- --------
----------
$359,265 TOTAL INVESTMENTS (Identified Cost $339,928,599) (a).................................... 98.7% 368,086,906
- --------
- --------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 1.3 4,682,011
---- ----------
NET ASSETS............................................................................... 100.0% $372,768,917
---- ----------
---- ----------
</TABLE>
- ---------------------
<TABLE>
<C> <S>
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to Maturity.
WI Security purchased on a when issued basis.
* Current coupon of variable rate security.
(a) The aggregate cost for federal income tax purposes is $339,928,599; the aggregate gross unrealized
appreciation is $28,978,654 and the aggregate gross unrealized depreciation is $820,347, resulting in net
unrealized appreciation of $28,158,307.
</TABLE>
<TABLE>
<CAPTION>
Bond Insurance:
- -------------------------------------------------------------------------------------------------------------------------
<C> <S>
AMBAC AMBAC Indemnity Corporation.
CGIC Capital Guaranty Insurance Company.
Connie Lee Connie Lee Insurance Company.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
MUNICIPAL PREMIUM INCOME TRUST
PORTFOLIO OF INVESTMENTS November 30, 1995 (unaudited) continued
- --------------------------------------------------------------------------------
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
November 30, 1995 (unaudited)
<TABLE>
<S> <C>
Alabama.............. 2.4%
Arizona.............. 4.4
California........... 3.3
Colorado............. 0.2
District of
Columbia............ 1.6
Florida.............. 1.0
Georgia.............. 2.5
Idaho................ 0.2
Illinois............. 9.2
Indiana.............. 1.9
Kansas............... 4.8
Kentucky............. 1.0%
Louisiana............ 0.9
Maine................ 1.3
Massachusetts........ 9.8
Michigan............. 5.4
Minnesota............ 1.8
Mississippi.......... 0.2
Missouri............. 3.1
New Mexico........... 1.0
New York............. 4.9
Ohio................. 0.3
Oklahoma............. 0.1%
Pennsylvania......... 9.1
Rhode Island......... 1.0
South Carolina....... 3.4
Tennessee............ 1.7
Texas................ 15.1
Utah................. 2.5
Virginia............. 0.7
Washington........... 3.9
---
Total................ 98.7%
---
---
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
MUNICIPAL PREMIUM INCOME TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $339,928,599)....................................... $368,086,906
Cash.................................................................. 71,072
Receivable for:
Interest.......................................................... 7,675,984
Investments sold.................................................. 275,000
Prepaid expenses and other assets..................................... 33,453
----------
TOTAL ASSETS...................................................... 376,142,415
----------
LIABILITIES:
Payable for:
Investments purchased............................................. 3,014,000
Investment advisory fee........................................... 138,025
Administration fee................................................ 86,266
Accrued expenses and other payables................................... 135,207
----------
TOTAL LIABILITIES................................................. 3,373,498
----------
NET ASSETS:
Preferred shares of beneficial interest (1,000,000 shares authorized
of non-participating $.01 par value, 1,000 shares outstanding)....... 100,000,000
----------
Common shares of beneficial interest (unlimited shares authorized of
$.01 par value, 25,854,124 shares outstanding)....................... 240,338,136
Net unrealized appreciation........................................... 28,158,307
Accumulated undistributed net realized gain........................... 3,600,506
Accumulated undistributed net investment income....................... 671,968
----------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS...................... 272,768,917
----------
NET ASSETS........................................................ $372,768,917
----------
----------
NET ASSET VALUE PER COMMON SHARE
($272,768,917 divided by 25,854,124 common shares outstanding)....... $10.55
-----
-----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 12
MUNICIPAL PREMIUM INCOME TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended November 30, 1995 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME........................................................ $11,869,802
---------
EXPENSES
Investment advisory fee................................................ 737,132
Administration fee..................................................... 460,707
Auction commission fees................................................ 124,952
Professional fees...................................................... 66,194
Transfer agent fees and expenses....................................... 54,900
Auction agent fees..................................................... 33,109
Trustees' fees and expenses............................................ 16,644
Registration fees...................................................... 16,464
Shareholder reports and notices........................................ 16,221
Other.................................................................. 17,209
---------
TOTAL EXPENSES..................................................... 1,543,532
---------
NET INVESTMENT INCOME.............................................. 10,326,270
---------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain...................................................... 2,113,253
Net change in unrealized appreciation.................................. 3,527,222
---------
NET GAIN........................................................... 5,640,475
---------
NET INCREASE........................................................... $15,966,745
---------
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 13
MUNICIPAL PREMIUM INCOME TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
NOVEMBER 30, ENDED
1995 MAY 31, 1995
- ---------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................. $ 10,326,270 $ 21,712,893
Net realized gain................................. 2,113,253 1,494,255
Net change in unrealized appreciation............. 3,527,222 4,565,857
---------- ----------
NET INCREASE.................................. 15,966,745 27,773,005
---------- ----------
DIVIDENDS TO PREFERRED SHAREHOLDERS FROM NET
INVESTMENT INCOME............................... (1,982,326) (4,023,613)
---------- ----------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income............................. (9,058,447) (18,749,585)
Net realized gain................................. -- (2,498,582)
---------- ----------
TOTAL......................................... (9,058,447) (21,248,167)
---------- ----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Preferred......................................... -- (25,000,000)
Common............................................ (381,656) (2,808,603)
---------- ----------
TOTAL......................................... (381,656) (27,808,603)
---------- ----------
TOTAL INCREASE (DECREASE)..................... 4,544,316 (25,307,378)
NET ASSETS:
Beginning of period............................... 368,224,601 393,531,979
---------- ----------
END OF PERIOD
(Including undistributed net investment income
of $671,968 and $1,386,471, respectively)..... $372,768,917 $368,224,601
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 14
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1995 (unaudited)
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. The Fund was organized as a Massachusetts business trust on
November 16, 1988 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 Trustees. The pricing
service has informed the Fund that in valuing the Fund's portfolio securities,
it uses both a computerized 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. Short-term debt
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Discounts are accreted and premiums are amortized over the life of the
respective securities. Interest income is accrued daily.
C. 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.
D. 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 are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis
<PAGE> 15
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1995 (unaudited) continued
treatment; temporary differences do not require reclassification. 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.
2. INVESTMENT ADVISORY AGREEMENT
Pursuant to an Investment Advisory Agreement with Dean Witter InterCapital Inc.
(the "Investment Adviser"), an affiliate of Dean Witter Services Company Inc.
(the "Administrator"), the Fund pays 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 Agreement, in addition to managing the Fund's
investments, 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 with the Administrator, the Fund pays 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,
office space, facilities, equipment, clerical, bookkeeping and certain legal
services and pays the salaries of all personnel, including officers of the Fund
who are employees of the Administrator. The Administrator also bears the cost of
telephone services, heat, light, power and other utilities provided to the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended November 30, 1995 aggregated
$25,426,680 and $23,889,592, respectively.
Dean Witter Trust Company, an affiliate of the Investment Adviser and
Administrator, is the Fund's transfer agent. At November 30, 1995, the Fund had
transfer agent fees and expenses payable of approximately $27,000.
<PAGE> 16
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1995 (unaudited) continued
The Fund has 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, 1995
included in Trustees' fees and expenses in the Statement of Operations amounted
to $5,999. At November 30, 1995, the Fund had an accrued pension liability of
$54,887 which is included in accrued expenses in the Statement of Assets and
Liabilities.
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 of which 50
shares of each Series have subsequently been retired. The preferred shares have
a liquidation value of $100,000 per share plus the redemption premium, if any,
plus accumulated but unpaid dividends, whether or not declared, thereon to the
date of distribution. The Fund may redeem such shares, in whole or in part, at
the original purchase price of $100,000 per share plus accumulated but unpaid
dividends, whether or not declared, thereon to the date of redemption.
Dividends, which are cumulative, are reset through auction procedures.
<TABLE>
<CAPTION>
RANGE OF
NEXT DIVIDEND
SHARES* SERIES RATE* RESET DATE RATES**
- -------- ------- ------ ---------- -------------
<S> <C> <C> <C> <C>
200 A 3.92 % 12/05/95 3.649% - 4.25%
200 B 3.699 12/05/95 3.699 - 4.25
200 C 3.699 12/05/95 3.64 - 4.35
200 D 3.70 12/05/95 3.70 - 4.26
200 E 4.07 12/05/95 3.70 - 4.15
</TABLE>
- ---------------------
* As of November 30, 1995.
** For the six months ended November 30, 1995.
<PAGE> 17
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1995 (unaudited) continued
Subsequent to November 30, 1995 and up through January 12, 1996, the Fund paid
dividends to each of the Series A through E at rates ranging from 3.60% to 5.00%
in the aggregate amount of $461,576.
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 purchasing 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.
6. COMMON SHARES OF BENEFICIAL INTEREST
Transactions in 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, 1993.......................................................... 26,243,024 $262,430 $243,568,894
Treasury shares purchased and retired (weighted average discount 4.53%)*....... (31,400) (314) (302,615)
---------- --------- ------------
Balance, May 31, 1994.......................................................... 26,211,624 262,116 243,266,279
Treasury shares purchased and retired (weighted average discount 8.49%)*....... (317,300) (3,173) (2,805,430)
---------- --------- ------------
Balance, May 31, 1995.......................................................... 25,894,324 258,943 240,460,849
Treasury shares purchased and retired (weighted average discount 7.91%)*....... (40,200) (402) (381,254)
---------- --------- ------------
Balance, November 30, 1995..................................................... 25,854,124 $258,541 $240,079,595
========== ========= ============
</TABLE>
- ---------------------
* The Trustees have voted to retire the shares purchased.
7. DIVIDENDS TO COMMON SHAREHOLDERS
The Fund has declared the following dividends from net investment income:
<TABLE>
<CAPTION>
AMOUNT
DECLARATION DATE PER SHARE RECORD DATE PAYABLE DATE
- ------------------ ---------- ---------------- -----------------
<S> <C> <C> <C>
November 28, 1995 $0.05 December 8, 1995 December 22, 1995
January 2, 1996 $0.05 January 12, 1996 January 26, 1996
</TABLE>
<PAGE> 18
MUNICIPAL PREMIUM INCOME TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1995 (unaudited) continued
8. SELECTED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------
11/30/95 8/31/95
------------------- -----------------
PER PER
TOTAL* SHARE TOTAL* SHARE
-------- ------ ------- -----
<S> <C> <C> <C> <C>
Total investment income........................................................ $ 5,872 $ 0.23 $ 5,998 $0.23
Net investment income.......................................................... 5,103 0.20 5,223 0.20
Net realized and unrealized gain (loss)........................................ 7,190 0.28 (1,550) (0.06)
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------------------------------------------------------------------------
5/31/95 02/28/95 11/30/94 8/31/94
------------------- ------------------ ------------------- -----------------
PER PER PER PER
TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE
-------- ------ ------- ------ -------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income........ $ 6,084 $ 0.24 $ 5,966 $ 0.23 $ 6,329 $ 0.24 $ 6,477 $0.25
Net investment income.......... 5,310 0.21 5,227 0.20 5,544 0.21 5,632 0.22
Net realized and unrealized
gain (loss)................... 7,398 0.30 18,178 0.70 (19,670) (0.75) 154 0.01
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------------------------------------------------------------------------
5/31/94 02/28/94 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)................... (15,611) (0.60) (3,452) (0.13) (1,146) (0.04) 8,558 0.32
</TABLE>
- ---------------------
* Amounts in thousands.
<PAGE> 19
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 SIX FOR THE YEAR ENDED MAY 31
MONTHS ENDED -----------------------------------------------
NOVEMBER 30, 1995* 1995* 1994* 1993* 1992* 1991*
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(unaudited)
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $10.36 $ 10.24 $10.67 $10.02 $ 9.61 $ 9.35
----- ------ ----- ----- ------ -----
Net investment income......................... 0.40 0.84 0.90 0.91 0.95 0.96
Net realized and unrealized gain (loss)....... 0.22 0.26 (0.45) 0.64 0.42 0.34
----- ------ ----- ----- ------ -----
Total from investment operations.............. 0.62 1.10 0.45 1.55 1.37 1.30
----- ------ ----- ----- ------ -----
Less dividends and distributions from:
Net investment income...................... (0.35) (0.72) (0.76) (0.77) (0.72) (0.70)
Net realized gain.......................... -- (0.10) -- (0.01) (0.05) (0.07)
Common share equivalent of dividends paid
to preferred shareholders.................. (0.08) (0.16) (0.12) (0.12) (0.19) (0.27)
----- ------ ----- ----- ------ -----
Total dividends and distributions............. (0.43) (0.98) (0.88) (0.90) (0.96) (1.04)
----- ------ ----- ----- ------ -----
Net asset value, end of period................ $10.55 $ 10.36 $10.24 $10.67 $ 10.02 $ 9.61
----- ------ ----- ----- ------ -----
----- ------ ----- ----- ------ -----
Market value, end of period................... $9.375 $9.6875 $ 9.75 $10.75 $10.375 $9.625
----- ------ ----- ----- ------ -----
----- ------ ----- ----- ------ -----
TOTAL INVESTMENT RETURN+...................... 0.28%(1) 8.15% (2.72)% 11.30% 16.44% 14.62%
RATIOS TO AVERAGE NET ASSETS OF COMMON
SHAREHOLDERS:
Expenses...................................... 1.15%(2) 1.21% 1.23% 1.38% 1.44% 1.59%
Net investment income before preferred stock
dividends.................................... 7.71%(2) 8.37% 8.31% 8.73% 9.67% 10.20%
Preferred stock dividends..................... 1.48%(2) 1.55% 1.11% 1.21% 1.90% 2.88%
Net investment income available to common
shareholders................................. 6.23%(2) 6.82% 7.20% 7.52% 7.77% 7.32%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands....... $372,769 $368,225 $393,532 $404,979 $388,022 $373,207
Asset coverage on preferred shares at end of
period....................................... 373% 368% 314% 324% 310% 299%
Portfolio turnover rate....................... 7%(1) 16% 23% 7% 16% 56%
</TABLE>
- ---------------------
+ 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 brokerage commissions.
* The per share amounts were computed using an average number of shares
outstanding during the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 20
TRUSTEES
- -----------------------------------
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
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
INDEPENDENT ACCOUNTANTS
- -----------------------------------
Price Waterhouse LLP
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
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.
MUNICIPAL
PREMIUM
INCOME
TRUST
SEMIANNUAL REPORT
NOVEMBER 30, 1995
