MUNICIPAL PREMIUM INCOME TRUST/MA, N-30D, 1997-01-28

MUNICIPAL PREMIUM INCOME TRUST/MA
N-30D, 1997-01-28

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<PAGE> 1

MUNICIPAL PREMIUM INCOME TRUST Two World Trade Center, New York, New York 10048

LETTER TO THE SHAREHOLDERS November 30, 1996

DEAR SHAREHOLDER:

We are pleased to present the semi-annual report on the operations of Municipal
Premium Income Trust for the November 30, 1996 fiscal period.

Stronger economic growth and the potential threat of rising inflation shifted
the tone of the fixed-income markets from bullish to bearish early in 1996. This
change in market psychology was confirmed in March by a surprisingly large
increase in payroll employment. The rise in interest rates between February and
July may be attributed to market weakness on the days that strong monthly
employment figures were reported. The bond market sporadically pushed long-term
yields higher, in anticipation of a possible increase in the federal-funds rate
by the Federal Reserve Board. However, as employment growth and overall economic
activity slowed during the summer, the central bank left monetary policy
unchanged. As a result, the fixed-income markets regained an optimistic outlook
and rallied from September through November to lower yields last seen at the
beginning of the year.

MUNICIPAL MARKET CONDITIONS

Between February and July 1996, 30-year insured revenue bond yields rose 75
basis points from 5.40 percent to reach 6.15 percent in April and again in
mid-June. Subsequently, demand for municipal bonds improved and followed the
trend of Treasuries to lower rates. By the end of November, insured bond yields
stood at 5.50 percent. In November, the yield curve pickup for extending
maturities from 1 to 30 years was 190 basis points.

The ratio of insured revenue bond yields to 30-year U.S. Treasury yields moved
from 92 percent to 86 percent during the calendar year. A declining ratio means
that municipal bond prices outperformed U.S. Treasury prices. The relative
improvement in municipals occurred as flat-tax proposals failed to gain public
support.
<PAGE> 2

MUNICIPAL PREMIUM INCOME TRUST

LETTER TO THE SHAREHOLDERS November 30, 1996, continued

The municipal market also benefited from steady demand. In addition to regular
maturities and calls for redemption this year, it has been estimated that
investors also faced the retirement of over $60 billion in debt that had been
previously refinanced. On the supply side, new issues increased 13 percent to
$150 billion for the first 11 months of 1996.

PERFORMANCE

The Fund's net asset value (NAV) moved from $10.02 to $10.44 per share over the
six-month period ended November 30, 1996. Based on this NAV change plus
reinvestment of tax-free dividends totaling $0.30 per share, the Fund's total
return was 7.48 percent. The Fund's market price on the New York Stock Exchange
moved from $9.00 to $9.375 per share. Based on this market price and
reinvestment of tax-free dividends the Fund's total return was 7.56 percent. On
November 30, 1996, the Fund was trading at a 10 percent discount to NAV.
Undistributed net investment income available for dividends increased from
$0.047 to $0.066 per share over the past six months.

PORTFOLIO STRUCTURE

On November 30, 1996 the Fund's $362 million in net assets was diversified among
13 long-term sectors and 73 credits. Average maturity and call protection were
20 and 6 years, respectively. Throughout the period, high credit quality was
maintained with nearly 80 percent of long-term holdings rated double or triple
"A."

THE IMPACT OF LEVERAGING

As discussed in previous reports, the total income available for distribution to
common shareholders includes incremental income

CREDIT RATINGS as of November 30, 1996
(% of Total Long-Term Portfolio)

AAA or Aaa 57%
AA or aa 23%
BBB or Baa 15%
A or A 4%
Not Rated 1%

As measured by Standard & Poor's Corp. or Moody's Investors Service, Inc.

Portfolio Structure is subject to change

FIVE LARGEST SECTORS as of November 30, 1996
(% of Net Assets)

Refunded 17%
IDR/PCR* 15%
Electric 13%
Hospital 13%
Mortgage 12%
All Others 30%

*Industrial Development/Pollution Control Revenue

Portfolio Structure is subject to change
<PAGE> 3

MUNICIPAL PREMIUM INCOME TRUST

LETTER TO THE SHAREHOLDERS November 30, 1996, continued

provided by the Trust's outstanding Auction Rate Preferred Shares (ARPS). 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 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.

Weekly ARPS yields ranged between 3.00 and 3.85 percent during the past six
months. Five ARPS series totaling $100 million and representing 28 percent of
net assets were outstanding. Leverage contributed approximately $0.04 per share
to common share earnings.

LOOKING AHEAD

The balance between the supply of new issues and demand created by maturities is
expected to remain positive for the municipal market. Long-term insured
municipal securities currently yield 86 percent of the yield on U.S. Treasury
securities and may be expected to follow the direction of the Treasury market.
Although municipal performance relative to Treasuries has improved, tax-exempt
investments could again be affected by market uncertainty if new tax-reduction
proposals resurface.

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 past six months, the Fund purchased
and retired 412,900 shares of common stock at a weighted average market discount
of 8.27 percent.

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> 4

MUNICIPAL PREMIUM INCOME TRUST

PORTFOLIO OF INVESTMENTS November 30, 1996 (unaudited)

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (97.4%)
General Obligation (5.4%)
$ 5,000 Chicago Park District, Illinois, Ser 1995............................... 6.60% 11/15/14 $ 5,452,500
3,500 Massachusetts, 1995 Ser A (AMBAC)....................................... 5.00 07/01/12 3,425,695
4,500 Shelby County, Tennessee, Refg 1995 Ser A............................... 5.625 04/01/11 4,648,140
6,000 Washington, Ser 1993 A.................................................. 5.75 10/01/17 6,093,960
- -------- ----------
19,000 19,620,295
- -------- ----------

Educational Facilities Revenue (3.4%)
5,500 Oakland University, Michigan, Ser 1995 (MBIA)........................... 5.75 05/15/26 5,586,240
New York State Dormitory Authority,
4,000 State University Refg Ser 1993 A....................................... 5.50 05/15/08 4,003,280
1,350 State University Ser 1990 B............................................ 7.50 05/15/11 1,607,269
1,000 Pennsylvania Higher Educational Facilities Authority, Temple University
First Ser (MBIA)....................................................... 6.50 04/01/21 1,088,240
- -------- ----------
11,850 12,285,029
- -------- ----------

Electric Revenue (12.5%)
5,000 Sacramento Municipal Utility District, California, Refg 1994 Ser I
(MBIA)................................................................. 6.00 01/01/24 5,216,600
4,000 Kansas City, Kansas, Utility Refg & Impr Ser 1994 (FGIC)................ 6.375 09/01/23 4,350,160
7,750 South Carolina Public Service Authority, 1995 Refg Ser A (AMBAC)........ 6.25 01/01/22 8,367,675
20,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 C...................... 4.70 02/01/06 19,334,000
Intermountain Power Agency, Utah,
1,270 Refg Ser 1988 B........................................................ 7.50 07/01/21 1,352,601
5,000 Refg Ser 1997 B (MBIA) (WI)............................................ 5.75 07/01/19 4,969,350
- -------- ----------
43,020 43,590,386
- -------- ----------

Hospital Revenue (13.2%)
5,000 Alabama Special Care Facilities Financing Authority of Birmingham,
Daughters of Charity National Health/St Vincent's & Providence
Hospitals Ser 1995..................................................... 5.00 11/01/25 4,559,200
5,000 Birmingham-Carraway Special Care Facilities Financing Authority,
Alabama, Carraway Methodist Health Systems Ser 1995 A (Connie Lee)..... 5.875 08/15/15 5,125,350
3,500 Colbert County - Northwest Health Care Authority, Alabama, Helen Keller
Hospital Refg Ser 1990................................................. 8.75 06/01/09 3,879,470
1,000 California Health Facilities Financing Authority, Alexian Brothers/San
Jose Refg Ser 1990 (MBIA).............................................. 7.125 01/01/16 1,091,080
3,000 Hall County and Gainesville Hospital Authority, Georgia, Northeast
Georgia Healthcare Ser 1995 (MBIA)..................................... 6.00 10/01/20 3,118,500
3,750 Evergreen Park, Illinois, Little Company of Mary Hospital Refg Ser 1988
(MBIA)................................................................. 7.25 02/15/11 3,954,675
1,800 Southwestern Illinois Development Authority, Anderson Hospital Ser 1992
A...................................................................... 7.00 08/15/22 1,874,682
3,420 Kentucky Development Finance Authority, Ashland Hospital/King's
Daughters Refg Ser 1987................................................ 9.75 08/01/05 3,656,561
9,500 Boston, Massachusetts, Boston City Hospital - FHA Mtge Refg Ser B....... 5.75 02/15/13 9,540,280
2,985 Lehigh County General Purpose Authority, Pennsylvania, St Lukes Hospital
Ser 1992 (AMBAC)....................................................... 6.25 07/01/22 3,146,787
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5

MUNICIPAL PREMIUM INCOME TRUST

PORTFOLIO OF INVESTMENTS November 30, 1996 (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 $ 2,588,987
2,750 Jefferson County Health Facilities Development Corporation, Texas,
Baptist Health Care Ser 1989........................................... 8.30 10/01/14 2,762,265
2,400 Peninsula Ports Authority, Virginia, Mary Immaculate Hospital Ser
1989................................................................... 8.375 08/01/04 2,603,544
- -------- ----------
46,480 47,901,381
- -------- ----------

Industrial Development/Pollution Control Revenue (15.3%)
12,090 Pima County Industrial Development Authority, Arizona, Tucson Electric
Power Co Refg Ser 1988 A (FSA Surety).................................. 7.25 07/15/10 13,546,603
10,000 Burlington, Kansas, Kansas Gas & Electric Co Refg Ser 1991 (MBIA)....... 7.00 06/01/31 11,151,200
5,000 New York State Energy Research & Development Authority, Brooklyn Union
Gas Co 1996 Ser (MBIA)................................................. 5.50 01/01/21 4,953,600
1,000 Ohio Water Development Authority, Toledo Edison Co Ser 1990 A
(Secondary FSA)........................................................ 7.75 05/15/19 1,119,530
9,500 Montgomery County Industrial Development Authority, Pennsylvania,
Philadelphia Electric Co Refg 1991 Ser B (MBIA)........................ 6.70 12/01/21 10,556,875
13,000 Alliance Airport Authority, Texas, AMR Corp Ser 1990 (AMT).............. 7.50 12/01/29 13,974,610
- -------- ----------
50,590 55,302,418
- -------- ----------

Mortgage Revenue - Multi-Family (2.9%)
1,250 Lake Charles Non-Profit Housing Development Corporation, Louisiana,
Ser 1990 A (FSA)....................................................... 7.875 02/15/25 1,253,688
Massachusetts Housing Finance Agency,
2,000 Rental 1994 Ser A (AMT) (AMBAC)......................................... 6.60 07/01/14 2,079,000
4,000 Rental 1994 Ser A (AMT) (AMBAC)......................................... 6.65 07/01/19 4,160,600
3,000 Minnesota Housing Finance Agency, Rental 1995 Ser D (MBIA).............. 6.00 02/01/22 3,056,880
- -------- ----------
10,250 10,550,168
- -------- ----------

Mortgage Revenue - Single Family (9.3%)
440 Colorado Housing & Finance Authority, Ser 1990 B-2...................... 8.00 02/01/18 463,430
11,705 Pinellas County Housing Finance Authority, Florida, Ser 1983............ 0.00 01/01/15 1,883,100
545 Idaho Housing Agency, 1988 Ser D-2 (AMT)................................ 8.25 01/01/20 579,270
2,180 Illinois Housing Development Authority, 1988 Ser C (AMT)................ 8.10 02/01/22 2,265,194
960 Indiana Housing Finance Authority, Ser 1990 A-2 (AMT)................... 8.10 01/01/22 990,864
1,180 Kansas City Leavenworth & Lenexa, Kansas, GNMA-Backed Ser 1988 C (AMT).. 8.00 11/01/20 1,222,834
Olathe, Kansas,
180 GNMA Collateralized Ser 1990 B......................................... 7.50 09/01/10 191,808
605 GNMA Collateralized Ser 1989 A (AMT) (MBIA)............................ 8.00 11/01/20 636,684
1,655 New Orleans Home Mortgage Authority, Louisiana, 1989 Ser B-1 (AMT)...... 8.25 12/01/21 1,739,686
Maine Housing Authority,
3,540 Purchase Ser 1988 D4 (AMT)............................................. 7.55 11/15/19 3,738,205
1,000 Purchase Ser 1988 D5 (AMT)............................................. 7.55 11/15/19 1,054,100
Massachusetts Housing Finance Agency,
1,660 Residential Ser 1989 A (AMT)............................................ 8.20 08/01/15 1,757,625
4,960 1989 Ser 7 (AMT)....................................................... 8.10 06/01/20 5,165,146
755 Mississippi Housing Finance Corporation, GNMA-Backed Ser 1989 (AMT)..... 8.25 10/15/18 794,064
365 Muskogee County Home Finance Authority, Oklahoma, 1990 Ser A (FGIC)..... 7.60 12/01/10 385,352
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6

MUNICIPAL PREMIUM INCOME TRUST

PORTFOLIO OF INVESTMENTS November 30, 1996 (unaudited) continued

Nursing & Health Related Facilities Revenue (1.2%)
New York State Medical Care Facilities Finance Agency,
1,625 Mental Health Ser 1987................................................. 8.875 08/15/07 1,712,490
1,555 Mental Health Ser 1990 (MBIA).......................................... 7.75 02/15/20 1,729,362
985 Mental Health Ser 1991 A............................................... 7.50 02/15/21 1,102,954
- -------- ----------
4,165 4,544,806
- -------- ----------

Public Facilities Revenue (1.0%)
200 Metropolitan Pier & Exposition Authority, Illinois, Ser 1992 A (FGIC)... 0.00 06/15/07 204,956
Saint Paul Independent School District #625, Minnesota,
1,700 Ser 1995 C COPs........................................................ 5.45 02/01/11 1,727,863
1,800 Ser 1995 C COPs........................................................ 5.50 02/01/12 1,829,448
- -------- ----------
3,700 3,762,267
- -------- ----------

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 11,908,825
----------

Transportation Facilities Revenue (8.1%)
3,500 Atlanta, Georgia, Airport Ser 1994 B (AMT) (AMBAC)...................... 6.00 01/01/21 3,575,950
Chicago, Illinois,
5,000 Chicago-O'Hare International Airport Ser 1996 A (AMBAC)................ 5.625 01/01/12 5,063,500
7,000 Midway Airport 1994 Ser A (AMT) (MBIA)................................. 6.25 01/01/24 7,249,620
5,000 Regional Transportation Authority, Illinois, Ser 1994 A (AMBAC)......... 6.25 06/01/24 5,286,100
8,000 Austin, Texas, Airport Prior Lien Ser 1995 A (AMT) (MBIA)............... 6.125 11/15/25 8,347,040
- -------- ----------
28,500 29,522,210
- -------- ----------

Water & Sewer Revenue (4.8%)
2,500 Coachella, California, Ser 1992 COPs (FSA).............................. 6.10 03/01/22 2,600,625
4,000 Santa Rosa, California, Wastewater Refg 1996 Ser A (FGIC)............... 4.75 09/01/16 3,686,240
3,500 Chicago, Illinois, Wastewater Ser 1994 (MBIA)........................... 6.375 01/01/24 3,762,570
3,600 Rio Rancho, New Mexico, Water & Wastewater Ser 1995 A (FSA)............. 6.00 05/15/22 3,750,156
3,490 Texas Water Resource Finance Authority, Ser 1989 (AMBAC)................ 7.50 08/15/13 3,760,545
- -------- ----------
17,090 17,560,136
- -------- ----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7

MUNICIPAL PREMIUM INCOME TRUST

PORTFOLIO OF INVESTMENTS November 30, 1996 (unaudited) continued

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Refunded (17.0%)
$ 3,000 Central Coast Water Authority, California, Ser 1992 (AMBAC)............. 6.60% 10/01/02++ $ 3,407,220
5,000 District of Columbia, Ser 1990 A (AMBAC)................................ 7.50 06/01/00++ 5,606,900
1,000 Jacksonville Health Facilities Authority, Florida, Riverside Hospital
Ser 1989............................................................... 7.625 10/01/99+ 1,057,640
3,800 Metropolitan Pier & Exposition Authority, Illinois, Ser 1992 A (FGIC)... 0.00 06/15/03++ 4,059,426
4,000 Indiana Health Facility Financing Authority, Hancock Memorial Hospital
Ser 1990............................................................... 8.30 08/15/00++ 4,594,480
3,965 Massachusetts, 1994 Ser C (FGIC)........................................ 6.75 11/01/04++ 4,553,089
11,000 Western Townships Utilities Authority, Michigan, Sewerage Disposal Ser
1989 (Crossover)....................................................... 8.20 01/01/18 12,048,960
1,340 Missouri Health & Educational Facilities Authority, Missouri Baptist
Medical Center Refg Ser 1989 (ETM)..................................... 7.625 07/01/18 1,699,147
4,650 New York Local Government Assistance Corporation, Ser 1991 A............ 7.25 04/01/01++ 5,280,540
5,000 Intermountain Power Agency, Utah, Refg Ser 1987 D....................... 8.625 07/01/97+ 5,230,950
12,550 Washington Public Power Supply System, Nuclear Proj #2 Refg Ser 1990
C...................................................................... 7.625 07/01/01++ 14,274,119
- -------- ----------
55,305 61,812,471
- -------- ----------
343,630 TOTAL MUNICIPAL BONDS (Identified Cost $330,080,473)............................................. 352,213,746
- -------- ----------
SHORT-TERM MUNICIPAL OBLIGATIONS (1.9%)
500 McIntosh Industrial Development Board, Alabama, CIBA-GEIGY Corp Ser 1986
(Demand 12/02/96)...................................................... 4.15* 07/01/04 500,000
6,500 Louisiana Offshore Terminal Authority, Loop Inc Ser 1992 A (Demand
12/02/96).............................................................. 4.05* 09/01/08 6,500,000
- -------- ----------
7,000 TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS (Identified Cost $7,000,000).............................. 7,000,000
- -------- ----------

$350,630 TOTAL INVESTMENTS (Identified Cost $337,080,473) (a).................................... 99.3% 359,213,746
========

CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.7 2,594,546
---- ----------

NET ASSETS............................................................................... 100.0% $361,808,292
==== ==========
</TABLE>

- ---------------------

AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to Maturity.
WI Security purchased on a when issued basis.
++ Prerefunded to call date shown.
+ Refunded to call date shown by forward delivery contract.
* Current coupon of variable rate security.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$23,054,559 and the aggregate gross unrealized depreciation is
$921,286, resulting in net unrealized appreciation of $22,133,273.

Bond Insurance:
AMBAC AMBAC Indemnity Corporation.
Connie Lee Connie Lee Insurance Company.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8

MUNICIPAL PREMIUM INCOME TRUST

PORTFOLIO OF INVESTMENTS November 30, 1996 (unaudited) continued

GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
November 30, 1996

<TABLE>
<S> <C>
Alabama.................. 3.9%
Arizona.................. 3.7
California............... 4.4
Colorado................. 0.1
District of Columbia..... 1.6
Florida.................. 0.8
Georgia.................. 1.9
Idaho.................... 0.2
Illinois................. 10.8
Indiana.................. 1.5
Kansas................... 4.9
Kentucky................. 1.0
Louisiana................ 2.6
Maine.................... 1.3
Massachusetts............ 8.5
Michigan................. 4.9
Minnesota................ 1.8
Mississippi.............. 0.2
Missouri................. 0.5
New Mexico............... 1.0
New York................. 5.6
Ohio..................... 0.3
Oklahoma................. 0.1
Pennsylvania............. 8.1
Rhode Island............. 0.7
South Carolina........... 3.5
Tennessee................ 1.3
Texas.................... 14.4
Utah..................... 3.4
Virginia................. 0.7
Washington............... 5.6
---
Total.................... 99.3%
===
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9

MUNICIPAL PREMIUM INCOME TRUST

FINANCIAL STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1996 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $337,080,473).......... $359,213,746
Cash..................................... 367,554
Receivable for:
Interest............................. 7,171,569
Investments sold..................... 210,000
Prepaid expenses and other assets........ 112,337
----------

TOTAL ASSETS......................... 367,075,206
----------

LIABILITIES:
Payable for:
Investments purchased................ 4,750,000
Investment advisory fee.............. 141,985
Dividends to preferred
shareholders........................ 126,192
Administration fee................... 88,741
Accrued expenses and other payables...... 159,996
----------

TOTAL LIABILITIES.................... 5,266,914
----------

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, 25,088,524 shares outstanding)... 233,220,862
Net unrealized appreciation.............. 22,133,273
Accumulated undistributed net investment
income.................................. 1,659,121
Accumulated undistributed net realized
gain.................................... 4,795,036
----------

NET ASSETS APPLICABLE TO COMMON
SHAREHOLDERS........................ 261,808,292
----------

TOTAL NET ASSETS..................... $361,808,292
==========

NET ASSET VALUE PER COMMON SHARE
($261,808,292 divided by 25,088,524
common shares outstanding).............. $10.44
=====
<CAPTION>
STATEMENT OF OPERATIONS
For the six months ended November 30, 1996 (unaudited)
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME.......................... $ 11,353,049
----------

EXPENSES
Investment advisory fee.................. 716,729
Administration fee....................... 447,955
Auction commission fees.................. 125,225
Transfer agent fees and expenses......... 91,500
Professional fees........................ 47,148
Shareholder reports and notices.......... 35,583
Registration fees........................ 16,058
Auction agent fees....................... 12,493
Custodian fees........................... 11,875
Trustees' fees and expenses.............. 8,147
Servicing fees........................... 6,498
Other.................................... 10,022
----------

TOTAL EXPENSES BEFORE EXPENSE
OFFSET............................... 1,529,233

LESS: EXPENSE OFFSET................. (11,780)
----------
TOTAL EXPENSES AFTER
EXPENSE OFFSET....................... 1,517,453
----------

NET INVESTMENT INCOME................ 9,835,596
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss........................ (205,758)
Net change in unrealized appreciation.... 9,802,226
----------

NET GAIN............................. 9,596,468
----------

NET INCREASE............................. $ 19,432,064
==========
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10

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
1996 MAY 31, 1996
- ---------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................. $ 9,835,596 $ 20,385,122
Net realized gain (loss).......................... (205,758) 6,527,149
Net change in unrealized appreciation............. 9,802,226 (12,300,038)
------------ ------------

NET INCREASE.................................. 19,432,064 14,612,233
------------ ------------

DIVIDENDS TO PREFERRED SHAREHOLDERS FROM NET
INVESTMENT INCOME................................. (1,771,272) (3,811,460)
------------ ------------

DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income............................. (7,599,014) (16,766,322)
Net realized gain................................. -- (3,013,608)
------------ ------------

TOTAL......................................... (7,599,014) (19,779,930)
------------ ------------

Decrease from transactions in common shares of
beneficial interest.............................. (3,840,917) (3,658,013)
------------ ------------

NET INCREASE (DECREASE)....................... 6,220,861 (12,637,170)
NET ASSETS:
Beginning of period............................... 355,587,431 368,224,601
------------ ------------

END OF PERIOD
(Including undistributed net investment income
of $1,659,121 and $1,193,811, respectively)... $ 361,808,292 $355,587,431
============ ============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11

MUNICIPAL PREMIUM INCOME TRUST

NOTES TO FINANCIAL STATEMENTS November 30, 1996 (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's investment objective is to provide a high level
of current income exempt from federal income tax. The Fund was organized as a
Massachusetts business trust on November 16, 1988 and commenced operations on
February 1, 1989.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- Portfolio securities are valued by an outside
independent pricing service approved by the Trustees. The pricing service has
informed the Fund that in valuing the 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 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
<PAGE> 12

MUNICIPAL PREMIUM INCOME TRUST

NOTES TO FINANCIAL STATEMENTS November 30, 1996, (unaudited) continued

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 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 the 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 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, 1996 aggregated
$9,636,450 and $12,925,454, respectively.
<PAGE> 13

MUNICIPAL PREMIUM INCOME TRUST

NOTES TO FINANCIAL STATEMENTS November 30, 1996, (unaudited) continued

Dean Witter Trust Company, an affiliate of the Investment Adviser and
Administrator, is the Fund's transfer agent. At November 30, 1996, the Fund had
transfer agent fees and expenses payable of approximately $63,000.

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, 1996
included in Trustees' fees and expenses in the Statement of Operations amounted
to $426. At November 30, 1996, the Fund had an accrued pension liability of
$48,488 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. The Fund has issued Series A through E Auction Rate
Preferred Shares ("Preferred Shares") which 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>
AMOUNT NEXT RANGE OF
SERIES SHARES* IN THOUSANDS* RATE* RESET DATE DIVIDEND RATES**
- ------- ------- ------------- ----- ---------- ----------------
<S> <C> <C> <C> <C> <C>
A 200 20,000 3.35% 12/03/96 3.00% - 3.49%
B 200 20,000 3.49 12/03/96 3.20 - 3.49
C 200 20,000 3.50 12/03/96 3.00 - 3.59
D 200 20,000 3.579 12/31/96 3.42 - 3.75
E 200 20,000 3.85 07/08/97 3.25 - 3.85
</TABLE>

- ---------------------
* As of November 30, 1996.

** For the six months ended November 30, 1996.

Subsequent to November 30, 1996 and up through January 10, 1997, the Fund paid
dividends to each of the Series A through E at rates ranging from 3.00% to 4.25%
in the aggregate amount of $372,944.
<PAGE> 14

MUNICIPAL PREMIUM INCOME TRUST

NOTES TO FINANCIAL STATEMENTS November 30, 1996, (unaudited) continued

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 IN
EXCESS OF
SHARES PAR VALUE PAR VALUE
---------- ---------- ------------
<S> <C> <C> <C>
Balance, May 31, 1995.......................................................... 25,894,324 $258,943 $240,460,849
Treasury shares purchased and retired (weighted average discount 9.66%)*....... (392,900) (3,929) (3,654,084)
--------- ------- -----------
Balance, May 31, 1996.......................................................... 25,501,424 255,014 236,806,765
Treasury shares purchased and retired (weighted average discount 8.27%)*....... (412,900) (4,129) (3,836,788)
--------- ------- -----------
Balance, November 30, 1996..................................................... 25,088,524 $250,885 $232,969,977
========= ======= ===========
</TABLE>

- ---------------------
* The Trustees have voted to retire the shares purchased.

7. DIVIDENDS TO COMMON SHAREHOLDERS

The Fund declared the following dividends from net investment income:

<TABLE>
<CAPTION>
DECLARATION AMOUNT RECORD PAYABLE
DATE PER SHARE DATE DATE
- ------------------ --------- ----------------- ------------------
<S> <C> <C> <C>
November 26, 1996... $0.05 December 6, 1996 December 20, 1996
December 31, 1996... $0.05 January 10, 1997 January 24, 1997
</TABLE>
<PAGE> 15

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, 1996* 1996++ 1995
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(unaudited)
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................... $ 10.02 $ 10.36 $ 10.24
------ ------ ------
Net investment income.................................... 0.39 0.89 0.84
Net realized and unrealized gain (loss).................. 0.39 (0.33) 0.26
------ ------ ------
Total from investment operations......................... 0.78 0.56 1.10
------ ------ ------
Less dividends and distributions from:
Net investment income................................. (0.30) (0.65) (0.72)
Common share equivalent of dividends paid to preferred
shareholders......................................... (0.07) (0.15) (0.16)
Net realized gain..................................... -- (0.11) (0.10)
------ ------ ------
Total dividends and distributions........................ (0.37) (0.91) (0.98)
------ ------ ------
Anti-dilutive effect of acquiring treasury shares........ 0.01 0.01 --
------ ------ ------
Net asset value, end of period........................... $ 10.44 $ 10.02 $ 10.36
====== ====== ======
Market value, end of period.............................. $ 9.375 $ 9.00 $ 9.6875
====== ====== ======
TOTAL INVESTMENT RETURN+................................. 7.56%(3) %0.67 %8.15
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Expenses................................................. 1.19%(1)(2) %1.16(1) %1.21
Net investment income before preferred stock dividends... 7.66%(1)(2) %7.63(1) %8.37
Preferred stock dividends................................ 1.38%(2) %1.43 %1.55
Net investment income available to common shareholders... 6.28%(1)(2) %6.20(1) %6.82
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................. $361,808 $355,587 $368,225
Asset coverage on preferred shares at end of period...... 353% % 355 % 368
Portfolio turnover rate.................................. 3%(3) % 14 % 16

MONTHS ENDED --------------------------------------

NOVEMBER 30, 1996* 1996++ 1995 1994
1993 1992
------------------------------------------------------
<S> <C> <C> <C>

PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................... $ 10.67 $ 10.02 $ 9.61

------ ------ ------

Net investment income.................................... 0.90 0.91 0.95

Net realized and unrealized gain (loss).................. (0.45) 0.64 0.42

------ ------ ------

Total from investment operations......................... 0.45 1.55 1.37

------ ------ ------

Less dividends and distributions from:
Net investment income................................. (0.76) (0.77) (0.72)

Common share equivalent of dividends paid to preferred
shareholders......................................... (0.12) (0.12) (0.19)

Net realized gain..................................... -- (0.01) (0.05)

------ ------ ------

Total dividends and distributions........................ (0.88) (0.90) (0.96)

------ ------ ------

Anti-dilutive effect of acquiring treasury shares........ -- -- --

------ ------ ------

Net asset value, end of period........................... $ 10.24 $ 10.67 $ 10.02

====== ====== ======

Market value, end of period.............................. $ 9.75 $ 10.75 $ 10.375

====== ====== ======

TOTAL INVESTMENT RETURN+................................. (2.72)% 11.30% 16.44%

RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Expenses................................................. %1.23 %1.38 %1.44

Net investment income before preferred stock dividends... %8.31 %8.73 %9.67

Preferred stock dividends................................ %1.11 %1.21 %1.90

Net investment income available to common shareholders... %7.20 %7.52 %7.77

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................. $393,532 $404,979 $388,022

Asset coverage on preferred shares at end of period...... % 314 % 324 % 310

Portfolio turnover rate.................................. % 23 % 7 % 16

</TABLE>

- ---------------------
* 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 brokerage commissions.
++ Restated for comparative purposes.
(1) The above ratios reflect the effect of expense offsets of 0.01%.
(2) Annualized.
(3) Not annualized.

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 16

TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
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 MANAGER
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

[PHOTO]

SEMIANNUAL REPORT
NOVEMBER 30, 1996