-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RKCD23+0E8T2Tf68EM/VnlpaB5ZJIgmq63KfXFrCpnOOkhr+ywj4VyJsccPtazyT eEkj81Q8xNZj/VjFCxb8gg== 0000950123-97-000522.txt : 19970129 0000950123-97-000522.hdr.sgml : 19970129 ACCESSION NUMBER: 0000950123-97-000522 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970128 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNICIPAL PREMIUM INCOME TRUST/MA CENTRAL INDEX KEY: 0000842891 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133498050 STATE OF INCORPORATION: NY FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05688 FILM NUMBER: 97512217 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CENTER CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123922550 FORMER COMPANY: FORMER CONFORMED NAME: ALLSTATE MUNICIPAL PREIMIUM INCOME TRUST/MA DATE OF NAME CHANGE: 19930721 FORMER COMPANY: FORMER CONFORMED NAME: MUNICIPAL PREMIUM INCOME TRUST/ DATE OF NAME CHANGE: 19930721 N-30D 1 SEMI-ANNUAL REPORT 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. 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 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 4 MUNICIPAL PREMIUM INCOME TRUST PORTFOLIO OF INVESTMENTS November 30, 1996 (unaudited)
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - -------------------------------------------------------------------------------------------------------------------------------- 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
SEE NOTES TO FINANCIAL STATEMENTS 5 MUNICIPAL PREMIUM INCOME TRUST PORTFOLIO OF INVESTMENTS November 30, 1996 (unaudited) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - -------------------------------------------------------------------------------------------------------------------------------- $ 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
SEE NOTES TO FINANCIAL STATEMENTS 6 MUNICIPAL PREMIUM INCOME TRUST PORTFOLIO OF INVESTMENTS November 30, 1996 (unaudited) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - -------------------------------------------------------------------------------------------------------------------------------- $ 2,560 Rhode Island Housing & Mortgage Finance Corporation, Homeownership 1988 Ser 1-D (AMT)....................................... 7.875% 10/01/22 $ 2,691,174 South Carolina Housing Finance & Development Authority, 3,000 Homeownership 1988 Ser C-1 (AMT)....................................... 8.125 07/01/21 3,158,100 1,220 Homeownership 1991 Ser A (AMT)......................................... 7.40 07/01/23 1,277,328 2,870 El Paso Housing Finance Corporation, Texas, Ser 1989 (AMT).............. 8.20 03/01/21 3,025,037 Utah Housing Finance Agency, 415 Ser 1991 B-1.......................................................... 7.50 07/01/16 437,576 385 Ser 1989 B (AMT)...................................................... 8.25 07/01/21 396,777 - -------- ---------- 42,180 33,853,354 - -------- ---------- 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 - -------- ----------
SEE NOTES TO FINANCIAL STATEMENTS 7 MUNICIPAL PREMIUM INCOME TRUST PORTFOLIO OF INVESTMENTS November 30, 1996 (unaudited) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - -------------------------------------------------------------------------------------------------------------------------------- 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 ==== ==========
- --------------------- 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 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 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% ===
SEE NOTES TO FINANCIAL STATEMENTS 9 MUNICIPAL PREMIUM INCOME TRUST FINANCIAL STATEMENTS 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 =====
STATEMENT OF OPERATIONS For the six months ended November 30, 1996 (unaudited) 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 ==========
SEE NOTES TO FINANCIAL STATEMENTS 10 MUNICIPAL PREMIUM INCOME TRUST FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED FOR THE YEAR NOVEMBER 30, ENDED 1996 MAY 31, 1996 - --------------------------------------------------------------------------------------- (unaudited) 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 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS 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 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. 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.
AMOUNT NEXT RANGE OF SERIES SHARES* IN THOUSANDS* RATE* RESET DATE DIVIDEND RATES** - ------- ------- ------------- ----- ---------- ---------------- 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
- --------------------- * 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. 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:
CAPITAL PAID IN EXCESS OF SHARES PAR VALUE PAR VALUE ---------- ---------- ------------ 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 ========= ======= ===========
- --------------------- * The Trustees have voted to retire the shares purchased. 7. DIVIDENDS TO COMMON SHAREHOLDERS The Fund declared the following dividends from net investment income:
DECLARATION AMOUNT RECORD PAYABLE DATE PER SHARE DATE DATE - ------------------ --------- ----------------- ------------------ November 26, 1996... $0.05 December 6, 1996 December 20, 1996 December 31, 1996... $0.05 January 10, 1997 January 24, 1997
15 MUNICIPAL PREMIUM INCOME TRUST FINANCIAL HIGHLIGHTS Selected ratios and per share data for a common share of beneficial interest outstanding throughout each period:
FOR THE SIX FOR THE YEAR ENDED MAY 31* MONTHS ENDED ----------------------------------------- NOVEMBER 30, 1996* 1996++ 1995 ------------------------------------------------------------------------------------------------------------------------- (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 ------------------------------------------------------ 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
- --------------------- * 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 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 -----END PRIVACY-ENHANCED MESSAGE-----