-----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, A9WN1GqRcXYcPhBpGfGUmNHQ0/4NPnHJHXykAOsuqvAwdIIH2TV3ySYnSVLYYqy4 rHeKtFkzSLsPZW6cIchVBg== 0000950123-98-000660.txt : 19980130 0000950123-98-000660.hdr.sgml : 19980130 ACCESSION NUMBER: 0000950123-98-000660 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971130 FILED AS OF DATE: 19980129 SROS: NONE 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: SEC FILE NUMBER: 811-05688 FILM NUMBER: 98515986 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 DEAN WITTER MUNICIPAL PREMIUM INCOME TRUST 1 MUNICIPAL PREMIUM INCOME TRUST Two World Trade Center, New York, New York 10048 LETTER TO THE SHAREHOLDERS November 30, 1997 DEAR SHAREHOLDER: We are pleased to present the semiannual report on the operations of Municipal Premium Income Trust (PIA) for the six-month period ended November 30, 1997. Over the past six months the bond market rallied and the pace of economic growth moderated. Inflation remained subdued and the Federal Reserve Board favored a stable monetary policy following its tightening move in March. In addition, the bond rally was supported by a shrinking federal budget deficit and a stronger dollar. By August the bond market began to retreat on fears that record-setting employment conditions might prompt the Federal Reserve Board to tighten interest rates further. However, yields declined in October and November. The spreading Asian currency crisis created turmoil in the international markets, precipitating "flight-to-quality" demand for U.S. Treasuries. BOND YIELDS 1994-1997
Insured Municipal 30-Year 30-Year Revenue Yields Insured Municipal U.S. Treasury as a Percentage of Revenue Yields Yields U.S. Treasury Yields Dec '93 5.4 6.34 85.17% 5.4 6.24 86.54% 5.8 6.66 87.09% 6.4 7.09 90.27% 6.35 7.32 86.75% 6.25 7.43 84.12% Jun '94 6.5 7.61 85.41% 6.25 7.39 84.57% 6.3 7.45 84.56% 6.55 7.81 83.87% 6.75 7.96 84.80% 7 8 87.50% Dec '94 6.75 7.88 85.66% 6.4 7.7 83.12% 6.15 7.44 82.66% 6.15 7.43 82.77% 6.2 7.34 84.47% 5.8 6.66 87.09% Jun '95 6.1 6.62 92.15% 6.1 6.86 88.92% 6 6.66 90.08% 5.95 6.48 91.82% 5.75 6.33 90.84% 5.5 6.14 89.56% Dec '95 5.35 5.94 90.07% 5.4 6.03 89.55% 5.8 6.46 86.69% 5.85 6.66 87.84% 5.95 6.89 86.36% 6.05 6.99 86.55% Jun '96 5.9 6.89 85.63% 5.85 6.97 83.93% 5.9 7.11 82.98% 5.7 6.93 82.25% 5.65 6.64 85.09% 5.5 6.35 86.61% Dec '96 5.6 6.63 84.46% 5.7 6.79 83.95% 5.65 6.8 83.08% 5.9 7.1 83.10% 5.75 6.94 82.85% 5.65 6.91 81.77% Jun '97 5.6 6.78 82.60% 5.3 6.3 84.00% 5.5 6.61 83.00% 5.4 6.4 84.40% 5.35 6.15 86.90% 5.3 6.05 87.60%
2 MUNICIPAL PREMIUM INCOME TRUST LETTER TO THE SHAREHOLDERS November 30, 1997, continued MUNICIPAL MARKET CONDITIONS Municipal yields followed the trend of Treasury yields but with less volatility. Long-term insured revenue index yields declined from 5.65 percent in May 1997 to 5.30 percent by the end of November. Yields on 1-year notes moved from 3.90 percent to 3.80 percent. Consequently, the yield pickup for extending maturities from 1 to 30 years narrowed from 175 basis points to 150 basis points over the past six months. The ratio of 30-year insured revenue bond yields to 30-year U.S. Treasury yields rose from 82 percent at the end of May 1997 to 88 percent in November. A rising ratio means that municipals have underperformed Treasuries and have become relatively more attractive. Over the past four years, this ratio has annually ranged from an average low of 83 percent to an average high of 90 percent. New-issue underwriting volume was slightly ahead of last year's pace in the first half of 1997. The decline in interest rates led to a surge in refunding activity in the third quarter. As a result, new-issue municipal volume was up 17 percent during the first 11 months of 1997. Refundings accounted for one-quarter of total volume. PERFORMANCE During the six-month period ended November 30, 1997, the Fund's net asset value (NAV) increased from $10.08 to $10.32. Based on this NAV change plus reinvestment of tax-free dividends totaling $0.30 per share, the Fund's total NAV return was 5.55 percent. PIA's price on the New York Stock Exchange moved from $9.375 to $9.875 per share. Based on this change in market price plus reinvestment of dividends, the Fund's total market return was 8.59 percent. On November 30, 1997, the Fund was trading at a 4 percent discount to NAV. Monthly dividends for the fourth quarter of 1997 were declared in September and remained unchanged at $0.05 per share. Over the past six months the level of undistributed net investment income increased from $0.086 to $0.099 per share. PORTFOLIO STRUCTURE The Fund remained fully invested in long-term municipal bonds. Investments were diversified among 13 long-term sectors and 71 credits. The Fund's weighted average maturity was 19 years. The distribution of call dates in the portfolio produced 5 years of weighted average call protection. High credit quality was maintained with 80 percent of long-term holdings rated double or triple "A". 3 MUNICIPAL PREMIUM INCOME TRUST LETTER TO THE SHAREHOLDERS November 30, 1997, continued LARGEST SECTORS AS OF NOVEMBER 30, 1997 (% OF NET ASSETS) REFUNDED 17% IDR/PCR* 14% ELECTRIC 13% MORTGAGE 13% HOSPITAL 12% TRANSPORTATION 9% GENERAL OBLIGATION 6% WATER & SEWER 6% ALL OTHERS 10%
* INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE. CREDIT RATINGS AS OF NOVEMBER 30, 1997 (% OF TOTAL LONG-TERM PORTFOLIO) Aaa OR AAA 58% Aa OR AA 22% Baa OR BBB 9% A OR A 8% N/R 3%
AS MEASURED BY MOODY'S INVESTORS SERVICE, INC. OR STANDARD & POOR'S CORP. PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE. CALL STRUCTURE AS OF NOVEMBER 30, 1997 (% OF TOTAL LONG-TERM PORTFOLIO) PERCENT CALLABLE WEIGHTED AVERAGE CALL PROTECTION: 5 YEARS YEARS BONDS CALLABLE 1998 12% 1999 12% 2000 6% 2001 4% 2002 1% 2003 12% 2004 7% 2005 12% 2006 11% 2007 4% 2008+ 19%
4 MUNICIPAL PREMIUM INCOME TRUST LETTER TO THE SHAREHOLDERS November 30, 1997, continued THE IMPACT OF LEVERAGING As discussed in previous reports, the total income available for distribution to common shareholders includes incremental income provided by the Fund'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 shareholders depends on two factors. The first factor is the amount of ARPS outstanding. Five ARPS series totaling $100 million are outstanding and represent 28 percent of net assets. The second factor is the spread between the portfolio's book yield and the cost of ARPS (ARPS auction rate and expenses). The greater the spread and the amount of ARPS outstanding, the greater the amount of incremental income available for distribution to common shareholders. The level of net investment income available for distribution to common shareholders varies with the level of short-term interest rates. Weekly ARPS yields ranged between 3.34 and 5.75 percent. LOOKING AHEAD So far this year, long-term municipal bonds have followed the trend of Treasuries toward lower yields. The recent enactment of the Taxpayer Relief Act of 1997 preserved the traditional tax-exempt benefits of municipal bond income. 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, 1997, the Fund purchased and retired 204,000 shares of common stock at a weighted average market discount of 4.837 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 5 MUNICIPAL PREMIUM INCOME TRUST PORTFOLIO OF INVESTMENTS November 30, 1997 (unaudited)
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS (97.4%) General Obligation (5.7%) $ 5,000 Chicago Park District, Illinois, Ser 1995............................... 6.60% 11/15/14 $ 5,542,450 3,500 Massachusetts, 1995 Ser A (AMBAC)....................................... 5.00 07/01/12 3,510,640 4,500 Shelby County, Tennessee, Refg 1995 Ser A............................... 5.625 04/01/11 4,705,200 6,000 Washington, Ser 1993 A.................................................. 5.75 10/01/17 6,204,900 - -------- ------------ 19,000 19,963,190 - -------- ------------ Educational Facilities Revenue (3.6%) 5,500 Oakland University, Michigan, Ser 1995 (MBIA)........................... 5.75 05/15/26 5,707,075 New York State Dormitory Authority, 4,000 State University Refg Ser 1993 A........................................ 5.50 05/15/08 4,218,040 1,350 State University Ser 1990 B............................................. 7.50 05/15/11 1,636,173 1,000 Pennsylvania Higher Educational Facilities Authority, Temple University First Ser (MBIA)....................................................... 6.50 04/01/21 1,078,570 - -------- ------------ 11,850 12,639,858 - -------- ------------ Electric Revenue (12.6%) 5,000 Sacramento Municipal Utility District, California, Refg 1994 Ser I (MBIA)................................................................. 6.00 01/01/24 5,305,250 4,000 Kansas City, Kansas, Utility Refg & Impr Ser 1994 (FGIC)................ 6.375 09/01/23 4,427,440 7,750 South Carolina Public Service Authority, 1995 Refg Ser A (AMBAC)........ 6.25 01/01/22 8,448,353 20,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 C...................... 4.70 02/01/06 19,745,399 Intermountain Power Agency, Utah, 5,000 Refg 1997 Ser B (MBIA)................................................. 5.75 07/01/19 5,223,600 1,270 Refg Ser 1988 B........................................................ 7.50 07/01/21 1,319,327 - -------- ------------ 43,020 44,469,369 - -------- ------------ Hospital Revenue (12.2%) 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 4,665,350 5,000 Birmingham-Carraway Special Care Facilities Financing Authority, Alabama, Carraway Methodist Health Systems Ser 1995 A (Connie Lee)..... 5.875 08/15/15 5,225,299 3,500 Colbert County - Northwest Health Care Authority, Alabama, Hellen Keller Hospital Refg Ser 1990................................................. 8.75 06/01/09 3,843,385 1,000 California Health Facilities Financing Authority, Alexian Brothers/San Jose Refg Ser 1990 (MBIA).............................................. 7.125 01/01/16 1,071,670 3,000 Hall County & Gainesville Hospital Authority, Georgia, Northeast Georgia Healthcare Ser 1995 (MBIA)............................................. 6.00 10/01/20 3,187,560 3,750 Evergreen Park, Illinois, Little Company of Mary Hospital Refg Ser 1988 (MBIA)................................................................. 7.25 02/15/11 3,848,100 1,800 Southwestern Illinois Development Authority, Anderson Hospital Ser 1992 A...................................................................... 7.00 08/15/22 1,943,136 3,420 Kentucky Development Finance Authority, Ashland Hospital/King's Daughters Refg Ser 1987................................................ 9.75 08/01/05 3,519,283 9,500 Boston, Massachussetts, Boston City Hospital - FHA Mtg Refg Ser B....... 5.75 02/15/13 9,655,610
SEE NOTES TO FINANCIAL STATEMENTS 6 MUNICIPAL PREMIUM INCOME TRUST PORTFOLIO OF INVESTMENTS November 30, 1997 (unaudited) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------- $ 2,985 Lehigh County General Purpose Authority, Pennsylvania, St Lukes Hospital Ser 1992 (AMBAC)....................................................... 6.25% 07/01/22 $ 3,176,219 2,750 Jefferson County Health Facilities Development Corporation, Texas, Baptist Health Care Ser 1989........................................... 8.30 10/01/14 2,908,208 - -------- ------------ 41,705 43,043,820 - -------- ------------ Industrial Development/Pollution Control Revenue (14.2%) 12,045 Pima County Industrial Development Authority, Arizona, Tucson Electric Power Co Refg Ser 1988 A (FSA Surety).................................. 7.25 07/15/10 13,434,993 10,000 Burlington, Kansas, Kansas Gas & Electric Co Ser 1991 (MBIA)............ 7.00 06/01/31 10,905,800 1,000 Ohio Water Development Authority, Toledo Edison Co Ser 1990 A (Secondary FSA)................................................................... 7.75 05/15/19 1,092,900 9,500 Montgomery County Industrial Development Authority, Pennsylvania, Philadelphia Electric Co Refg 1991 Ser B (MBIA)........................ 6.70 12/01/21 10,362,695 13,000 Alliance Airport Authority, Texas, AMR Corp Ser 1990 (AMT).............. 7.50 12/01/29 14,155,700 - -------- ------------ 45,545 49,952,088 - -------- ------------ Mortgage Revenue - Multi-Family (3.0%) 1,250 Lake Charles Non-Profit Housing Development Corporation, Louisiana, Ser 1990 A (FSA)........................................................... 7.875 02/15/25 1,262,500 Massachusetts Housing Finance Agency, 2,000 Rental 1994 Ser A (AMT) (AMBAC)........................................ 6.60 07/01/14 2,141,280 4,000 Rental 1994 Ser A (AMT) (AMBAC)........................................ 6.65 07/01/19 4,282,520 2,750 Minnesota Housing Finance Agency, Rental 1995 Ser D (MBIA).............. 6.00 02/01/22 2,835,800 - -------- ------------ 10,000 10,522,100 - -------- ------------ Mortgage Revenue - Single Family (9.7%) Colorado Housing & Finance Authority, 380 Ser 1990 B-2........................................................... 8.00 02/01/18 398,327 2,500 Ser 1997 A-2 (AMT)..................................................... 7.25 05/01/27 2,794,125 490 Idaho Housing Agency, 1988 Ser D-2 (AMT)................................ 8.25 01/01/20 524,555 460 Illinois Housing Development Authority, 1988 Ser C (AMT)................ 8.10 02/01/22 473,506 130 Indiana Housing Finance Authority, GNMA Collateralized Ser 1990 A-2 (AMT).................................................................. 8.10 01/01/22 133,465 1,045 Kansas City Leavenworth & Lenexa, Kansas, GNMA-Backed Ser 1988 C (AMT).. 8.00 11/01/20 1,077,677 Olathe, Kansas, 155 GNMA Collateralized Ser 1990 B.......................................... 7.50 09/01/10 164,388 485 GNMA Collateralized Ser 1989 A (AMT) (MBIA)............................. 8.00 11/01/20 506,956 1,490 New Orleans Home Mortgage Authority, Louisiana, 1989 Ser B-1 (AMT)...... 8.25 12/01/21 1,548,691 Maine Housing Authority, 3,540 Purchase Ser 1988 D4 (AMT)............................................. 7.55 11/15/19 3,736,187 1,000 Purchase Ser 1988 D5 (AMT)............................................. 7.55 11/15/19 1,055,420 Massachusetts Housing Finance Agency, 1,660 Residential Ser 1989 A (AMT)........................................... 8.20 08/01/15 1,731,264 4,960 1989 Ser 7 (AMT)....................................................... 8.10 06/01/20 5,094,018 665 Mississippi Housing Finance Corporation, GNMA-Backed Ser 1989 (AMT) (FGIC)................................................................. 8.25 10/15/18 701,143 2,885 Missouri Housing Development Commission, Homeownership 1996 Ser D (AMT).................................................................. 7.10 09/01/27 3,158,440 280 Muskogee County Home Finance Authority, Oklahoma, 1990 Ser A (FGIC)..... 7.60 12/01/10 294,188
SEE NOTES TO FINANCIAL STATEMENTS 7 MUNICIPAL PREMIUM INCOME TRUST PORTFOLIO OF INVESTMENTS November 30, 1997 (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 $ 2,690,099 South Carolina Housing Finance & Development Authority, 3,000 Homeownership 1998 Ser C-1 (AMT)....................................... 8.125 07/01/21 3,124,980 1,220 Homeownership 1991 Ser A (AMT)......................................... 7.40 07/01/23 1,287,198 2,870 El Paso Housing Finance Corporation, Texas, GNMA Collateralized Ser 1989 (AMT).................................................................. 8.20 03/01/21 2,999,982 Utah Housing Finance Agency, 300 Ser 1991 B-1........................................................... 7.50 07/01/16 316,692 300 Ser 1989 B (AMT)....................................................... 8.25 07/01/21 308,658 - -------- ------------ 32,375 34,119,959 - -------- ------------ Nursing & Health Related Facilities Revenue (0.5%) New York State Medical Care Facilities Finance Agency, 825 Mental Health Ser 1987................................................. 8.875 08/15/07 845,056 560 Mental Health Ser 1990 A (Secondary MBIA).............................. 7.75 02/15/20 609,028 405 Mental Health Ser 1991 A............................................... 7.50 02/15/21 448,732 - -------- ------------ 1,790 1,902,816 - -------- ------------ Public Facilities Revenue (1.0%) Saint Paul Independent School District #625, Minnesota, 1,700 Ser 1995 C COPs........................................................ 5.45 02/01/11 1,744,489 1,800 Ser 1995 C COPs........................................................ 5.50 02/01/12 1,845,936 - -------- ------------ 3,500 3,590,425 - -------- ------------ Resource Recovery Revenue (3.3%) 11,500 Cambria County Industrial Development Authority, Pennsylvania, Cambria - -------- Cogen Co Ser 1989 F-2 (MBIA)........................................... 7.75 09/01/19 11,736,785 ------------ Transportation Facilities Revenue (8.5%) 3,500 Atlanta, Georgia, Airport Ser 1994 B (AMT) (AMBAC)...................... 6.00 01/01/21 3,666,355 Chicago, Illinois, 5,000 Chicago-O'Hare International Airport Ser 1996 A (AMBAC)................ 5.625 01/01/12 5,204,800 7,000 Midway Airport 1994 Ser A (AMT) (MBIA)................................. 6.25 01/01/24 7,427,840 5,000 Regional Transportation Authority, Illinois, Ser 1994 A (AMBAC)......... 6.25 06/01/24 5,398,650 8,000 Austin, Texas, Airport Prior Lien Ser 1995 A (AMT) (MBIA)............... 6.125 11/15/25 8,480,160 - -------- ------------ 28,500 30,177,805 - -------- ------------ Water & Sewer Revenue (5.8%) 2,500 Coachella, California, Ser 1992 COPs (FSA).............................. 6.10 03/01/22 2,628,175 4,000 Santa Rosa, California, Wastewater Refg 1996 Ser A (FGIC)............... 4.75 09/01/16 3,781,120 3,500 Chicago, Illinois, Wastewater Ser 1994 (MBIA)........................... 6.375 01/01/24 3,811,990 3,000 Detroit, Michigan, Water Supply 1997 Ser A (MBIA)....................... 5.00 07/01/21 2,879,460 3,600 Rio Rancho, New Mexico, Water & Wastewater Ser 1995 A (FSA)............. 6.00 05/15/22 3,828,024 3,490 Texas Water Resource Finance Authority, Ser 1989 (AMBAC)................ 7.50 08/15/13 3,672,283 - -------- ------------ 20,090 20,601,052 - -------- ------------
SEE NOTES TO FINANCIAL STATEMENTS 8 MUNICIPAL PREMIUM INCOME TRUST PORTFOLIO OF INVESTMENTS November 30, 1997 (unaudited) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------- Refunded (17.3%) $ 3,000 Central Coast Water Authority, California, Ser 1992 (AMBAC)............. 6.60% 10/01/02++ $ 3,362,730 5,000 District of Columbia, Ser 1990 A (AMBAC)................................ 7.50 06/01/00++ 5,482,800 3,800 Metropolitan Pier & Exposition Authority, Illinois, Ser 1992 A (FGIC)... 6.50 06/15/03++ 4,248,590 4,000 Indiana Health Facility Financing Authority, Hancock Memorial Hospital Ser 1990............................................................... 8.30 08/15/00++ 4,482,200 3,965 Massachusetts, 1994 Ser C (FGIC)........................................ 6.75 11/01/04++ 4,532,431 11,000 Western Townships Utilities Authority, Michigan, Sewerage Disposal Ser 1989 (Crossover 01/01/99).............................................. 8.20 01/01/18 11,649,880 1,340 Missouri Health & Educational Facilities Authority, Missouri Baptist Medical Center Refg Ser 1989 (ETM)..................................... 7.625 07/01/18 1,463,146 4,650 New York Local Government Assistance Corporation, Ser 1991 A............ 7.25 04/01/01++ 5,179,309 New York State Medical Care Facilities Finance Agency, 985 Mental Health Ser 1990 (Secondary MBIA)................................ 7.75 02/15/00++ 1,078,930 580 Mental Health Ser 1991 A............................................... 7.50 02/15/01++ 647,640 2,375 Montgomery County Higher Educational & Health Authority, Pennsylvania, Holy Redeemer Hospital 1990 Ser A (AMBAC).............................. 7.625 02/01/00++ 2,548,328 2,400 Peninsula Ports Authority, Virginia, Mary Immaculate Hospital Ser 1989................................................................... 8.375 08/01/99++ 2,605,752 12,550 Washington Public Power Supply System, Nuclear Proj #2 Refg Ser 1990 C...................................................................... 7.625 01/01/01++ 13,976,935 - -------- ------------ 55,645 61,258,671 - -------- ------------ 324,520 TOTAL MUNICIPAL BONDS (Identified Cost $321,062,671)............................................ 343,977,938 - -------- ------------ SHORT-TERM MUNICIPAL OBLIGATION (0.5%) 1,800 East Baton Rouge Parish, Louisiana, Exxon Corp Ser 1993 - -------- (Demand 12/01/97) (Identified Cost $1,800,000)......................... 3.80* 03/01/22 1,800,000 ------------ $326,320 TOTAL INVESTMENTS (Identified Cost $322,862,671) (a)................................... 97.9% 345,777,938 ======== CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 2.1 7,343,256 ----- ------------ NET ASSETS.............................................................................. 100.0% $353,121,194 ===== ============
SEE NOTES TO FINANCIAL STATEMENTS 9 MUNICIPAL PREMIUM INCOME TRUST PORTFOLIO OF INVESTMENTS November 30, 1997 (unaudited) continued - --------------------- AMT Alternative Minimum Tax. COPs Certificates of Participation. ETM Escrowed to maturity. ++ Prerefunded to call date shown. * Current coupon of variable rate demand obligation. (a) The aggregate cost for federal income tax purposes approximates identified cost. The aggregate gross unrealized appreciation is $23,203,162 and the aggregate gross unrealized depreciation is $287,895, resulting in net unrealized appreciation of $22,915,267. 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.
GEOGRAPHIC SUMMARY OF INVESTMENTS Based on Market Value as a Percent of Net Assets November 30, 1997 Alabama.................. 3.9% Arizona.................. 3.8 California............... 4.6 Colorado................. 0.9 District of Columbia..... 1.6 Georgia.................. 1.9 Idaho.................... 0.2 Illinois................. 10.7 Indiana.................. 1.3 Kansas................... 4.8 Kentucky................. 1.0 Louisiana................ 1.3 Maine.................... 1.4 Massachusetts............ 8.8 Michigan................. 5.7 Minnesota................ 1.8 Mississippi.............. 0.2 Missouri................. 1.3 New Mexico............... 1.1 New York................. 4.2 Ohio..................... 0.3 Oklahoma................. 0.1 Pennsylvania............. 8.2 Rhode Island............. 0.8 South Carolina........... 3.6 Tennessee................ 1.3 Texas.................... 14.7 Utah..................... 2.0 Virginia................. 0.7 Washington............... 5.7 ---- Total.................... 97.9% ====
SEE NOTES TO FINANCIAL STATEMENTS 10 MUNICIPAL PREMIUM INCOME TRUST FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES November 30, 1997 (unaudited) ASSETS: Investments in securities, at value (identified cost $322,862,671)....................................... $345,777,938 Cash.................................................................. 409,364 Receivable for: Interest.......................................................... 7,072,244 Investments sold.................................................. 130,000 Prepaid expenses and other assets..................................... 200,892 ------------ TOTAL ASSETS...................................................... 353,590,438 ------------ LIABILITIES: Payable for: Dividends to preferred shareholders............................... 172,894 Investment advisory fee........................................... 116,152 Administration fee................................................ 72,595 Accrued expenses and other payables................................... 107,603 ------------ TOTAL LIABILITIES................................................. 469,244 ------------ NET ASSETS........................................................ $353,121,194 ============ COMPOSITION OF 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, 24,517,924 shares outstanding)....................... 227,852,622 Net unrealized appreciation........................................... 22,915,267 Accumulated undistributed net investment income....................... 2,418,464 Accumulated net realized loss......................................... (65,159) ------------ NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS...................... 253,121,194 ------------ TOTAL NET ASSETS.................................................. $353,121,194 ============ NET ASSET VALUE PER COMMON SHARE ($253,121,194 divided by 24,517,924 common shares outstanding)....... $10.32 ======
SEE NOTES TO FINANCIAL STATEMENTS 11 MUNICIPAL PREMIUM INCOME TRUST FINANCIAL STATEMENTS, continued STATEMENT OF OPERATIONS For the six months ended November 30, 1997 (unaudited) NET INVESTMENT INCOME: INTEREST INCOME........................................................ $11,001,619 ----------- EXPENSES Investment advisory fee................................................ 708,287 Administration fee..................................................... 442,679 Auction commission fees................................................ 134,796 Professional fees...................................................... 45,195 Transfer agent fees and expenses....................................... 38,950 Auction agent fees..................................................... 30,504 Shareholder reports and notices........................................ 25,636 Registration fees...................................................... 16,214 Custodian fees......................................................... 8,342 Trustees' fees and expenses............................................ 6,767 Other.................................................................. 18,822 ----------- TOTAL EXPENSES..................................................... 1,476,192 Less: expense offset................................................... (8,278) ----------- NET EXPENSES....................................................... 1,467,914 ----------- NET INVESTMENT INCOME.............................................. 9,533,705 ----------- NET REALIZED AND UNREALIZED GAIN: Net realized gain...................................................... 28,093 Net change in unrealized appreciation.................................. 5,491,260 ----------- NET GAIN........................................................... 5,519,353 ----------- NET INCREASE........................................................... $15,053,058 ===========
SEE NOTES TO FINANCIAL STATEMENTS 12 MUNICIPAL PREMIUM INCOME TRUST FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED NOVEMBER 30, 1997 MAY 31, 1997 - -------------------------------------------------------------------------------------------- (unaudited) INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income.............................. $ 9,533,705 $ 19,568,521 Net realized gain (loss)........................... 28,093 (93,251) Net change in unrealized appreciation.............. 5,491,260 5,092,960 ------------ ------------ NET INCREASE................................... 15,053,058 24,568,230 ------------ ------------ Dividends to preferred shareholders from net investment income................................. (1,850,160) (3,571,216) ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM: Net investment income.............................. (7,384,914) (15,071,283) Net realized gain.................................. -- (5,000,795) ------------ ------------ TOTAL.......................................... (7,384,914) (20,072,078) ------------ ------------ Decrease from transactions in common shares of beneficial interest............................... (1,991,109) (7,218,048) ------------ ------------ NET INCREASE (DECREASE)........................ 3,826,875 (6,293,112) NET ASSETS: Beginning of period................................ 349,294,319 355,587,431 ------------ ------------ END OF PERIOD (Including undistributed net investment income of $2,418,464 and $2,119,833, respectively).... $353,121,194 $349,294,319 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS 13 MUNICIPAL PREMIUM INCOME TRUST NOTES TO FINANCIAL STATEMENTS November 30, 1997 (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 14 MUNICIPAL PREMIUM INCOME TRUST NOTES TO FINANCIAL STATEMENTS November 30, 1997 (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 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 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. 15 MUNICIPAL PREMIUM INCOME TRUST NOTES TO FINANCIAL STATEMENTS November 30, 1997 (unaudited) continued 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, 1997 aggregated $2,832,150 and $4,889,348, respectively. Dean Witter Trust FSB, an affiliate of the Investment Adviser and Administrator, is the Fund's transfer agent. At November 30, 1997, the Fund had transfer agent fees and expenses payable of approximately $2,800. 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, 1997 included in Trustees' fees and expenses in the Statement of Operations amounted to $1,545. At November 30, 1997, the Fund had an accrued pension liability of $47,928 which is included in accrued expenses in the Statement of Assets and Liabilities. 5. COMMON SHARES OF BENEFICIAL INTEREST Transactions in shares of beneficial interest were as follows:
CAPITAL PAID IN PAR VALUE EXCESS OF SHARES OF SHARES PAR VALUE ---------- --------- ------------ Balance, May 31, 1996........................................................... 25,501,424 $255,014 $236,806,765 Treasury shares purchased and retired (weighted average discount 8.30%)*........ (779,500) (7,795) (7,210,253) ---------- -------- ------------ Balance, May 31, 1997........................................................... 24,721,924 247,219 229,596,512 Treasury shares purchased and retired (weighted average discount 4.837%)*....... (204,000) (2,040) (1,989,069) ---------- -------- ------------ Balance, November 30, 1997...................................................... 24,517,924 $245,179 $227,607,443 ========== ======== ============
- --------------------- * The Trustees have voted to retire the shares purchased. 6. 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, 16 MUNICIPAL PREMIUM INCOME TRUST NOTES TO FINANCIAL STATEMENTS November 30, 1997 (unaudited) continued 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 $14,768 3.85% 12/03/97 3.34% - 3.99% B 200 14,000 3.65 12/03/97 3.35 - 3.99 C 200 57,534 3.75 09/02/98 3.62 - 3.87 D 200 56,306 3.67 01/07/98 3.55 - 5.75 E 200 59,054 3.85 07/08/98 3.849
- --------------------- * As of November 30, 1997. ** For the six months ended November 30, 1997. Subsequent to November 30, 1997 and up through December 5, 1997, the Fund paid dividends to each of the Series A through E at rates ranging from 3.65% to 3.85% in the aggregate amount of $28,768. 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. 7. DIVIDENDS TO COMMON SHAREHOLDERS The Fund declared the following dividends from net investment income:
DECLARATION AMOUNT RECORD PAYABLE DATE PER SHARE DATE DATE - ------------------- --------- ------------------ ------------------- September 23, 1997 $0.05 December 5, 1997 December 19, 1997 December 30, 1997 $0.05 January 9, 1998 January 23, 1998
8. FEDERAL INCOME TAX STATUS At May, 1997, the Fund had a net capital loss carryover of approximately $93,000 which will be available through May 31, 2005 to offset future capital gains to the extent provided by regulations. 17 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, 1997* 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------------- (unaudited) PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period........... $10.08 $10.02 $10.36 $10.24 ------ ------ ------ ------ Net investment income.......................... 0.39 0.78 0.79 0.84 Net realized and unrealized gain (loss)........ 0.23 0.19 (0.22) 0.26 ------ ------ ------ ------ Total from investment operations............... 0.62 0.97 0.57 1.10 ------ ------ ------ ------ Less dividends and distributions from: Net investment income....................... (0.30) (0.60) (0.65) (0.72) Common share equivalent of dividends paid to preferred shareholders.................... (0.08) (0.14) (0.15) (0.16) Net realized gain........................... -- (0.20) (0.12) (0.10) ------ ------ ------ ------ Total dividends and distributions.............. (0.38) (0.94) (0.92) (0.98) ------ ------ ------ ------ Anti-dilutive effect of acquiring treasury shares........................................ -- 0.03 0.01 -- ------ ------ ------ ------ Net asset value, end of period................. $10.32 $10.08 $10.02 $10.36 ====== ====== ====== ====== Market value, end of period.................... $9.875 $9.375 $ 9.00 $9.688 ====== ====== ====== ====== TOTAL INVESTMENT RETURN+....................... 8.59%(3) 13.52% 0.67% 8.15% RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS: Expenses....................................... 1.16%(2) 1.14%(1) 1.16%(1) 1.21% Net investment income before preferred stock dividends..................................... 7.56%(2) 7.70% 7.68% 8.37% Preferred stock dividends...................... 1.47%(2) 1.41% 1.44% 1.55% Net investment income available to common shareholders.................................. 6.09%(2) 6.29% 6.24% 6.82% SUPPLEMENTAL DATA: Net assets, end of period, in thousands........ $353,121 $349,294 $355,587 $368,225 Asset coverage on preferred shares at end of period........................................ 352% 349% 355% 368% Portfolio turnover rate........................ 1%(3) 5% 14% 16% FOR THE YEAR ENDED MAY 31* ----------------------------- 1994 1993 - ---------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period........... $10.67 $10.02 ------ ------ Net investment income.......................... 0.90 0.91 Net realized and unrealized gain (loss)........ (0.45) 0.64 ------ ------ Total from investment operations............... 0.45 1.55 ------ ------ Less dividends and distributions from: Net investment income....................... (0.76) (0.77) Common share equivalent of dividends paid to preferred shareholders.................... (0.12) (0.12) Net realized gain........................... -- (0.01) ------ ------ Total dividends and distributions.............. (0.88) (0.90) ------ ------ Anti-dilutive effect of acquiring treasury shares........................................ -- -- ------ ------ Net asset value, end of period................. $10.24 $10.67 ====== ====== Market value, end of period.................... $ 9.75 $10.75 ====== ====== TOTAL INVESTMENT RETURN+....................... (2.72)% 11.30% RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS: Expenses....................................... 1.23% 1.38% Net investment income before preferred stock dividends..................................... 8.31% 8.73% Preferred stock dividends...................... 1.11% 1.21% Net investment income available to common shareholders.................................. 7.20% 7.52% SUPPLEMENTAL DATA: Net assets, end of period, in thousands........ $393,532 $404,979 Asset coverage on preferred shares at end of period........................................ 314% 324% Portfolio turnover rate........................ 23% 7%
- --------------------- * 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. (1) Does not reflect the effect of expense offset of 0.01%. (2) Annualized. (3) Not annualized. SEE NOTES TO FINANCIAL STATEMENTS 18 (This Page Intentionally Left Blank) 19 (This Page Intentionally Left Blank) 20 TRUSTEES - ------------------------------------------------- Michael Bozic Charles A. Fiumefreddo Edwin J. Garn John R. Haire Wayne E. Hedien Dr. Manuel H. Johnson Michael E. Nugent Philip J. Purcell John L. Schroeder OFFICERS - ------------------------------------------------- Charles A. Fiumefreddo Chairman and Chief Executive Officer Barry Fink Vice President, Secretary and General Counsel James F. Willison Vice President Thomas F. Caloia Treasurer TRANSFER AGENT - ------------------------------------------------- Dean Witter Trust FSB 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, 1997 -----END PRIVACY-ENHANCED MESSAGE-----