Toronto, September 23, 2003 - (TSX: PIC.A, PIC.PR.A) Premium Income Corporation is pleased to announce that it has finalized the terms of its treasury offering of Preferred shares and Class A shares and has filed a final prospectus dated September 22, 2003. The amount of the offering is $226,525,000 (8,500,000 Preferred shares and 8,500,000 Class A shares) and the offering price has been set at $15.65 per Preferred share and $11.00 per Class A share. Closing of the offering is scheduled for September 29, 2003.

Premium Income Corporation is a mutual fund corporation which invests in the common shares of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and The Toronto-Dominion Bank. To generate additional returns above the dividend income earned on the Portfolio, the Fund may from time to time, write covered call options in respect of all or part of the common shares in the Portfolio. In addition, the Fund may write cash covered put options in respect of securities in which the Fund is permitted to invest.

The Fund's investment portfolio is managed by its investment manager, Mulvihill Capital Management Inc. The Fund's Preferred shares and Class A shares are listed on the Toronto Stock Exchange under the symbols PIC.PR.A and PIC.A.

RBC Capital Markets is the leader of the syndicate of agents for the offering that includes CIBC World Markets Inc., Scotia Capital Inc., TD Securities Inc., BMO Nesbitt Burns Inc., National Bank Financial Inc., HSBC Securities (Canada) Inc., Desjardins Securities Inc., Canaccord Capital Corporation, Dundee Securities Corporation, Raymond James Ltd. and First Associates Investments Inc.

The Corporation has granted to the Agents an option exercisable for a period of 30 days from the closing of the offering to purchase up to 1,275,000 additional Preferred shares and 1,275,000 Class A shares on the same terms and conditions as set forth above.