Press Releases

Quarterly Dividends, Special Dividend Declared
(For Release 4 p.m. EDT July 21, 1997)

Toronto, July 21, 1997:Premium Income Corporation (the "Company") has declared quarterly dividends of $0.215625 on each of its Preferred Shares and $0.20 on each of its Class A Shares payable on July 31, 1997 to shareholders of record on that date. In addition the Company has declared a special dividend on each of its Class A Shares of $0.10 payable on the same date.

The increased market volatility over the past nine months has resulted in higher income for the Company than had been anticipated. The Board of Directors has decided to pay a portion of this income to shareholders at this time while maintaining the regular dividend policy at a rate that is expected to be sustainable over the long term. Any net realized capital gains, dividend income and option premium earned by the Company in excess of the dividends payable to preferred shareholders and the dividends already paid to Class A shareholders will be paid to Class A shareholders of record at year end.

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 Company will from time to time write covered call options in respect to all or part of the common shares in the Portfolio.

The Company's investment Portfolio is managed by it's investment manager, Mulvihill Capital Management Inc. The Company's Preferred and Class A Shares are listed on The Toronto Stock Exchange and the Montreal Exchange under the symbols PIC.PR.A and PIC.A.

Distribution Details:

For more information, please contact:
John Mulvihill, Chairman & CEO, Mulvihill Capital Management
Don Biggs, Vice President, Mulvihill Capital Management

Premium Income Corporation
121 King Street West, Suite 2600
Toronto, Ontario M5H 3T9
(416) 681-3966   (800) 725-7172
premium@mulvihill.com
www.mulvihill.com