Is semester tests a good idea?

I can remember being in school and having the option of taking a semester test.  I was usually exempt from having to take these tests because I made the honor roll.  But today I was in a meeting and the principal said that he wanted to do away with semester tests.  I wondered if semester tests are a good idea.  I believe that they are good for testing what the student has learned all year long.  But I wonder if it is a waste of time and energy.  I would like to find out what an alternative for the semester test would be.