UNITED STATES | |
SECURITIES AND EXCHANGE COMMISSION | |
Washington, D.C. 20549 | |
FORM N-CSR | |
CERTIFIED SHAREHOLDER REPORT OF REGISTERED | |
MANAGEMENT INVESTMENT COMPANIES | |
Investment Company Act file number 811-4186 | |
John Hancock Income Securities Trust | |
(Exact name of registrant as specified in charter) | |
601 Congress Street, Boston, Massachusetts 02210 | |
(Address of principal executive offices) (Zip code) | |
Salvatore Schiavone | |
Treasurer | |
601 Congress Street | |
Boston, Massachusetts 02210 | |
(Name and address of agent for service) | |
Registrant's telephone number, including area code: 617-663-4497 | |
Date of fiscal year end: | October 31 |
Date of reporting period: | April 30, 2013 |
ITEM 1. REPORTS TO STOCKHOLDERS.
Portfolio summary
Portfolio Composition1 | ||||
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Corporate Bonds | 48.4% | Capital Preferred Securities | 1.3% | |
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U.S. Government Agency | 19.1% | Term Loans | 0.4% | |
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Collateralized Mortgage Obligations | 14.9% | Convertible Bonds | 0.2% | |
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Asset Backed Securities | 6.1% | Foreign Government Obligations | 0.1% | |
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U.S. Government | 4.5% | Municipal Bonds | 0.1% | |
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Common Stocks | 3.0% | Short-Term Investments | 0.3% | |
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Preferred Securities | 1.6% | |||
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Quality Composition1,2 | ||||
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U.S. Government | 4.5% | B | 6.6% | |
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U.S. Government Agency | 19.1% | CCC & Below | 7.4% | |
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AAA | 5.0% | Not Rated | 0.7% | |
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AA | 2.6% | Equity | 3.0% | |
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A | 6.6% | Preferred Securities | 1.6% | |
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BBB | 33.6% | Short-Term Investments | 0.3% | |
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BB | 9.0% | |||
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1 As a percentage of the Fund’s total investments on 4-30-13.
2 Ratings are from Moody’s Investors Service. If not available, we have used Standard & Poor’s Ratings Services. In the absence of ratings from these agencies, we have used Fitch ratings. “Not Rated” securities are those with no ratings available from these agencies. All ratings are as of 4-30-13 and do not reflect subsequent downgrades or upgrades, if any.
6 | Income Securities Trust | Semiannual report |
Fund’s investments
As of 4-30-13 (unaudited)
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Corporate Bonds 71.2% (48.4% of Total Investments) | $135,095,730 | ||||
| |||||
(Cost $123,256,596) | |||||
Consumer Discretionary 8.7% | 16,598,485 | ||||
Auto Components 0.0% | |||||
| |||||
American Axle & Manufacturing, Inc. | 6.625 | 10-15-22 | $55,000 | 58,782 | |
Automobiles 2.2% | |||||
| |||||
Ford Motor Company (Z) | 4.750 | 01-15-43 | 365,000 | 365,319 | |
| |||||
Ford Motor Company | 6.625 | 10-01-28 | 100,000 | 120,394 | |
| |||||
Ford Motor Credit Company LLC (Z) | 5.000 | 05-15-18 | 478,000 | 533,082 | |
| |||||
Ford Motor Credit Company LLC (Z) | 5.875 | 08-02-21 | 1,318,000 | 1,538,096 | |
| |||||
Ford Motor Credit Company LLC (Z) | 8.000 | 12-15-16 | 330,000 | 397,226 | |
| |||||
Hyundai Capital Services, Inc. (S)(Z) | 4.375 | 07-27-16 | 310,000 | 334,876 | |
| |||||
Kia Motors Corp. (S)(Z) | 3.625 | 06-14-16 | 315,000 | 332,250 | |
| |||||
Nissan Motor Acceptance Corp. (S) | 1.950 | 09-12-17 | 490,000 | 500,809 | |
Distributors 0.1% | |||||
| |||||
Burlington Holdings LLC, PIK (S) | 9.000 | 02-15-18 | 140,000 | 145,250 | |
Hotels, Restaurants & Leisure 2.5% | |||||
| |||||
CCM Merger, Inc. (S) | 9.125 | 05-01-19 | 380,000 | 399,950 | |
| |||||
Greektown Superholdings, Inc. | 13.000 | 07-01-15 | 1,713,000 | 1,839,334 | |
| |||||
Landry’s, Inc. (S) | 9.375 | 05-01-20 | 250,000 | 275,313 | |
| |||||
Little Traverse Bay Bands of Odawa Indians (S) | 9.000 | 08-31-20 | 319,000 | 309,430 | |
| |||||
Marina District Finance Company, Inc. (Z) | 9.500 | 10-15-15 | 320,000 | 340,896 | |
| |||||
Rivers Pittsburgh Borrower LP (S) | 9.500 | 06-15-19 | 155,000 | 171,275 | |
| |||||
Seminole Indian Tribe of Florida (S)(Z) | 6.535 | 10-01-20 | 650,000 | 728,000 | |
| |||||
Seminole Indian Tribe of Florida (S)(Z) | 7.750 | 10-01-17 | 325,000 | 351,000 | |
| |||||
Station Casinos LLC (S) | 7.500 | 03-01-21 | 285,000 | 300,675 | |
| |||||
Waterford Gaming LLC (S) | 8.625 | 09-15-14 | 165,622 | 72,747 | |
Household Durables 0.1% | |||||
| |||||
American Standard Americas (S) | 10.750 | 01-15-16 | 165,000 | 173,456 | |
Internet & Catalog Retail 0.6% | |||||
| |||||
Expedia, Inc. (Z) | 5.950 | 08-15-20 | 530,000 | 593,888 | |
| |||||
QVC, Inc. (S) | 4.375 | 03-15-23 | 325,000 | 332,897 | |
| |||||
QVC, Inc. | 5.125 | 07-02-22 | 205,000 | 220,533 | |
Media 2.2% | |||||
| |||||
CBS Corp. (Z) | 7.875 | 07-30-30 | 595,000 | 823,059 | |
| |||||
Cogeco Cable, Inc. (S) | 4.875 | 05-01-20 | 100,000 | 101,875 |
See notes to financial statements | Semiannual report | Income Securities Trust | 7 |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Media (continued) | |||||
| |||||
News America, Inc. (Z) | 6.150 | 03-01-37 | $165,000 | $203,037 | |
| |||||
News America, Inc. (Z) | 6.400 | 12-15-35 | 150,000 | 190,826 | |
| |||||
News America, Inc. (Z) | 7.600 | 10-11-15 | 1,000,000 | 1,153,860 | |
| |||||
News America, Inc. (Z) | 7.750 | 01-20-24 | 1,020,000 | 1,321,215 | |
| |||||
Time Warner Cable, Inc. | 8.250 | 04-01-19 | 350,000 | 459,354 | |
Multiline Retail 0.3% | |||||
| |||||
Macy’s Retail Holdings, Inc. (Z) | 7.875 | 08-15-36 | 444,000 | 495,305 | |
Specialty Retail 0.3% | |||||
| |||||
CST Brands, Inc. (S) | 5.000 | 05-01-23 | 135,000 | 138,544 | |
| |||||
Hillman Group, Inc. (Z) | 10.875 | 06-01-18 | 305,000 | 337,788 | |
| |||||
Toys R Us, Inc. | 10.375 | 08-15-17 | 180,000 | 194,175 | |
Textiles, Apparel & Luxury Goods 0.4% | |||||
| |||||
Burlington Coat Factory Warehouse Corp. (Z) | 10.000 | 02-15-19 | 665,000 | 743,969 | |
Consumer Staples 2.9% | 5,525,332 | ||||
Beverages 0.2% | |||||
| |||||
Pernod-Ricard SA (S) | 5.750 | 04-07-21 | 325,000 | 390,863 | |
Food & Staples Retailing 1.1% | |||||
| |||||
Rite Aid Corp. (Z) | 9.250 | 03-15-20 | 720,000 | 833,400 | |
| |||||
Safeway, Inc. | 4.750 | 12-01-21 | 125,000 | 136,848 | |
| |||||
Safeway, Inc. (Z) | 5.000 | 08-15-19 | 840,000 | 941,856 | |
| |||||
Safeway, Inc. (Z) | 7.250 | 02-01-31 | 225,000 | 268,257 | |
Food Products 0.9% | |||||
| |||||
Bunge, Ltd. Finance Corp. (Z) | 8.500 | 06-15-19 | 389,000 | 507,071 | |
| |||||
ConAgra Foods, Inc. (Z) | 3.200 | 01-25-23 | 325,000 | 332,404 | |
| |||||
Corporacion Pesquera Inca SAC (S)(Z) | 9.000 | 02-10-17 | 340,000 | 364,820 | |
| |||||
Simmons Foods, Inc. (S) | 10.500 | 11-01-17 | 475,000 | 479,750 | |
Tobacco 0.7% | |||||
| |||||
Alliance One International, Inc. (Z) | 10.000 | 07-15-16 | 1,000,000 | 1,061,900 | |
| |||||
Vector Group, Ltd. (S) | 7.750 | 02-15-21 | 195,000 | 208,163 | |
Energy 7.5% | 14,153,661 | ||||
Energy Equipment & Services 0.9% | |||||
| |||||
Astoria Depositor Corp., Series B (S) | 8.144 | 05-01-21 | 1,000,000 | 1,025,000 | |
| |||||
Rowan Companies, Inc. (Z) | 4.875 | 06-01-22 | 330,000 | 363,865 | |
| |||||
Trinidad Drilling, Ltd. (S) | 7.875 | 01-15-19 | 265,000 | 288,188 | |
Gas Utilities 0.3% | |||||
| |||||
DCP Midstream LLC (S)(Z) | 9.750 | 03-15-19 | 405,000 | 534,982 | |
Oil, Gas & Consumable Fuels 6.3% | |||||
| |||||
Afren PLC (S)(Z) | 10.250 | 04-08-19 | 240,000 | 286,200 | |
| |||||
Afren PLC (S)(Z) | 11.500 | 02-01-16 | 200,000 | 237,500 | |
| |||||
BreitBurn Energy Partners LP | 7.875 | 04-15-22 | 215,000 | 236,500 | |
| |||||
Continental Resources, Inc. (S) | 4.500 | 04-15-23 | 90,000 | 95,963 | |
| |||||
DCP Midstream Operating LP | 3.875 | 03-15-23 | 225,000 | 230,600 | |
| |||||
Energy Transfer Partners LP (Z) | 5.200 | 02-01-22 | 135,000 | 154,370 | |
| |||||
Energy Transfer Partners LP (Z) | 9.700 | 03-15-19 | 425,000 | 579,962 |
8 | Income Securities Trust | Semiannual report | See notes to financial statements |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Oil, Gas & Consumable Fuels (continued) | |||||
| |||||
Enterprise Products Operating LLC (7.000% to | |||||
6-1-17, then 3 month LIBOR + 2.777%) | 7.000 | 06-01-67 | $695,000 | $750,600 | |
| |||||
EP Energy LLC (Z) | 7.750 | 09-01-22 | 195,000 | 223,763 | |
| |||||
EV Energy Partners LP (Z) | 8.000 | 04-15-19 | 400,000 | 426,000 | |
| |||||
Halcon Resources Corp. (S)(Z) | 8.875 | 05-15-21 | 140,000 | 150,150 | |
| |||||
Hess Corp. | 8.125 | 02-15-19 | 570,000 | 742,833 | |
| |||||
Kerr-McGee Corp. (Z) | 6.950 | 07-01-24 | 600,000 | 767,233 | |
| |||||
Kinder Morgan Energy Partners LP | 7.750 | 03-15-32 | 195,000 | 268,731 | |
| |||||
Lukoil International Finance BV (S) | 3.416 | 04-24-18 | 675,000 | 686,884 | |
| |||||
Newfield Exploration Company (Z) | 5.750 | 01-30-22 | 260,000 | 287,625 | |
| |||||
NuStar Logistics LP | 8.150 | 04-15-18 | 381,000 | 437,062 | |
| |||||
Penn Virginia Corp. (S) | 8.500 | 05-01-20 | 190,000 | 190,950 | |
| |||||
Petro-Canada (Z) | 9.250 | 10-15-21 | 1,000,000 | 1,438,095 | |
| |||||
Petrohawk Energy Corp. (Z) | 6.250 | 06-01-19 | 595,000 | 670,187 | |
| |||||
Petroleos de Venezuela SA | 5.375 | 04-12-27 | 450,000 | 315,000 | |
| |||||
Petroleos Mexicanos (Z) | 4.875 | 01-24-22 | 275,000 | 312,813 | |
| |||||
TransCanada Pipelines, Ltd. (6.350% to | |||||
5-15-17, then 3 month LIBOR + 2.210%) (Z) | 6.350 | 05-15-67 | 710,000 | 758,050 | |
| |||||
Williams Partners LP (Z) | 5.250 | 03-15-20 | 1,460,000 | 1,694,555 | |
Financials 26.1% | 49,558,774 | ||||
Capital Markets 3.8% | |||||
| |||||
Jefferies Group, Inc. (Z) | 6.875 | 04-15-21 | 1,005,000 | 1,199,294 | |
| |||||
Jefferies Group, Inc. (Z) | 8.500 | 07-15-19 | 235,000 | 298,343 | |
| |||||
JPMorgan Chase & Company (5.150% to | |||||
5-1-23, then 3 month LIBOR + 3.250%) (Q) | 5.150 | 05-01-23 | 375,000 | 381,094 | |
| |||||
Macquarie Bank, Ltd. (S)(Z) | 6.625 | 04-07-21 | 260,000 | 296,864 | |
| |||||
Macquarie Group, Ltd. (S)(Z) | 6.000 | 01-14-20 | 340,000 | 379,788 | |
| |||||
Morgan Stanley | 5.550 | 04-27-17 | 1,080,000 | 1,219,194 | |
| |||||
Morgan Stanley (Z) | 5.750 | 01-25-21 | 515,000 | 613,068 | |
| |||||
Morgan Stanley (Z) | 6.375 | 07-24-42 | 405,000 | 514,154 | |
| |||||
Morgan Stanley (Z) | 7.300 | 05-13-19 | 485,000 | 607,538 | |
| |||||
The Goldman Sachs Group, Inc. (Z) | 5.250 | 07-27-21 | 1,195,000 | 1,385,745 | |
| |||||
The Goldman Sachs Group, Inc. (Z) | 5.750 | 01-24-22 | 275,000 | 328,396 | |
Commercial Banks 3.4% | |||||
| |||||
Abbey National Treasury Services PLC (Z) | 4.000 | 04-27-16 | 630,000 | 676,777 | |
| |||||
Banco de Credito del Peru (S) | 4.250 | 04-01-23 | 191,000 | 191,669 | |
| |||||
Barclays Bank PLC (S)(Z) | 10.179 | 06-12-21 | 260,000 | 355,706 | |
| |||||
BPCE SA (12.500% to 9-30-19, then 3 month | |||||
LIBOR + 12.980%) (Q)(S)(Z) | 12.500 | 09-30-19 | 330,000 | 414,169 | |
| |||||
First Horizon National Corp. (Z) | 5.375 | 12-15-15 | 355,000 | 386,708 | |
| |||||
ICICI Bank, Ltd. (S)(Z) | 5.750 | 11-16-20 | 475,000 | 529,499 | |
| |||||
Nordea Bank AB (S)(Z) | 3.125 | 03-20-17 | 680,000 | 726,089 | |
| |||||
Regions Financial Corp. (Z) | 7.750 | 11-10-14 | 620,000 | 684,933 | |
| |||||
Santander Holdings USA, Inc. | 4.625 | 04-19-16 | 115,000 | 123,464 | |
| |||||
Sberbank of Russia (S)(Z) | 6.125 | 02-07-22 | 200,000 | 228,250 | |
| |||||
Swedbank AB (S)(Z) | 2.125 | 09-29-17 | 460,000 | 470,902 |
See notes to financial statements | Semiannual report | Income Securities Trust | 9 |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Commercial Banks (continued) | |||||
| |||||
Synovus Financial Corp. | 7.875 | 02-15-19 | $200,000 | $229,500 | |
| |||||
VTB Bank OJSC (9.500% to 12-6-22, then | |||||
10 Year U.S. Treasury + 8.067%) (Q)(S) | 9.500 | 12-06-22 | 235,000 | 257,325 | |
| |||||
Wachovia Bank NA (Z) | 5.850 | 02-01-37 | 390,000 | 486,487 | |
| |||||
Wells Fargo & Company, Series K (7.980% | |||||
to 03-15-18, then 3 month LIBOR + | |||||
3.770%) (Q)(Z) | 7.980 | 03-15-18 | 635,000 | 735,806 | |
Consumer Finance 1.8% | |||||
| |||||
Capital One Financial Corp. | 4.750 | 07-15-21 | 485,000 | 556,794 | |
| |||||
Capital One Financial Corp. (Z) | 6.750 | 09-15-17 | 1,000,000 | 1,212,295 | |
| |||||
Discover Bank | 7.000 | 04-15-20 | 270,000 | 337,427 | |
| |||||
Discover Financial Services (Z) | 5.200 | 04-27-22 | 585,000 | 670,652 | |
| |||||
Nelnet, Inc. (P)(Z) | 3.659 | 09-29-36 | 715,000 | 534,463 | |
Diversified Financial Services 5.6% | |||||
| |||||
Bank of America Corp. (Z) | 3.300 | 01-11-23 | 260,000 | 263,379 | |
| |||||
Bank of America Corp. (Z) | 5.000 | 05-13-21 | 670,000 | 766,866 | |
| |||||
Bank of America Corp. | 5.700 | 01-24-22 | 370,000 | 441,064 | |
| |||||
Bank of America Corp. (Z) | 6.500 | 08-01-16 | 305,000 | 351,790 | |
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Bank of America NA (Z) | 5.300 | 03-15-17 | 150,000 | 168,708 | |
| |||||
General Electric Capital Corp. (Z) | 4.375 | 09-16-20 | 365,000 | 414,130 | |
| |||||
General Electric Capital Corp. (Z) | 5.875 | 01-14-38 | 160,000 | 194,109 | |
| |||||
General Electric Capital Corp. (Z) | 6.000 | 08-07-19 | 335,000 | 410,471 | |
| |||||
General Electric Capital Corp. (7.125% | |||||
until 6-15-22, then 3 month LIBOR + | |||||
5.296%) (Q)(Z) | 7.125 | 06-15-22 | 600,000 | 702,769 | |
| |||||
International Lease Finance Corp. (S)(Z) | 7.125 | 09-01-18 | 290,000 | 345,100 | |
| |||||
iPayment, Inc. (Z) | 10.250 | 05-15-18 | 440,000 | 402,600 | |
| |||||
JPMorgan Chase & Company | 4.625 | 05-10-21 | 895,000 | 1,018,965 | |
| |||||
JPMorgan Chase & Company (7.900% | |||||
to 4-30-18, then 3 month LIBOR + | |||||
3.470%) (Q)(Z) | 7.900 | 04-30-18 | 655,000 | 763,107 | |
| |||||
Merrill Lynch & Company, Inc. (Z) | 6.875 | 04-25-18 | 1,000,000 | 1,215,799 | |
| |||||
Merrill Lynch & Company, Inc. (Z) | 7.750 | 05-14-38 | 310,000 | 420,277 | |
| |||||
SPL Logistics Escrow LLC (S) | 8.875 | 08-01-20 | 215,000 | 226,825 | |
| |||||
The Bear Stearns Companies LLC (Z) | 7.250 | 02-01-18 | 1,000,000 | 1,245,395 | |
| |||||
UBS AG (Z) | 7.625 | 08-17-22 | 445,000 | 516,068 | |
| |||||
USB Realty Corp. (P)(Q)(S) | 1.424 | 01-15-17 | 800,000 | 714,000 | |
Insurance 5.8% | |||||
| |||||
Aflac, Inc. (Z) | 8.500 | 05-15-19 | 385,000 | 522,741 | |
| |||||
American International Group, Inc. (Z) | 8.250 | 08-15-18 | 230,000 | 298,289 | |
| |||||
Aon PLC (S) | 4.250 | 12-12-42 | 345,000 | 346,495 | |
| |||||
AXA SA (Z) | 8.600 | 12-15-30 | 175,000 | 225,766 | |
| |||||
CNA Financial Corp. (Z) | 5.875 | 08-15-20 | 720,000 | 861,099 | |
| |||||
CNA Financial Corp. (Z) | 7.250 | 11-15-23 | 540,000 | 700,853 | |
| |||||
Glen Meadow Pass-Through Trust (6.505% to | |||||
2-15-17, then 3 month LIBOR +2.125%) (S) | 6.505 | 02-12-67 | 835,000 | 802,644 | |
| |||||
Hartford Financial Services Group, Inc. | 5.500 | 03-30-20 | 190,000 | 227,112 | |
| |||||
Hartford Financial Services Group, Inc. | 6.000 | 01-15-19 | 90,000 | 108,835 |
10 | Income Securities Trust | Semiannual report | See notes to financial statements |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Insurance (continued) | |||||
| |||||
Liberty Mutual Group, Inc. (S)(Z) | 5.000 | 06-01-21 | $650,000 | $721,790 | |
| |||||
Liberty Mutual Group, Inc. (S)(Z) | 7.800 | 03-15-37 | 705,000 | 828,375 | |
| |||||
Lincoln National Corp. (Z) | 8.750 | 07-01-19 | 535,000 | 728,978 | |
| |||||
Lincoln National Corp. (6.050% until 4-20-17, | |||||
then 3 month LIBOR + 2.040%) (Z) | 6.050 | 04-20-67 | 395,000 | 399,938 | |
| |||||
Lincoln National Corp. (7.000% to 5-17-16, | |||||
then 3 month LIBOR + 2.358%) | 7.000 | 05-17-66 | 135,000 | 138,713 | |
| |||||
MetLife, Inc. (Z) | 6.400 | 12-15-36 | 305,000 | 340,881 | |
| |||||
Nippon Life Insurance Company (P)(S)(Z) | 5.000 | 10-18-42 | 310,000 | 324,264 | |
| |||||
Pacific LifeCorp. (S) | 6.000 | 02-10-20 | 180,000 | 209,578 | |
| |||||
Prudential Financial, Inc. (P) | 5.200 | 03-15-44 | 110,000 | 111,925 | |
| |||||
Prudential Financial, Inc. (5.875% to 9-15-22, | |||||
then 3 month LIBOR + 4.175%) (Z) | 5.875 | 09-15-42 | 445,000 | 480,876 | |
| |||||
Teachers Insurance & Annuity Association of | |||||
America (S)(Z) | 6.850 | 12-16-39 | 475,000 | 657,924 | |
| |||||
The Chubb Corp. (6.375% until 4-15-17, then | |||||
3 month LIBOR + 2.250%) (Z) | 6.375 | 03-29-67 | 585,000 | 650,813 | |
| |||||
The Hanover Insurance Group, Inc. (Z) | 6.375 | 06-15-21 | 150,000 | 174,781 | |
| |||||
Unum Group (Z) | 7.125 | 09-30-16 | 395,000 | 464,827 | |
| |||||
White Mountains Re Group, Ltd. (7.506% | |||||
to 6-30-17, then 3 month LIBOR + | |||||
3.200%) (Q)(S)(Z) | 7.506 | 06-30-17 | 415,000 | 439,389 | |
| |||||
WR Berkley Corp. (Z) | 5.375 | 09-15-20 | 265,000 | 303,991 | |
Real Estate Investment Trusts 5.2% | |||||
| |||||
Boston Properties LP (Z) | 3.700 | 11-15-18 | 195,000 | 214,982 | |
| |||||
Brandywine Operating Partnership LP (Z) | 7.500 | 05-15-15 | 345,000 | 386,218 | |
| |||||
DDR Corp. | 4.625 | 07-15-22 | 85,000 | 94,061 | |
| |||||
DDR Corp. (Z) | 7.500 | 04-01-17 | 880,000 | 1,056,556 | |
| |||||
DDR Corp. | 7.875 | 09-01-20 | 110,000 | 142,737 | |
| |||||
Goodman Funding Pty, Ltd. (S)(Z) | 6.375 | 04-15-21 | 645,000 | 757,398 | |
| |||||
Health Care REIT, Inc. | 4.950 | 01-15-21 | 190,000 | 215,674 | |
| |||||
Health Care REIT, Inc. (Z) | 6.125 | 04-15-20 | 1,205,000 | 1,459,561 | |
| |||||
Healthcare Realty Trust, Inc. (Z) | 6.500 | 01-17-17 | 540,000 | 623,089 | |
| |||||
Highwoods Realty LP (Z) | 5.850 | 03-15-17 | 650,000 | 732,931 | |
| |||||
Host Hotels & Resorts LP | 3.750 | 10-15-23 | 160,000 | 163,200 | |
| |||||
MPT Operating Partnership LP (Z) | 6.375 | 02-15-22 | 320,000 | 346,400 | |
| |||||
ProLogis International Funding II (S) | 4.875 | 02-15-20 | 180,000 | 187,923 | |
| |||||
ProLogis LP (Z) | 4.500 | 08-15-17 | 55,000 | 60,626 | |
| |||||
ProLogis LP (Z) | 6.250 | 03-15-17 | 475,000 | 550,396 | |
| |||||
SL Green Realty Corp. | 7.750 | 03-15-20 | 245,000 | 306,812 | |
| |||||
Ventas Realty LP | 2.700 | 04-01-20 | 220,000 | 223,591 | |
| |||||
Ventas Realty LP (Z) | 4.000 | 04-30-19 | 330,000 | 363,267 | |
| |||||
Ventas Realty LP (Z) | 4.750 | 06-01-21 | 670,000 | 755,103 | |
| |||||
WEA Finance LLC (S)(Z) | 6.750 | 09-02-19 | 290,000 | 360,277 | |
| |||||
Weyerhaeuser Company (Z) | 7.375 | 03-15-32 | 690,000 | 943,192 |
See notes to financial statements | Semiannual report | Income Securities Trust | 11 |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Real Estate Management & Development 0.1% | |||||
| |||||
General Shopping Investments, Ltd. | |||||
(12.000% to 3-20-17, then 5 Year USGG + | |||||
11.052%) (Q)(S) | 12.000 | 03-20-17 | $260,000 | $241,800 | |
Thrifts & Mortgage Finance 0.4% | |||||
| |||||
Nationstar Mortgage LLC (S)(Z) | 7.875 | 10-01-20 | 310,000 | 347,200 | |
| |||||
Nationstar Mortgage LLC (S)(Z) | 9.625 | 05-01-19 | 220,000 | 254,650 | |
| |||||
Nationstar Mortgage LLC (S) | 9.625 | 05-01-19 | 75,000 | 86,438 | |
Health Care 1.5% | 2,814,972 | ||||
Health Care Equipment & Supplies 0.3% | |||||
| |||||
Alere, Inc. | 8.625 | 10-01-18 | 185,000 | 198,413 | |
| |||||
DJO Finance LLC | 9.875 | 04-15-18 | 75,000 | 82,688 | |
| |||||
MModal, Inc. (S) | 10.750 | 08-15-20 | 285,000 | 245,100 | |
Health Care Providers & Services 0.5% | |||||
| |||||
Catalent Pharma Solutions, Inc. | 9.500 | 04-15-15 | 198,004 | 198,499 | |
| |||||
Medco Health Solutions, Inc. (Z) | 7.125 | 03-15-18 | 545,000 | 680,324 | |
Pharmaceuticals 0.7% | |||||
| |||||
Hospira, Inc. (Z) | 6.050 | 03-30-17 | 485,000 | 552,092 | |
| |||||
Mylan, Inc. (S)(Z) | 7.875 | 07-15-20 | 545,000 | 637,066 | |
| |||||
Zoetis, Inc. (S) | 3.250 | 02-01-23 | 215,000 | 220,790 | |
Industrials 8.8% | 16,612,230 | ||||
Aerospace & Defense 1.3% | |||||
| |||||
Ducommun, Inc. (Z) | 9.750 | 07-15-18 | 70,000 | 77,350 | |
| |||||
Embraer Overseas, Ltd. (Z) | 6.375 | 01-15-20 | 380,000 | 440,230 | |
| |||||
Kratos Defense & Security Solutions, Inc. (Z) | 10.000 | 06-01-17 | 350,000 | 385,875 | |
| |||||
Textron Financial Corp. (6.000% to 2-15-17, | |||||
then 3 month LIBOR + 1.735%) (S) | 6.000 | 02-15-67 | 750,000 | 686,250 | |
| |||||
Textron, Inc. (Z) | 5.600 | 12-01-17 | 505,000 | 571,701 | |
| |||||
Textron, Inc. (Z) | 7.250 | 10-01-19 | 270,000 | 328,099 | |
Airlines 3.5% | |||||
| |||||
Air Canada 2013-1 Class A Pass Through | |||||
Trust (C)(S) | 4.125 | 05-15-25 | 115,000 | 117,300 | |
| |||||
Air Canada 2013-1 Class B Pass Through | |||||
Trust (C)(S) | 5.375 | 05-15-21 | 80,000 | 81,700 | |
| |||||
America West Airlines 2000-1 Pass Through | |||||
Trust (Z) | 8.057 | 07-02-20 | 162,891 | 181,623 | |
| |||||
American Airlines 2011-1 Class B Pass Through | |||||
Trust (S) | 7.000 | 01-31-18 | 533,394 | 565,397 | |
| |||||
Continental Airlines 1997-4 Class A Pass | |||||
Through Trust (Z) | 6.900 | 01-02-18 | 396,703 | 428,440 | |
| |||||
Continental Airlines 1998-1 Class A Pass | |||||
Through Trust (Z) | 6.648 | 09-15-17 | 133,669 | 144,763 | |
| |||||
Continental Airlines 1999-1 Class A Pass | |||||
Through Trust (Z) | 6.545 | 02-02-19 | 178,143 | 196,848 | |
| |||||
Continental Airlines 2000-2 Class B Pass | |||||
Through Trust | 8.307 | 04-02-18 | 96,493 | 102,765 | |
| |||||
Continental Airlines 2007-1 Class A Pass | |||||
Through Trust (Z) | 5.983 | 04-19-22 | 495,644 | 565,034 |
12 | Income Securities Trust | Semiannual report | See notes to financial statements |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Airlines (continued) | |||||
| |||||
Continental Airlines 2010-1 Class A Pass | |||||
Through Trust | 4.750 | 01-12-21 | $143,095 | $157,046 | |
| |||||
Continental Airlines 2012-1 Class B Pass | |||||
Through Trust | 6.250 | 04-11-20 | 240,000 | 252,000 | |
| |||||
Delta Air Lines 2002-1 Class G-1 Pass | |||||
Through Trust | 6.718 | 01-02-23 | 642,696 | 716,606 | |
| |||||
Delta Air Lines 2007-1 Class A Pass Through | |||||
Trust (Z) | 6.821 | 08-10-22 | 643,347 | 747,055 | |
| |||||
Delta Air Lines 2010-1 Class A Pass | |||||
Through Trust | 6.200 | 07-02-18 | 181,025 | 206,369 | |
| |||||
Delta Air Lines 2011-1 Class A Pass Through | |||||
Trust (Z) | 5.300 | 04-15-19 | 301,409 | 334,564 | |
| |||||
Northwest Airlines 2002-1 Class G-2 Pass | |||||
Through Trust | 6.264 | 11-20-21 | 122,554 | 131,905 | |
| |||||
Northwest Airlines 2007-1 Class A Pass | |||||
Through Trust (Z) | 7.027 | 11-01-19 | 390,277 | 437,110 | |
| |||||
UAL 2009-1 Pass Through Trust | 10.400 | 11-01-16 | 123,974 | 143,810 | |
| |||||
UAL 2009-2A Pass Through Trust (Z) | 9.750 | 01-15-17 | 323,613 | 375,391 | |
| |||||
United Airlines 2007-1 Class C Pass Through | |||||
Trust (P) | 2.758 | 07-02-14 | 557,290 | 551,717 | |
| |||||
US Airways 2012-1 Class A Pass Through Trust | 5.900 | 10-01-24 | 174,685 | 196,084 | |
Building Products 1.0% | |||||
| |||||
Masco Corp. | 7.125 | 03-15-20 | 285,000 | 331,989 | |
| |||||
Owens Corning (Z) | 4.200 | 12-15-22 | 395,000 | 416,813 | |
| |||||
Ply Gem Industries, Inc. | 9.375 | 04-15-17 | 75,000 | 82,781 | |
| |||||
Voto-Votorantim Overseas Trading Operations | |||||
NV (S)(Z) | 6.625 | 09-25-19 | 450,000 | 526,500 | |
| |||||
Voto-Votorantim, Ltd. (S)(Z) | 6.750 | 04-05-21 | 490,000 | 575,138 | |
Commercial Services & Supplies 0.5% | |||||
| |||||
Casella Waste Systems, Inc. | 7.750 | 02-15-19 | 365,000 | 353,138 | |
| |||||
Garda World Security Corp. (S) | 9.750 | 03-15-17 | 100,000 | 107,500 | |
| |||||
Steelcase, Inc. (Z) | 6.375 | 02-15-21 | 500,000 | 560,584 | |
Construction & Engineering 0.4% | |||||
| |||||
Aeropuertos Dominicanos Siglo XXI SA (S) | 9.250 | 11-13-19 | 300,000 | 325,500 | |
| |||||
Tutor Perini Corp. (Z) | 7.625 | 11-01-18 | 335,000 | 355,100 | |
Industrial Conglomerates 0.8% | |||||
| |||||
General Electric Company (Z) | 4.125 | 10-09-42 | 210,000 | 222,641 | |
| |||||
KOC Holding AS (S) | 3.500 | 04-24-20 | 340,000 | 339,268 | |
| |||||
Odebrecht Finance, Ltd. (S)(Z) | 7.125 | 06-26-42 | 425,000 | 486,625 | |
| |||||
Odebrecht Finance, Ltd. (Q)(S) | 7.500 | 09-14-15 | 200,000 | 217,000 | |
| |||||
Tenedora Nemak SA de CV (S) | 5.500 | 02-28-23 | 210,000 | 218,138 | |
Marine 0.2% | |||||
| |||||
Navios South American Logistics, Inc. (Z) | 9.250 | 04-15-19 | 315,000 | 344,138 | |
Road & Rail 0.8% | |||||
| |||||
Penske Truck Leasing Company LP (S)(Z) | 2.875 | 07-17-18 | 1,000,000 | 1,048,294 | |
| |||||
Penske Truck Leasing Company LP (S)(Z) | 3.750 | 05-11-17 | 460,000 | 498,826 |
See notes to financial statements | Semiannual report | Income Securities Trust | 13 |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Trading Companies & Distributors 0.3% | |||||
| |||||
Air Lease Corp. | 4.500 | 01-15-16 | $95,000 | $98,800 | |
| |||||
Air Lease Corp. | 6.125 | 04-01-17 | 175,000 | 191,625 | |
| |||||
Aircastle, Ltd. | 7.625 | 04-15-20 | 160,000 | 188,800 | |
Information Technology 1.1% | 2,154,354 | ||||
Internet Software & Services 0.1% | |||||
| |||||
VeriSign, Inc. (S) | 4.625 | 05-01-23 | 300,000 | 307,500 | |
IT Services 0.7% | |||||
| |||||
Brightstar Corp. (S) | 9.500 | 12-01-16 | 560,000 | 606,900 | |
| |||||
Computer Sciences Corp. (Z) | 4.450 | 09-15-22 | 225,000 | 240,953 | |
| |||||
Fidelity National Information Services, Inc. | 3.500 | 04-15-23 | 155,000 | 156,363 | |
| |||||
Global Generations Merger Sub, Inc. (S)(Z) | 11.000 | 12-15-20 | 305,000 | 343,888 | |
Software 0.3% | |||||
| |||||
Aspect Software, Inc. | 10.625 | 05-15-17 | 475,000 | 498,750 | |
Materials 6.5% | 12,249,284 | ||||
Chemicals 1.4% | |||||
| |||||
Braskem Finance, Ltd. (S)(Z) | 7.000 | 05-07-20 | 515,000 | 592,250 | |
| |||||
CF Industries, Inc. (Z) | 7.125 | 05-01-20 | 580,000 | 725,247 | |
| |||||
Incitec Pivot Finance LLC (S)(Z) | 6.000 | 12-10-19 | 345,000 | 401,493 | |
| |||||
LyondellBasell Industries NV | 5.000 | 04-15-19 | 610,000 | 695,219 | |
| |||||
Polymer Group, Inc. | 7.750 | 02-01-19 | 95,000 | 104,381 | |
Construction Materials 0.6% | |||||
| |||||
American Gilsonite Company (S) | 11.500 | 09-01-17 | 390,000 | 414,375 | |
| |||||
Magnesita Finance, Ltd. (Q)(S)(Z) | 8.625 | 04-05-17 | 420,000 | 450,376 | |
| |||||
Severstal Columbus LLC | 10.250 | 02-15-18 | 100,000 | 107,750 | |
| |||||
Vulcan Materials Company | 7.500 | 06-15-21 | 130,000 | 153,400 | |
Containers & Packaging 0.7% | |||||
| |||||
ARD Finance SA, PIK (S)(Z) | 11.125 | 06-01-18 | 274,462 | 309,113 | |
| |||||
Consolidated Container Company LLC (S) | 10.125 | 07-15-20 | 320,000 | 355,200 | |
| |||||
Pretium Packaging LLC | 11.500 | 04-01-16 | 165,000 | 179,025 | |
| |||||
Rock-Tenn Company | 4.000 | 03-01-23 | 480,000 | 498,869 | |
Metals & Mining 2.6% | |||||
| |||||
Allegheny Technologies, Inc. (Z) | 5.950 | 01-15-21 | 140,000 | 158,098 | |
| |||||
Allegheny Technologies, Inc. (Z) | 9.375 | 06-01-19 | 715,000 | 921,570 | |
| |||||
ArcelorMittal (Z) | 10.350 | 06-01-19 | 370,000 | 470,041 | |
| |||||
Barrick Gold Corp. (S) | 4.100 | 05-01-23 | 335,000 | 334,363 | |
| |||||
Commercial Metals Company (Z) | 7.350 | 08-15-18 | 310,000 | 342,550 | |
| |||||
Edgen Murray Corp. (S)(Z) | 8.750 | 11-01-20 | 310,000 | 329,763 | |
| |||||
Evraz Group SA (S) | 6.500 | 04-22-20 | 400,000 | 391,500 | |
| |||||
FMG Resources August 2006 Pty, Ltd. (S)(Z) | 8.250 | 11-01-19 | 170,000 | 187,000 | |
| |||||
Gerdau Trade, Inc. (S) | 4.750 | 04-15-23 | 225,000 | 222,654 | |
| |||||
JMC Steel Group (S) | 8.250 | 03-15-18 | 185,000 | 193,556 | |
| |||||
Metinvest BV (S)(Z) | 8.750 | 02-14-18 | 435,000 | 443,700 | |
| |||||
Rain CII Carbon LLC (S)(Z) | 8.000 | 12-01-18 | 340,000 | 362,950 | |
| |||||
SunCoke Energy, Inc. | 7.625 | 08-01-19 | 259,000 | 280,368 | |
| |||||
Thompson Creek Metals Company, Inc. | 7.375 | 06-01-18 | 395,000 | 322,913 |
14 | Income Securities Trust | Semiannual report | See notes to financial statements |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Paper & Forest Products 1.2% | |||||
| |||||
Georgia-Pacific LLC (S)(Z) | 5.400 | 11-01-20 | $485,000 | $579,739 | |
| |||||
Georgia-Pacific LLC (Z) | 7.250 | 06-01-28 | 165,000 | 220,721 | |
| |||||
International Paper Company (Z) | 9.375 | 05-15-19 | 385,000 | 533,525 | |
| |||||
Westvaco Corp. (Z) | 7.950 | 02-15-31 | 770,000 | 967,575 | |
Telecommunication Services 3.5% | 6,731,873 | ||||
Diversified Telecommunication Services 2.4% | |||||
| |||||
American Tower Corp. (Z) | 4.700 | 03-15-22 | 400,000 | 440,372 | |
| |||||
BellSouth Telecommunications, Inc. (Z) | 6.300 | 12-15-15 | 396,557 | 413,654 | |
| |||||
CenturyLink, Inc. (Z) | 5.800 | 03-15-22 | 480,000 | 508,151 | |
| |||||
CenturyLink, Inc. (Z) | 6.450 | 06-15-21 | 305,000 | 337,723 | |
| |||||
Crown Castle Towers LLC (S)(Z) | 4.883 | 08-15-20 | 760,000 | 877,250 | |
| |||||
GTP Acquisition Partners I LLC (S) | 4.704 | 05-15-18 | 485,000 | 485,000 | |
| |||||
GTP Acquisition Partners I LLC (S) | 7.628 | 06-15-16 | 650,000 | 708,202 | |
| |||||
Telecom Italia Capital SA (Z) | 6.999 | 06-04-18 | 330,000 | 382,924 | |
| |||||
Telecom Italia Capital SA (Z) | 7.200 | 07-18-36 | 365,000 | 393,328 | |
Wireless Telecommunication Services 1.1% | |||||
| |||||
Clearwire Communications LLC (S)(Z) | 12.000 | 12-01-15 | 315,000 | 337,050 | |
| |||||
Digicel Group, Ltd. (S) | 8.250 | 09-30-20 | 385,000 | 411,950 | |
| |||||
SBA Tower Trust (S) | 2.933 | 12-15-17 | 395,000 | 409,199 | |
| |||||
SBA Tower Trust (S) | 3.598 | 04-15-18 | 370,000 | 371,430 | |
| |||||
Softbank Corp. (S) | 4.500 | 04-15-20 | 400,000 | 414,427 | |
| |||||
Verizon New York, Inc. | 7.000 | 12-01-33 | 235,000 | 241,213 | |
Utilities 4.6% | 8,696,765 | ||||
Electric Utilities 3.4% | |||||
| |||||
Beaver Valley II Funding (Z) | 9.000 | 06-01-17 | 244,000 | 247,136 | |
| |||||
BVPS II Funding Corp. (Z) | 8.890 | 06-01-17 | 398,000 | 435,026 | |
| |||||
Commonwealth Edison Company (Z) | 5.800 | 03-15-18 | 270,000 | 325,330 | |
| |||||
DPL, Inc. (Z) | 7.250 | 10-15-21 | 570,000 | 607,050 | |
| |||||
Electricite de France SA (P)(Q)(S)(Z) | 5.250 | 01-29-23 | 205,000 | 206,235 | |
| |||||
Exelon Corp. (Z) | 4.900 | 06-15-15 | 985,000 | 1,063,930 | |
| |||||
Exelon Generation Company LLC | 5.600 | 06-15-42 | 200,000 | 224,469 | |
| |||||
FirstEnergy Corp. | 4.250 | 03-15-23 | 580,000 | 599,200 | |
| |||||
FPL Energy National Wind LLC (S)(Z) | 5.608 | 03-10-24 | 188,416 | 184,156 | |
| |||||
NextEra Energy Capital Holdings, Inc. (6.650% | |||||
to 6-15-17, then 3 month LIBOR + 2.125%) | 6.650 | 06-15-67 | 180,000 | 193,500 | |
| |||||
Oncor Electric Delivery Company LLC (Z) | 5.000 | 09-30-17 | 820,000 | 940,991 | |
| |||||
PNPP II Funding Corp. (Z) | 9.120 | 05-30-16 | 191,000 | 198,192 | |
| |||||
PPL Capital Funding, Inc. (6.700% to 3-30-17, | |||||
then 3 month LIBOR + 2.665%) (Z) | 6.700 | 03-30-67 | 525,000 | 557,813 | |
| |||||
Southern California Edison Company | |||||
(6.250% to 2-1-22, then 3 month LIBOR + | |||||
4.199%) (Q)(Z) | 6.250 | 02-01-22 | 320,000 | 357,665 | |
| |||||
W3A Funding Corp. (Z) | 8.090 | 01-02-17 | 301,225 | 310,450 |
See notes to financial statements | Semiannual report | Income Securities Trust | 15 |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Independent Power Producers & Energy Traders 0.2% | |||||
| |||||
AES Corp. | 4.875 | 05-15-23 | $80,000 | $81,600 | |
| |||||
Exelon Generation Company LLC (Z) | 6.250 | 10-01-39 | 175,000 | 211,436 | |
Multi-Utilities 1.0% | |||||
| |||||
Integrys Energy Group, Inc. (6.110% to | |||||
12-1-16, then 3 month LIBOR + 2.120%) (Z) | 6.110 | 12-01-66 | 650,000 | 689,000 | |
| |||||
MidAmerican Energy Holdings Company (Z) | 8.480 | 09-15-28 | 550,000 | 816,686 | |
| |||||
Wisconsin Energy Corp. (6.250% to 5-15-17, | |||||
then 3 month LIBOR + 2.113%) (Z) | 6.250 | 05-15-67 | 410,000 | 446,900 | |
Convertible Bonds 0.2% (0.2% of Total Investments) | $459,420 | ||||
| |||||
(Cost $267,530) | |||||
Consumer Discretionary 0.2% | 459,420 | ||||
Media 0.2% | |||||
| |||||
XM Satellite Radio, Inc. (S) | 7.000 | 12-01-14 | 248,000 | 459,420 | |
Municipal Bonds 0.2% (0.1% of Total Investments) | $358,923 | ||||
| |||||
(Cost $326,442) | |||||
Illinois 0.2% | 358,923 | ||||
State of Illinois | |||||
General Obligation Bond | 5.100 | 06-01-33 | 355,000 | 358,923 | |
Term Loans (M) 0.5% (0.4% of Total Investments) | $974,830 | ||||
| |||||
(Cost $958,342) | |||||
Consumer Discretionary 0.3% | 713,550 | ||||
Hotels, Restaurants & Leisure 0.3% | |||||
| |||||
CCM Merger, Inc. | 6.000 | 03-01-17 | 172,585 | 173,880 | |
| |||||
Kalispel Tribal Economic Authority | 7.500 | 02-25-17 | 536,985 | 539,670 | |
Financials 0.1% | 110,159 | ||||
Real Estate Investment Trusts 0.1% | |||||
| |||||
iStar Financial, Inc. | 5.750 | 09-28-17 | 109,068 | 110,159 | |
Industrials 0.1% | 151,121 | ||||
Aerospace & Defense 0.1% | |||||
| |||||
WP CPP Holdings LLC | 4.753 | 12-28-19 | 149,625 | 151,121 | |
Capital Preferred Securities (a) 1.9% (1.3% of Total Investments) | $3,600,618 | ||||
| |||||
(Cost $3,341,877) | |||||
Financials 1.9% | 3,600,618 | ||||
Capital Markets 0.4% | |||||
| |||||
State Street Capital Trust IV (P)(Z) | 1.280 | 06-15-37 | 935,000 | 788,906 | |
Commercial Banks 1.0% | |||||
| |||||
Fifth Third Capital Trust IV (6.500% to 4-15-17, | |||||
then 3 month LIBOR + 1.368%) (Z) | 6.500 | 04-15-37 | 825,000 | 827,574 | |
| |||||
PNC Financial Services Group, Inc. (6.750% | |||||
to 8-1-21, then 3 month LIBOR + | |||||
3.678%) (Q)(Z) | 6.750 | 08-01-21 | 215,000 | 247,288 |
16 | Income Securities Trust | Semiannual report | See notes to financial statements |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Commercial Banks (continued) | |||||
| |||||
Regions Financing Trust II (6.625% to 5-15-27, | |||||
then 3 month LIBOR + 1.290%) | 6.625 | 05-15-47 | $260,000 | $262,600 | |
| |||||
Sovereign Capital Trust VI | 7.908 | 06-13-36 | 480,000 | 506,400 | |
Insurance 0.5% | |||||
| |||||
MetLife Capital Trust IV (7.875% to 12-15-37, | |||||
then 3 month LIBOR + 3.960%) (S) | 7.875 | 12-15-37 | 110,000 | 138,050 | |
| |||||
MetLife Capital Trust X (9.250% to 4-8-38, | |||||
then 3 month LIBOR + 5.540%) (S)(Z) | 9.250 | 04-08-38 | 315,000 | 441,000 | |
| |||||
ZFS Finance USA Trust II (6.450% to 6-15-16, | |||||
then 3 month LIBOR + 2.000%) (S)(Z) | 6.450 | 12-15-65 | 360,000 | 388,800 | |
U.S. Government & Agency Obligations 34.6% | |||||
(23.6% of Total Investments) | $65,688,739 | ||||
| |||||
(Cost $64,271,289) | |||||
U.S. Government 6.6% | 12,544,783 | ||||
| |||||
U.S. Treasury Bonds | |||||
Bond (Z) | 2.750 | 11-15-42 | 590,000 | 573,222 | |
Bond (Z) | 3.125 | 02-15-42 | 2,325,000 | 2,445,609 | |
| |||||
U.S. Treasury Notes | |||||
Note (Z) | 1.750 | 05-15-22 | 900,000 | 916,242 | |
Note (Z) | 2.000 | 02-15-23 | 997,000 | 1,026,287 | |
Note (Z) | 2.625 | 08-15-20 | 6,300,000 | 6,951,162 | |
| |||||
U.S. Treasury Strips, PO (Z) | 2.907 | 11-15-30 | 1,020,000 | 632,261 | |
U.S. Government Agency 28.0% | 53,143,956 | ||||
| |||||
Federal Home Loan Mortgage Corp. | |||||
30 Yr Pass Thru (Z) | 5.000 | 03-01-41 | 5,319,335 | 5,941,447 | |
30 Yr Pass Thru (Z) | 6.500 | 06-01-37 | 21,503 | 24,038 | |
30 Yr Pass Thru (Z) | 6.500 | 11-01-37 | 116,208 | 129,689 | |
30 Yr Pass Thru | 6.500 | 04-01-39 | 749,664 | 835,699 | |
| |||||
Federal National Mortgage Association | |||||
30 Yr Pass Thru | 3.000 | 07-01-27 | 1,848,576 | 1,951,548 | |
30 Yr Pass Thru | 3.000 | 10-29-27 | 705,000 | 704,048 | |
30 Yr Pass Thru | 3.000 | 12-01-42 | 4,785,554 | 5,019,091 | |
30 Yr Pass Thru | 3.000 | 12-01-42 | 1,037,942 | 1,086,972 | |
30 Yr Pass Thru | 3.500 | 12-01-42 | 6,382,673 | 6,825,222 | |
30 Yr Pass Thru | 3.500 | 01-01-43 | 4,953,378 | 5,307,660 | |
30 Yr Pass Thru (Z) | 4.000 | 10-01-40 | 609,059 | 663,946 | |
30 Yr Pass Thru | 4.000 | 09-01-41 | 928,440 | 1,019,942 | |
30 Yr Pass Thru (Z) | 4.000 | 09-01-41 | 3,913,786 | 4,233,463 | |
30 Yr Pass Thru (Z) | 4.000 | 09-01-41 | 1,914,145 | 2,051,948 | |
30 Yr Pass Thru (Z) | 4.000 | 10-01-41 | 2,790,977 | 3,044,236 | |
30 Yr Pass Thru (Z) | 4.500 | 10-01-40 | 2,696,225 | 2,961,950 | |
30 Yr Pass Thru (Z) | 5.000 | 02-01-41 | 2,547,517 | 2,872,325 | |
30 Yr Pass Thru (Z) | 5.000 | 04-01-41 | 772,293 | 864,968 | |
30 Yr Pass Thru (Z) | 5.500 | 02-01-36 | 1,285,440 | 1,405,095 | |
30 Yr Pass Thru (Z) | 5.500 | 10-01-39 | 2,254,764 | 2,449,148 | |
30 Yr Pass Thru (Z) | 5.500 | 08-01-40 | 306,579 | 333,009 | |
30 Yr Pass Thru (Z) | 6.000 | 05-01-37 | 574,971 | 630,042 | |
30 Yr Pass Thru (Z) | 6.500 | 07-01-36 | 415,036 | 464,463 | |
30 Yr Pass Thru (Z) | 6.500 | 01-01-39 | 1,947,903 | 2,173,260 | |
30 Yr Pass Thru (Z) | 6.500 | 03-01-39 | 134,972 | 150,747 |
See notes to financial statements | Semiannual report | Income Securities Trust | 17 |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Foreign Government Obligations 0.2% (0.1% of Total Investments) | $400,599 | ||||
| |||||
(Cost $368,851) | |||||
South Korea 0.2% | 400,599 | ||||
Korea Development Bank | 4.000 | 09-09-16 | $370,000 | 400,599 | |
Collateralized Mortgage Obligations 21.9% | |||||
(14.9% of Total Investments) | $41,566,030 | ||||
| |||||
(Cost $39,832,182) | |||||
Commercial & Residential 18.0% | 34,162,669 | ||||
American Home Mortgage Assets LLC | |||||
Series 2006-6, Class XP IO | 1.962 | 12-25-46 | 6,444,826 | 576,952 | |
| |||||
American Home Mortgage Investment Trust | |||||
Series 2005-1, Class 1A1 (P) | 0.420 | 06-25-45 | 687,018 | 639,866 | |
| |||||
Americold 2010 LLC Trust | |||||
Series 2010-ARTA, Class D (S) | 7.443 | 01-14-29 | 605,000 | 724,495 | |
| |||||
Banc of America Commercial Mortgage Trust, Inc. | |||||
Series 2006-2, Class AM (P) | 5.954 | 05-10-45 | 595,000 | 671,004 | |
Series 2006-4, Class AM | 5.675 | 07-10-46 | 845,000 | 959,634 | |
| |||||
Bear Stearns Adjustable Rate Mortgage | |||||
Trust, Inc. | |||||
Series 2005-1, Class B2 (P) | 3.226 | 03-25-35 | 755,478 | 37,649 | |
| |||||
Bear Stearns Alt-A Trust | |||||
Series 2004-12, Class 1A1 (P) | 0.900 | 01-25-35 | 581,876 | 570,974 | |
Series 2005-5, Class 1A4 (P) | 0.760 | 07-25-35 | 530,107 | 500,174 | |
| |||||
Bear Stearns Asset Backed Securities Trust | |||||
Series 2004-AC5, Class A1 | 5.250 | 10-25-34 | 433,851 | 452,060 | |
| |||||
Citigroup/Deutsche Bank Commercial | |||||
Mortgage Trust | |||||
Series 2005-CD1, Class C (P) | 5.392 | 07-15-44 | 295,000 | 301,856 | |
| |||||
Commercial Mortgage Pass Through Certificates | |||||
Series 2012-CR5, Class XA IO | 2.090 | 12-10-45 | 4,671,608 | 571,753 | |
Series 2012-LC4, Class B (P) | 4.934 | 12-10-44 | 360,000 | 413,862 | |
Series 2012-LC4, Class C (P) | 5.824 | 12-10-44 | 645,000 | 754,367 | |
| |||||
Countrywide Alternative Loan Trust | |||||
Series 2006-OA12, Class X IO | 3.857 | 09-20-46 | 124,171 | 0 | |
| |||||
Fontainebleau Miami Beach Trust | |||||
Series 2012-FBLU, Class C (S) | 4.270 | 05-05-27 | 315,000 | 330,526 | |
Series 2012-FBLU, Class D (S) | 5.007 | 05-05-27 | 465,000 | 486,010 | |
| |||||
GMAC Mortgage Corp. Loan Trust | |||||
Series 2004-AR2, Class 3A (P) | 3.565 | 08-19-34 | 689,329 | 667,378 | |
| |||||
Greenwich Capital Commercial Funding Corp. | |||||
Series 2006-GG7, Class AM (P) | 6.061 | 07-10-38 | 670,000 | 758,275 | |
| |||||
GS Mortgage Securities Corp. II | |||||
Series 2013-KYO, Class D (P)(S) | 2.800 | 11-08-29 | 570,000 | 572,651 | |
| |||||
GSR Mortgage Loan Trust | |||||
Series 2006-4F, Class 6A1 | 6.500 | 05-25-36 | 2,283,145 | 1,768,382 | |
Series 2004-9, Class B1 (P) | 3.214 | 08-25-34 | 781,327 | 425,260 | |
| |||||
Harborview Mortgage Loan Trust | |||||
Series 2004-11, Class X1 IO | 2.050 | 01-19-35 | 3,950,779 | 293,175 | |
Series 2005-11, Class X IO | 2.022 | 08-19-45 | 2,524,842 | 153,866 | |
Series 2005-2, Class IX IO | 2.248 | 05-19-35 | 9,161,592 | 654,732 |
18 | Income Securities Trust | Semiannual report | See notes to financial statements |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
| |||||
Harborview Mortgage Loan Trust | |||||
Series 2005-9, Class 2A1C (P) | 0.649 | 06-20-35 | $789,044 | $734,726 | |
Series 2005-8, Class 1X IO | 2.190 | 09-19-35 | 3,529,005 | 277,853 | |
Series 2007-3, Class ES IO | 0.350 | 05-19-47 | 10,018,621 | 70,130 | |
Series 2007-4, Class ES IO | 0.350 | 07-19-47 | 11,408,665 | 79,861 | |
Series 2007-6, Class ES IO (S) | 0.342 | 08-19-37 | 8,360,963 | 58,527 | |
| |||||
IndyMac Index Mortgage Loan Trust | |||||
Series 2005-AR18, Class 1X IO | 2.021 | 10-25-36 | 8,779,342 | 704,542 | |
Series 2005-AR18, Class 2X IO | 1.669 | 10-25-36 | 8,034,696 | 482,242 | |
| |||||
JPMorgan Chase Commercial Mortgage Securities Corp. | |||||
Series 2005-LDP5, Class AM (P) | 5.410 | 12-15-44 | 1,155,000 | 1,278,882 | |
Series 2006-LDP7, Class AM (P) | 6.059 | 04-15-45 | 735,000 | 834,548 | |
Series 2006-LDP9, Class AM | 5.372 | 05-15-47 | 1,020,000 | 1,123,138 | |
Series 2007-LD12, Class AM (P)(Z) | 6.198 | 02-15-51 | 880,000 | 1,021,418 | |
Series 2007-LDPX Class AM (P) | 5.464 | 01-15-49 | 650,000 | 701,476 | |
Series 2012-HSBC Class XA IO (S) | 1.582 | 07-05-32 | 3,620,000 | 413,610 | |
Series 2012-PHH, Class D (P)(S) | 3.466 | 10-15-25 | 260,000 | 264,268 | |
| |||||
Merrill Lynch Mortgage Investors Trust | |||||
Series 2007-3, Class M1 (P) | 3.409 | 09-25-37 | 240,539 | 120,585 | |
Series 2007-3, Class M2 (P) | 3.409 | 09-25-37 | 91,887 | 9,227 | |
Series 2007-3, Class M3 (P) | 3.409 | 09-25-37 | 29,646 | 843 | |
| |||||
Morgan Stanley Capital I Trust | |||||
Series 2006-HQ10, Class AM | 5.360 | 11-12-41 | 660,000 | 739,279 | |
Series 2006-HQ8, Class AM (P) | 5.646 | 03-12-44 | 1,020,000 | 1,135,727 | |
| |||||
Morgan Stanley Mortgage Loan Trust | |||||
Series 2004-11, Class 1A2A (P) | 0.510 | 01-25-35 | 1,246,064 | 1,196,264 | |
| |||||
MortgageIT Trust | |||||
Series 2005-2, Class 1A2 (P) | 0.530 | 05-25-35 | 516,187 | 491,134 | |
| |||||
Motel 6 Trust | |||||
Series 2012-MTL6, Class D (S) | 3.781 | 10-05-25 | 975,000 | 980,356 | |
| |||||
Springleaf Mortgage Loan Trust | |||||
Series 2012-2A, Class A (P)(S) | 2.220 | 10-25-57 | 428,154 | 433,421 | |
Series 2012-3A, Class M1 (P)(S) | 2.660 | 12-25-59 | 265,000 | 268,928 | |
| |||||
Thornburg Mortgage Securities Trust | |||||
Series 2004-1, Class II2A (P) | 1.793 | 03-25-44 | 704,057 | 701,447 | |
| |||||
UBS Commercial Mortgage Trust | |||||
Series 2012-C1, Class B | 4.822 | 05-10-45 | 405,000 | 451,385 | |
Series 2012-C1, Class C (P)(S) | 5.720 | 05-10-45 | 270,000 | 309,728 | |
| |||||
UBS-Barclays Commercial Mortgage Trust | |||||
Series 2012-C2, Class XA IO (S) | 1.974 | 05-10-63 | 4,962,828 | 516,740 | |
| |||||
Wachovia Bank Commercial Mortgage Trust | |||||
Series 2007-C31, Class AM (P) | 5.591 | 04-15-47 | 285,000 | 319,790 | |
| |||||
WaMu Mortgage Pass Through Certificates | |||||
Series 2005-AR1, Class X IO | 1.482 | 01-25-45 | 14,766,355 | 823,424 | |
Series 2005-AR19, Class A1A2 (P)(Z) | 0.490 | 12-25-45 | 763,735 | 712,938 | |
Series 2005-AR2, Class X IO | 1.620 | 01-25-45 | 11,214,844 | 662,249 | |
Series 2005-AR6, Class X IO | 1.653 | 04-25-45 | 6,882,104 | 397,858 | |
Series 2005-AR8, Class 2AB2 (P) | 0.620 | 07-25-45 | 738,960 | 695,856 | |
Series 2005-AR8, Class X IO | 1.653 | 07-25-45 | 12,222,509 | 766,680 | |
| |||||
Wells Fargo Commercial Mortgage Trust | |||||
Series 2013-BTC, Class E (P)(S) | 3.550 | 04-16-35 | 415,000 | 360,112 | |
| |||||
WF-RBS Commercial Mortgage Trust | |||||
Series 2012-C9, Class XA IO (S) | 2.437 | 11-15-45 | 5,185,829 | 738,576 |
See notes to financial statements | Semiannual report | Income Securities Trust | 19 |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
U.S. Government Agency 3.9% | $7,403,361 | ||||
| |||||
Federal Home Loan Mortgage Corp. | |||||
Series 290, Class IO | 3.500 | 11-15-32 | $3,596,333 | 714,470 | |
Series 3747, Class HI IO | 4.500 | 07-15-37 | 5,149,212 | 313,651 | |
Series 3794, Class PI IO | 4.500 | 02-15-38 | 777,619 | 67,608 | |
Series 3830, Class NI IO | 4.500 | 01-15-36 | 3,660,939 | 382,355 | |
Series 4077, Class IK IO | 5.000 | 07-15-42 | 1,022,834 | 270,257 | |
Series 4136, Class IH IO | 3.500 | 09-15-27 | 2,924,115 | 413,696 | |
Series K017, Class X1 IO | 1.601 | 12-25-21 | 2,805,789 | 276,889 | |
Series K018, Class X1 IO (Z) | 1.608 | 01-25-22 | 3,750,355 | 373,247 | |
Series K021, Class X1 IO | 1.647 | 06-25-22 | 814,262 | 90,162 | |
Series K022, Class X1 IO | 1.434 | 07-25-22 | 6,071,040 | 580,901 | |
Series K707, Class X1 IO | 1.694 | 12-25-18 | 2,459,678 | 187,083 | |
Series K708, Class X1 IO | 1.644 | 01-25-19 | 5,797,304 | 439,812 | |
Series K709, Class X1 IO | 1.677 | 03-25-19 | 3,387,861 | 265,375 | |
Series K710, Class X1 IO | 1.915 | 05-25-19 | 2,572,804 | 237,184 | |
| |||||
Federal National Mortgage Association | |||||
Series 2009-47, Class EI IO | 5.000 | 08-25-19 | 518,142 | 41,797 | |
Series 2010-68, Class CI IO | 5.000 | 11-25-38 | 996,801 | 104,242 | |
Series 2012-118, Class IB IO | 3.500 | 11-25-42 | 1,505,412 | 365,502 | |
Series 2012-137, Class QI IO | 3.000 | 12-25-27 | 2,934,079 | 452,200 | |
Series 2012-137, Class WI IO | 3.500 | 12-25-32 | 2,136,501 | 407,928 | |
Series 398, Class C3 IO | 4.500 | 05-25-39 | 451,765 | 38,531 | |
Series 401, Class C2 IO | 4.500 | 06-25-39 | 358,278 | 37,541 | |
Series 402, Class 3 IO | 4.000 | 11-25-39 | 614,605 | 56,838 | |
Series 402, Class 4 IO | 4.000 | 10-25-39 | 986,470 | 90,096 | |
Series 402, Class 7 IO | 4.500 | 11-25-39 | 913,970 | 100,814 | |
Series 402, Class 8 IO | 4.500 | 11-25-39 | 911,249 | 94,805 | |
Series 407, Class 15 IO | 5.000 | 01-25-40 | 979,199 | 136,990 | |
Series 407, Class 16 IO | 5.000 | 01-25-40 | 184,985 | 19,006 | |
Series 407, Class 17 IO | 5.000 | 01-25-40 | 183,996 | 21,781 | |
Series 407, Class 21 IO | 5.000 | 01-25-39 | 619,039 | 60,402 | |
Series 407, Class 7 IO | 5.000 | 03-25-41 | 367,085 | 61,640 | |
Series 407, Class 8 IO | 5.000 | 03-25-41 | 373,314 | 51,143 | |
Series 407, Class C6 IO | 5.500 | 01-25-40 | 1,580,738 | 245,799 | |
| |||||
Government National Mortgage Association | |||||
Series 2010-78, Class AI IO | 4.500 | 04-20-39 | 817,546 | 35,439 | |
Series 2012-114, Class IO | 1.028 | 01-16-53 | 2,083,207 | 203,854 | |
Series 2013-42, Class IO | 3.500 | 03-20-43 | 1,161,328 | 164,323 | |
Asset Backed Securities 9.0% (6.1% of Total Investments) | $17,027,246 | ||||
| |||||
(Cost $15,718,388) | |||||
Asset Backed Securities 9.0% | 17,027,246 | ||||
| |||||
ACE Securities Corp. | |||||
Series 2006-ASP5, Class A2B (P) | 0.330 | 10-25-36 | 347,937 | 176,253 | |
Series 2006-ASP5, Class A2C (P) | 0.380 | 10-25-36 | 305,170 | 155,748 | |
Series 2006-ASP5, Class A2D (P) | 0.460 | 10-25-36 | 583,012 | 300,227 | |
| |||||
Aegis Asset Backed Securities Trust | |||||
Series 2005-4, Class M1 (P) | 0.650 | 10-25-35 | 750,000 | 628,366 | |
| |||||
Ameriquest Mortgage Securities, Inc. | |||||
Series 2005-R1, Class M1 (P) | 0.650 | 03-25-35 | 399,709 | 393,487 | |
Series 2005-R3, Class M2 (P) | 0.670 | 05-25-35 | 480,000 | 447,345 | |
| |||||
Argent Securities, Inc. | |||||
Series 2003-W10, Class M1 (P) | 1.280 | 01-25-34 | 281,784 | 274,675 | |
Series 2004-W6, Class M1 (P) | 0.750 | 05-25-34 | 359,324 | 352,446 | |
Series 2006-M2, Class A2C (P) | 0.350 | 09-25-36 | 1,590,458 | 673,265 |
20 | Income Securities Trust | Semiannual report | See notes to financial statements |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
| |||||
Asset Backed Funding Certificates | |||||
Series 2005-AQ1, Class A4 | 5.010 | 06-25-35 | $309,112 | $313,077 | |
| |||||
Asset Backed Securities Corp. Home Equity | |||||
Series 2006-HE1, Class A3 (P) | 0.400 | 01-25-36 | 561,221 | 523,745 | |
| |||||
Bravo Mortgage Asset Trust | |||||
Series 2006-1A, Class A2 (P)(S)(Z) | 0.440 | 07-25-36 | 764,517 | 700,395 | |
| |||||
Carrington Mortgage Loan Trust | |||||
Series 2005-OPT2, Class M2 (P) | 0.650 | 05-25-35 | 338,262 | 328,174 | |
| |||||
Citicorp Residential Mortgage Securities, Inc. | |||||
Series 2007-2, Class A6 | 6.034 | 06-25-37 | 333,321 | 338,181 | |
| |||||
CKE Restaurant Holdings, Inc. | |||||
Series 2013-1A, Class A2 (S) | 4.474 | 03-20-43 | 890,000 | 943,364 | |
| |||||
ContiMortgage Home Equity Loan Trust | |||||
Series 1995-2, Class A5 | 8.100 | 08-15-25 | 33,322 | 33,124 | |
| |||||
Countrywide Asset-Backed Certificates | |||||
Series 2004-10, Class AF5B | 5.110 | 02-25-35 | 552,467 | 565,021 | |
| |||||
CSMC Trust | |||||
Series 2006-CF2, Class M1 (P)(S) | 0.670 | 05-25-36 | 540,000 | 522,872 | |
| |||||
Dominos Pizza Master Issuer LLC | |||||
Series 2012-1A, Class A2 (S)(Z) | 5.216 | 01-25-42 | 1,094,094 | 1,229,903 | |
| |||||
Encore Credit Receivables Trust | |||||
Series 2005-2, Class M2 (P) | 0.660 | 11-25-35 | 600,000 | 564,623 | |
| |||||
GSAA Trust | |||||
Series 2005-10, Class M3 (P) | 0.750 | 06-25-35 | 675,000 | 628,704 | |
| |||||
Home Equity Asset Trust | |||||
Series 2005-5, Class M1 (P) | 0.680 | 11-25-35 | 450,000 | 439,459 | |
| |||||
Leaf Receivables Funding 6 LLC | |||||
Series 2011-1, Class A (S) | 1.700 | 12-20-18 | 28,038 | 28,038 | |
| |||||
Mastr Asset Backed Securities Trust | |||||
Series 2007-HE2, Class A2 (P) | 0.900 | 08-25-37 | 312,683 | 303,282 | |
| |||||
Merrill Lynch Mortgage Investors, Inc. | |||||
Series 2005-WMC1, Class M1 (P) | 0.950 | 09-25-35 | 256,559 | 240,629 | |
| |||||
Morgan Stanley ABS Capital I | |||||
Series 2006-HE4, Class A3 (P) | 0.350 | 06-25-36 | 509,969 | 362,648 | |
| |||||
New Century Home Equity Loan Trust | |||||
Series 2005-3, Class M1 (P) | 0.680 | 07-25-35 | 305,000 | 299,902 | |
| |||||
NovaStar Home Equity Loan | |||||
Series 2004-4, Class M3 (P) | 1.280 | 03-25-35 | 616,533 | 615,190 | |
| |||||
Park Place Securities, Inc. | |||||
Series 2004-WHQ2, Class M2 (P) | 0.830 | 02-25-35 | 852,973 | 842,633 | |
| |||||
People’s Choice Home Loan Securities Trust | |||||
Series 2005-1, Class M3 (P) | 1.070 | 01-25-35 | 480,000 | 475,175 | |
| |||||
RAMP Trust | |||||
Series 2005-RS3, Class M1 (P) | 0.620 | 03-25-35 | 320,000 | 301,161 | |
| |||||
Sonic Capital LLC | |||||
Series 2011-1A, Class A2 (S) | 5.438 | 05-20-41 | 559,736 | 626,515 | |
| |||||
Soundview Home Loan Trust | |||||
Series 2006-OPT2, Class A3 (P) | 0.380 | 05-25-36 | 268,995 | 246,880 | |
| |||||
Specialty Underwriting & Residential | |||||
Finance Trust | |||||
Series 2006-BC1, Class A2D (P) | 0.500 | 12-25-36 | 1,090,000 | 1,046,331 |
See notes to financial statements | Semiannual report | Income Securities Trust | 21 |
Maturity | |||||
Rate (%) | date | Par value | Value | ||
| |||||
Westgate Resorts LLC | |||||
Series 2012-2A, Class A (S) | 3.000 | 01-20-25 | $574,854 | $579,884 | |
Series 2012-3A, Class A (S) | 2.500 | 03-20-25 | 403,909 | 405,045 | |
Series 2012-3A, Class B (S) | 4.500 | 03-20-25 | 120,313 | 121,479 | |
Shares | Value | ||||
Common Stocks 4.4% (3.0% of Total Investments) | $8,411,940 | ||||
| |||||
(Cost $7,744,369) | |||||
Consumer Staples 0.9% | 1,728,250 | ||||
Food Products 0.4% | |||||
| |||||
Kraft Foods Group, Inc. (Z) | 15,000 | 772,350 | |||
Tobacco 0.5% | |||||
| |||||
Philip Morris International, Inc. (Z) | 10,000 | 955,900 | |||
Energy 0.7% | 1,306,360 | ||||
Oil, Gas & Consumable Fuels 0.7% | |||||
| |||||
Royal Dutch Shell PLC, ADR (Z) | 8,000 | 543,760 | |||
| |||||
The Williams Companies, Inc. (Z) | 20,000 | 762,600 | |||
Health Care 1.3% | 2,392,189 | ||||
Pharmaceuticals 1.3% | |||||
| |||||
Eli Lilly & Company (Z) | 17,000 | 941,460 | |||
| |||||
Johnson & Johnson (Z) | 8,258 | 703,829 | |||
| |||||
Sanofi, ADR | 14,000 | 746,900 | |||
Industrials 0.4% | 762,030 | ||||
Machinery 0.4% | |||||
| |||||
Caterpillar, Inc. | 9,000 | 762,030 | |||
Information Technology 0.3% | 622,700 | ||||
Semiconductors & Semiconductor Equipment 0.3% | |||||
| |||||
Intel Corp. (Z) | 26,000 | 622,700 | |||
Materials 0.4% | 817,650 | ||||
Chemicals 0.4% | |||||
| |||||
E.I. du Pont de Nemours & Company (Z) | 15,000 | 817,650 | |||
Telecommunication Services 0.4% | 782,761 | ||||
Diversified Telecommunication Services 0.4% | |||||
| |||||
Oi SA, ADR (Z) | 313,276 | 748,730 | |||
| |||||
Oi SA, Series C, ADR | 12,025 | 34,031 | |||
Preferred Securities (b) 2.4% (1.6% of Total Investments) | $4,573,241 | ||||
| |||||
(Cost $4,163,146) | |||||
Consumer Staples 0.6% | 1,167,969 | ||||
Food & Staples Retailing 0.6% | |||||
| |||||
Ocean Spray Cranberries, Inc., Series A, | |||||
6.250% (S) | 12,500 | 1,167,969 |
22 | Income Securities Trust | Semiannual report | See notes to financial statements |
Shares | Value | ||||
Financials 1.3% | $2,425,566 | ||||
Commercial Banks 0.6% | |||||
| |||||
PNC Financial Services Group, Inc. (6.125% to | |||||
5-1-22, then 3 month LIBOR + 4.067%) (Z) | 19,375 | 556,063 | |||
| |||||
U.S. Bancorp (6.000% to 4-15-17, then | |||||
3 month LIBOR + 4.861%) (Z) | 15,475 | 434,229 | |||
| |||||
Wells Fargo & Company, Series L, 7.500% | 192 | 253,392 | |||
Consumer Finance 0.2% | |||||
| |||||
Ally Financial, Inc., 7.300% (Z) | 11,815 | 304,236 | |||
Diversified Financial Services 0.5% | |||||
| |||||
Citigroup Capital XIII (7.875% to 10-30-15, | |||||
then 3 month LIBOR + 6.370%) (Z) | 3,900 | 110,136 | |||
| |||||
GMAC Capital Trust I (8.125% to 2-15-16, | |||||
then 3 month LIBOR + 5.785%) (Z) | 16,350 | 447,827 | |||
| |||||
The Goldman Sachs Group, Inc., 5.500% | 12,425 | 319,683 | |||
Industrials 0.2% | 361,109 | ||||
Aerospace & Defense 0.2% | |||||
| |||||
United Technologies Corp., 7.500% (Z) | 6,106 | 361,109 | |||
Materials 0.0% | 50,094 | ||||
Metals & Mining 0.0% | |||||
| |||||
ArcelorMittal, 6.000% | 2,420 | 50,094 | |||
Telecommunication Services 0.2% | 324,500 | ||||
Diversified Telecommunication Services 0.2% | |||||
| |||||
Intelsat SA, 5.750% | 5,900 | 324,500 | |||
Utilities 0.1% | 244,003 | ||||
Electric Utilities 0.1% | |||||
| |||||
Duke Energy Corp., 5.125% (Z) | 9,565 | 244,003 | |||
Maturity | |||||
Rate (%) | date | Par value | Value | ||
Escrow Certificates 0.0% (0.0% of Total Investments) | $539 | ||||
| |||||
(Cost $0) | |||||
Materials 0.0% | 539 | ||||
Smurfit-Stone Container Corp. (I) | 8.000 | 03-15-17 | $245,000 | 539 |
See notes to financial statements | Semiannual report | Income Securities Trust | 23 |
Par value | Value | ||||
Short-Term Investments 0.5% (0.3% of Total Investments) | $849,000 | ||||
| |||||
(Cost $849,000) | |||||
Repurchase Agreement 0.5% | 849,000 | ||||
Repurchase Agreement with State Street Corp. dated 4-30-13 at | |||||
0.010% to be repurchased at $849,000 on 5-1-13, collateralized | |||||
by $870,000 U.S. Treasury Bills, 0.010% due 4-03-14 (valued at | |||||
$868,695, including interest) | $849,000 | 849,000 | |||
Total investments (Cost $261,098,012)† 147.0% | $279,006,855 | ||||
| |||||
Other assets and liabilities, net (47.0%) | ($89,192,440) | ||||
| |||||
Total net assets 100.0% | $189,814,415 | ||||
|
The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund.
ADR American Depositary Receipts
IO Interest-Only Security — (Interest Tranche of Stripped Mortgage Pool). Rate shown is the annualized yield at the end of the period.
LIBOR London Interbank Offered Rate
PIK Paid In Kind
PO Principal-Only Security — (Principal Tranche of Stripped Security). Rate shown is the annualized yield on date of purchase.
REIT Real Estate Investment Trust
USGG U.S. Generic Government Yield Index
(a) Includes hybrid securities with characteristics of both equity and debt that trade with, and pay, interest income.
(b) Includes preferred stocks and hybrid securities with characteristics of both equity and debt that pay dividends on a periodic basis.
(C) Security purchased on a when-issued or delayed delivery basis.
(I) Non-income producing security.
(M) Term loans are variable rate obligations. The coupon rate shown represents the rate at period end.
(P) Variable rate obligation. The coupon rate shown represents the rate at period end.
(Q) Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date.
(S) These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $53,648,384 or 28.3% of the Fund’s net assets as of 4-30-13.
(Z) All or a portion of this security is pledged as collateral pursuant to the Credit Facility Agreement. Total collateral value at 4-30-13 was $150,434,013.
† At 4-30-13, the aggregate cost of investment securities for federal income tax purposes was $261,935,967. Net unrealized appreciation aggregated $17,070,888, of which $21,948,056 related to appreciated investment securities and $4,877,168 related to depreciated investment securities.
24 | Income Securities Trust | Semiannual report | See notes to financial statements |
F I N A N C I A L S T A T E M E N T S
Financial statements
Statement of assets and liabilities 4-30-13 (unaudited)
This Statement of assets and liabilities is the Fund’s balance sheet. It shows the value of what the Fund owns, is due and owes. You’ll also find the net asset value for each common share.
Assets | |
| |
Investments, at value (Cost $261,098,012) | $279,006,855 |
Cash | 28,280 |
Cash segregated at custodian for swap contracts | 820,000 |
Receivable for investments sold | 893,215 |
Dividends and interest receivable | 2,661,261 |
Other receivables and prepaid expenses | 28,215 |
Total assets | 283,437,826 |
Liabilities | |
| |
Credit facility agreement payable | 90,300,000 |
Payable for investments purchased | 1,746,056 |
Payable for delayed delivery securities purchased | 195,000 |
Swap contracts, at value | 1,242,238 |
Interest payable | 51,728 |
Payable to affiliates | |
Accounting and legal services fees | 4,813 |
Trustees’ fees | 8,170 |
Other liabilities and accrued expenses | 75,406 |
Total liabilities | 93,623,411 |
Net assets | $189,814,415 |
Net assets consist of | |
| |
Paid-in capital | $185,422,070 |
Undistributed net investment income | 522,896 |
Accumulated net realized gain (loss) on investments and swap agreements | (12,797,156) |
Net unrealized appreciation (depreciation) on investments and | |
swap agreements | 16,666,605 |
Net assets | $189,814,415 |
Net asset value per share | |
| |
Based on 11,729,058 shares of beneficial interest outstanding — unlimited | |
number of shares authorized with no par value | $16.18 |
See notes to financial statements | Semiannual report | Income Securities Trust | 25 |
F I N A N C I A L S T A T E M E N T S
Statement of operations For the six-month period ended 4-30-13
(unaudited)
This Statement of operations summarizes the Fund’s investment income earned and expenses incurred in operating the Fund. It also shows net gains (losses) for the period stated.
Investment income | |
| |
Interest | $6,324,821 |
Dividends | 301,317 |
Less foreign taxes withheld | (2,064) |
Total investment income | 6,624,074 |
Expenses | |
| |
Investment management fees | 709,264 |
Accounting and legal services fees | 39,415 |
Transfer agent fees | 47,529 |
Trustees’ fees | 19,997 |
Printing and postage | 32,187 |
Professional fees | 48,209 |
Custodian fees | 11,911 |
Interest expense | 320,383 |
Stock exchange listing fees | 12,073 |
Other | 24,238 |
Total expenses | 1,265,206 |
Net investment income | 5,358,868 |
Realized and unrealized gain (loss) | |
| |
Net realized gain (loss) on | |
Investments | 4,769,900 |
Realized loss on investments not meeting investment restrictions | (4,308) |
Payment from investment advisor for loss on investments not meeting | |
investment restrictions | 4,308 |
Swap contracts | (197,034) |
4,572,866 | |
Change in net unrealized appreciation (depreciation) of | |
Investments | (47,680) |
Swap contracts | (33,175) |
(80,855) | |
Net realized and unrealized gain | 4,492,011 |
Increase in net assets from operations | $9,850,879 |
26 | Income Securities Trust | Semiannual report | See notes to financial statements |
F I N A N C I A L S T A T E M E N T S
Statements of changes in net assets
These Statements of changes in net assets show how the value of the Fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of Fund share transactions.
Six months | ||
ended | Year | |
4-30-13 | ended | |
(Unaudited) | 10-31-12 | |
Increase (decrease) in net assets | ||
| ||
From operations | ||
Net investment income | $5,358,868 | $12,044,957 |
Net realized gain (loss) | 4,572,866 | (168,211) |
Change in net unrealized appreciation (depreciation) | (80,855) | 15,369,312 |
Increase in net assets resulting from operations | 9,850,879 | 27,246,058 |
Distributions to shareholders | ||
From net investment income | (6,302,734) | (12,769,589) |
From Fund share transactions | ||
Issued pursuant to Dividend Reinvestment Plan | 474,851 | 1,017,966 |
Total increase | 4,022,996 | 15,494,435 |
Net assets | ||
| ||
Beginning of period | 185,791,419 | 170,296,984 |
End of period | $189,814,415 | $185,791,419 |
Undistributed net investment income | $522,896 | $1,466,762 |
Share activity | ||
| ||
Shares outstanding | ||
Beginning of period | 11,699,015 | 11,631,473 |
Issued pursuant to Dividend Reinvestment Plan | 30,043 | 67,542 |
End of period | 11,729,058 | 11,699,015 |
See notes to financial statements | Semiannual report | Income Securities Trust | 27 |
F I N A N C I A L S T A T E M E N T S
Statement of cash flows 4-30-13
This Statement of cash flows shows cash flow from operating and financing activities for the period stated.
For the | |
six-month | |
period ended | |
4-30-13 | |
(unaudited) | |
Cash flows from operating activities | |
| |
Net increase in net assets from operations | $9,850,879 |
Adjustments to reconcile net increase in net assets from operations to net | |
cash provided by operating activities: | |
Long-term investments purchased | (100,759,957) |
Long-term investments sold | 97,561,650 |
Decrease in short-term investments | 251,000 |
Net amortization of premium (discount) | 2,616,879 |
Decrease in dividends and interest receivable | 247,323 |
Increase in payable for investments purchased | 1,547,858 |
Increase in payable for delayed delivery securities purchased | 103,074 |
Increase in receivable for investments sold | (890,425) |
Increase in other receivables and prepaid assets | (8,075) |
Increase in unrealized depreciation of swap contracts | 33,175 |
Decrease in payable to affiliates | (8,100) |
Decrease in interest payable | (5,821) |
Decrease in other liabilities and accrued expenses | (29,929) |
Net change in unrealized (appreciation) depreciation on investments | 47,680 |
Net realized gain on investments | (4,769,900) |
Net cash provided by operating activities | $5,787,311 |
| |
Cash flows from financing activities | |
Distributions to common shareholders net of reinvestments | ($5,827,883) |
Net cash used in financing activities | ($5,827,883) |
Net decrease in cash | ($40,572) |
Cash at beginning of period | $68,852 |
Cash at end of period | $28,280 |
Supplemental disclosure of cash flow information | |
| |
Cash paid for interest | $326,204 |
Noncash financing activities not included herein consist of | 474,851 |
reinvestment of distributions |
28 | Income Securities Trust | Semiannual report | See notes to financial statements |
Financial highlights
The Financial highlights show how the Fund’s net asset value for a share has changed during the period.
COMMON SHARES | |||||||
Period ended | 4-30-131 | 10-31-12 | 10-31-11 | 10-31-10 | 10-31-09 | 10-31-082 | 12-31-07 |
Per share operating performance | |||||||
| |||||||
Net asset value, beginning | |||||||
of period | $15.88 | $14.64 | $14.82 | $13.42 | $10.67 | $14.53 | $15.22 |
Net investment income3 | 0.46 | 1.03 | 1.08 | 1.19 | 1.18 | 1.05 | 1.34 |
Net realized and unrealized | |||||||
gain (loss) on investments | 0.38 | 1.31 | (0.13) | 1.37 | 2.70 | (3.92) | (0.69) |
Distributions to Auction | |||||||
Preferred Shares (APS) | — | — | — | — | — | (0.15) | (0.42) |
Total from | |||||||
investment operations | 0.84 | 2.34 | 0.95 | 2.56 | 3.88 | (3.02) | 0.23 |
Less distributions to | |||||||
common shareholders | |||||||
From net investment income | (0.54) | (1.10) | (1.13) | (1.16) | (1.13) | (0.84) | (0.92) |
Net asset value, end | |||||||
of period | $16.18 | $15.88 | $14.64 | $14.82 | $13.42 | $10.67 | $14.53 |
Per share market value, end | |||||||
of period | $16.92 | $16.53 | $14.81 | $14.76 | $12.94 | $9.67 | $12.85 |
Total return at net asset | |||||||
value (%)4 | 5.395 | 16.57 | 6.78 | 19.90 | 39.06 | (21.36)5 | 1.97 |
Total return at market value | |||||||
(%)4 | 5.875 | 19.95 | 8.46 | 23.85 | 47.95 | (19.41)5 | (6.94) |
Ratios and supplemental data | |||||||
| |||||||
Net assets applicable to | |||||||
common shares, end of | |||||||
period (in millions) | $190 | $186 | $170 | $171 | $154 | $121 | $165 |
Ratios (as a percentage of | |||||||
average net assets): | |||||||
Expenses6 | 1.377 | 1.53 | 1.56 | 1.78 | 2.25 | 2.177 | 1.168 |
Net investment income | 5.807 | 6.88 | 7.34 | 8.44 | 10.56 | 9.377 | 8.879 |
Portfolio turnover (%) | 36 | 50 | 71 | 79 | 94 | 40 | 54 |
Senior securities | |||||||
| |||||||
Total value of APS outstanding | |||||||
(in millions) | — | — | — | — | — | — | $90 |
Involuntary liquidation | |||||||
preference per unit | |||||||
(in thousands) | — | — | — | — | — | — | 25 |
Average market value per unit | |||||||
(in thousands) | — | — | — | — | — | — | 25 |
Asset coverage per unit10 | — | — | — | — | — | —11 | $71,228 |
Total debt outstanding end of | |||||||
period (in millions) | $90 | $90 | $87 | $84 | $58 | $58 | — |
Asset coverage per $1,000 | |||||||
of APS12 | — | — | — | — | — | — | $2,851 |
Asset coverage per $1,000 | |||||||
of debt13 | $3,102 | $3,057 | $2,957 | $3,051 | $3,656 | $3,094 | — |
See notes to financial statements | Semiannual report | Income Securities Trust | 29 |
1 Six months ended 4-30-13. Unaudited.
2 For the ten-month period ended 10-31-08. The Fund changed its fiscal year end from December 31 to October 31.
3 Based on the average daily shares outstanding.
4 Total return based on net asset value reflects changes in the Fund’s net asset value during each period. Total
return based on market value reflects changes in market value. Each figure assumes that dividend and capital gain
distributions, if any, were reinvested. These figures will differ depending upon the level of any discount from or
premium to net asset value at which the Fund’s shares traded during the period.
5 Not annualized.
6 Expenses excluding interest expense were 1.02% (annualized), 1.06%, 1.04%, 1.12%, 1.40% and 1.41%
(annualized) for the periods ended 4-30-13, 10-31-12, 10-31-11, 10-31-10, 10-31-09 and 10-31-08, respectively.
7 Annualized.
8 Ratios calculated on the basis of expenses relative to the average net assets of common shares. Without
the exclusion of preferred shares, the annualized ratio of expenses would have been 0.76% for the year
ended 12-31-07.
9 Ratios calculated on the basis of net investment income relative to the average net assets of common shares.
Without the exclusion of preferred shares, the annualized ratio of net investment income would have been 5.82%
for the year ended 12-31-07.
10 Calculated by subtracting the Fund’s total liabilities from the Fund’s total assets and dividing that amount by the
number of APS outstanding as of the applicable 1940 Act Evaluation Date, which may differ from the financial
reporting date.
11 In May 2008, the Fund entered into a Committed Facility Agreement with a third-party commercial bank in order to
redeem the APS. The redemption of all APS was completed on 6-12-08.
12 Asset coverage equals the total net assets plus APS divided by the APS of the Fund outstanding at period end.
13 Asset coverage equals the total net assets plus borrowings divided by the borrowings of the Fund outstanding at
period end (Note 7). As debt outstanding changes, level of invested assets may change accordingly. Asset coverage
ratio provides a measure of leverage.
30 | Income Securities Trust | Semiannual report | See notes to financial statements |
Notes to financial statements
(unaudited)
Note 1 — Organization
John Hancock Income Securities Trust (the Fund) is a closed-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act).
Note 2 — Significant accounting policies
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the Fund uses the following valuation techniques: Equity securities held by the Fund are valued at the last sale price or official closing price on the principal securities exchange on which they trade. In the event there were no sales during the day or closing prices are not available, then the securities are valued using the last quoted bid or evaluated price. Debt obligations are valued based on the evaluated prices provided by an independent pricing service, which utilizes both dealer-supplied and electronic data processing techniques, taking into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Swaps are marked-to-market daily based upon values from third party vendors, which may include a registered commodities exchange, or broker quotations. Certain securities traded only in the over-the-counter market are valued at the last bid price quoted by brokers making markets in the securities at the close of trading. Certain short-term securities are valued at amortized cost. Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the Fund’s Pricing Committee following procedures established by the Board of Trustees, which include price verification procedures. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed.
The Fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the Fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.
Semiannual report | Income Securities Trust | 31 |
The following is a summary of the values by input classification of the Fund’s investments as of April 30, 2013, by major security category or type:
LEVEL 3 | ||||
LEVEL 2 | SIGNIFICANT | |||
TOTAL MARKET | LEVEL 1 | SIGNIFICANT | UNOBSERVABLE | |
VALUE AT 4-30-13 | QUOTED PRICE | OBSERVABLE INPUTS | INPUTS | |
| ||||
Corporate Bonds | $135,095,730 | — | $133,986,753 | $1,108,977 |
Convertible Bonds | 459,420 | — | 459,420 | — |
Municipal Bonds | 358,923 | — | 358,923 | — |
Term Loans | 974,830 | — | 974,830 | — |
Capital Preferred Securities | 3,600,618 | — | 3,600,618 | — |
U.S. Government & Agency | ||||
Obligations | 65,688,739 | — | 65,688,739 | — |
Foreign Government | ||||
Obligations | 400,599 | — | 400,599 | — |
Collateralized Mortgage | ||||
Obligations | 41,566,030 | — | 40,997,400 | 568,630 |
Asset Backed Securities | 17,027,246 | — | 17,027,246 | — |
Common Stocks | 8,411,940 | $8,411,940 | — | — |
Preferred Securities | 4,573,241 | 3,085,589 | 1,487,652 | — |
Escrow Certificates | 539 | — | 539 | — |
Short-Term Investments | 849,000 | — | 849,000 | — |
| ||||
Total Investments in | ||||
Securities | $279,006,855 | $11,497,529 | $265,831,718 | $1,677,607 |
Other Financial Instruments | ||||
Interest Rate Swaps | ($1,242,238) | — | ($1,242,238) | — |
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value. Transfers into or out of Level 3 represent the beginning value of any security or instrument where a change in the level has occurred from the beginning to the end of the period.
COLLATERALIZED | |||||
CORPORATE | MORTGAGE | PREFERRED | |||
BONDS | OBLIGATIONS | COMMON STOCKS | SECURITIES | TOTAL | |
| |||||
Balance as of 10-31-12 | $625,692 | $989,419 | $43,162 | $1,177,393 | $2,835,666 |
Realized gain (loss) | 85 | — | (15,805) | (172,570) | ($188,290) |
Change in unrealized appreciation (depreciation) | 16,725 | (18,937) | 41,763 | 344,367 | $383,918 |
Purchases | 485,000 | 357,315 | — | — | $842,315 |
Sales | (18,525) | — | (69,120) | (1,349,190) | ($1,436,835) |
Transfers into Level 3 | — | — | — | — | — |
Transfers out of Level 3 | — | (759,167) | — | — | ($759,167) |
Balance as of 4-30-13 | $1,108,977 | $568,630 | — | — | $1,677,607 |
Change in unrealized at period end* | $16,725 | ($18,937) | — | — | ($2,212) |
*Change in unrealized appreciation (depreciation) attributable to Level 3 securities held at the period end. This balance is included in the change in unrealized appreciation (depreciation) on the Statement of operations.
Repurchase agreements. The Fund may enter into repurchase agreements. When the Fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the Fund’s custodian. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline.
32 | Income Securities Trust | Semiannual report |
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Debt obligations may be placed in a non-accrual status and related interest income may be reduced by stopping current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the Fund becomes aware of the dividends. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain if amounts are estimable. Foreign taxes are provided for based on the Fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
During the period ended April 30, 2013, the Fund realized losses of $4,308 on the disposal of investments not meeting the Fund’s respective guidelines, which was reimbursed by the Advisor.
Foreign taxes. The Fund may be subject to withholding tax on income or capital gains or repatriation taxes as imposed by certain countries in which the Fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.
Stripped securities. Stripped securities are financial instruments structured to separate principal and interest cash flows so that one class receives principal payments from the underlying assets (PO or principal only), while the other class receives the interest cash flows (IO or interest only). Both PO and IO investments represent an interest in the cash flows of an underlying stripped security. If the underlying assets experience greater than anticipated prepayments of principal, the Fund may fail to fully recover its initial investment in an IO security. The market value of these securities can be extremely volatile in response to changes in interest rates. In addition, these securities present additional credit risk such that the Fund may not receive all or part of its principal or interest payments because the borrower or issuer has defaulted on its obligation.
Overdrafts. Pursuant to the custodian agreement, the Fund’s custodian may, in its discretion, advance funds to the Fund to make properly authorized payments. When such payments result in an overdraft, the Fund is obligated to repay the custodian for any overdraft, including any costs or expenses associated with the overdraft. The custodian may have a lien, security interest or security entitlement in any Fund property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.
Expenses. Within the John Hancock Funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Federal income taxes. The Fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
Semiannual report | Income Securities Trust | 33 |
Under the Regulated Investment Company Modernization Act of 2010, the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
For federal income tax purposes, the Fund has a capital loss carryforward of $16,617,020 available to offset future net realized capital gains as of October 31, 2012. The following table details the capital loss carryforward available as of October 31, 2012:
CAPITAL LOSS CARRYFORWARD EXPIRING AT OCTOBER 31 | NO EXPIRATION DATE | ||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | SHORT-TERM LONG-TERM | |
| |||||||
$2,205,183 | $3,342,775 | $1,351,797 | $1,367,076 | $6,785,450 | $436,296 | — | $1,128,443 |
As of October 31, 2012, the Fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The Fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The Fund generally declares and pays dividends quarterly and capital gain distributions, if any, annually.
Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to derivative transactions and amortization and accretion on debt securities.
Statement of cash flows. Information on financial transactions that have been settled through the receipt and disbursement of cash is presented in the Statement of cash flows. The cash amount shown in the Statement of cash flows is the amount included in the Fund’s Statement of assets and liabilities and represents the cash on hand at the Fund’s custodian and does not include any short-term investments or cash segregated at custodian for swap contracts.
New accounting pronouncements. In December 2011, the Financial Accounting Standards Board issued Accounting Standards Update No. 2011-11 (ASU 2011-11), Disclosures about Offsetting Assets and Liabilities and in January 2013, Accounting Standards Update No. 2013-1, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. These updates create new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of assets and liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods. These updates may result in additional disclosure relating to the presentation of derivatives and certain other financial instruments.
Note 3 — Derivative instruments
The Fund may invest in derivatives in order to meet its investment objective. The use of derivatives involves risks different from, or potentially greater than, the risks associated with investing directly in securities. Specifically, the Fund is exposed to the risk that the counterparty to an over-the-counter (OTC) derivatives contract will be unable or unwilling to make timely settlement
34 | Income Securities Trust | Semiannual report |
payments or otherwise honor its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction. If the counterparty defaults, the Fund will have contractual remedies, but there is no assurance that the counterparty will meet its contractual obligations or that the Fund will succeed in enforcing them.
The Fund has entered into collateral agreements with certain counterparties to mitigate counterparty risk on OTC derivatives. Subject to established minimum levels, collateral is generally determined based on the net aggregate unrealized gain or loss on contracts with a particular counterparty. Collateral pledged to the Fund is held in a segregated account by a third-party agent or held by the custodian bank for the benefit of the Fund and can be in the form of cash or debt securities issued by the U.S. government or related agencies; collateral posted by the Fund is held in a segregated account at the Fund’s custodian and is noted in the accompanying portfolio of investments, or if cash is posted, on the Statement of assets and liabilities. As of April 30, 2013, $820,000 was posted by the Fund for the benefit of counterparties.
Interest rate swaps. Interest rate swaps represent an agreement between a Fund and counterparty to exchange cash flows based on the difference between two interest rates applied to a notional amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other. The Fund settles accrued net interest receivable or payable under the swap contracts at specified, future intervals. Swap agreements are privately negotiated in the OTC swaps market or may be executed on a registered commodities exchange (centrally cleared swaps). Swaps are marked-to-market daily and the change in value is recorded as unrealized appreciation/ depreciation of swap contracts. A termination payment by the counterparty or the Fund is recorded as realized gain or loss, as well as the net periodic payments received or paid by the Fund. The value of the swap will typically impose collateral posting obligations on the party that is considered out-of-the-money on the swap.
Entering into swap agreements involves, to varying degrees, elements of credit, market and documentation risk that may amount to values that are in excess of the amounts recognized on the Statement of assets and liabilities. Such risks involve the possibility that there will be no liquid market for the swap, or that a counterparty may default on its obligation or delay payment under the swap terms. The counterparty may disagree or contest the terms of the swap. Market risks may also accompany the swap, including interest rate risk. The Fund may also suffer losses if it is unable to terminate or assign outstanding swaps or reduce its exposure through offsetting transactions.
During the six months ended April 30, 2013, the Fund used interest rate swaps in anticipation of rising interest rates. The following table summarizes the interest rate swap contracts held as of April 30, 2013.
PAYMENTS | PAYMENTS | ||||
USD NOTIONAL | MADE BY | RECEIVED BY | MATURITY | MARKET | |
COUNTERPARTY | AMOUNT | FUND | FUND | DATE | VALUE |
| |||||
Morgan Stanley | $22,000,000 | Fixed 1.442500% | 3 Month LIBOR (a) | Aug 2016 | ($738,410) |
Capital Services | |||||
Morgan Stanley | 22,000,000 | Fixed 1.093750% | 3 Month LIBOR (a) | May 2017 | (503,828) |
Capital Services | |||||
Total | $44,000,000 | ($1,242,238) |
(a) At 4-30-13, the 3-month LIBOR rate was 0.27310%.
No interest rate swap positions were entered into or closed during the six months ended April 30, 2013.
Semiannual report | Income Securities Trust | 35 |
Fair value of derivative instruments by risk category
The table below summarizes the fair value of derivatives held by the Fund at April 30, 2013 by risk category:
FINANCIAL | ASSET | LIABILITY | ||
STATEMENT OF ASSETS | INSTRUMENTS | DERIVATIVES FAIR | DERIVATIVES | |
RISK | AND LIABILITIES LOCATION | LOCATION | VALUE | FAIR VALUE |
| ||||
Interest rate | Swap contracts | Interest | — | ($1,242,238) |
contracts | at value | Rate Swaps |
Effect of derivative instruments on the Statement of operations
The table below summarizes the net realized gain (loss) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the six months ended April 30, 2013:
RISK | STATEMENT OF OPERATIONS LOCATION | SWAP CONTRACTS |
| ||
Interest rate contracts | Net realized gain (loss) | ($197,034) |
The table below summarizes the net change in unrealized appreciation (depreciation) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the six months ended April 30, 2013:
RISK | STATEMENT OF OPERATIONS LOCATION | SWAP CONTRACTS |
| ||
Interest rate contracts | Change in unrealized appreciation | ($33,175) |
(depreciation) |
Note 4 — Guarantees and indemnifications
Under the Fund’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 5 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the Fund. The Advisor is an indirect, wholly owned subsidiary of Manulife Financial Corporation (MFC).
Management fee. The Fund has an investment advisory agreement with the Advisor under which the Fund pays a daily management fee to the Advisor equivalent, on an annual basis, to the sum of (a) 0.650% of the first $150,000,000 of the Fund’s average daily managed assets (net assets plus borrowings under the Credit Facility Agreement) (see Note 7), (b) 0.375% of the next $50,000,000 of the Fund’s average daily managed assets, (c) 0.350% of the next $100,000,000 of the Fund’s average daily managed assets and (d) 0.300% of the Fund’s average daily managed assets in excess of $300,000,000. The Advisor has a subadvisory agreement with John Hancock Asset Management a division of Manulife Asset Management (US) LLC, an indirectly owned subsidiary of MFC and an affiliate of the Advisor. The Fund is not responsible for payment of the subadvisory fees.
The investment management fees incurred for the six months ended April 30, 2013, were equivalent to a net annual effective rate of 0.52% of the Fund’s average daily managed assets.
36 | Income Securities Trust | Semiannual report |
Accounting and legal services. Pursuant to a service agreement, the Fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the Fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred for the six months ended April 30, 2013 amounted to an annual rate of 0.02% of the Fund’s average daily managed assets.
Trustee expenses. The Fund compensates each Trustee who is not an employee of the Advisor or its affiliates. Under the John Hancock Group of Funds Deferred Compensation Plan (the Plan), which was terminated in November 2012, certain Trustees could have elected, for tax purposes, to defer receipt of this compensation. Any deferred amounts were invested in various John Hancock funds. The investment of deferred amounts and the offsetting liability are included within Other receivables and prepaid expenses and Payable to affiliates — Trustees’ fees, respectively, in the accompanying Statement of assets and liabilities. Plan assets will be liquidated in accordance with the Plan documents.
Note 6 — Leverage risk
The Fund utilizes a Credit Facility Agreement (CFA) to increase its assets available for investment. When the Fund leverages its assets, common shareholders bear the fees associated with the CFA and have the potential to benefit or be disadvantaged from the use of leverage. The Advisor’s fee is also increased in dollar terms from the use of leverage. Consequently, the Fund and the Advisor may have differing interests in determining whether to leverage the Fund’s assets. Leverage creates risks that may adversely affect the return for the holders of common shares, including:
• the likelihood of greater volatility of net asset value and market price of common shares;
• fluctuations in the interest rate paid for the use of the credit facility;
• increased operating costs, which may reduce the Fund’s total return;
• the potential for a decline in the value of an investment acquired through leverage, while the Fund’s obligations under such leverage remains fixed; and
• the Fund is more likely to have to sell securities in a volatile market in order to meet asset coverage or other debt compliance requirements.
To the extent the income or capital appreciation derived from securities purchased with funds received from leverage exceeds the cost of leverage, the Fund’s return will be greater than if leverage had not been used, conversely, returns would be lower if the cost of the leverage exceeds the income or capital appreciation derived.
In addition to the risks created by the Fund’s use of leverage, the Fund is subject to the risk that it would be unable to timely, or at all, obtain replacement financing if the CFA is terminated. Were this to happen, the Fund would be required to de-leverage, selling securities at a potentially inopportune time and incurring tax consequences. Further, the Fund’s ability to generate income from the use of leverage would be adversely affected.
Note 7 — Credit Facility Agreement
The Fund has entered into a CFA with Credit Suisse Securities (USA) LLC (CSSU), pursuant to which the Fund borrows money to increase its assets available for investment. In accordance with the 1940 Act, the Fund’s borrowings under the CFA will not exceed 33 1/3% of the Fund’s managed assets (net assets plus borrowings) at the time of any borrowing.
The Fund pledges a portion of its assets as collateral to secure borrowings under the CFA. Such pledged assets are held in a special custody account with the Fund’s custodian. The amount of
Semiannual report | Income Securities Trust | 37 |
assets required to be pledged by the Fund is determined in accordance with the CFA. The Fund retains the benefits of ownership of assets pledged to secure borrowings under the CFA. Interest charged is at the rate of three month (LIBOR) London Interbank Offered Rate plus 0.41% and is payable monthly. As of April 30, 2013, the Fund had borrowings of $90,300,000, at an interest rate of 0.68%, which is reflected in the Credit facility agreement payable on the Statement of assets and liabilities. During the six months ended April 30, 2013, the average borrowings under the CFA and the effective average interest rate were $90,300,000 and 0.72%, respectively.
The Fund may terminate the CFA with CSSU at any time. If certain asset coverage and collateral requirements or other covenants are not met, the CFA could be deemed in default and result in termination. Absent a default or facility termination event, CSSU is required to provide the Fund with 270 calendar days’ notice prior to terminating or amending the CFA.
Note 8 — Purchase and sale of securities
Purchases and sales of securities, other than short-term securities and U.S. Treasury obligations, aggregated $86,122,233 and $91,098,789, respectively, for the six months ended April 30, 2013. Purchases and sales of U.S. Treasury obligations aggregated $14,637,724 and $6,462,861, respectively, for the six months ended April 30, 2013.
38 | Income Securities Trust | Semiannual report |
Additional information
Unaudited
Investment objective and policy
The Fund is a closed-end, diversified management investment company, common shares of which were initially offered to the public on February 14, 1973 and are publicly traded on the New York Stock Exchange (the NYSE). The Fund’s investment objective is to generate a high level of current income consistent with prudent investment risk. There can be no assurance that the Fund will achieve its investment objective.
Under normal circumstances, the Fund invests at least 80% of net assets in income securities, consisting of the following: (i) marketable corporate debt securities, (ii) governmental obligations and (iii) cash and commercial paper. “Net assets” is defined as net assets plus borrowings for investment purposes. The Fund will notify shareholders at least 60 days prior to any change in this 80% investment policy. The Fund may invest up to 20% of its total assets in income-producing preferred securities and common stocks.
Effective March 20, 2013, the Board of Trustees approved a revision to the Fund’s investment policy regarding the amount of the Fund’s securities that is rated investment grade. The new investment policy provides that the Fund will invest at least 75% of its net assets (plus borrowings for investment purposes) in debt securities that are rated, at the time of acquisition, investment grade (i.e., at least “Baa” by Moody’s Investors Service, Inc. (Moody’s) or “BBB” by Standard & Poor’s Ratings Services (S&P)), or in unrated securities determined by the Fund’s investment advisor or subadvisor to be of comparable credit quality. Under the new investment policy, the Fund can invest up to 25% of its net assets (plus borrowings for investment purposes) in debt securities that are rated, at the time of acquisition, below investment grade (junk bonds) (i.e., rated “Ba” or lower by Moody’s or “BB” or lower by S&P), or in unrated securities determined by the Fund’s advisor or subadvisor to be of comparable quality.
Under the prior investment policy, the Fund was required to invest at least 75% of its total assets in debt securities which were rated, at the time of acquisition, investment grade or in unrated securities determined to be of comparable credit quality. In addition, under the prior investment policy, the Fund had the ability to invest up to 25% of its total assets in debt securities rated below investment grade at the time of acquisition.
Dividends and distributions
During the six months ended April 30, 2013, dividends from net investment income totaling $0.5384 per share were paid to shareholders. The dates of payments and the amounts per share were as follows:
INCOME | |||||
PAYMENT DATE | DIVIDEND | ||||
|
|||||
December 31, 2012 | $0.3086 | ||||
|
|||||
March 28, 2013 | 0.2298 | ||||
|
|||||
Total | $0.5384 |
Dividend reinvestment plan
The Fund’s Dividend Reinvestment Plan (the Plan) provides that distributions of dividends and capital gains are automatically reinvested in common shares of the Fund by Computershare Trust Company, N.A. (the Plan Agent). Every shareholder holding at least one full share of the Fund is entitled to participate in the Plan. In addition, every shareholder who became a shareholder of the Fund after June 30, 2011 and holds at least one full share of the Fund will
Semiannual report | Income Securities Trust | 39 |
be automatically enrolled in the Plan. Shareholders may withdraw from the Plan at any time and shareholders who do not participate in the Plan will receive all distributions in cash.
If the Fund declares a dividend or distribution payable either in cash or in common shares of the Fund and the market price of shares on the payment date for the distribution or dividend equals or exceeds the Fund’s net asset value per share (NAV), the Fund will issue common shares to participants at a value equal to the higher of NAV or 95% of the market price. The number of additional shares to be credited to each participant’s account will be determined by dividing the dollar amount of the distribution or dividend by the higher of NAV or 95% of the market price. If the market price is lower than NAV, or if dividends or distributions are payable only in cash, then participants will receive shares purchased by the Plan Agent on participants’ behalf on the New York Stock Exchange (the NYSE) or otherwise on the open market. If the market price exceeds NAV before the Plan Agent has completed its purchases, the average per share purchase price may exceed NAV, resulting in fewer shares being acquired than if the Fund had issued new shares.
There are no brokerage charges with respect to common shares issued directly by the Fund. However, whenever shares are purchased or sold on the NYSE or otherwise on the open market, each participant will pay a pro rata portion of brokerage trading fees, currently $0.05 per share purchased or sold. Brokerage trading fees will be deducted from amounts to be invested.
The reinvestment of dividends and net capital gains distributions does not relieve participants of any income tax that may be payable on such dividends or distributions.
Shareholders participating in the Plan may buy additional shares of the Fund through the Plan at any time in amounts of at least $50 per investment, up to a maximum of $10,000, with a total calendar year limit of $100,000. Shareholders will be charged a $5 transaction fee plus $0.05 per share brokerage trading fee for each order. Purchases of additional shares of the Fund will be made on the open market. Shareholders who elect to utilize monthly electronic fund transfers to buy additional shares of the Fund will be charged a $2 transaction fee plus $0.05 per share brokerage trading fee for each automatic purchase. Shareholders can also sell Fund shares held in the Plan account at any time by contacting the Plan Agent by telephone, in writing or by visiting the Plan Agent’s Web site at www.computershare.com by clicking on EquityAccess & More. The Plan Agent will mail a check (less applicable brokerage trading fees) on settlement date, which is three business days after the shares have been sold. If shareholders choose to sell shares through their stockbroker, they will need to request that the Plan Agent electronically transfer those shares to their stockbroker through the Direct Registration System.
Shareholders participating in the Plan may withdraw from the Plan at any time by contacting the Plan Agent by telephone, in writing or by visiting the Plan Agent’s Web site at www.computershare.com. Click on EquityAccess & More. Such termination will be effective immediately if the notice is received by the Plan Agent prior to any dividend or distribution record date; otherwise, such termination will be effective on the first trading day after the payment date for such dividend or distribution, with respect to any subsequent dividend or distribution. If shareholders withdraw from the Plan, their shares will be credited to their account; or, if they wish, the Plan Agent will sell their full and fractional shares and send the shareholders the proceeds, less a transaction fee of $5 and less brokerage trading fees of $0.05 per share. If a shareholder does not maintain at least one whole share of common stock in the Plan account, the Plan Agent may terminate such shareholder’s participation in the Plan after written notice. Upon termination, shareholders will be sent a check for the cash value of any fractional share in the Plan account, less any applicable broker commissions and taxes.
Shareholders who hold at least one full share of the Fund may join the Plan by notifying the Plan Agent by telephone, in writing or by visiting the Plan Agent’s Web site at www.computershare.com. Click on EquityAccess & More. If received in proper form by the Plan Agent before the record date of a dividend, the election will be effective with respect to
40 | Income Securities Trust | Semiannual report |
all dividends paid after such record date. If shareholders wish to participate in the Plan and their shares are held in the name of a brokerage firm, bank or other nominee, shareholders should contact their nominee to see if it will participate in the Plan. If shareholders wish to participate in the Plan, but their brokerage firm, bank or other nominee is unable to participate on their behalf, they will need to request that their shares be re-registered in their own name, or they will not be able to participate. The Plan Agent will administer the Plan on the basis of the number of shares certified from time to time by shareholders as representing the total amount registered in their name and held for their account by their nominee.
Experience under the Plan may indicate that changes are desirable. Accordingly, the Fund and the Plan Agent reserve the right to amend or terminate the Plan. Participants generally will receive written notice at least 90 days before the effective date of any amendment. In the case of termination, participants will receive written notice at least 90 days before the record date for the payment of any dividend or distribution by the Fund.
Effective July 1, 2013, the Plan will be revised to reflect an updated definition of the market price. Under the revised Plan, “market price” will be defined as “the last sale price for the Fund’s shares in the market on that date as of the close of regular trading on the New York Stock Exchange (NYSE), or, if there is no sale in the market on that date or sale prices are not available, then the mean between the closing bid and asked quotations for such shares on such date.” This definition will replace the current definition, stating that “market price” is “the last sale price for the Fund’s shares on the New York Stock Exchange (NYSE) on that date, or, if there is no sale on the NYSE on that date, then the mean between the closing bid and asked quotations for such shares on the NYSE on such date”.
All correspondence or additional information about the Plan should be directed to Computershare Trust Company, N.A., at the address stated below, or by calling 1-800-852-0218, 1-201-680-6578 (For International Telephone Inquiries) and 1-800-952-9245 (For the Hearing Impaired (TDD)).
Shareholder communication and assistance
If you have any questions concerning the Fund, we will be pleased to assist you. If you hold shares in your own name and not with a brokerage firm, please address all notices, correspondence, questions or other communications regarding the Fund to the transfer agent at:
Computershare
P.O. Box 43006
Providence, RI 02940-3006
Telephone: 1-800-852-0218
If your shares are held with a brokerage firm, you should contact that firm, bank or other nominee for assistance.
Semiannual report | Income Securities Trust | 41 |
Shareholder meeting
The Fund held its Annual Meeting of Shareholders on November 9, 2012. The following proposal was considered by the shareholders:
Proposal: Election of thirteen (13) Nominees to serve until their respective successors have been duly elected and qualified.
Each nominee was elected by the Fund’s shareholders and the votes cast with respect to each Trustee are set forth below.
TOTAL VOTES | TOTAL VOTES WITHHELD | |
FOR THE NOMINEE | FROM THE NOMINEE | |
| ||
Independent Trustees | ||
Charles L. Bardelis | 9,039,726 | 240,552 |
Peter S. Burgess | 9,062,578 | 217,700 |
William H. Cunningham | 9,100,143 | 180,135 |
Grace K. Fey | 9,036,621 | 243,657 |
Theron S. Hoffman | 9,063,622 | 216,656 |
Deborah C. Jackson | 9,098,733 | 181,545 |
Hassell H. McClellan | 9,044,508 | 235,770 |
James M. Oates | 9,040,289 | 239,989 |
Steven R. Pruchansky | 9,094,643 | 185,635 |
Gregory A. Russo | 9,112,320 | 167,958 |
Non-Independent Trustees | ||
James R. Boyle | 9,068,469 | 211,809 |
Craig Bromley | 9,034,479 | 245,799 |
Warren A. Thomson | 9,062,938 | 217,340 |
Portfolio manager change
Effective May 15, 2013, the portfolio management team at John Hancock Asset Management a division of Manulife Asset Management (US) LLC has changed as follows: Barry H. Evans no longer serves on the portfolio management team responsible for managing the Fund. Jeffrey N. Given, CFA and Howard C. Greene, CFA continue to serve as portfolio managers of the Fund.
42 | Income Securities Trust | Semiannual report |
More information
Trustees | Officers | Investment advisor |
James M. Oates, | Hugh McHaffie | John Hancock Advisers, LLC |
Chairman | President | |
Steven R. Pruchansky, | Subadvisor | |
Vice Chairman | Andrew G. Arnott | John Hancock Asset Management |
Charles L. Bardelis* | Executive Vice President | a division of Manulife Asset |
James R. Boyle† | Management (US) LLC | |
Craig Bromley† | Thomas M. Kinzler | |
Peter S. Burgess* | Secretary and Chief Legal Officer | Custodian |
William H. Cunningham | State Street Bank and | |
Grace K. Fey | Francis V. Knox, Jr. | Trust Company |
Theron S. Hoffman* | Chief Compliance Officer | |
Deborah C. Jackson | Transfer agent | |
Hassell H. McClellan | Charles A. Rizzo | Computershare Shareowner |
Gregory A. Russo | Chief Financial Officer | Services, LLC |
Warren A. Thomson† | ||
Salvatore Schiavone | Legal counsel | |
Treasurer | K&L Gates LLP | |
*Member of the | Stock symbol | |
Audit Committee | Listed New York Stock | |
†Non-Independent Trustee | Exchange: JHS | |
For shareholder assistance refer to page 41
You can also contact us: | ||
1-800-852-0218 | Regular mail: | |
jhfunds.com | Computershare | |
P.O. Box 43006 | ||
Providence, RI 02940-3006 |
The Fund’s proxy voting policies and procedures, as well as the Fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) Web site at www.sec.gov or on our Web site.
The Fund’s complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The Fund’s Form N-Q is available on our Web site and the SEC’s Web site, www.sec.gov, and can be reviewed and copied (for a fee) at the SEC’s Public Reference Room in Washington, DC. Call 1-800-SEC-0330 to receive information on the operation of the SEC’s Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our Web site at www.jhfunds.com or by calling 1-800-852-0218.
The report is certified under the Sarbanes-Oxley Act, which requires closed-end funds and other public companies to affirm that, to the best of their knowledge, the information in their financial reports is fairly and accurately stated in all material respects.
Semiannual report | Income Securities Trust | 43 |
PRESORTED | |
STANDARD | |
U.S. POSTAGE | |
PAID | |
MIS |
1-800-852-0218
1-800-231-5469 TDD
1-800-843-0090 EASI-Line
www.jhfunds.com
P6SA 4/13 | |
MF142391 | 6/13 |
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. SCHEDULE OF INVESTMENTS.
(a) Not applicable.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has adopted procedures by which shareholders may recommend nominees to the registrant’s Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached “John Hancock Funds – Nominating, Governance and Administration Committee Charter.”
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the registrant's principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(b) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.
(c)(1) Submission of Matters to a Vote of Security Holders is attached. See attached John Hancock Funds Nominating, Governance and Administration Committee Charter.
(c)(2) Contact person at the registrant.
SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
John Hancock Income Securities Trust | |
By: | /s/ Hugh McHaffie |
------------------------------ | |
Hugh McHaffie | |
President | |
Date: | June 26, 2013 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Hugh McHaffie |
------------------------------- | |
Hugh McHaffie | |
President | |
Date: | June 26, 2013 |
By: | /s/ Charles A. Rizzo |
----------------------- | |
Charles A. Rizzo | |
Chief Financial Officer | |
Date: | June 26, 2013 |
CERTIFICATION
I, Hugh McHaffie, certify that:
1. I have reviewed this report on Form N-CSR of the John Hancock Income Securities Trust (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: June 26, 2013 | /s/ Hugh McHaffie |
------------------------------ | |
Hugh McHaffie | |
President |
CERTIFICATION
I, Charles A. Rizzo, certify that:
1. I have reviewed this report on Form N-CSR of the John Hancock Income Securities Trust (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: June 26, 2013 | /s/ Charles A. Rizzo |
------------------------------ | |
Charles A. Rizzo | |
Chief Financial Officer |
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of |
the Sarbanes-Oxley Act of 2002 |
In connection with the attached Report of John Hancock Income Securities Trust (the “registrant”) on Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the registrant does hereby certify that, to the best of such officer's knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant as of, and for, the periods presented in the Report.
/s/ Hugh McHaffie | |
-------------------------------- | |
Hugh McHaffie | |
President | |
Dated: | June 26, 2013 |
/s/ Charles A. Rizzo | |
----------------------- | |
Charles A. Rizzo | |
Chief Financial Officer | |
Dated: | June 26, 2013 |
A signed original of this written statement, required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.
6/12/13 |
JOHN HANCOCK FUNDS 1 |
NOMINATING AND GOVERNANCE COMMITTEE CHARTER |
Overall Role and Responsibility
The Nominating and Govrnance Committee the "Committee") of each of the Trusts shall (I) make determinations and recommendations to the Board of Trustees (the "Board") regarding issues related to (a) the composition of the Board and (b) corporate governance matters applicable to the Trustees who are not "interested persons" as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), of any of the Trusts, or of any Fund's investment adviser, subadviser or principal underwriter and who are "independent" as defined in the rules of the New York Stock Exchange ("NYSE") (the "Independent Trustees") and (2) discharge such additional duties, responsibilities and functions as are delegated to it from time to time.
Membership
The Nominating and Governance Committee (the "Committee") shall be composed of all of the Independent Trustees of the Board. One member of the Committee shall be appointed by the Board as Chair of the Committee. The chair shall be responsible for leadership of the Committee, including scheduling meetings or reviewing and approving the schedule for them, preparing agendas or reviewing and approving them before meetings, presiding over meetings of the Committee and making reports to the full Board, as appropriate.
Structure, Operations and Governance
Meetings and Actions by Written Consent. The Committee shall meet as often as required or as the Committee deems appropriate, with or without management present. Meetings may be called and notice given by the Committee chair or a majority of the members of the Committee. Members may attend meetings in person or by telephone. The Committee may act by written consent to the extent permitted by law and the Funds' governing documents. The Committee shall report to the Board on any significant action it takes not later than the next following Board meeting.
Required Vote and Quorum. The affirmative vote of a majority of the members of the Committee participating in any meeting of the Committee at which a quorum is present is necessary for the adoption of any resolution. At least a majority of the Committee members present at the meeting in person or by telephone shall constitute a quorum for the transaction of business.
__________________________
1 "John Hancock Funds" includes each trust and series thereof listed in Appendix A, as may be amended from time to time (each individually, a "Trust," and collectively, the "Trusts," and each series thereof, a ''Portfolio" or '' Fund," and collectively, the "Portfolios"or "Funds").
{ N0345447; 21 1 |
Delegation to Subcommittees. The Committee may delegate any portion of its authority to a subcommittee of one or more members.
Appropriate Resources and Authority. The Committee shall have the resources and authority appropriate to discharge its responsibilities, including the authority to retain special counsel and other advisers, experts or consultants, at the Funds' expense, as it determines necessary or appropriate to carry out its duties and responsibilities. In addition, the Committee shall have direct access to such officers of and service providers to the Funds as it deems desirable.
Review of Charter. The Committee Charter shall be approved by at least a majority of the Independent Trustees of the Trust. The Committee shall review and assess the adequacy of this Charter periodically and, where necessary or as it deems desirable, will recommend changes to the Board for its approval. The Board may amend this Charter at any time in response to recommendations from the Committee or on its own motion.
Executive Sessions. The Committee may meet privately and may invite non-members to attend such meetings. The Committee may meet with representatives of the Investment Management Services department of the Funds' advisers, internal legal counsel of the Funds' advisers, members of the John Hancock Funds Risk & Investment Operations Committee (the "RIO Committee") and with representatives of the Funds' service providers, including the subadvisers, to discuss matters that relate to the areas for which the Committee has responsibility.
Specific Duties and Responsibilities
The Committee shall have the following duties and powers, to be exercised at such times and in such manner as the Committee shall determine:
1. Except where a Trust is legally required to nominate individuals recommended by another, to identify individuals qualified to serve as Independent Trustees of the Trusts, and to consider and recommend to the full Board nominations of individuals to serve as Trustees.
2. To consider, as it deems necessary or appropriate, the criteria for persons to fill existing or newly created Trustee vacancies. The Committee shall use the criteria and principles set forth in Annex A to guide its Trustee selection process.
3. To consider and recommend changes to the Board regarding the size, structure, and composition of the Board.
4. To evaluate, from time to time, and determine changes to the retirement policies for the Independent Trustees, as appropriate.
5. To periodically review the Board's committee structure and, in collaboration with the Chairs of the various Committees, the charters of the Board's committees, and
{N034544 7: 2} 2 |
recommend to the Board of Trustees changes to the committee structure and charters as it deems appropriate.
6. To retain and terminate any firm(s) to be used to identify or evaluate or assist in identifying or evaluating potential Independent Board nominees, subject to the Board's sole authority to approve the firm's fees and other retention terms.
7. To consider and determine the amount of compensation to be paid by the Trusts to the Independent Trustees, including the compensation of the Chair of the Board or any Vice-Chair of the Board and of Committee Chairs, and to address compensation-related matters. The Chair of the Board has been granted the authority to approve special compensation to Independent Trustees in recognition of any significant amount of additional time and service to the Trusts provided by them, subject to ratification of any such special compensation by the Committee at the next regular meeting of the Committee.
8. To coordinate and administer an annual self-evaluation of the Board, which will include, at a minimum, a review of its effectiveness in overseeing the number of Funds in the Fund complex and the effectiveness of its committee structure.
9. To review the Board Governance Procedures and recommend to the Board of Trustees changes to the Procedures as the Committee deems appropriate.
10. To report its activities to the full Board and to make such recommendations with respect to the matters described above and other matters as the Committee may deem necessary or appropriate.
Additional Responsibilities
The Committee will also perform other tasks assigned to it from time to time by the Chair of the Board or by the Board, and will report findings and recommendations to the Board, as appropriate.
Last revised:
6/12/13
{N034544 7: 2} 3 |
ANNEX A |
The Committee may take into account a wide variety of factors in considering Trustee candidates, including (but not limited to) the criteria set forth below. The Committee may determine that a candidate who does not satisfy these criteria in one or more respects should nevertheless be considered as a nominee if the Committee finds that the criteria satisfied by the candidate and the candidate's other qualifications demonstrate the appropriate level of fitness to serve.
General Criteria
1. Nominees should have a reputation for integrity, honesty and adherence to high ethical standards, and such other personal characteristics as a capacity for leadership and the ability to work well with others.
2. Nominees should have business, professional, academic, financial, accounting or other experience and qualifications which demonstrate that they will make a valuable contribution as Trustees.
3. Nominees should have a commitment to understand the Funds, and the responsibilities of a trustee/director of an investment company and to regularly attend and participate in meetings of the Board and its committees.
4. Nominees should have the ability to understand the sometimes conflicting interests of the various constituencies of the Funds, including shareholders and the investment adviser, and to act in the interests of all shareholders.
5. Nominees should not have, nor appear to have, a conflict of interest that would impair their ability to represent the interests of all the shareholders and to fulfill the responsibilities of a trustee.
6. Nominees should have experience on corporate or other institutional bodies having oversight responsibilities.
It is the intent of the Committee that at least one Independent Trustee be an "audit committee financial expert" as that term is defined in Item 3 of Form N-CSR.
{ N0345447; 2} |
Application of Criteria to Current Trustees
The re-nomination of current Trustees should not be viewed as automatic, but should be based on continuing qualification under the criteria set forth above based on, among other things, the current Trustee's contribution to the Board and any committee on which he or she serves.
Review of Nominations
1. The Committee believes that it is in the best interests of each Trust and its shareholders to obtain highly-qualified candidates to serve as members of the Board.
2. In nominating candidates who would be Independent Trustees, the Committee believes that no particular qualities or skills nor any specific minimum qualifications or disqualifications are controlling or paramount. The Committee shall take into consideration any such factors as it deems appropriate. These factors may include (but are not limited to) the person's character, integrity, judgment, skill, diversity and experience with investment companies and other organizations of comparable purpose, complexity and size and subject to similar legal restrictions and oversight; the interplay of the candidate's experience with the experience of other Board members; and the extent to which the candidate would be a desirable addition to the Board and any Committees thereof. Other factors that the Committee may take into consideration include a person's availability and commitment to attend meetings and perform his or her responsibilities; whether or not the person has or had any relationships that might impair or appear to impair his or her independence, such as any business, financial or family relationships with Fund management, the investment adviser and/or any subadviser of the Funds, as applicable, Fund service providers, or their affiliates or with Fund shareholders. The Committee will strive to achieve a group that reflects a diversity of experiences in respect of industries, professions and other experiences, and that is diversified as to gender and race.
3. While the Committee is solely responsible for the selection and recommendation to the Board of Independent Trustee candidates, the Committee may consider nominees recommended by any source, including shareholders, management, legal counsel and Board members, as it deems appropriate. The Committee may retain a professional search firm or a consultant to assist the Committee in a search for a qualified candidate. Any recommendations from shareholders shall be directed to the Secretary of the relevant Trust at such address as is set forth in the Trust's disclosure documents. Recommendations from management may be submitted to the Committee Chair. All recommendations shall include all information relating to such person that is required to be disclosed in solicitations of proxies for the election of Board members and as specified in the relevant Trust 's By-Laws, and must be accompanied by a written consent of the proposed candidate to stand for election if nominated for the Board and to serve if elected by shareholders.
{N0345447; 21 |
4. Any shareholder nomination must be submitted in compliance with all of the pertinent provisions of Rule 14a -8 under the Securities Exchange Act of 1934 in order to be considered by the Committee. In evaluating a nominee recommended by a shareholder, the Committee, in addition to the criteria discussed above, may consider the objectives of the shareholder in submitting that nomination and whether such objectives are consistent with the interests of all shareholders. If the Board determines to include a shareholder 's candidate among the slate of its designated nominees, the candidate's name will be placed on the Trust's proxy card. If the Board determines not to include such candidate among its designated nominees, and the shareholder has satisfied the requirements of Rule 14a -8, the shareholder's candidate will be treated as a nominee of the shareholder who originally nominated the candidate. In that case, the candidate will not be named on the proxy card distributed with the Trust's proxy statement.
5. As long as a current Independent Trustee continues, in the opinion of the Committee, to satisfy the criteria listed above, the Committee generally would favor the re-nomination of a current Trustee rather than a new candidate. Consequently, while the Committee will consider nominees recommended by shareholders to serve as trustees, the Committee may only act upon such recommendations if there is a vacancy on the Board, or the Committee determines that the selection of a new or additional Trustee is in the best interests of the relevant Trust. In the event that a vacancy arises or a change in Board membership is determined to be advisable, the Committee will, in addition to any shareholder recommendations, consider candidates identified by other means as discussed in this Annex A.
6. With respect to candidates for Independent Trustee, a biography of each candidate shall be acquired and shall be reviewed by counsel to the Independent Trustees and counsel to the Trust to dctem1ine the candidate's eligibility to serve as an Independent Trustee.
7. The Committee may from time to time establish specific requirements and/or additional factors to be considered for Independent Trustee candidates as it deems necessary or appropriate.
8. After its consideration of relevant factors, the Committee shall present its recommendation(s) to the full Board for its consideration.
l N0345447; 21 |
Appendix A | |
List of John Hancock Fund Trusts | |
John Hancock Financial Opportunities Fund | John Hancock Investors Trust |
John Hancock Bond Trust | John Hancock Municipal Securities Trust |
John Hancock California Tax-Free Income Fund | John Hancock Preferred Income Fund |
John Hancock Capital Series | John Hancock Preferred Income Fund II |
John Hancock Current Interest | John Hancock Preferred Income Fund Ill |
John Hancock Emerging Markets Income Fund | John Hancock Premium Dividend Fund |
John Hancock Flexible Income Opportunities Fund | John Hancock Series Trust |
John Hancock Funds II | John Hancock Sovereign Bond Fund |
John Hancock Funds Ill | John Hancock Strategic Diversified Income Fund |
John Hancock Hedged Equity & Income Fund | John Hancock Strategic Series |
John Hancock Income Securities Trust | John Hancock Tax-Advantaged Dividend Income Fund |
John Hancock Investment Trust | John Hancock Tax-Advantaged Global Shareholder Yield Fund |
John Hancock Investment Trust II | John Hancock Tax-Exempt Series Fund |
John Hancock Investment Trust Ill | John Hancock Variable Insurance Trust |
t N0345447; 2} |
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