| UNITED STATES | |
| SECURITIES AND EXCHANGE COMMISSION | |
| Washington, D.C. 20549 | |
| FORM N-Q | |
| QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS 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) | |
| Alfred P. Ouellette, Senior Counsel and Assistant Secretary | |
| 601 Congress Street | |
| Boston, Massachusetts 02210 | |
| (Name and address of agent for service) | |
| Registrant's telephone number, including area code: 617-663-4324 | |
| Date of fiscal year end: | December 31 |
| Date of reporting period: | September 30, 2008 |
ITEM 1. SCHEDULE OF INVESTMENTS
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Bonds 66.81% | $92,041,480 | ||||
| (Cost $108,880,712) | |||||
| Agricultural Products 0.38% | 519,447 | ||||
| Bunge Ltd. Finance Corp., | |||||
| Gtd Sr Note | 5.350 | 04/15/14 | BBB- | 555 | 519,447 |
| Airlines 1.74% | 2,391,126 | ||||
| Continental Airlines, Inc., | |||||
| Pass Thru Ctf Ser 1999-1 Class A | 6.545 | 02/02/19 | A- | 346 | 294,448 |
| Pass Thru Ctf Ser 2000-2 Class B | 8.307 | 04/02/18 | B+ | 391 | 310,863 |
| Pass Thru Ctf Ser 2001-1 Class C | 7.033 | 06/15/11 | B+ | 106 | 86,736 |
| Delta Air Lines, Inc., | |||||
| Sec Pass Thru Ctf Ser A | 6.821 | 08/10/22 | A- | 743 | 616,917 |
| Sr Pass Thru Ctf Ser 2002-1 | 6.417 | 07/02/12 | AA | 825 | 723,937 |
| Northwest Airlines, Inc., | |||||
| Gtd Collateralized Note Ser 2007-1 | 7.027 | 11/01/19 | BBB+ | 445 | 358,225 |
| Aluminum 0.72% | 989,625 | ||||
| CII Carbon, LLC, | |||||
| Gtd Sr Sub Note (S) | 11.125 | 11/15/15 | CCC+ | 1,015 | 989,625 |
| Auction Dealer 0.32% | 437,575 | ||||
| Sotheby's, | |||||
| Sr Note (S) | 7.750 | 06/15/15 | BBB- | 460 | 437,575 |
| Auto Parts & Equipment 0.84% | 1,160,175 | ||||
| Allison Transmission, Inc., | |||||
| Gtd Sr Note (S) | 11.000 | 11/01/15 | B- | 1,000 | 870,000 |
| Tenneco, Inc., | |||||
| Gtd Sr Sub Note | 8.625 | 11/15/14 | B | 365 | 290,175 |
| Automobile Manufacturers 0.12% | 158,700 | ||||
| General Motors Corp., | |||||
| Sr Note | 7.125 | 07/15/13 | B- | 345 | 158,700 |
| Automotive Retail 0.09% | 126,500 | ||||
| Avis Budget Car Rental LLC, | |||||
| Gtd Sr Note | 7.625 | 05/15/14 | B- | 200 | 126,500 |
| Brewers 0.32% | 440,489 | ||||
| Sabmiller PLC, | |||||
| Note (S) | 6.500 | 07/17/18 | BBB+ | 465 | 440,489 |
| Broadcasting & Cable TV 2.14% | 2,946,443 | ||||
| Canadian Satellite Radio Holdings, Inc., | |||||
| Sr Note (G) | 12.750 | 02/15/14 | CCC+ | 979 | 606,980 |
| Charter Communications Holdings II, LLC, | |||||
| Gtd Sr Note (S) | 10.250 | 10/01/13 | CAA2 | 447 | 371,010 |
| Comcast Cable Communications Holdings, Inc., | |||||
| Sr Note | 8.375 | 03/15/13 | BBB+ | 1,095 | 1,148,425 |
| Page 1 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Broadcasting & Cable TV (continued) | |||||
| Nexstar Broadcasting, Inc., | |||||
| Sr Sub Note | 7.000% | 01/15/14 | CCC | $340 | $255,000 |
| Time Warner Cable, Inc., | |||||
| Gtd Sr Note | 6.750 | 07/01/18 | BBB+ | 605 | 565,028 |
| Casinos & Gaming 4.90% | 6,745,163 | ||||
| Chukchansi Economic Development Authority, | |||||
| Sr Note (S) | 8.000 | 11/15/13 | B+ | 460 | 368,000 |
| Downstream Development Authority of the Quapaw | |||||
| Tribe of Oklahoma, | |||||
| Sr Sec Note (S) | 12.000 | 10/15/15 | B- | 500 | 362,500 |
| Fontainebleau Las Vegas Holdings, LLC, | |||||
| Note (S) | 10.250 | 06/15/15 | CCC | 995 | 278,600 |
| Greektown Holdings LLC, | |||||
| Sr Note (S) | 10.750 | 12/01/13 | D | 1,015 | 700,350 |
| Indianapolis Downs Capital LLC, | |||||
| Sr Sec Note (S) | 11.000 | 11/01/12 | CCC | 1,010 | 686,800 |
| Jacobs Entertainment, Inc., | |||||
| Gtd Sr Note | 9.750 | 06/15/14 | B | 500 | 335,000 |
| Little Traverse Bay Bands of Odawa Indians, | |||||
| Sr Note (S) | 10.250 | 02/15/14 | B- | 500 | 340,000 |
| MTR Gaming Group, Inc., | |||||
| Gtd Sr Sub Note Ser B | 9.000 | 06/01/12 | CCC | 290 | 203,000 |
| Pinnacle Entertainment, Inc., | |||||
| Sr Sub Note | 7.500 | 06/15/15 | B+ | 1,000 | 740,000 |
| Seminole Hard Rock Entertainment, | |||||
| Sr Sec Note (P)(S) | 5.319 | 03/15/14 | BB | 500 | 375,000 |
| Seminole Tribe of Florida, | |||||
| Bond (S) | 6.535 | 10/01/20 | BBB | 650 | 639,828 |
| Turning Stone Casino Resort Enterprise, | |||||
| Sr Note (S) | 9.125 | 09/15/14 | B+ | 1,540 | 1,401,400 |
| Waterford Gaming, LLC, | |||||
| Sr Note (S) | 8.625 | 09/15/14 | BB- | 333 | 314,685 |
| Commodity Chemicals 0.28% | 391,000 | ||||
| Sterling Chemicals, Inc., | |||||
| Gtd Sr Sec Note | 10.250 | 04/01/15 | B- | 400 | 391,000 |
| Construction & Farm Machinery & Heavy Trucks 0.34% | 465,000 | ||||
| Manitowoc Co., Inc., | |||||
| Gtd Sr Note | 7.125 | 11/01/13 | BB | 500 | 465,000 |
| Consumer Finance 1.47% | 2,018,141 | ||||
| CIT Group, Inc., | |||||
| Sr Note | 5.125 | 09/30/14 | A- | 255 | 125,755 |
| Sr Note | 5.000 | 02/13/14 | A- | 120 | 67,880 |
| Ford Motor Credit Co., | |||||
| Sr Note | 8.000 | 12/15/16 | B- | 140 | 88,519 |
| Sr Note | 9.875 | 08/10/11 | B- | 1,920 | 1,324,587 |
| SLM Corp., | |||||
| Sr Note Ser MTN | 8.450 | 06/15/18 | BBB- | 605 | 411,400 |
| Page 2 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Data Processing & Outsourced Services 0.32% | $443,922 | ||||
| Fiserv, Inc., | |||||
| Gtd Sr Note | 6.800% | 11/20/17 | BBB | $460 | 443,922 |
| Department Stores 0.62% | 855,783 | ||||
| J.C. Penney Co., Inc., | |||||
| Debenture | 7.650 | 08/15/16 | BBB- | 445 | 429,095 |
| Macy's Retail Holdings, Inc., | |||||
| Gtd Note | 7.875 | 07/15/15 | BBB- | 450 | 426,688 |
| Diversified Banks 2.91% | 4,011,508 | ||||
| Banco Mercantil del Norte SA, | |||||
| Sub Note (S) | 6.862 | 10/13/21 | Baa1 | 685 | 604,117 |
| Barclays Bank PLC, | |||||
| Bond (6.860% to 6-15-32 then variable) (S) | 6.860 | 09/29/49 | A+ | 1,655 | 1,255,430 |
| Chuo Mitsui Trust & Banking Co., | |||||
| Jr Sub Note (5.506% to 4-15-15 then variable) (S) | 5.506 | 12/15/49 | A2 | 940 | 700,965 |
| Natixis SA, | |||||
| Sub Bond (10.000% to 4-30-18 then variable) (S) | 10.000 | 04/30/49 | BBB+ | 420 | 389,382 |
| Northern Trust Co., | |||||
| Sub Note | 6.500 | 08/15/18 | AA- | 225 | 229,404 |
| Royal Bank of Scotland Group PLC, | |||||
| Jr Sub Bond (7.648% to 9-30-31 then variable) | 7.648 | 08/29/49 | BBB+ | 650 | 534,203 |
| Jr Sub Bond Ser MTN (7.640% to 9-29-17 then | |||||
| variable) | 7.640 | 03/31/49 | BBB+ | 400 | 298,007 |
| Diversified Chemicals 1.83% | 2,514,979 | ||||
| Mosiac Co., | |||||
| Sr Note (S) | 7.625 | 12/01/16 | BBB- | 480 | 490,429 |
| NOVA Chemicals Corp., | |||||
| Sr Note Ser MTN | 7.400 | 04/01/09 | B+ | 2,045 | 2,024,550 |
| Diversified Commercial & Professional Services 0.53% | 731,213 | ||||
| Hutchison Whampoa International Ltd., | |||||
| Gtd Sr Note (S) | 6.500 | 02/13/13 | A- | 750 | 731,213 |
| Diversified Financial Services 2.92% | 4,032,468 | ||||
| American General Finance Corp., | |||||
| Note Ser MTN | 6.900 | 12/15/17 | BBB | 1,470 | 681,627 |
| Erac USA Finance Co., | |||||
| Gtd Sr Note (S) | 6.375 | 10/15/17 | BBB | 465 | 369,594 |
| Huntington Capital III, | |||||
| Gtd Jr Sub Bond (6.650% to 5-15-17 then variable) | 6.650 | 05/15/37 | BBB- | 590 | 217,212 |
| Nelnet, Inc., | |||||
| Note (7.400% to 9-1-11 then variable) | 7.400 | 09/29/36 | BB+ | 715 | 482,890 |
| NiSource Finance Corp., | |||||
| Gtd Bond | 6.800 | 01/15/19 | BBB- | 440 | 399,670 |
| QBE Capital Funding II LP, | |||||
| Gtd Sub Bond (6.797% to 6-1-17 then variable) (S) | 6.797 | 06/01/49 | BBB | 695 | 554,865 |
| SMFG Preferred Capital, | |||||
| Sub Bond (6.078% to 1-25-17 then variable) (S) | 6.078 | 01/25/49 | BBB+ | 590 | 421,289 |
| Sovereign Capital Trust VI, | |||||
| Gtd Note | 7.908 | 06/13/36 | BB+ | 480 | 351,340 |
| TECO Finance, Inc., | |||||
| Gtd Sr Note | 6.572 | 11/01/17 | BB+ | 233 | 211,446 |
| Sr Note | 7.000 | 05/01/12 | BB+ | 337 | 342,535 |
| Page 3 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Diversified Metals & Mining 0.35% | $477,533 | ||||
| Rio Tinto Finance (USA) Ltd., | |||||
| Gtd Note | 6.500 | 07/15/18 | BBB+ | $505 | 477,533 |
| Diversified REIT's 0.55% | 763,551 | ||||
| HRPT Properties Trust, | |||||
| Sr Note | 6.650 | 01/15/18 | BBB | 285 | 243,937 |
| ProLogis, | |||||
| Sr Sec Note | 6.625 | 05/15/18 | BBB+ | 605 | 519,614 |
| Diversified Support Services 0.39% | 537,099 | ||||
| Ingersoll-Rand Global Holding Co., Ltd. | 6.875 | 08/15/18 | BBB+ | 545 | 537,099 |
| Drug Retail 0.97% | 1,337,199 | ||||
| CVS Caremark Corp., | |||||
| Jr Sub Bond (6.302% to 6-1-12 then variable) | 6.302 | 06/01/37 | BBB- | 990 | 790,521 |
| Sr Note | 5.750 | 06/01/17 | BBB+ | 585 | 546,678 |
| Electric Utilities 5.35% | 7,367,489 | ||||
| AES Eastern Energy LP, | |||||
| Sr Pass Thru Ctf Ser 1999-A | 9.000 | 01/02/17 | BB+ | 958 | 1,005,710 |
| Beaver Valley Funding, | |||||
| Sec Lease Obligation Bond | 9.000 | 06/01/17 | BBB- | 680 | 726,968 |
| BVPS II Funding Corp., | |||||
| Collateralized Lease Bond | 8.890 | 06/01/17 | BBB- | 699 | 715,351 |
| Constellation Energy Group, | |||||
| Sr Note | 4.550 | 06/15/15 | BBB | 945 | 810,238 |
| FPL Energy National Wind, | |||||
| Sr Sec Note (S) | 5.608 | 03/10/24 | BBB- | 323 | 306,137 |
| Indiantown Cogeneration LP, | |||||
| 1st Mtg Note Ser A-9 | 9.260 | 12/15/10 | BB+ | 255 | 261,945 |
| IPALCO Enterprises, Inc., | |||||
| Sr Sec Note | 8.625 | 11/14/11 | BB | 325 | 326,625 |
| Midwest Generation LLC, | |||||
| Gtd Pass Thru Ctf | 8.560 | 01/02/16 | BB+ | 330 | 339,638 |
| Pepco Holdings, Inc., | |||||
| Note | 6.450 | 08/15/12 | BBB- | 565 | 562,548 |
| PNPP II Funding Corp., | |||||
| Debenture | 9.120 | 05/30/16 | BBB- | 408 | 418,020 |
| Texas Competitive Electric Holdings Co. LLC, | |||||
| Gtd Sr Note Ser A (S) | 10.250 | 11/01/15 | CCC | 1,000 | 902,500 |
| Sec Bond | 7.460 | 01/01/15 | CCC | 467 | 421,005 |
| Waterford 3 Funding Corp., | |||||
| Sec Lease Obligation Bond | 8.090 | 01/02/17 | BBB | 563 | 570,804 |
| Electronic Equipment Manufacturers 0.57% | 791,038 | ||||
| Thomas & Betts Corp., | |||||
| Sr Note | 7.250 | 06/01/13 | BBB | 775 | 791,038 |
| Environmental & Facilities Services 0.12% | 165,413 | ||||
| Blaze Recycling & Metals, Inc., | |||||
| Gtd Sr Sec Note (G)(S) | 10.875 | 07/15/12 | B | 165 | 165,413 |
| Food Distributors 0.66% | 911,807 | ||||
| Independencia International Ltd., | |||||
| Gtd Sr Bond (S) | 9.875 | 01/31/17 | B | 1,000 | 810,000 |
| Gtd Sr Note (S) | 9.875 | 05/15/15 | B | 120 | 101,807 |
| Page 4 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Gas Utilities 0.30% | $414,941 | ||||
| Southern Union Co., | |||||
| Jr Sub Note, Ser A (7.200% to 11-1-11 then | |||||
| variable) | 7.200% | 11/01/66 | BB | $565 | 414,941 |
| Health Care Distributors 0.29% | 400,137 | ||||
| Covidien International Finance SA, | |||||
| Gtd Sr Note | 6.000 | 10/15/17 | A- | 405 | 400,137 |
| Health Care Facilities 0.48% | 660,250 | ||||
| Community Health Systems, Inc., | |||||
| Gtd Sr Sub Note | 8.875 | 07/15/15 | B | 695 | 660,250 |
| Health Care Services 1.21% | 1,668,936 | ||||
| Humana, Inc., | |||||
| Sr Note | 8.150 | 06/15/38 | BBB | 755 | 713,936 |
| Sun Healthcare Group, Inc., | |||||
| Gtd Sr Sub Note | 9.125 | 04/15/15 | CCC+ | 1,000 | 955,000 |
| Household Products 0.24% | 329,875 | ||||
| Yankee Candle Co., Inc., | |||||
| Gtd Sr Sub Note | 8.500 | 02/15/15 | B- | 455 | 329,875 |
| Housewares & Specialties 0.24% | 325,000 | ||||
| Vitro SA de CV, | |||||
| Gtd Sr Note | 9.125 | 02/01/17 | B | 500 | 325,000 |
| Industrial Conglomerates 0.85% | 1,176,444 | ||||
| Grupo Kuo SAB de CV, | |||||
| Gtd Sr Note (S) | 9.750 | 10/17/17 | BB- | 975 | 926,250 |
| Tyco Electronics Group SA, | |||||
| Gtd Sr Note | 6.550 | 10/01/17 | BBB | 260 | 250,194 |
| Integrated Oil & Gas 0.75% | 1,036,159 | ||||
| Petro-Canada, | |||||
| Debenture | 9.250 | 10/15/21 | BBB | 1,000 | 1,036,159 |
| Integrated Telecommunication Services 3.78% | 5,207,772 | ||||
| AT&T Inc., | |||||
| Sr Note | 6.400 | 05/15/38 | A | 495 | 415,414 |
| Bellsouth Corp., | |||||
| Debenture | 6.300 | 12/15/15 | A | 869 | 866,561 |
| Cincinnati Bell, Inc., | |||||
| Gtd Sr Sub Note | 8.375 | 01/15/14 | B- | 1,025 | 891,750 |
| Qwest Corp., | |||||
| Sr Note | 7.875 | 09/01/11 | BBB- | 445 | 427,200 |
| Sprint Capital Corp., | |||||
| Gtd Sr Note | 8.375 | 03/15/12 | BB | 500 | 450,000 |
| Gtd Sr Note | 6.900 | 05/01/19 | BB | 1,000 | 775,000 |
| Telecom Italia Capital, | |||||
| Gtd Sr Note | 7.721 | 06/04/38 | BBB | 765 | 634,047 |
| Verizon Communications, Inc., | |||||
| Bond | 6.900 | 04/15/38 | A | 405 | 359,000 |
| West Corp., | |||||
| Gtd Sr Sub Note | 11.000 | 10/15/16 | B- | 540 | 388,800 |
| Page 5 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Investment Banking & Brokerage 4.09% | $5,631,853 | ||||
| Bear Stearns Cos., Inc., | |||||
| Sr Note | 7.250% | 02/01/18 | AA- | $1,000 | 962,375 |
| Citigroup, Inc., | |||||
| Jr Sub Bond (8.400% to 4-30-18 then variable) | 8.400 | 04/29/49 | A | 770 | 524,108 |
| Sr Note | 6.875 | 03/05/38 | AA- | 460 | 376,264 |
| Sr Note | 6.125 | 05/15/18 | AA- | 1,100 | 910,805 |
| Goldman Sachs Group, Inc., | |||||
| Sr Note | 5.125 | 01/15/15 | AA- | 760 | 627,342 |
| JPMorgan Chase & Co., | |||||
| Jr Sub Note Ser 1 (7.900% to 4-30-18 then variable) 7.900 | 12/31/49 | A | 655 | 551,432 | |
| Merrill Lynch & Co., Inc., | |||||
| Jr Sub Bond | 7.750 | 05/14/38 | A- | 495 | 416,037 |
| Mizuho Financial Group, Ltd., | |||||
| Gtd Sub Bond | 8.375 | 12/29/49 | Aa3 | 750 | 643,695 |
| Morgan Stanley Co., | |||||
| Sr Note | 5.375 | 10/15/15 | A+ | 1,000 | 619,795 |
| IT Consulting & Other Services 0.28% | 392,184 | ||||
| NCR Corp., | |||||
| Note | 7.125 | 06/15/09 | BBB- | 390 | 392,184 |
| Life & Health Insurance 0.33% | 451,000 | ||||
| Lincoln National Corp., | |||||
| Jr Sub Bond (6.050% to 4-20-17 then variable) | 6.050 | 04/20/67 | A- | 250 | 165,000 |
| Symetra Financial Corp., | |||||
| Jr Sub Bond (8.300% to 10-1-17 then variable) (S) | 8.300 | 10/15/37 | BB | 440 | 286,000 |
| Marine 1.04% | 1,438,000 | ||||
| CMA CGM SA, | |||||
| Sr Note (S) | 7.250 | 02/01/13 | BB+ | 700 | 518,000 |
| Navios Maritime Holdings, Inc., | |||||
| Sr Note | 9.500 | 12/15/14 | B+ | 1,000 | 920,000 |
| Metal & Glass Containers 0.57% | 790,241 | ||||
| Commercial Metals Co., | |||||
| Sr Note | 7.350 | 08/15/18 | BBB | 310 | 292,741 |
| Owens-Brockway Glass Container, Inc., | |||||
| Gtd Sr Note | 8.250 | 05/15/13 | BB+ | 500 | 497,500 |
| Movies & Entertainment 0.49% | 681,780 | ||||
| Cinemark, Inc., | |||||
| Sr Disc Note (Zero to 3-15-09 then 9.750%) | Zero | 03/15/14 | CCC+ | 245 | 235,506 |
| Rogers Cable, Inc., | |||||
| Gtd Sr Sec Note | 6.750 | 03/15/15 | BBB- | 455 | 446,274 |
| Multi-Line Insurance 1.25% | 1,725,468 | ||||
| Genworth Financial, Inc., | |||||
| Jr Sub Note (6.150% to 11-15-16 then variable) | 6.150 | 11/15/66 | BBB+ | 430 | 188,310 |
| Horace Mann Educators Corp., | |||||
| Sr Note | 6.850 | 04/15/16 | BBB | 395 | 412,891 |
| Liberty Mutual Group, | |||||
| Bond (S) | 7.500 | 08/15/36 | BBB- | 885 | 698,455 |
| Gtd Bond (S) | 7.800 | 03/15/37 | BB | 705 | 425,812 |
| Page 6 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Multi-Media 0.74% | $1,015,375 | ||||
| News America Holdings, Inc., | |||||
| Gtd Note | 7.750% | 01/20/24 | BBB+ | $1,020 | 1,015,375 |
| Multi-Utilities 0.44% | 605,407 | ||||
| CalEnergy Co., Inc., | |||||
| Sr Bond | 8.480 | 09/15/28 | BBB+ | 550 | 605,407 |
| Office Services & Supplies 0.46% | 632,282 | ||||
| Xerox Corp., | |||||
| Sr Note | 6.750 | 02/01/17 | BBB | 670 | 632,282 |
| Oil & Gas Drilling 0.38% | 519,136 | ||||
| Allis-Chalmers Energy, Inc., | |||||
| Sr Note | 8.500 | 03/01/17 | B+ | 335 | 286,425 |
| Delek & Avner-Yam Tethys Ltd., | |||||
| Sr Sec Note (S) | 5.326 | 08/01/13 | BBB- | 231 | 232,711 |
| Oil & Gas Exploration & Production 0.49% | 672,164 | ||||
| McMoRan Exploration Co., | |||||
| Gtd Sr Note | 11.875 | 11/15/14 | B- | 340 | 323,000 |
| Petro-Canada, | |||||
| Sr Note | 6.050 | 05/15/18 | BBB | 400 | 349,164 |
| Oil & Gas Refining & Marketing 0.35% | 475,676 | ||||
| Enterprise Products Operating LP, | |||||
| Gtd Jr Sub Note (7.034% to 1-15-18 then variable) | 7.034 | 01/15/68 | BB | 590 | 475,676 |
| Oil & Gas Storage & Transportation 2.65% | 3,653,324 | ||||
| Markwest Energy Partners LP, | |||||
| Gtd Sr Note Ser B | 8.500 | 07/15/16 | B+ | 545 | 515,025 |
| NGPL PipeCo LLC, | |||||
| Sr Note (S) | 7.119 | 12/15/17 | BBB- | 1,580 | 1,499,624 |
| Plains All American Pipeline LP, | |||||
| Sr Note (S) | 6.500 | 05/01/18 | BBB- | 345 | 311,224 |
| TEPPCO Partners LP, | |||||
| Gtd Jr Sub Note | 7.000 | 06/01/67 | BB | 695 | 583,451 |
| Williams Partners LP, | |||||
| Gtd Sr Note | 7.250 | 02/01/17 | BBB- | 800 | 744,000 |
| Packaged Foods & Meats 0.60% | 820,800 | ||||
| Minerva Overseas Ltd., | |||||
| Gtd Note (S) | 9.500 | 02/01/17 | B | 1,080 | 820,800 |
| Paper Packaging 1.14% | 1,569,050 | ||||
| Graphic Packaging International, Inc., | |||||
| Gtd Sr Note | 8.500 | 08/15/11 | B- | 445 | 422,750 |
| Smurfit-Stone Container Corp., | |||||
| Sr Note | 8.375 | 07/01/12 | B- | 1,000 | 840,000 |
| Sr Note | 8.000 | 03/15/17 | B- | 245 | 191,100 |
| U.S. Corrugated, Inc., | |||||
| Sr Sec Note | 10.000 | 06/01/13 | B | 160 | 115,200 |
| Paper Products 1.23% | 1,696,454 | ||||
| International Paper Co., | |||||
| Sr Note | 7.950 | 06/15/18 | BBB | 505 | 496,219 |
| Page 7 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Paper Products (continued) | |||||
| Plum Creek Timber Co., Inc., | |||||
| Gtd Note | 5.875% | 11/15/15 | BBB- | $365 | $340,235 |
| Verso Paper Holdings LLC, | |||||
| Gtd Sr Note Ser B | 9.125 | 08/01/14 | B+ | 1,000 | 860,000 |
| Property & Casualty Insurance 0.75% | 1,034,740 | ||||
| Ohio Casualty Corp., | |||||
| Sr Note | 7.300 | 06/15/14 | BBB- | 750 | 765,868 |
| Progressive Corp., | |||||
| Jr Sub Deb (6.700% to 6-1-17 then variable) | 6.700 | 06/15/37 | A- | 330 | 268,872 |
| Publishing 0.92% | 1,278,416 | ||||
| Idearc, Inc., | |||||
| Gtd Sr Note (S) | 8.000 | 11/15/16 | B- | 1,055 | 287,488 |
| New York Times Co., | |||||
| Sr Note | 4.500 | 03/15/10 | BB- | 650 | 627,628 |
| R.H. Donnelley Corp., | |||||
| Sr Disc Note Ser A-1 | 6.875 | 01/15/13 | B- | 200 | 78,000 |
| Sr Note | 8.875 | 10/15/17 | B- | 495 | 168,300 |
| Sr Disc Note Ser A-2 | 6.875 | 01/15/13 | B- | 300 | 117,000 |
| Real Estate Management & Development 1.24% | 1,711,378 | ||||
| Health Care Realty Trust, Inc., | |||||
| Sr Note | 8.125 | 05/01/11 | BBB- | 175 | 180,310 |
| Health Care REIT, Inc., | |||||
| Sr Note | 6.200 | 06/01/16 | BBB- | 505 | 444,180 |
| Post Apartment Homes, | |||||
| Sr Note | 5.125 | 10/12/11 | BBB | 870 | 846,888 |
| Ventas Realty LP/Capital Corp., | |||||
| Sr Note | 6.625 | 10/15/14 | BBB- | 250 | 240,000 |
| Regional Banks 0.64% | 880,297 | ||||
| Capital One Financial Corp., | |||||
| Sr Note | 6.750 | 09/15/17 | BBB+ | 1,000 | 880,297 |
| Semiconductors 0.50% | 690,000 | ||||
| Freescale Semiconductor, Inc., | |||||
| Gtd Sr Note | 8.875 | 12/15/14 | B- | 1,000 | 690,000 |
| Specialized Finance 2.47% | 3,399,273 | ||||
| American Express Credit Co., | |||||
| Sr Note Ser C | 7.300 | 08/20/13 | A+ | 670 | 646,233 |
| Astoria Depositor Corp., | |||||
| Pass Thru Ctf Ser B (G)(S) | 8.144 | 05/01/21 | BB | 1,000 | 921,250 |
| Bosphorous Financial Services, | |||||
| Sec Floating Rate Note (P)(S) | 4.604 | 02/15/12 | Baa2 | 438 | 422,325 |
| Drummond Co., Inc., | |||||
| Sr Note (S) | 7.375 | 02/15/16 | BB- | 290 | 245,775 |
| ESI Tractebel Acquisition Corp., | |||||
| Gtd Sec Bond Ser B | 7.990 | 12/30/11 | BB | 746 | 753,460 |
| Graftech Finance, Inc., | |||||
| Gtd Sr Note | 10.250 | 02/15/12 | BB | 41 | 42,230 |
| Page 8 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Specialized Finance (continued) | |||||
| USB Realty Corp., | |||||
| Perpetual Bond (6.091% to 1-15-12 then variable) (S) | 6.091% | 12/22/49 | A+ | $800 | $368,000 |
| Specialty Chemicals 0.99% | 1,362,300 | ||||
| American Pacific Corp., | |||||
| Gtd Sr Note | 9.000 | 02/01/15 | B+ | 590 | 572,300 |
| Momentive Performance, | |||||
| Gtd Sr Note | 9.750 | 12/01/14 | B | 1,000 | 790,000 |
| Tobacco 1.04% | 1,425,728 | ||||
| Alliance One International, Inc., | |||||
| Gtd Sr Note | 11.000 | 05/15/12 | B+ | 175 | 171,500 |
| Gtd Sr Note | 8.500 | 05/15/12 | B+ | 245 | 226,625 |
| Reynolds American, Inc., | |||||
| Sr Sec Note | 7.250 | 06/01/13 | BBB | 1,000 | 1,027,603 |
| Wireless Telecommunication Services 1.57% | 2,166,398 | ||||
| Crown Castle Towers LLC, | |||||
| Sub Bond Ser 2005-1A Class D (S) | 5.612 | 06/15/35 | Baa2 | 1,340 | 1,259,198 |
| Digicel Group Ltd., | |||||
| Sr Note (S) | 8.875 | 01/15/15 | Caa1 | 1,080 | 907,200 |
| Credit | |||||
| Issuer, description | rating (A) | Shares | Value | ||
| Preferred Stocks 2.82% | $3,886,259 | ||||
| (Cost $5,106,105) | |||||
| Agricultural Products 0.79% | 1,093,750 | ||||
| Ocean Spray Cranberries, Inc., Ser A (S) | BBB- | 12,500 | 1,093,750 | ||
| Investment Banking & Brokerage 0.37% | 504,659 | ||||
| Merrill Lynch & Co., Inc., 8.625%, Ser MER | BBB+ | 26,575 | 504,659 | ||
| Real Estate Investment Trusts 0.47% | 652,000 | ||||
| Public Storage REIT, Inc., 6.50%, Depositary Shares, Ser W | BBB | 40,000 | 652,000 | ||
| Real Estate Management & Development 0.71% | 976,250 | ||||
| Apartment Investment & Management Co., 8.00%, Ser T | B+ | 55,000 | 976,250 | ||
| Wireless Telecommunication Services 0.48% | 659,600 | ||||
| Telephone & Data Systems, Inc., 7.60% | BBB- | 40,000 | 659,600 | ||
| Par value | |||||
| Issuer, description, maturity date | (000) | Value | |||
| Tranche Loans 0.36% | $490,000 | ||||
| (Cost $495,000) | |||||
| Hotels, Resorts & Cruise Lines 0.36% | 490,000 | ||||
| East Valley Tourist Development Authority, | |||||
| Tranche (Facility LN5501750) 8-6-12 | $500 | 490,000 |
| Page 9 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| U.S. Government & agency securities 52.84% | $72,802,356 | ||||
| (Cost $72,748,386) | |||||
| U.S. Government Agency 52.84% | 72,802,356 | ||||
| Federal Home Loan Mortgage Corp., | |||||
| 30 Yr Pass Thru Ctf | 11.250% | 01/01/16 | AAA | $12 | 13,361 |
| 30 Yr Pass Thru Ctf | 6.000 | 05/01/37 | AAA | 3,783 | 3,830,997 |
| 30 Yr Pass Thru Ctf | 6.000 | 08/01/37 | AAA | 3,270 | 3,312,549 |
| 30 Yr Pass Thru Ctf | 6.000 | 05/01/38 | AAA | 905 | 916,565 |
| 30 Yr Pass Thru Ctf | 6.000 | 07/01/38 | AAA | 2,453 | 2,484,051 |
| 30 Yr Pass Thru Ctf | 5.500 | 04/01/33 | AAA | 1,446 | 1,441,654 |
| Federal National Mortgage Assn., | |||||
| 15 Yr Pass Thru Ctf | 7.000 | 09/01/12 | AAA | 2 | 2,268 |
| 30 Yr Pass Thru Ctf | 6.000 | 09/01/36 | AAA | 13,442 | 13,621,473 |
| 30 Yr Pass Thru Ctf | 6.000 | 07/01/37 | AAA | 2,777 | 2,814,185 |
| 30 Yr Pass Thru Ctf | 6.000 | 01/01/38 | AAA | 8,309 | 8,420,008 |
| 30 Yr Pass Thru Ctf | 5.500 | 10/01/33 | AAA | 10,000 | 9,971,880 |
| 30 Yr Pass Thru Ctf | 5.500 | 01/01/36 | AAA | 1,976 | 1,971,219 |
| 30 Yr Pass Thru Ctf | 5.500 | 02/01/36 | AAA | 3,784 | 3,774,352 |
| 30 Yr Pass Thru Ctf | 5.500 | 03/01/37 | AAA | 4,151 | 4,139,357 |
| 30 Yr Pass Thru Ctf | 5.500 | 06/01/37 | AAA | 4,841 | 4,827,510 |
| 30 Yr Pass Thru Ctf | 5.500 | 12/01/37 | AAA | 4,460 | 4,447,164 |
| 30 Yr Pass Thru Ctf | 5.500 | 07/01/38 | AAA | 4,209 | 4,197,320 |
| Note | 6.000 | 05/30/25 | AAA | 1,720 | 1,696,881 |
| Government National Mortgage Assn., | |||||
| 30 Yr Pass Thru Ctf | 10.000 | 11/15/20 | AAA | 4 | 4,847 |
| 30 Yr Pass Thru Ctf | 9.500 | 01/15/21 | AAA | 4 | 4,556 |
| 30 Yr Pass Thru Ctf | 9.500 | 02/15/25 | AAA | 12 | 14,047 |
| Small Business Administration CMBS Trust, | |||||
| Sub Bond Ser 2005-1A Class D (S) | 6.219 | 11/15/35 | Baa2 | 225 | 201,058 |
| Sub Bond Ser 2005-1A Class E (S) | 6.706 | 11/15/35 | Baa3 | 200 | 177,148 |
| Sub Bond Ser 2006-1A Class H (S) | 7.389 | 11/15/36 | Ba3 | 365 | 316,039 |
| Sub Bond Ser 2006-1A Class J (S) | 7.825 | 11/15/36 | B1 | 220 | 201,867 |
| Collateralized Mortgage Obligation 21.41% | $29,498,212 | ||||
| (Cost $42,335,943) | |||||
| Collateralized Mortgage Obligation 21.41% | 29,498,212 | ||||
| American Home Mortgage Assets, | |||||
| Mtg Pass Thru Ctf Ser 2006-6 Class XP IO | 2.941% | 12/25/46 | BBB | $13,386 | 535,444 |
| Mtg Pass Thru Ctf Ser 2007-5 Class XP IO | 3.420 | 06/25/47 | AAA | 9,597 | 575,838 |
| American Home Mortgage Investment Trust, | |||||
| Mtg Pass Thru Ctf Ser 2007-1 Class GIOP IO | 2.078 | 05/25/47 | AAA | 8,013 | 445,704 |
| American Tower Trust, | |||||
| Mtg Pass Thru Ctf Ser 2007-1A Class D (S) | 5.957 | 04/15/37 | BBB | 865 | 774,648 |
| Banc of America Commercial Mortgage, Inc., | |||||
| Mtg Pass Thru Ctf Ser 2005-6 Class A4 (P) | 5.180 | 09/10/47 | AAA | 300 | 272,285 |
| Banc of America Funding Corp., | |||||
| Mtg Pass Thru Ctf Ser 2006-B Class 6A1 | 5.886 | 03/20/36 | A | 947 | 804,123 |
| Mtg Pass Thru Ctf Ser 2006-D Class 6B2 | 5.942 | 05/20/36 | CCC | 1,825 | 641,805 |
| Bear Stearns Adjustable Rate Mortgage Trust, | |||||
| Mtg Pass Thru Ctf Ser 2005-1 Class B2 (P) | 5.306 | 03/25/35 | AA+ | 808 | 439,392 |
| Page 10 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Collateralized Mortgage Obligation (continued) | |||||
| Bear Stearns Alt-A Trust, | |||||
| Mtg Pass Thru Ctf Ser 2005-3 Class B2 (P) | 5.440% | 04/25/35 | AA+ | $553 | $212,913 |
| Mtg Pass Thru Ctf Ser 2006-4 Class 3B1 (P) | 6.256 | 07/25/36 | CCC | 2,522 | 52,146 |
| Bear Stearns Commercial Mortgage Securities, Inc., | |||||
| Mtg Pass Thru Ctf Ser 2006-PW14 Class D (S) | 5.412 | 12/11/38 | A | 655 | 373,387 |
| Citigroup Mortgage Loan Trust, Inc., | |||||
| Mtg Pass Thru Ctf Ser 2005-10 Class 1A5A (P) | 5.839 | 12/25/35 | AAA | 711 | 507,265 |
| Mtg Pass Thru Ctf Ser 2005-5 Class 2A3 | 5.000 | 08/25/35 | AAA | 441 | 394,123 |
| Citigroup/Deutsche Bank Commercial Mortgage | |||||
| Trust, | |||||
| Mtg Pass Thru Ctf Ser 2005-CD1 Class C (P) | 5.225 | 07/15/44 | AA | 295 | 218,702 |
| ContiMortgage Home Equity Loan Trust, | |||||
| Mtg Pass Thru Ctf Ser 1995-2 Class A-5 | 8.100 | 08/15/25 | BB | 66 | 54,659 |
| Countrywide Alternative Loan Trust, | |||||
| Mtg Pass Thru Ctf Ser 2005-59 Class 2X IO | 3.188 | 11/20/35 | AAA | 10,587 | 363,920 |
| Mtg Pass Thru Ctf Ser 2006-0A10 Class XPP IO | 1.833 | 08/25/46 | AAA | 5,421 | 206,694 |
| Mtg Pass Thru Ctf Ser 2006-0A12 Class X IO | 2.759 | 09/20/46 | AAA | 17,412 | 761,782 |
| Mtg Pass Thru Ctf Ser 2006-11CB Class 3A1 | 6.500 | 05/25/36 | A3 | 2,805 | 1,782,057 |
| Crown Castle Towers LLC, | |||||
| Mtg Pass Thru Ctf Ser 2006-1A Class G (S) | 6.795 | 11/15/36 | Ba2 | 3,000 | 2,585,811 |
| DB Master Finance LLC, | |||||
| Mtg Pass Thru Ctf Ser 2006-1-M1 (S) | 8.285 | 06/20/31 | BB | 340 | 254,704 |
| Dominos Pizza Master Issuer LLC, | |||||
| Mtg Pass Thru Ctf Ser 2007-1-M1 (S) | 7.629 | 04/25/37 | BB | 1,000 | 625,000 |
| DSLA Mortgage Loan Trust, | |||||
| Mtg Pass Thru Ctf Ser 2005-AR5 Class X2 IO | 2.348 | 08/19/45 | AAA | 26,775 | 778,138 |
| First Horizon Alternative Mortgage Securities, | |||||
| Mtg Pass Thru Ctf Ser 2004-AA5 Class B1 (P) | 5.213 | 12/25/34 | AA | 419 | 247,591 |
| Mtg Pass Thru Ctf Ser 2006-AA2 Class B1 (P) | 6.139 | 05/25/36 | AA | 1,544 | 124,331 |
| GSR Mortgage Loan Trust, | |||||
| Mtg Pass Thru Ctf Ser 2004-9 Class B1 (G)(P) | 4.526 | 08/25/34 | AA | 861 | 668,507 |
| Mtg Pass Thru Ctf Ser 2006-4F Class 6A1 | 6.500 | 05/25/36 | BB | 3,607 | 2,904,805 |
| HarborView Mortgage Loan Trust, | |||||
| Mtg Pass Thru Ctf Ser 2005-8 Class 1X IO | 1.781 | 09/19/35 | AAA | 7,329 | 146,571 |
| Mtg Pass Thru Ctf Ser 2007-3 Class ES IO (G) | 0.350 | 05/19/47 | BB | 23,407 | 146,291 |
| Mtg Pass Thru Ctf Ser 2007-4 Class ES IO (G) | 0.350 | 07/19/47 | BB | 23,563 | 147,272 |
| Mtg Pass Thru Ctf Ser 2007-6 Class ES IO (G)(S) | 0.343 | 08/19/37 | BB | 16,517 | 103,232 |
| Harborview NIM Corp., | |||||
| Mtg Pass Thru Ctf Ser 2006-9A Class N2 (G)(S) | 8.350 | 11/19/36 | BBB- | 323 | 226,196 |
| Indymac Index Mortgage Loan Trust, | |||||
| Mtg Pass Thru Ctf Ser 2004-AR13 Class B1 | 5.296 | 01/25/35 | AA | 333 | 167,074 |
| Mtg Pass Thru Ctf Ser 2005-AR18 Class 1X IO | 2.730 | 10/25/36 | AAA | 15,137 | 349,666 |
| Mtg Pass Thru Ctf Ser 2005-AR18 Class 2X IO | 2.446 | 10/25/36 | AAA | 15,259 | 219,725 |
| Mtg Pass Thru Ctf Ser 2005-AR5 Class B1 (P) | 5.463 | 05/25/35 | AA | 442 | 213,775 |
| Mtg Pass Thru Ctf Ser 2006-AR19 Class 1B1 (P) | 6.335 | 08/25/36 | B | 452 | 41,332 |
| JPMorgan Chase Commercial Mortgage Security Corp., | |||||
| Mtg Pass Thru Ctf Ser 2005-LDP4 Class B (P) | 5.129 | 10/15/42 | Aa2 | 2,035 | 1,373,841 |
| JPMorgan Mortgage Trust, | |||||
| Mtg Pass Thru Ctf Ser 2005-S3 Class 2A2 | 5.500 | 01/25/21 | AAA | 774 | 717,755 |
| Luminent Mortgage Trust, | |||||
| Mtg Pass Thru Ctf Ser 2006-1 Class X IO | 2.870 | 04/25/36 | AAA | 22,429 | 448,578 |
| Merrill Lynch Mortgage Investors Trust, | |||||
| Mtg Pass Thru Ctf Ser 2006-AF1 Class MF1 (P) | 6.150 | 08/25/36 | CCC | 1,205 | 406,876 |
| Page 11 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
| Interest | Maturity | Credit | Par value | ||
| Issuer, description | rate | date | rating (A) | (000) | Value |
| Collateralized Mortgage Obligation (continued) | |||||
| MLCC Mortgage Investors, Inc., | |||||
| Mtg Pass Thru Ctf Ser 2007-3 Class M1 (P) | 5.935% | 09/25/37 | AA | $420 | $293,951 |
| Mtg Pass Thru Ctf Ser 2007-3 Class M2 (P) | 5.935 | 09/25/37 | A | 155 | 122,507 |
| Mtg Pass Thru Ctf Ser 2007-3 Class M3 (P) | 5.935 | 09/25/37 | BBB | 105 | 72,839 |
| Morgan Stanley Capital I, | |||||
| Mtg Pass Thru Ctf Ser 2005-HQ7 Class A4 (P) | 5.208 | 11/14/42 | AAA | 840 | 774,127 |
| Mtg Pass Thru Ctf Ser 2006-IQ12 Class E (P) | 5.538 | 12/15/43 | A+ | 640 | 367,475 |
| Provident Funding Mortgage Loan Trust, | |||||
| Mtg Pass Thru Ctf Ser 2005-1 Class B1 (P) | 4.819 | 05/25/35 | AA | 415 | 320,434 |
| Residential Accredit Loans, Inc., | |||||
| Mtg Pass Thru Ctf Ser 2005-QA12 Class NB5 (P) | 5.957 | 12/25/35 | AAA | 3,144 | 2,295,271 |
| Washington Mutual, Inc., | |||||
| Mtg Pass Thru Ctf Ser 2005-6 Class 1CB | 6.500 | 08/25/35 | AAA | 445 | 345,147 |
| Mtg Pass Thru Ctf Ser 2005-AR4 Class B1 (P) | 4.668 | 04/25/35 | AA | 1,510 | 1,009,181 |
| Mtg Pass Thru Ctf Ser 2007-0A4 Class XPPP IO | 0.834 | 04/25/47 | Aaa | 19,262 | 240,778 |
| Mtg Pass Thru Ctf Ser 2007-0A5 Class 1XPP IO | 0.873 | 08/07/47 | Aaa | 44,646 | 502,273 |
| Mtg Pass Thru Ctf Ser 2007-0A5 Class 2XPP IO | 0.813 | 06/25/47 | Aaa | 51,181 | 471,826 |
| Mtg Pass Thru Ctf Ser 2007-0A6 Class 1XPP IO | 0.803 | 07/25/47 | Aaa | 25,948 | 291,919 |
| Mtg Pass Thru Ctf Ser 2007-1 Class B1 (P) | 6.198 | 02/25/37 | CCC | 567 | 76,526 |
| Asset Backed Securities 0.94% | $1,294,405 | ||||
| (Cost $1,325,198) | |||||
| Asset Backed Securities 0.94% | 1,294,405 | ||||
| American Honda Fin Corp., | |||||
| Tranche Tr 00606 (S) | 7.625 | 10/01/18 | A+ | 375 | 372,856 |
| Global Signal Trust, | |||||
| Sub Bond Ser 2004-2A Class D (P)(S) | 5.093% | 12/15/14 | Baa2 | $495 | 475,888 |
| Global Signal Trust, | |||||
| Sub Bond Ser 2006-1 Class E (P)(S) | 6.495 | 02/15/36 | Baa3 | 460 | 445,661 |
| Total investments (Cost $230,891,344)† 144.91% | $199,639,856 | ||||
| Other assets and liabilities, net (44.91%) | ($61,870,585) | ||||
| Total net assets 100.00% | $137,769,271 | ||||
The percentage shown for each investment category is the total value of that category as a percentage of the net assets applicable to common shareholders.
IO Interest only (carries notional principal amount)
MTN Medium-Term Note
REIT Real Estate Investment Trust
(A) Credit ratings are unaudited and are rated by Moody's Investors Service where Standard & Poor's ratings are not available unless indicated otherwise.
(G) Security rated internally by John Hancock Advisers, LLC.
(P) Variable rate obligation. The coupon rate shown represents the rate at period end.
(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 $34,736,360 or 25.21% of the net assets of the Fund as of September 30, 2008.
† At September 30, 2008, the aggregate cost of investment securities for federal income tax purposes was $231,372,163. Net unrealized depreciation aggregated $31,732,307, of which $2,755,284 related to appreciated investment securities and $34,487,591 related to depreciated investment securities.
| Page 12 |
John Hancock Income Securities Trust
Securities owned by the Fund on
September 30, 2008 (Unaudited)
The Fund had the following interest rate swap contracts open on September 30, 2008:
| PAYMENTS | PAYMENTS | ||||
| NOTIONAL | MADE BY | RECEIVED BY | TERMINATION | UNREALIZED | |
| AMOUNT | FUND | FUND | DATE | COUNTERPARTY | DEPRECIATION |
| $29,000,000 | 4.6875% (a) | 3-month LIBOR | Sep 2010 | Bank of America | $757,000 |
| (a) Fixed rate |
| Page 13 |
Notes to portfolio of investments
Security valuation
The net asset value of common shares of the Fund is determined daily as of the close of the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. Short-term debt investments that have a remaining maturity of 60 days or less are valued at amortized cost, and thereafter assume a constant amortization to maturity of any discount or premium, which approximates market value. All other securities held by the Fund are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) as of the close of business on the principal securities exchange (domestic or foreign) on which they trade or, lacking any sales, at the closing bid price. 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. Securities for which there are no such quotations, principally debt securities, are valued based on the evaluated prices provided by an independent pricing service, which utilizes both dealer-supplied and electronic data processing techniques, which take 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.
Other assets and securities for which no such quotations are readily available are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. Generally, trading in non-U.S. securities is substantially completed each day at various times prior to the close of trading on the NYSE. The values of such securities used in computing the net asset value of the Fund’s shares are generally determined as of such times. Occasionally, significant events that affect the values of such securities may occur between the times at which such values are generally determined and the close of the NYSE. Upon such an occurrence, these securities will be valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. Debt securities whose prices cannot be provided by an independent pricing service are valued at prices provided by broker-dealers.
In deciding whether to make a fair value adjustment to the price of a security, the Board of Trustees or their designee may review a variety of factors, including developments in foreign markets, the performance of U.S. securities markets and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. The Fund may also fair value securities in other situations, for example, when a particular foreign market is closed, but the Fund is calculating the net asset value. In view of these factors, it is likely that a Fund investing significant amounts of assets in securities in foreign markets will be fair valued more frequently than a Fund investing significant amounts of assets in frequently traded, U.S. exchange listed securities of large-capitalization U.S. issuers.
For purposes of determining when fair value adjustments may be appropriate with respect to investments in securities in foreign markets that close prior to the NYSE, the Fund will, on an ongoing basis, monitor for “significant market events.” A significant market event may be a certain percentage change in the value of an index that tracks foreign markets in which the Fund has significant investments. If a significant market event occurs due to a change in the value of the index, the pricing for investments in foreign markets that have closed prior to the NYSE will promptly be reviewed and potential adjustments to the net asset value will be recommended to the Fund’s Pricing Committee where applicable.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity.
The Fund adopted Statement of Financial Accounting Standards No. 157 (FAS 157), Fair Value Measurements, effective with the beginning of the Fund’s fiscal year. FAS 157 established a three-tier hierarchy to prioritize the assumptions, referred to as inputs, used in valuation
techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below:
Level 1 – Quoted prices in active markets for identical securities.
Level 2 – Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.
Level 3 – Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable, such as when there is little or no market activity for an investment, unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors that market participants would use in pricing an investment and would be based on the best information available.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value the Fund’s net assets as of September 30, 2008:
| Investments in | Other Financial | |
| Valuation Inputs | Securities | Instruments* |
| Level 1 – Quoted Prices | $2,792,509 | - |
| Level 2 – Other Significant Observable Inputs | 185,428,147 | ($757,000) |
| Level 3 – Significant Unobservable Inputs | 11,419,200 | - |
| Total | $199,639,856 | ($757,000) |
*Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instrument.
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
| Investments in | Other Financial | |
| Securities | Instruments | |
| Balance as of December 31, 2007 | $30,869,350 | - |
| Accrued discounts/premiums | (120,040) | - |
| Realized gain (loss) | (752,359) | - |
| Change in unrealized appreciation | (524,352) | - |
| (depreciation) | ||
| Net purchases (sales) | (3,566,604) | - |
| Transfers in and/or out of Level 3 | (14,486,795) | - |
| Balance as of September 30, 2008 | $11,419,200 | - |
Mortgage security risk
The Fund may invest a portion of its assets in issuers and/or securities of issuers that hold mortgage securities, including subprime mortgage securities. The value of these securities is sensitive to changes in economic conditions, including delinquencies and/or defaults, and may be adversely affected by shifts in the market’s perception of the issuers and changes in interest rates.
Swap contracts
The Fund may enter into swap transactions in order to hedge the value of the Fund’s portfolio against interest rate fluctuations or to enhance the Fund’s income or to manage the Fund’s exposure to credit or market risk.
Interest rate swaps represent an agreement between two counterparties to exchange cash flows based on the difference in the two interest rates, applied to the notional principal amount for a specified period. 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 receivable or payable under the swap contracts on a periodic basis.
Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event (such as payment default or bankruptcy). Under the terms of the swap, one party acts as a “guarantor” receiving a periodic payment that is a fixed percentage applied to a notional principal amount. In return the party agrees to purchase the notional amount of the underlying instrument, at par, if a credit event occurs during the term of the swap. The Fund may enter into credit default swaps in which either it or its counterparty act as guarantors. By acting as the guarantor of a swap, the Fund assumes the market and credit risk of the underlying instrument including liquidity and loss of value.
The Fund records changes in the value of the swap as unrealized gains or losses on swap contracts. Net periodic payments accrued but not yet received (paid) are included in change in the unrealized appreciation/depreciation. Accrued interest income and interest expense on the swap contracts are recorded as realized gain (loss).
Swap contracts are subject to risks related to the counterparty’s ability to perform under the contract, and may decline in value if the counterparty’s creditworthiness deteriorates. The risks may arise from unanticipated movement in interest rates. The Fund may also suffer losses if it is unable to terminate outstanding swap contracts or reduce its exposure through offsetting transactions.
Leverage
The Fund utilizes a credit facility to increase its assets available for investment. The Fund has a Revolving Credit Agreement (RCA) with a third party commercial bank that allows it to borrow up to an initial limit of $77 million and to invest the borrowings in accordance with its investment practices. Borrowings under the RCA are secured by the assets of the Fund.
ITEM 2. 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-Q, the registrant's principal executive officer and principal accounting 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 last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 3. EXHIBITS.
Separate certifications for the registrant's principal executive officer and principal accounting officer, as required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
| 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/ Keith F. Hartstein
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Keith F. Hartstein
President and Chief Executive Officer
Date: November 24, 2008
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/ Keith F. Hartstein
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Keith F. Hartstein
President and Chief Executive Officer
Date: November 24, 2008
By: /s/ Charles A. Rizzo
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Charles A. Rizzo
Chief Financial Officer
Date: November 24, 2008