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<SEC-DOCUMENT>0000928816-07-000332.txt : 20070228
<SEC-HEADER>0000928816-07-000332.hdr.sgml : 20070228
<ACCEPTANCE-DATETIME>20070228145943
ACCESSION NUMBER:		0000928816-07-000332
CONFORMED SUBMISSION TYPE:	N-CSR
PUBLIC DOCUMENT COUNT:		14
CONFORMED PERIOD OF REPORT:	20061231
FILED AS OF DATE:		20070228
DATE AS OF CHANGE:		20070228
EFFECTIVENESS DATE:		20070228

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HANCOCK JOHN INCOME SECURITIES TRUST /MA
		CENTRAL INDEX KEY:			0000759866
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-CSR
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-04186
		FILM NUMBER:		07657163

	BUSINESS ADDRESS:	
		STREET 1:		C/O JOHN HANCOCK FUNDS
		STREET 2:		601 CONGRESS STREET
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02210
		BUSINESS PHONE:		617-663-3000

	MAIL ADDRESS:	
		STREET 1:		C/O JOHN HANCOCK FUNDS
		STREET 2:		601 CONGRESS STREET
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02210
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-CSR
<SEQUENCE>1
<FILENAME>a_incsectrust.htm
<DESCRIPTION>JOHN HANCOCK INCOME SECURITIES TRUST
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<P align=center><FONT face=sans-serif>UNITED STATES </FONT><BR>
<FONT face=sans-serif>SECURITIES AND EXCHANGE COMMISSION </FONT><BR>
<FONT face=sans-serif>Washington, D.C. 20549</FONT><BR>
<BR>
<B><FONT face=sans-serif>FORM N-CSR</FONT></B><BR>
<BR>
<B><FONT face=sans-serif>CERTIFIED SHAREHOLDER REPORT OF REGISTERED</FONT></B><BR>
<BR>
<B><FONT face=sans-serif>MANAGEMENT INVESTMENT COMPANIES</FONT></B><BR>
<BR>
<FONT face=sans-serif>Investment Company Act file number </FONT><U><FONT face=sans-serif>811- 4186</FONT></U><BR>
<BR>
<U><FONT face=sans-serif>John Hancock Income Securities Trust</FONT></U><FONT face=sans-serif> </FONT><BR>
<FONT face=sans-serif>(Exact name of registrant as specified in charter)</FONT><BR>
<BR>
<U><FONT face=sans-serif>601 Congress Street, Boston, Massachusetts 02210</FONT></U><FONT face=sans-serif> </FONT><BR>
<FONT face=sans-serif>(Address of principal executive offices) (Zip code)</FONT><BR>
<BR>
<FONT face=sans-serif>Alfred P. Ouellette </FONT><BR>
<FONT face=sans-serif>Senior Counsel and Assistant Secretary </FONT><BR>
<BR>
<FONT face=sans-serif>601 Congress Street</FONT><BR>
<BR>
<U><FONT face=sans-serif>Boston, Massachusetts 02210</FONT></U><FONT face=sans-serif> </FONT><BR>
<FONT face=sans-serif>(Name and address of agent for service)</FONT></P>
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     <TD noWrap align=left width="70%"><FONT face=sans-serif>Registrant's telephone number, including area code:</FONT>&nbsp;<U><FONT face=Arial>617-663-4324</FONT></U>&nbsp;&nbsp; </TD>
     <TD noWrap align=center width="28%" colSpan=2></TD></TR>
<TR>
     <TD noWrap align=left width="70%" background="">&nbsp;&nbsp;&nbsp; </TD>
     <TD noWrap align=center width="28%" background="" colSpan=2></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="70%"><FONT face=sans-serif>Date of fiscal year end:</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif>December</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif>31</FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="70%" background="">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
     <TD noWrap align=right width="16%" background=""></TD>
     <TD noWrap align=left width="12%" background=""></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="70%"><FONT face=sans-serif>Date of reporting period:</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif>December</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif>31, 2006</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=2>ITEM 1. REPORT TO SHAREHOLDERS. </FONT></P>
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<P><BR>
&nbsp;</P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
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     <TD noWrap align=left width="100%"><FONT face=sans-serif size=1>TABLE OF CONTENTS</FONT>&nbsp; </TD></TR>
<TR>
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</TD></TR>
<TR>
     <TD width="100%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="100%"><FONT face=sans-serif size=1>Your fund at a glance</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="100%"><B><FONT face=sans-serif size=1>page 1</FONT></B>&nbsp; </TD></TR>
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     <TD width="100%">
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<TR>
     <TD width="100%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="100%"><FONT face=sans-serif size=1>Managers&#146; report</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="100%"><B><FONT face=sans-serif size=1>page 2</FONT></B>&nbsp; </TD></TR>
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     <TD width="100%">
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<TR>
     <TD width="100%">&nbsp; </TD></TR>
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     <TD noWrap align=left width="100%"><FONT face=sans-serif size=1>Fund&#146;s investments</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="100%"><B><FONT face=sans-serif size=1>page 6</FONT></B>&nbsp; </TD></TR>
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<TR>
     <TD width="100%">&nbsp; </TD></TR>
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     <TD noWrap align=left width="100%"><FONT face=sans-serif size=1>Financial statements</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="100%"><B><FONT face=sans-serif size=1>page 1 9</FONT></B>&nbsp; </TD></TR>
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<TR>
     <TD width="100%">&nbsp; </TD></TR>
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     <TD noWrap align=left width="100%"><FONT face=sans-serif size=1>Notes to financial</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="100%"><FONT face=sans-serif size=1>statements</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="100%"><B><FONT face=sans-serif size=1>page 2 4</FONT></B>&nbsp; </TD></TR>
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     <TD width="100%">&nbsp; </TD></TR>
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     <TD noWrap align=left width="100%"><FONT face=sans-serif size=1>Trustees and officers</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="100%"><B><FONT face=sans-serif size=1>page 4 1</FONT></B>&nbsp; </TD></TR>
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     <TD width="100%">&nbsp; </TD></TR>
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     <TD noWrap align=left width="100%"><FONT face=sans-serif size=1>For more information</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="100%"><B><FONT face=sans-serif size=1>page 4 8</FONT></B>&nbsp; </TD></TR>
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<P align=left><FONT face=sans-serif size=4>CEO corner</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>To Our Shareholders,</FONT></B><BR>
<FONT face=serif size=2>The future has arrived at John Hancock Funds.</FONT></P>
<P align=left><FONT face=serif size=2>We have always been firm believers in the powerful role the Internet can play in providing fund information to our shareholders and prospective investors. Recently, we launched a redesigned, completely overhauled Web site that is more visually pleasing, easier to navigate and, most importantly, provides more fund information and learning tools without overwhelming the user.</FONT></P>
<P align=left><FONT face=serif size=2>Not long after we embarked on this major project, a study was released by the Investment Company Institute, the mutual fund industry&#146;s main trade group, which found that an overwhelming majority of shareholders consider the Internet the &#147;wave of the future&#148; for accessing fund information.</FONT></P>
<P align=left><FONT face=serif size=2>Our new site sports fresher and faster ways to access account information. New innovations allow investors to view funds by risk level, track the performance of the John Hancock funds of their choice or sort funds by Morningstar, Inc.&#146;s star ratings. Investors who own a John Hancock fund through a qualified retirement plan and don&#146;t pay sales charges when making a purchase have the option of sorting by a &#147;Load Waived&#148; Morningstar Rating, thereby creating an apples-to-apples comparison with no-load funds that may also be available in their retirement plan. </FONT></P>
<P align=left><FONT face=serif size=2>The new site also has more educational tools and interactive modules to educate and assist investors with their financial goals, from college savings to retirement planning. A new &#147;</FONT><I><FONT face=serif size=2>I want to</FONT></I><FONT face=serif size=2>&#133;&#148; feature allows investors to check performance, invest more money, update personal information or download prospectuses and forms quickly and easily. </FONT></P>
<P align=left><FONT face=serif size=2>In another of our ongoing efforts to provide our shareholders with top-notch service, we also redesigned our shareholder reports, as you may have noticed with this report. We hope the larger size, more colorful cover and redesigned presentation of the commentary and data tables will draw you in and make them easier to read.</FONT></P>
<P align=left><FONT face=serif size=2>After you&#146;ve read your shareholder report, we encourage you to visit our new Web site &#151; www.jhfunds.com &#151; and take a tour. It&#146;s easy, fast and fun and allows you to be in control of what you see and do. In short, it&#146;s the wave of the future!</FONT></P>
<P align=left><FONT face=serif size=2>Sincerely,</FONT></P>
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<BR>
<P align=left><FONT face=serif size=2>Keith F. Hartstein, </FONT><BR>
<FONT face=serif size=2>President and Chief Executive Officer</FONT></P>
<P align=left><FONT face=sans-serif size=1>This commentary reflects the CEO&#146;s views as of December 31, 2006. They are subject to change at any time.</FONT></P>
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<P align=left><FONT face=sans-serif size=4>Your fund at a glance
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</FONT><B><FONT face=sans-serif size=1>The Fund seeks a high level of current income consistent with prudent investment risk by investing at least 80% of its assets in a diversified portfolio of income securities.</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=1>Over the last twelve months</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=2>&#9658;</FONT></B><FONT face=sans-serif size=2> Bonds overcame rising interest rates to post solid gains in 2006 as the economy decelerated in the second half of the year.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&#9658;</FONT></B><FONT face=sans-serif size=2> High-yield corporate bonds were far and away the best performers, while Treasury securities lagged.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&#9658;</FONT></B><FONT face=sans-serif size=2> The Fund outperformed thanks to overweights in high-yield corporate bonds and mortgage-backed securities.</FONT></P>
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<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
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     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=2>Top 10 issuers</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="37%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Federal National Mortgage Assn.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>27.7%</FONT>&nbsp; </TD>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Bank of America</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>2.0%</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Federal Home Loan Mortgage Corp.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>5.8%</FONT>&nbsp; </TD>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>U.S. Treasury Bonds/Notes</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>1.9%</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="49%" background="" colSpan=2>
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     <TD noWrap align=left width="49%" background="" colSpan=2>
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     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Countrywide Home Loan</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>3.8%</FONT>&nbsp; </TD>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Crown Castle Int&#146;l Corp.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>1.7%</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>JPMorgan Chase</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>3.6%</FONT>&nbsp; </TD>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Residential Asset Mortgage</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
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     <TD width="49%" colSpan=2>
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     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Goldman Sachs Group</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>2.5%</FONT>&nbsp; </TD>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Products, Inc.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>1.5%</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="49%" background="" colSpan=2>
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     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Bear Stearns Cos. Inc.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>2.2%</FONT>&nbsp; </TD>
     <TD noWrap align=left width="37%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
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<P align=left><FONT face=sans-serif size=1>As a percentage of net assets plus value of preferred shares on December 31, 2006.</FONT></P>
<P align=left><FONT face=sans-serif size=2>1</FONT></P>
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<P align=left><FONT face=serif size=7>Managers&#146; report</FONT></P>
<P align=left><FONT face=serif size=5>John Hancock</FONT><BR>
<FONT face=sans-serif size=6>Income Securities Trust</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>The U.S. bond market posted positive returns in 2006, overcoming a modest rise in interest rates. </FONT></B><FONT face=sans-serif size=2>The Lehman Brothers U.S. Aggregate Bond Index, a broad measure of bond market performance, posted its seventh consecutive calendar year of positive performance.</FONT></P>
<P align=left><FONT face=serif size=2>The environment for bonds shifted markedly during the year. The first half of 2006 was a challenging period for bonds &#151; economic growth was stronger than expected, inflation spiked higher in the spring and the Federal Reserve raised short-term interest rates for the 17th time in two years. In this environment, bonds declined in value as interest rates rose sharply.</FONT></P>
<P align=left><FONT face=serif size=2>Over the last six months, however, bonds staged a healthy rebound thanks to slowing economic growth, most notably in the slumping housing market, and moderating inflation, which largely reflected a decline in energy prices. The weaker economic environment led the Fed to hold short-term interest rates steady throughout the last half of 2006.</FONT></P>
<P align=left><FONT face=serif size=2>Bond yields finished the year slightly higher than where they started. Despite the significant yield fluctuations during the year, the yield curve remained &#147;inverted&#148; &#151; &nbsp;meaning short-term bond yields were higher than the yields of longer-term bonds &#151; throughout 2006.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>SCORECARD</FONT></B></P>
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     <TD noWrap align=left width="25%"><FONT face=sans-serif size=1>INVESTMENT</FONT>&nbsp; </TD>
     <TD noWrap align=left width="4%">&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=sans-serif size=1>PERIOD&#146;S PERFORMANCE... AND WHAT&#146;S BEHIND THE NUMBERS</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="25%"><B><FONT face=sans-serif size=2>Continental Airlines</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="4%">&#9650;&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=sans-serif size=1>Bonds backed by jets benefited from improving fundamentals and</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="25%">&nbsp; </TD>
     <TD noWrap align=left width="4%">&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=sans-serif size=1>potential consolidation in the airline industry</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="25%"><B><FONT face=sans-serif size=2>Ford Motor Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="4%">&#9650;&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=sans-serif size=1>Sale of a majority stake in GMAC led investors to boost valuations in</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="25%">&nbsp; </TD>
     <TD noWrap align=left width="4%">&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=sans-serif size=1>the auto finance industry</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="25%"><B><FONT face=sans-serif size=2>Sprint</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="4%">&#9660;&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=sans-serif size=1>Competitive pressures weighed on telecom bonds in the first half of</FONT>&nbsp; </TD></TR>
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     <TD noWrap align=left width="25%">&nbsp; </TD>
     <TD noWrap align=left width="4%">&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=sans-serif size=1>the year</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=2>2</FONT></P>
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<P align=left><B><FONT face=sans-serif size=2>Portfolio Managers, MFC Global Investment Management (U.S.), LLC</FONT></B><BR>
<B><FONT face=sans-serif size=2>Barry H. Evans, CFA, Jeffrey N. Given, CFA, and Howard C. Greene, CFA</FONT></B></P>
<P align=left><FONT face=serif size=2>From a sector perspective, every segment of the bond market gained ground during the year, but high-yield corporate bonds were by far the top performers. Strong balance sheets, a lack of credit defaults and increasing demand for yield led to double-digit gains&nbsp; </FONT><FONT face=serif size=2>for high yield bonds. Among investment-grade sectors, mortgage-backed securities posted the best returns, while Treasury bonds lagged.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2><BR>
&#147;Over the last six months, </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>however, bonds staged a healthy </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>rebound thanks to slowing </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>economic growth, most notably </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>in the slumping housing market, </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>and moderating inflation, which </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>largely reflected a decline in </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>energy prices.&#148;</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=2>Fund performance</FONT></B></P>
<P align=left><FONT face=serif size=2>For the year ended December 31, 2006, John Hancock Income Securities Trust produced a total return of 6.24% at net asset value (NAV) and 15.15% at market value. The Fund&#146;s NAV return and its market performance differ because the market&nbsp; </FONT><FONT face=serif size=2>share price is subject to the dynamics of secondary market trading, which could cause it to trade at a discount or premium to the Fund&#146;s NAV share price at any time. By comparison, the average closed-end intermediate-term bond fund returned 6.58%, according to Morningstar, Inc., and the Lehman Brothers Government/Credit Bond Index returned 3.78% .</FONT></P>
<P align=left><FONT face=serif size=2>The Fund outperformed its benchmark index largely because of overweight positions in mortgage-backed securities and high-yield corporate bonds. However, though we were overweight in high yield bonds relative to the index, we had a slightly lower weighting than our Morningstar peer group average. Consequently, the Fund modestly lagged the average return of its peer group.</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>3</FONT></P>
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<P align=left><B><FONT face=sans-serif size=2>Sector allocation paid off</FONT></B></P>
<P align=left><FONT face=serif size=2>In 2006, we substantially increased our holdings of mortgage-backed securities, which became the largest sector weighting in the portfolio. This positioning boosted portfolio performance for the year as mortgage-backed bonds outperformed. In addition to the increase in residential mortgage-backed securities, we added to our position in commercial mortgage-backed securities. With high credit ratings, intermediate maturities and attractive yields, these bonds provided a way to add yield in a defensive manner.</FONT></P>
<P align=left><FONT face=serif size=2>Reducing our Treasury bond holdings substantially during the year also added value as these bonds underperformed. By the end of 2006, Treasury securities comprised the smallest sector weighting in the portfolio.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>High yield bonds contributed strong results</FONT></B></P>
<P align=left><FONT face=serif size=2>Another positive factor was our overweight in high-yield corporate bonds, the top performers in the bond market in 2006. Although we trimmed our overall exposure to corporate securities, we sold mostly higher-quality securities while increasing our high yield position. By the end of the year, high yield bonds made up half of the portfolio&#146;s corporate bond holdings, up from a third at the beginning of the year.</FONT></P>
<P align=left><FONT face=serif size=2>Much of the increase in our high yield bond position resulted from finding specific securities that we found to be attractively valued. However, greater high yield exposure had the added benefit of helping protect the portfolio against the risk of leveraged buyouts (LBOs), which typically hurt bond-holders. Private equity firms are hesitant to pursue debt-financed </FONT><FONT face=serif size=2>acquisitions of companies that already have a significant amount of debt, as most below investment-grade companies do.</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="99%" colSpan=2><FONT face=sans-serif size=1>SECTOR DISTRIBUTION</FONT><SUP><FONT face=sans-serif size=1>1</FONT></SUP>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Government &#151;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>U.S. agency</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>34%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Mortgage bonds</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>23%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Financials</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>13%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Utilities</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>7%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Consumer discretionary</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>7%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Telecommunication</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>services</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>4%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Materials</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>4%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Industrials</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>3%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Energy</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>2%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Government &#151; U.S.</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>2%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Health care</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>1%</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=serif size=2>Another way we protected against LBO risk was to focus on specific segments of the corporate bond market that are not suited to these types of transactions. We continued to emphasize bonds issued by utilities, banks and finance-related companies, which are generally reluctant to take on additional leverage because they need to protect the quality of their balance sheets as an ongoing requirement of their businesses.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>A new maturity structure</FONT></B></P>
<P align=left><FONT face=serif size=2>The economy reached an inflection point in 2006, peaking in the first half of the year and then gradually slowing over the last </FONT></P>
<P align=left><FONT face=sans-serif size=2>4&nbsp;&nbsp; </FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
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<P align=left><FONT face=serif size=2>six months. Consequently, we positioned the portfolio to benefit from a return to a &#147;normal&#148; relationship between short- and long-term bond yields &#151; that is, longer-term bonds offering higher yields than short-term securities. This strategy involved reducing our holdings of long-term and short-term bonds and shifting the proceeds into intermediate-maturity bonds.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&#147;The Fund outperformed its </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>benchmark index, largely </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>because of overweight positions </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>in mortgage-backed securities </FONT></B><BR>
<BR>
<B><FONT face=sans-serif size=2>and high-yield corporate bonds.&#148;</FONT></B></P>
<P align=left><FONT face=serif size=2>This positioning tends to perform best when short- and long-term bond yields diverge, something that often occurs when economic growth slows and the market begins to price in expectations of one or more interest rate cuts by the Federal Reserve. Although&nbsp; </FONT><FONT face=serif size=2>this did not happen in 2006, we expect the inverted yield curve to unwind at some point in the not-too-distant future. Since 1980, the yield curve has inverted six times and the average length of time for each inversion was seven months. The current inversion has lasted for just over a year.</FONT></P>
<IMG src="incomesectrsx7x1.jpg" border=0>
<BR>
<P align=left><B><FONT face=sans-serif size=2>Outlook</FONT></B></P>
<P align=left><FONT face=serif size=2>We expect the Federal Reserve to remain on hold for the next three to six months. We think the Fed&#146;s next move will </FONT><FONT face=serif size=2>be an interest&nbsp;rate cut,&nbsp;but not until the second half of 2007. The timing will depend on how long it takes the weakness in the housing market to filter through to the rest of the economy.</FONT></P>
<P align=left><FONT face=serif size=2>Although yield spreads between Treasury and corporate bonds are near historically narrow levels, we are cautiously optimistic that corporate bonds &#151; especially the high yield segment &#151; will continue to outperform in a relatively stable interest rate environment. However, we also think that individual security selection will become increasingly important.</FONT></P>
<P align=left><FONT face=sans-serif size=1>This commentary reflects the views of the managers through the end of the Fund&#146;s period discussed in this report. The managers&#146; statements reflect their own opinions. As such, they are in no way guarantees of future events, and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.</FONT></P>
<P align=left><SUP><FONT face=sans-serif size=1>1</FONT></SUP><FONT face=sans-serif size=1> As a percentage of the Fund&#146;s portfolio on December 31, 2006.</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>5</FONT></P>
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<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<P align=left><FONT face=serif size=7>Fund&#146;s investments</FONT></P>
<P align=left><FONT face=sans-serif size=4>Securities owned by the Fund on 12-31-06</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>This schedule is divided into five main categories: bonds, preferred stocks, tranche loans, U.S. government and agencies securities and short-term investments. Bonds, preferred stocks, tranche loans and U.S. government and agencies securities are further broken down by industry group. Short-term investments, which represent the Fund&#146;s cash position, are listed last.</FONT></B></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="11%"><B><FONT face=sans-serif size=1>&nbsp;Credit&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>date &nbsp;&nbsp;&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="11%"><B><FONT face=sans-serif size=1>rating (A)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>(000)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Bonds 91.74%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>$157,493,608</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>(Cost $156,911,806)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Advertising 0.28%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>479,375</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>R.H. Donnelley Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Disc Note Ser A-1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.875%</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>01-15-13</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>B&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>$200</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>191,750</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Disc Note Ser A-2</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.875</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>01-15-13</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>300</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>287,625</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Airlines 0.55%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>948,039</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Continental Airlines, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Pass Thru Ctf Ser 1999-1 Class A</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.545</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>02-02-19</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>A&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>372</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>384,925</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Pass Thru Ctf Ser 2000-2 Class B (L)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.307</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>10-02-19</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>BB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>406</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>419,952</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Pass Thru Ctf Ser 2001-1 Class C</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.033</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>06-15-11</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>B+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>144</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>143,162</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><B><FONT face=sans-serif size=1>Apparel, Accessories &amp; Luxury Goods 0.13%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>223,850</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Hanesbrands, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Note (P)(S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.735</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>B&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>220</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>223,850</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Auto Parts &amp; Equipment 0.11%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>195,000</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Avis Budget Car Rental LLC,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.625</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>05-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>BB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>200</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>195,000</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Broadcasting &amp; Cable TV 0.85%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>1,463,288</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Comcast Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Gtd Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.900</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>03-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>BBB+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>450</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>451,283</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Cox Communications, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.875</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-01-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>495</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>491,489</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Nexstar Finance, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Sub Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.000</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>01-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>CCC+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>340</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>319,600</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Rogers Cable, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Sec Note (Canada)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.750</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>03-15-15</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>195</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>200,916</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1><BR>
Casinos &amp; Gaming 2.81%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>4,816,267</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Chukchansi Economic Development Auth,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.000</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>11-15-13</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>BB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>460</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>477,825</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Jacobs Entertainment, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Gtd Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.750</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>06-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>B&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>500</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>507,500</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Little Traverse Bay Bands of Odawa Indians,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>10.250</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>02-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>495</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>497,475</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=2>6&nbsp;&nbsp; </FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<!--$$/page=-->
<A name="page_9"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="13%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>date&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="13%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (000)</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="13%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; Value</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Casinos &amp; Gaming (continued)</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=2>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mashantucket West Pequot,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Bond (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>5.912%</FONT> </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>09-01-21</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $285</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>$272,554</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>MTR Gaming Group, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Sr Sub Note Ser B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>9.000</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>06-01-12</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT>105&nbsp;&nbsp;&nbsp;&nbsp; </FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 107,625</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Pokagon Gaming Auth,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>10.375</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>06-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B</FONT>&nbsp; </TD>
     <TD noWrap align=center width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;175</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;</TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 191,625</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Seminole Tribe of Florida,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Bond (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>6.535</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>10-01-20</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>650</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp; &nbsp;634,998</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Turning Stone Casino Resort Enterprise,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>9.125</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>09-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B+</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></FONT>1,540</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>1,574,650&nbsp;&nbsp; &nbsp;&nbsp;</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Waterford Gaming LLC,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>8.625</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>09-15-12</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>522</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 552,015</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Commodity Chemicals 0.30%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp; 509,375</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Lyondell Chemical Co.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Sr Sub Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>10.875</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>05-01-09</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 509,375</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="61%" colSpan=3><B><FONT face=sans-serif size=1>Construction &amp; Farm Machinery &amp; Heavy Trucks 0.29%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp; 505,000</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Manitowoc Co., Inc. (The),</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>7.125</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>11-01-13</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp; &nbsp;505,000</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Construction &amp; Engineering 0.20%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp; 340,306</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Owens Corning, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>6.500</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-01-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>335</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 340,306</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Consumer Finance 3.88%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%"><B><FONT face=sans-serif size=1>6,666,692</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>American Express Co.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sub Deb</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>6.800</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>09-01-66</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>545</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 581,154</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Capital One Capital III,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Jr Sub Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>7.686</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>08-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>855</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 968,338</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>CIT Group, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>5.850</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>09-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>460</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 466,754</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Ford Motor Credit Co.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>7.375</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>10-28-09</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></FONT>1,625</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>1,628,461</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>9.875</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>08-10-11</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>295</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 315,510</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>8.000</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>140</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 138,341</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>General Motors Acceptance Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>6.750</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-01-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>550</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp; &nbsp;564,923</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-15-11</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>465</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 462,977</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>HSBC Finance Capital Trust IX,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Note (5.911% to 11-30-15</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>then variable)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>5.911</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>11-30-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB+</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>800</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp; &nbsp;803,957</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Nelnet, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>7.400</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>09-29-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>715</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 736,277</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Department Stores 0.41%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp; 710,208</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Penney J.C. Co., Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Deb</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>8.125</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>04-01-27</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>215</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 221,075</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Deb</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>7.650</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>08-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1><FONT face=sans-serif size=1><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></FONT>445</FONT>&nbsp; </TD>
     <TD noWrap align=left width="13%"><FONT face=sans-serif size=1>&nbsp;&nbsp; 489,133</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>7</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_10"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<P align=left><FONT face=sans-serif size=2></FONT>&nbsp;</P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>date&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (000)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Diversified Banks 3.09%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>$5,301,379</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Banco Mercantil del Norte SA,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sub Note (Mexico) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.862%</FONT> </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>10-13-21</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Baa2</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $435</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>439,685</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Bank of New York,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Cap Security (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.780</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-01-26</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 650</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>675,872</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Barclays Bank Plc,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Perpetual Bond (6.860% to 06-15-32</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>then variable) (United Kingdom) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.860</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>09-29-49</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,655</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,794,866</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Chuo Mitsui Trust &amp; Banking Co., Ltd.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Perpetual Sub Note (5.506% to</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>04-15-15 then variable) (Japan) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.506</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-01-49</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Baa1</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 940</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>897,831</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Lloyds TSB Group Plc,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Bond (United Kingdom) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.267</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>11-14-49</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 730</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>729,972</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Royal Bank of Scotland Group Plc,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Perpetual Bond (7.648% to 09-30-31</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>then variable) (United Kingdom)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.648</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>08-29-49</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 650</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>763,153</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Diversified Chemicals 1.55%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>2,668,689</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Mosaic Co. (The),</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.625</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-01-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; 290</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>300,513</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.375</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-01-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 290</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>297,613</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>NOVA Chemicals Corp.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Med Term Note (Canada)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.400</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>04-01-09</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,045</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>2,070,563</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="61%" colSpan=3><B><FONT face=sans-serif size=1>Diversified Commercial &amp; Professional Services 0.46%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>784,919</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Hutchison Whampoa International Ltd.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Gtd Sr Note (Cayman Islands) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.500</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>02-13-13</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 750</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>784,919</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Diversified Financial Services 0.87%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>1,497,202</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>SMFG Preferred Capital Ltd.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Bond (Cayman Islands) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.078</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>01-25-49</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 590</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>583,197</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>St. George Funding Co.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Perpetual Bond (8.485% to 06-30-17</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>then variable) (Australia) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.485</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-31-49</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Baa1</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 870</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>914,005</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Diversified Metals &amp; Mining 0.29%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>503,625</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Vedanta Resources Plc,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Note (United Kingdom) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.625</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>02-22-10</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 510</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>503,625</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><B><FONT face=sans-serif size=1>Electric Utilities 6.82%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>11,700,601</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Abu Dhabi National Energy Co.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Bond (United Arab Emirates) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.500</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>10-27-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 935</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>964,386</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>AES Eastern Energy LP,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Pass Thru Ctf Ser 1999-A</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.000</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>01-02-17</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,049</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,174,799</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Beaver Valley Funding Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sec Lease Obligation Bond</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.000</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>06-01-17</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 513</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>576,094</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>BVPS II Funding Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Collateralized Lease Bond</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.890</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>06-01-17</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 700</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>798,791</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>FPL Energy National Wind,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Sr Sec Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.608</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>03-10-24</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 370</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>362,858</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>FPL Group Capital, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=sans-serif size=1>Jr Sec Sub Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.350</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>10-01-66</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 535</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>542,376</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=2>8&nbsp; &nbsp;</FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_11"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%">&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="11%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>date&nbsp; &nbsp;&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="11%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>(000)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>Electric Utilities (continued)</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=2>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>HQI Transelect Chile SA,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sr Note (Chile)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>7.875%</FONT> </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>04-15-11</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>A&#150; &nbsp; </FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>$1,230</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>$1,305,540</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Indiantown Cogeneration LP,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>1st Mtg Note Ser A-9</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>9.260</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-15-10</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>378</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>396,146</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>IPALCO Enterprises, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sr Sec Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>8.625</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>11-14-11</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>325</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>353,438</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Monterrey Power SA de CV,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sr Sec Bond (Mexico) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>9.625</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>11-15-09</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>514</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>568,326</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Pepco Holdings, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>6.450</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>08-15-12</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>565</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>585,776</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>PNPP II Funding Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Deb</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>9.120</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>05-30-16</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>481</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>542,284</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>System Energy Resources, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sec Bond (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>5.129</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>01-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>810</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>790,901</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>TransAlta Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Note (Canada)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>5.750</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-15-13</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>996,683</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>TXU Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sec Bond</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>7.460</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>01-01-15</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BBB </FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>593</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>601,877</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Waterford 3 Funding Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sec Lease Obligation Bond</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>8.090</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>01-02-17</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,132</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,140,326</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><B><FONT face=sans-serif size=1>Electrical Components &amp; Equipment 0.72%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>1,234,013</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Freescale Semiconductor, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>8.875</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>B&nbsp; &nbsp;&nbsp;&nbsp; </FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>996,250</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>NXP BV/NXP Funding LLC,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sr Sec Bond (Netherlands) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>7.875</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>10-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>230</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>237,763</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><B><FONT face=sans-serif size=1>Electronic Equipment Manufacturers 0.47%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>813,824</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Thomas &amp; Betts Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>7.250</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>06-01-13</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>775</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>813,824</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>Gas Utilities 1.40%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>2,399,772</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Energy Transfer Partners LP,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Gtd Sr Note (G)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>5.950</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>02-01-15</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,210</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,216,861</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>6.625</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>10-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>&nbsp;Baa3 </FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>375</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>386,125</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>KN Capital Trust I,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Gtd Cap Security Ser B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>8.560</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>04-15-27</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BB+ &nbsp;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>240</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>239,832</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Southern Union Co.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Jr Sub Bond</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>7.200</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>11-01-66</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BB &nbsp;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>565</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>556,954</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>Health Care Facilities 0.51%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>882,313</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Manor Care, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Gtd Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>6.250</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>05-01-13</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BBB </FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>875</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>882,313</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>Health Care Services 0.59%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>1,015,974</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Alliance Imaging, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Sr Sub Note (L)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>7.250</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>12-15-12</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>&nbsp;B&#150;&nbsp;&nbsp;&nbsp; </FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>440</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>418,000</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>WellPoint, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="34%"><FONT face=sans-serif size=1>Bond</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>5.250</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>01-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>BBB+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>610</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>597,974</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>9</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_12"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><B><FONT face=sans-serif size=1>Maturity</FONT></B></TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><B><FONT face=sans-serif size=1>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>(000)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Hotels, Resorts &amp; Cruise Lines 0.90%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>$1,546,804</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Hyatt Equities LLC,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.875%</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>06-15-07</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>$1,060</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,064,404</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Travelport, Inc.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.875</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>09-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>B&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>480</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>482,400</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Industrial Machinery 1.29%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>2,212,801</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Kennametal, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.200</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>06-15-12</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,405</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,479,583</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Trinity Industries, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Pass Thru Ctf (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.755</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>02-15-09</FONT></TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>Ba1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>719</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>733,218</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Integrated Oil &amp; Gas 1.15%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>1,974,529</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Pemex Project Funding Master Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.125</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>10-13-10</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>615</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>689,723</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Petro-Canada,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Deb (Canada)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.250</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>10-15-21</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,284,806</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="50%" colSpan=2><B><FONT face=sans-serif size=1>Integrated Telecommunication Services 2.59%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>4,445,702</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Bellsouth Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Deb</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.300</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>12-15-15</FONT></TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>A</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>999</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,021,294</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Embarq Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.082</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>06-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>620</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>631,172</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Qwest Capital Funding, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>08-03-09</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,017,500</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sprint Capital Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.900</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>05-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,031,036</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Telefonos de Mexico SA de CV,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Note (Mexico)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>01-27-15</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>765</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>744,700</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="50%" colSpan=2><B><FONT face=sans-serif size=1>Investment Banking &amp; Brokerage 0.90%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>1,536,345</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Goldman Sachs Group, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sub Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.450</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>05-01-36</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>A+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>715</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>743,895</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Mizuho Financial Group Cayman Ltd.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Sub Bond (Cayman Islands)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.375</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>12-29-49</FONT></TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>A2</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>750</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>792,450</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>IT Consulting &amp; Other Services 0.23%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>399,974</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>NCR Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.125</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>06-15-09</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>390</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>399,974</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Leisure Facilities 0.23%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>391,463</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>AMC Entertainment, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Sub Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>02-01-11</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>CCC+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>390</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>391,463</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Life &amp; Health Insurance 0.59%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>1,004,658</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Phoenix Cos., Inc. (The),</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Bond</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.675</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>02-16-08</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>510</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>514,402</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Provident Financing Trust I,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Cap Security (L)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.405</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>03-15-38</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>B+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>485</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>490,256</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Managed Health Care 0.31%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>532,500</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>HealthSouth Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%" colSpan=3>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note (P)(S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>11.354</FONT>&nbsp; </TD>
     <TD noWrap align=left width="3%">&nbsp; </TD>
     <TD noWrap align=left width="3%" background=""><FONT face=sans-serif size=1>06-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=left width="6%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>CCC+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>500</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>532,500</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=2>10&nbsp;&nbsp; </FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_13"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Maturity&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>Par value &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>date &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; (000)&nbsp;&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Marine 0.63%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>$1,079,475</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>CMA CGM SA,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Sr Note (France) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>&nbsp; 7.250%</FONT> </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>02-01-13</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>$700</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>682,500</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Navios Maritime Holdings,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Sr Note (Marshall Islands) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>9.500</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>B</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>395</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>396,975</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Metal &amp; Glass Containers 0.30%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>516,875</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Owens-Brockway Glass Container, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Gtd Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>8.250</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-15-13</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>B</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>500</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>516,875</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Movies &amp; Entertainment 0.49%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>838,019</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Cinemark, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Sr Disc Note (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>9.750</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>03-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>CCC+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>245</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>210,394</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Time Warner, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Gtd Deb</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>6.500</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>365</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>363,294</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>5.875</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>265</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>264,331</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Multi-Line Insurance 1.05%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>1,803,224</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Genworth Financial, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Jr Sub Bond</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>6.150</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-66</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>430</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>429,394</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Horace Mann Educators Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>6.850</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>04-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>395</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>405,575</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Liberty Mutual Group,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Bond (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>7.500</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>08-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>885</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>968,255</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Multi-Media 0.76%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>1,310,679</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Idearc, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>8.000</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>B+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>170</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>172,550</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>News America Holdings,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Gtd Sr Deb</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>7.750</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>01-20-24</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>1,020</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,138,129</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Multi-Utilities 1.55%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>2,659,830</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>CalEnergy Co., Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Sr Bond</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>8.480</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>09-15-28</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>550</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>701,122</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Dynegy-Roseton Danskamme,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Gtd Pass Thru Ctf Ser B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>7.670</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-08-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>B</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>500</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>518,125</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Salton Sea Funding Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Sr Sec Note Ser C</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>7.840</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-30-10</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>1,405</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,440,583</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Office Services &amp; Supplies 0.41%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>700,150</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Xerox Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>6.750</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>02-01-17</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>670</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>700,150</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Oil &amp; Gas Drilling 0.18%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>315,742</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Delek &amp; Avner-Yam Tethys Ltd.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Sr Sec Note (Israel) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>5.326</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>08-01-13</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>324</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>315,742</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%" colSpan=2><B><FONT face=sans-serif size=1>Oil &amp; Gas Exploration &amp; Production 0.23%</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>394,053</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Kerr-McGee Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=center width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Gtd Sec Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>6.950</FONT>&nbsp; </TD>
     <TD noWrap align=center width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>07-01-24</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>370</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>394,053</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp; &nbsp;</FONT><FONT face=sans-serif size=2>11</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_14"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="1%" background="">&nbsp;</TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>Par value&nbsp;&nbsp;&nbsp; </FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>date</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="2%" background="">&nbsp;</TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; (000)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="50%" colSpan=2><B><FONT face=sans-serif size=1>Oil &amp; Gas Refining &amp; Marketing 0.75%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>$1,289,954</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Enterprise Products Operations LP,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Sr Note Ser B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.600%</FONT> </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>10-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>$1,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>982,132</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Premcor Refining Group, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>02-01-13</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; 285</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>307,822</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="50%" colSpan=2><B><FONT face=sans-serif size=1>Oil &amp; Gas Storage &amp; Transportation 1.11%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>1,899,330</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>MarkWest Energy Partners LP/MarkWest</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Energy Finance Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>07-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 545</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>566,800</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>ONEOK Partners LP,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.650</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>10-01-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 505</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>516,530</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Williams Partners LP,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Bond (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.250</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>02-01-17</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 800</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>816,000</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Paper Packaging 1.18%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>2,027,656</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>MDP Acquisitions Plc,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note (Ireland)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.625</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>10-01-12</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 750</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>795,000</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Stone Container Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.750</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>02-01-11</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>CCC+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 245</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>252,656</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.375</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>07-01-12</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>CCC+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; 1,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>980,000</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Paper Products 1.08%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>1,861,750</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Graphic Packaging International Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>08-15-11</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 445 </FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>460,575</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Plum Creek Timber Co., Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.875</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>11-15-15</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 365</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>358,675</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Verso Paper Holdings LLC,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Sec Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>9.125</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>08-01-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; 1,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,042,500</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Property &amp; Casualty Insurance 0.47%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>800,704</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Ohio Casualty Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.300</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>06-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 750</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>800,704</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="50%" colSpan=2><B><FONT face=sans-serif size=1>Real Estate Management &amp; Development 1.98%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>3,391,044</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Healthcare Realty Trust, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.125</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>05-01-11</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 175</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>189,800</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Health Care REIT, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.200</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>06-01-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 360</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>361,726</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>HRPT Properties Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.750</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>11-01-15</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 780</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>779,178</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Post Apartment Homes,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.125</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>10-12-11</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 870</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>848,265</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Shimao Property Holding Ltd.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Sr Note (Cayman Islands) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>12-01-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 940</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>956,450</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Ventas Realty LP/Capital Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.625</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>10-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 250</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>255,625</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Regional Banks 2.61%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>4,476,195</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Colonial Capital II,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Cap Sec Ser A</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.920</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>01-15-27</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,085</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,135,371</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=8>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>First Chicago NDB Institutional Capital,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Cap Bond Ser A (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.950</FONT>&nbsp; </TD>
     <TD noWrap align=left width="1%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>12-01-26</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="2%" background=""></TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;500</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>520,355</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=2>12&nbsp;&nbsp;&nbsp;</FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_15"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>date</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (000)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Regional Banks (continued)</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>NB Capital Trust IV,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Cap Security</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>&nbsp;8.250%</FONT> </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>04-15-27</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp; $1,170</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>$1,221,182</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sovereign Capital Trust VI,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.908</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>06-13-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 480</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>539,902</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Suntrust Capital VIII,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Bond (6.100% to 12-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>then variable)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.100</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-01-66</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 545</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>530,137</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Wells Fargo Capital X,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Sub Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.950</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 540</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>529,248</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Soft Drinks 0.60%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>1,037,500</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Panamerican Beverages, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Note (Panama)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.250</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>07-01-09</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp; &nbsp;&nbsp; 1,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,037,500</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Specialized Finance 3.00%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>5,153,447</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Astoria Depositor Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Pass Thru Ctf Ser B (G)(S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.144</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-01-21</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 750</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>819,503</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Bosphorous Financial Services,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sec Floating Rate Note (P)(S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.174</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>02-15-12</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Baa3</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 500</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>506,887</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Drummond Co., Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Note (L)(S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.375</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>02-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 500</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>490,000</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>ESI Tractebel Acquisition Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Sec Bond Ser B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.990</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-30-11</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 956</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>981,123</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Graftech Finance, Inc.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Sr Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>10.250</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>02-15-12</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 705</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>742,894</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>JP Morgan Chase Capital,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Jr Sub Note Ser T</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.550</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>09-29-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 790</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>815,760</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>USB Realty Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Perpetual Bond (6.091% to 01-15-12</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>then variable) (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.091</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-22-49</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 800</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>797,280</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Steel 0.95%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>1,630,533</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Metallurg Holdings, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Sec Note (G)(S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>10.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>10-01-10</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 615</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>627,300</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Reliance Steel &amp; Aluminum Co.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Gtd Note (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.850</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 585</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>572,583</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>WCI Steel Acquisition, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sr Sec Note (G)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-01-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 435</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>430,650</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Thrifts &amp; Mortgage Finance 34.40%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>59,055,957</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%" colSpan=2><FONT face=sans-serif size=1>Banc of America Commercial Mortgage, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-6</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class A4 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.181</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>09-10-47</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 940</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>934,044</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-4</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class A3A</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.600</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>07-10-46</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; 1,250</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,269,538</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Banc of America Funding Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-B</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class 6A1 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.889</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>03-20-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; 1,101</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,107,263</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-D</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class 6B2 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.967</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-20-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; 1,829</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,814,782</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>13</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_16"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>date</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>(000)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%" colSpan=2><B><FONT face=sans-serif size=1>Thrifts &amp; Mortgage Finance (continued)</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=2>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Bear Stearns Adjustable Rate</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mortgage Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-1</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class B2 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>4.913%</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>03-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>$852</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>$834,225</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Bear Stearns Alt-A Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-3</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class B2 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.320</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>04-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>598</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>591,072</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-1</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class 23A1 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.636</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>02-25-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,027</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,026,614</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-4 Class 3B1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.342</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>07-25-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>2,529</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>2,563,418</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Bear Stearns Commercial Mortgage</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Securities, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-PW14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class D (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.412</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-01-38</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>655</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>646,096</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Chaseflex Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-2 Class 4A1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-25-20</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,075</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,048,670</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Citigroup Mortgage Loan Trust, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-10</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class 1A5A (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.874</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>906</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>910,411</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-5 Class 2A3</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>08-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>639</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>625,353</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Citigroup/Deutsche Bank Commercial</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mortgage Securities,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-CD1</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class A4 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.226</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>07-15-44</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>620</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>618,582</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-CD1</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class C (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.226</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>07-15-44</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>295</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>291,640</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>ContiMortgage Home Equity Loan Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Pass Thru Ctf Ser 1995-2 Class A-5</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.100</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>08-15-25</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>111</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>114,262</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Countrywide Alternative Loan Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2004-24CB</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class 1A1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-25-34</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>718</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>718,562</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-6 Class 2A1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>04-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Aaa</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>592</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>577,022</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-J1 Class 3A1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>08-25-32</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>455</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>459,534</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-11CB</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class 3A1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-25-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Aaa</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>4,037</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>4,078,762</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Countrywide Home Loans Servicing LP,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-21 Class A1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>10-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Aaa</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>4,047</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>3,997,895</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Crown Castle Towers LLC,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-1A Class G</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.795</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Ba2</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>3,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>2,995,535</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>DB Master Finance LLC,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ser 2006-1-M1 (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>8.285</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>06-20-31</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>BB</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>340</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>345,752</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>First Horizon Alternative</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mortgage Securities,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2004-AA5</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class B1 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.228</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-25-34</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>490</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>484,484</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-AA2</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class B1 (G)(P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.215</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-25-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,550</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,562,443</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=2>14&nbsp; &nbsp;</FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<!--$$/page=-->
<A name="page_17"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>date</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>(000)</FONT></B> </TD>
     <TD noWrap align=right width="13%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%" colSpan=2><B><FONT face=sans-serif size=1>Thrifts &amp; Mortgage Finance (continued)</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=2>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Global Signal Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sub Bond Ser 2004-2A Class D (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>&nbsp;5.093%</FONT></TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-15-14</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Baa2</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>$495</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>$488,877</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sub Bond Ser 2006-1 Class E (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.495</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>02-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Baa3</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>460</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>466,278</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>GSR Mortgage Loan Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2004-9</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class B1 (G)(P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>4.621</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>08-25-34</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,231</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,211,992</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-4F</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class 6A1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-25-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>4,537</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>4,615,371</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Indymac Index Mortgage Loan Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2004-AR13</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class B1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.296</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>01-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>462</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>459,081</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-AR5</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class B1 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.386</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>522</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>518,870</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-AR19</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class 1B1 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.443</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>08-25-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>454</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>461,752</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>JP Morgan Alternative Loan Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-S1</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class 1A4</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>4,455</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>4,457,087</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>JP Morgan Chase Commercial Mortgage</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Security Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-LDP4</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.129</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>10-15-42</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Aa2</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>2,035</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,988,681</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>JP Morgan Mortgage Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-S3</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class 2A2</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>01-25-21</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,023</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,015,864</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Merrill Lynch Mortgage Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-CKI1</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class A6 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.244</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-12-37</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>855</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>853,619</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Morgan Stanley Capital I,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-HQ7</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class A4 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.203</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-14-42</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>840</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>836,455</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-IQ10</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class A4A</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.230</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>09-15-42</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,225</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,215,464</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-IQ12</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class E</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.538</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-15-43</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A+</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>640</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>638,407</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Nomura Asset Acceptance Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2006-AF1</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class CB1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.540</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>06-25-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,001</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>1,021,413</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Provident Funding Mortgage Loan Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-1</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class B1 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>4.358</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>421</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>410,164</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Residential Accredit Loans, Inc.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-QA12</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Class NB5 (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.994</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>12-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>3,812</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>3,865,906</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>SBA CMBS Trust,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sub Bond Ser 2005-1A Class C (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.731</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>A2</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>200</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>201,838</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sub Bond Ser 2005-1A Class D (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.219</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Baa2</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>225</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>228,528</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sub Bond Ser 2005-1A Class E (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>6.706</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Baa3</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>200</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>204,483</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sub Bond Ser 2006-1A Class H (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.389</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>Ba3</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>270</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>270,548</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="37%"><FONT face=sans-serif size=1>Sub Bond Ser 2006-1A Class J (S)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>7.825</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>11-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>B1</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>220</FONT>&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=sans-serif size=1>220,441</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>15</FONT></P>
<HR align=center width="100%" noShade SIZE=2>


<A name="page_18"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=right width="49%" colSpan=2><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="2%" background="">&nbsp;</TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp;</TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>&nbsp;(000)</FONT></B></TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><B><FONT face=sans-serif size=1>Thrifts &amp; Mortgage Finance (continued)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=2>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sovereign Capital Trust I,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Cap Security</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>&nbsp;9.000%</FONT></TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>04-01-27</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BB</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>$1,000</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>$1,031,494</FONT>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><FONT face=sans-serif size=1>Washington Mutual Alternative Loan Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-6</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Class 1CB</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>6.500</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>08-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>639</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>646,091</FONT>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Washington Mutual, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2005-AR4</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Class B1 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>4.673</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>04-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AA</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,513</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,463,831</FONT>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Wells Fargo Mortgage Backed</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Securities Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Mtg Pass Thru Ctf Ser 2004-7 Class 2A2</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>5.000</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>07-25-19</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>662</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>647,463</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Tobacco 0.61%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>1,039,496</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Reynolds American, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Sec Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>7.250</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>06-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BB</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,000</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,039,496</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Wireless Telecommunication Services</FONT></B>&nbsp;</TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>2.63%</FONT></B></TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>4,507,508</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>America Movil SA de CV,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note (Mexico)</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>5.750</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>01-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,275</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,261,440</FONT>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Citizens Communications Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>6.250</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>01-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>460</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>451,375</FONT>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Crown Castle Towers LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sub Bond Ser 2005-1A Class D</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>5.612</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>06-15-35</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>Baa2</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,340</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,332,980</FONT>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Mobile Telesystems Finance SA,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Gtd Sr Note (Luxembourg) (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>9.750</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>01-30-08</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BB&#150;</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>400</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>414,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Nextel Communications, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Note Ser D</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>7.375</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>08-01-15</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB+</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>500</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>512,713</FONT>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Nordic Telephone Co. Holdings,</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Sr Bond (Denmark) (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>8.875</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>05-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>B</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>500</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>535,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%">&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>rating (A)&nbsp;</FONT></B>&nbsp;</TD>
     <TD noWrap align=right width="12%" background=""><FONT size=1>Shares</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Preferred stocks 4.69%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>$8,049,435</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>(Cost $8,233,146)</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Agricultural Products 0.59%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>1,009,375</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><FONT face=sans-serif size=1>Ocean Spray Cranberries, Inc., 6.25%, Ser A (S)</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>12,500</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,009,375</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Broadcasting &amp; Cable TV 0.59%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>1,003,600</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>CBS Corp., 7.250%</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>40,000</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,003,600</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Diversified Banks 0.81%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>1,395,350</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Bank One Capital Trust VI, 7.20%</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>A&#150;</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>55,000</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,395,350</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><B><FONT face=sans-serif size=1>Integrated Telecommunication Services 0.58%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>1,002,800</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><FONT face=sans-serif size=1>Telephone &amp; Data Systems, Inc., 7.60%, Ser A</FONT>&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>A&#150;</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>40,000</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,002,800</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=sans-serif size=1>Multi-Utilities 0.59%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>1,014,400</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=sans-serif size=1>Dominion CNG Capital Trust I, 7.80%</FONT>&nbsp;</TD>
     <TD noWrap align=left width="10%">&nbsp;</TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="12%">&nbsp;</TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BB+</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>40,000</FONT>&nbsp;</TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,014,400</FONT>&nbsp;</TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=2>16&nbsp; &nbsp;</FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_19"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>rating (A)&nbsp;</FONT></B> </TD>
     <TD noWrap align=center width="11%" background="">&nbsp;<B><FONT face=sans-serif size=1>Shares</FONT></B>&nbsp;</TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="50%" colSpan=2><B><FONT face=sans-serif size=1>Real Estate Management &amp; Development 1.40%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>$2,403,750</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="100%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="63%" colSpan=4><FONT face=sans-serif size=1>Apartment Investment &amp; Management Co., 8.00%, Ser T</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>B+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>55,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>1,399,750</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="100%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="50%" colSpan=2><FONT face=sans-serif size=1>Public Storage, Inc., 6.50%, Depositary Shares, Ser W</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB+</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>40,000</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>1,004,000</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Reinsurance 0.13%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>220,160</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="100%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="50%" colSpan=2><FONT face=sans-serif size=1>Aspen Insurance Holdings Ltd., 7.401% (Bermuda)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>BBB&#150;</FONT>&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=sans-serif size=1>8,600</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>220,160</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="100%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Issuer, description, maturity date</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>(000)</FONT></B> </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="100%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Tranche loans 0.12%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>$200,750</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>(Cost $200,000)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Education Services 0.12%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>200,750</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="100%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Riverdeep Interactive Learning Ltd.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Tranche B, 11-28-13</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>$200</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>200,750</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="100%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background="">&nbsp;</TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>date</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>(000)</FONT></B> </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="63%" colSpan=4><B><FONT face=sans-serif size=1>U.S. government and agencies securities 53.67%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>$92,136,274</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="100%" background="" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>(Cost $91,698,178)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Government U.S. 2.93%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>5,031,665</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="100%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>United States Treasury,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Bond (L)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>&nbsp;4.500%</FONT> </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>02-15-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>$265</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>251,999</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Note (L)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>5.125</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>05-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>605</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>623,174</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Note (L)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>4.625</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>11-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>400</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>397,375</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Note (L)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>4.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>02-15-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>3,820</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>3,759,117</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><B><FONT face=sans-serif size=1>Government U.S. Agency 50.74%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>87,104,609</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="100%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Federal Home Loan Mortgage Corp.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>20 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>11.250</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>01-01-16</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>19</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>19,423</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>08-01-34</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>2,196</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>2,212,527</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>04-01-33</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>1,738</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>1,721,755</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Adj Rate Pass Thru Ctf (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>5.161</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>11-01-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>2,146</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>2,103,029</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>CMO REMIC 2978-CL</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>01-15-31</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>2,695</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>2,680,235</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>CMO REMIC 3153-NE</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>05-15-34</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>1,335</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>1,319,778</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>CMO REMIC 3154-PM</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>05-15-34</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>1,145</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>1,124,113</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>CMO REMIC 3184-PD</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>07-15-34</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>3,885</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>3,825,418</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="100%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>Federal National Mortgage Assn.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>15 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>7.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>09-01-10</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>22</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>22,325</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>15 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>7.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>09-01-12</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>3</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>3,135</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>15 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>7.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>04-01-17</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>42</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>42,672</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>15 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>05-01-21</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>883</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>895,350</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>6.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>07-01-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>4,728</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>4,817,428</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>05-01-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>3,654</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>3,678,694</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>08-01-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>3,556</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>3,581,104</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>04-01-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>1,946</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>1,958,965</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>06-01-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>3,814</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>3,839,738</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>08-01-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>14,067</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>14,162,126</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>09-01-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>17,087</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>17,202,322</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>11-01-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="12%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>2,492</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>2,508,751</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>17</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<!--$$/page=-->
<A name="page_20"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp; &nbsp;S T A T E M E N T S</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background="">&nbsp;</TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Maturity</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>Issuer, description</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>rate</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>date</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>(000)</FONT></B> </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><B><FONT face=sans-serif size=1>Government U.S. Agency (continued)</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=2>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><FONT face=sans-serif size=1>Federal National Mortgage Assn., (continued)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>5.500%</FONT> </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>04-01-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>$2,095</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>$2,072,648</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>11-01-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>2,035</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>2,011,300</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>01-01-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>2,519</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>2,490,195</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>02-01-36</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>4,777</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>4,722,540</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>30 Yr Adj Rate Pass Thru Ctf (P)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>5.314</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>11-01-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>3,735</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>3,704,270</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>CMO REMIC 2006-57-PD</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>01-25-35</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,505</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>1,477,558</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>CMO REMIC 2006-67-PD</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>5.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>12-25-34</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,230</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>1,209,483</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>Note</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>6.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>05-30-25</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>1,720</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>1,674,083</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><FONT face=sans-serif size=1>Government National Mortgage Assn.,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>10.000</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>11-15-20</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>4</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>4,921</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>9.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>01-15-21</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>4</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>4,727</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>30 Yr Pass Thru Ctf</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>9.500</FONT>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>02-15-25</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>13</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>13,996</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>Credit</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>Par value</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>Issuer, description, maturity date</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=sans-serif size=1>rating (A)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="12%"><B><FONT face=sans-serif size=1>(000)</FONT></B> </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>Short-term investments 0.18%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>$310,000</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>(Cost $309,959)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>Government U.S. Agency 0.18%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>310,000</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>Federal Home Loan Bank,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=sans-serif size=1>Disc Note 01-02-07</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=sans-serif size=1>AAA</FONT>&nbsp; </TD>
     <TD noWrap align=right width="12%"><FONT face=sans-serif size=1>$310</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>310,000</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><B><FONT face=sans-serif size=1>Total investments (Cost $257,353,089) 150.40%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>$258,190,067</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="49%" colSpan=2><B><FONT face=sans-serif size=1>Other assets and liabilities, net</FONT></B>&nbsp; <B><FONT face=sans-serif size=1>1.47%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>$2,523,894</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%" colSpan=4><B><FONT face=sans-serif size=1>Fund preferred shares and accrued dividends (51.87%)</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>($89,045,317)</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=7>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>Total net assets 100.00%</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD>
     <TD noWrap align=left width="2%" background=""></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>$171,668,644</FONT></B>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>(A) Credit ratings are unaudited and are rated by Moody&#146;s Investors Service where Standard &amp; Poor&#146;s ratings are not available unless indicated otherwise.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1></FONT></B><FONT face=sans-serif size=1>(G) Security rated internally by John Hancock Advisers, LLC.</FONT></P>
<P align=left><FONT face=sans-serif size=1>(L) All or a portion of this security is on loan as of December 31, 2006. </FONT></P>
<P align=left><FONT face=sans-serif size=1>(P) Represents rate in effect on December 31, 2006.</FONT></P>
<P align=left><FONT face=sans-serif size=1>(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 $36,290,687 or 21.14% of the Fund&#146;s net assets as of December 31, 2006.</FONT></P>
<P align=left><FONT face=sans-serif size=1>Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer; however, security is U.S. dollar-denominated.</FONT></P>
<P align=left><FONT face=sans-serif size=1>The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund.</FONT></P>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=2>18&nbsp; &nbsp;</FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
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<A name="page_21"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<P align=left><FONT face=serif size=7>Financial statements</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=4>Statement of assets and liabilities </FONT><FONT face=sans-serif size=2>12-31-06</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="99%" colSpan=2><B><FONT face=sans-serif size=1>This Statement of Assets and Liabilities is the Fund&#146;s balance sheet. It shows the value</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="99%" colSpan=2><B><FONT face=sans-serif size=1>of what the Fund owns, is due and owes. You&#146;ll also find the net asset value for each</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><B><FONT face=sans-serif size=1>common share.</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=2>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><B><FONT face=sans-serif size=1>Assets</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Investments at value (cost $257,353,089)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>including $6,502,546 of securities loaned</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>$258,190,067</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Cash and cash equivalents</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>213,868</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Cash segregated for futures contacts</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>185,250</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Receivable for investments sold</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>29,231</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Receivable for dividends reinvested</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>218,715</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Dividends and interest receivable</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>2,543,933</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Receivable for futures variation margin</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>35,625</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Other assets</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>15,854</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><B><FONT face=sans-serif size=1>Total assets</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="20%"><B><FONT face=sans-serif size=1>261,432,543</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><B><FONT face=sans-serif size=1>Liabilities</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Payable for investments purchased</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>200,000</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Payable to affiliates</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Management fees</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>344,118</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Other</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>10,552</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Other payable and accrued expenses</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>163,913</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><B><FONT face=sans-serif size=1>Total liabilities</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="20%"><B><FONT face=sans-serif size=1>718,583</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Auction Preferred Shares (APS) Series A, including accrued dividends,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>unlimited number of shares of beneficial interest authorized with</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>no par value, 1,780 shares issued, liquidation preference of</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>$25,000 per share</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><B><FONT face=sans-serif size=1>44,522,658</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>APS Series B, including accrued dividends, unlimited number of shares of</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>beneficial interest authorized with no par value, 1,780 shares issued,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>liquidation preference of $25,000 per share</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><B><FONT face=sans-serif size=1>44,522,658</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><B><FONT face=sans-serif size=1>Net assets</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Common shares capital paid-in</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>178,860,851</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Accumulated net realized loss on investments and financial futures contracts</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>(8,261,117)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Net unrealized depreciation of investments and financial futures contracts</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>1,082,132</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Distributions in excess of net investment income</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>(13,222)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><B><FONT face=sans-serif size=1>Net assets applicable to common shares</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="20%"><B><FONT face=sans-serif size=1>$171,668,644</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><B><FONT face=sans-serif size=1>Net asset per common share</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>Based on 11,282,039 common shares outstanding &#151; the Fund has an</FONT>&nbsp; </TD>
     <TD noWrap align=left width="20%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="79%"><FONT face=sans-serif size=1>unlimited number of shares authorized with no par value</FONT>&nbsp; </TD>
     <TD noWrap align=right width="20%"><FONT face=sans-serif size=1>$15.22</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>19</FONT></P>
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<A name="page_22"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<P align=left><FONT face=sans-serif size=4>Statement of operations</FONT><FONT face=sans-serif size=2> For the year ended 12-31-06.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>This Statement of Operations summarizes the Fund&#146;s investment income earned and expenses incurred in operating the Fund. It also shows net gains (losses) for the period stated.</FONT></B></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><B><FONT face=sans-serif size=1>Investment income</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="27%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Interest</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>$15,251,937</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Dividends</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>694,961</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Securities lending</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>165,628</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><B><FONT face=sans-serif size=1>Total investment income</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="27%"><B><FONT face=sans-serif size=1>16,112,526</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><B><FONT face=sans-serif size=1>Expenses</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="27%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Investment management fees (Note 2)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>1,369,671</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Accounting and legal services fees (Note 2)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>40,280</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Compliance fees</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>2,750</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>APS auction fees</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>244,425</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Transfer agent fees</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>89,685</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Custodian fees</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>82,938</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Printing fees</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>62,238</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Professional fees</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>36,362</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Registration and filing fees</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>24,009</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Trustees&#146; fees</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>10,036</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Security lending fees</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>6,491</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Interest</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>1,831</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Miscellaneous</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>20,983</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><B><FONT face=sans-serif size=1>Total expenses</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="27%"><B><FONT face=sans-serif size=1>1,991,699</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><B><FONT face=sans-serif size=1>Net investment income</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="27%"><B><FONT face=sans-serif size=1>14,120,827</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><B><FONT face=sans-serif size=1>Realized and unrealized loss</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="27%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><B><FONT face=sans-serif size=1>Net realized gain (loss) on</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="27%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Investments</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>(2,977,212)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Financial futures contracts</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>575,432</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><B><FONT face=sans-serif size=1>Change in net unrealized appreciation (depreciation) of</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="27%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Investments</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>1,550,950</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Financial futures contracts</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>497,434</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><B><FONT face=sans-serif size=1>Net realized and unrealized loss</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="27%"><B><FONT face=sans-serif size=1>(353,396)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Distributions to APS Series A</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>(2,116,829)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><FONT face=sans-serif size=1>Distributions to APS Series B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="27%"><FONT face=sans-serif size=1>(2,138,690)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="72%"><B><FONT face=sans-serif size=1>Increase in net assets from operations</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="27%"><B><FONT face=sans-serif size=1>$9,511,912</FONT></B>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=2>20&nbsp;&nbsp; </FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_23"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<P align=left><FONT face=sans-serif size=4>Statement of changes in net assets</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>These Statements of Changes in Net Assets show how the value of the Fund&#146;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.</FONT></B></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%">&nbsp; </TD>
     <TD noWrap align=right width="24%"><B><FONT face=sans-serif size=1>Year</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="17%"><B><FONT face=sans-serif size=1>Year</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%">&nbsp; </TD>
     <TD noWrap align=right width="24%"><B><FONT face=sans-serif size=1>ended</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="17%"><B><FONT face=sans-serif size=1>ended</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%">&nbsp; </TD>
     <TD noWrap align=right width="24%"><B><FONT face=sans-serif size=1>12-31-05</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="17%"><B><FONT face=sans-serif size=1>12-31-06</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><B><FONT face=sans-serif size=1>Increase (decrease) in net assets</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="24%">&nbsp; </TD>
     <TD noWrap align=left width="17%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><B><FONT face=sans-serif size=1>From operations</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="24%">&nbsp; </TD>
     <TD noWrap align=left width="17%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=sans-serif size=1>Net investment income</FONT>&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=sans-serif size=1>$13,412,484</FONT>&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face=sans-serif size=1>$14,120,827</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=sans-serif size=1>Net realized loss</FONT>&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=sans-serif size=1>(1,421,022)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face=sans-serif size=1>(2,401,780)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=sans-serif size=1>Change in net unrealized appreciation (depreciation)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=sans-serif size=1>(7,479,689)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face=sans-serif size=1>2,048,384</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=sans-serif size=1>Distributions to APS Series A and B</FONT>&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=sans-serif size=1>(2,859,124)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face=sans-serif size=1>(4,255,519)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><B><FONT face=sans-serif size=1>Increase in net assets resulting from operations</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="24%"><B><FONT face=sans-serif size=1>1,652,649</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="17%"><B><FONT face=sans-serif size=1>9,511,912</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><B><FONT face=sans-serif size=1>Distributions to common shareholders</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="24%">&nbsp; </TD>
     <TD noWrap align=left width="17%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=sans-serif size=1>From net investment income</FONT>&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=sans-serif size=1>(11,475,867)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face=sans-serif size=1>(10,412,003)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><B><FONT face=sans-serif size=1>From Fund share transactions</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="24%"><B><FONT face=sans-serif size=1>1,074,345</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="17%"><B><FONT face=sans-serif size=1>932,358</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><B><FONT face=sans-serif size=1>Net assets</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="24%">&nbsp; </TD>
     <TD noWrap align=left width="17%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=sans-serif size=1>Beginning of period</FONT>&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=sans-serif size=1>180,385,250</FONT>&nbsp; </TD>
     <TD noWrap align=right width="17%"><FONT face=sans-serif size=1>171,636,377</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><B><FONT face=sans-serif size=1>End of period</FONT></B><SUP><FONT face=sans-serif size=1>1</FONT></SUP>&nbsp; </TD>
     <TD noWrap align=right width="24%"><B><FONT face=sans-serif size=1>$171,636,377</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="17%"><B><FONT face=sans-serif size=1>$171,668,644</FONT></B>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1></FONT><SUP><FONT face=sans-serif size=1>1</FONT></SUP><FONT face=sans-serif size=1> Includes accumulated (distributions in excess of) net investment income of $119,788 and ($13,222), respectively.</FONT></P>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>21</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<!--$$/page=-->
<A name="page_24"></A>
<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<P align=left><FONT face=sans-serif size=4>Financial highlights</FONT><BR>
<BR>
<B><FONT face=sans-serif size=1>The Financial highlights show how the Fund&#146;s net asset value for a share has changed </FONT></B><BR>
<B><FONT face=sans-serif size=1>since the end of the previous period.</FONT></B></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>COMMON SHARES</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>Period ended</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>12-31-02</FONT></B><B><SUP><FONT face=sans-serif size=1>1</FONT></SUP></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>12-31-03</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>12-31-04</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>12-31-05</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="9%"><B><FONT face=sans-serif size=1>12-31-06</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>Per share operating performance</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="97%" background="" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>Net asset value, beginning of period</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>$16.06</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>$16.31</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>$16.53</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>$16.19</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="9%"><B><FONT face=sans-serif size=1>$15.30</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Net investment income</FONT><SUP><FONT face=sans-serif size=1>2</FONT></SUP>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>0.89</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>0.93</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>1.22</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>1.20</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>1.26</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Net realized and unrealized</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>gain (loss) on investments</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>0.28</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>0.63</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>(0.25)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>(0.81)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>(0.03)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Distributions to APS Series A and B </FONT><SUP><FONT face=sans-serif size=1>3</FONT></SUP>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>(0.02)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>(0.12)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>(0.25)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>(0.38)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>Total from investment operations</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>1.17</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>1.54</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>0.85</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>0.14</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="9%"><B><FONT face=sans-serif size=1>0.85</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>Less distributions to common shareholders</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>From net investment income</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>(0.92)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>(0.96)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>(1.19)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>(1.03)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>(0.93)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>From net realized gain</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>(0.26)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%">&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>(0.92)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>(1.22)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>(1.19)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>(1.03)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="9%"><B><FONT face=sans-serif size=1>(0.93)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>Capital charges</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Offering costs and underwriting</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>discount related to APS</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>(0.10)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>Net asset value, end of period</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>$16.31</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>$16.53</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>$16.19</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>$15.30</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="9%"><B><FONT face=sans-serif size=1>$15.22</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>Per share market value, end of period</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>$14.66</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>$15.39</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>$15.68</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>$13.68</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="9%"><B><FONT face=sans-serif size=1>$14.75</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>Total return at market value</FONT></B><SUP><FONT face=sans-serif size=1>4 </FONT></SUP><B><FONT face=sans-serif size=1>(%)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="11%"><B><FONT face=sans-serif size=1>6.42</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>13.49</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>9.95</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=sans-serif size=1>(6.42)</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="9%"><B><FONT face=sans-serif size=1>15.15</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=sans-serif size=1>Ratios and supplemental data</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="97%" background="" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Net assets applicable</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>to common shares, end of period</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>(in millions)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>$179</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$183</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$180</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$172</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>$172</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Ratio of expenses to average</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>net assets (%)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>0.84</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>0.87</FONT><SUP><FONT face=sans-serif size=1>5</FONT></SUP>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>1.14</FONT><SUP><FONT face=sans-serif size=1>5</FONT></SUP>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>1.16</FONT><SUP><FONT face=sans-serif size=1>5</FONT></SUP>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>1.17</FONT><SUP><FONT face=sans-serif size=1>5</FONT></SUP>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Ratio of net investment income</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>to average net assets (%)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>5.56</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>5.58</FONT><SUP><FONT face=sans-serif size=1>6</FONT></SUP>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>7.44</FONT><SUP><FONT face=sans-serif size=1>6</FONT></SUP>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>7.62</FONT><SUP><FONT face=sans-serif size=1>6</FONT></SUP>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>8.30</FONT><SUP><FONT face=sans-serif size=1>6</FONT></SUP>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Portfolio turnover (%)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>371</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>273</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>135</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>148</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>94</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%">
<P><B><FONT face=sans-serif size=1><BR>
Senior securities</FONT></B>&nbsp; </P></TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="97%" background="" colSpan=6>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Total APS Series A outstanding</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>(in millions)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$45</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$45</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$45</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>$45</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Total APS Series B outstanding</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>(in millions)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$45</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$45</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$45</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>$45</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Involuntary liquidation preference</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>APS Series A per unit (in thousands)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Involuntary liquidation preference</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>APS Series B per unit (in thousands)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Average market value per unit</FONT>&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>(in thousands)</FONT>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>$25</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=sans-serif size=1>Asset coverage per unit </FONT><SUP><FONT face=sans-serif size=1>7</FONT></SUP>&nbsp; </TD>
     <TD noWrap align=right width="11%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$75,402</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$75,049</FONT>&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=sans-serif size=1>$72,470</FONT>&nbsp; </TD>
     <TD noWrap align=right width="9%"><FONT face=sans-serif size=1>$73,375</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=2>22&nbsp;&nbsp; </FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
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<P align=left><FONT face=sans-serif size=2>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Notes to Financial Highlights</FONT></B></P>
<P align=left><FONT face=sans-serif size=1></FONT><SUP><FONT face=sans-serif size=1>1</FONT></SUP><FONT face=sans-serif size=1> Audited by previous auditor.</FONT></P>
<P align=left><FONT face=sans-serif size=1></FONT><SUP><FONT face=sans-serif size=1>2</FONT></SUP><FONT face=sans-serif size=1> Based on the average of the shares outstanding. </FONT></P>
<P align=left><FONT face=sans-serif size=1></FONT><SUP><FONT face=sans-serif size=1>3</FONT></SUP><FONT face=sans-serif size=1> APS Series A and B were issued on 11-4-03. </FONT></P>
<P align=left><FONT face=sans-serif size=1></FONT><SUP><FONT face=sans-serif size=1>4</FONT></SUP><FONT face=sans-serif size=1> Assumes dividend reinvestment.</FONT></P>
<P align=left><FONT face=sans-serif size=1></FONT><SUP><FONT face=sans-serif size=1>5</FONT></SUP><FONT face=sans-serif size=1> Ratios calculated on the basis of expenses relative to the average net assets of common shares. Without the exclusion of preferred shares, the ratios of expenses would have been 0.81%, 0.76%, 0.77% and 0.77% for the years ended 12-31-03, 12-31-04, 12-31-05 and 12-31-06, respectively.</FONT></P>
<P align=left><FONT face=sans-serif size=1></FONT><SUP><FONT face=sans-serif size=1>6</FONT></SUP><FONT face=sans-serif size=1> 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 ratios of net investment income would have been 5.19%, 4.99%, 5.06% and 5.45% for the years ended 12-31-03, 12-31-04, 12-31-05 and 12-31-06, respectively.</FONT></P>
<P align=left><FONT face=sans-serif size=1></FONT><SUP><FONT face=sans-serif size=1>7</FONT></SUP><FONT face=sans-serif size=1> Calculated by subtracting the Fund&#146;s total liabilities from the Fund&#146;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.</FONT></P>
<P align=left><FONT face=sans-serif size=1>See notes to financial statements</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>23</FONT></P>
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<P align=left><FONT face=sans-serif size=4>Notes to financial statements</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Note 1 </FONT></B><BR>
<B><FONT face=sans-serif size=2>Accounting policies</FONT></B></P>
<P align=left><FONT face=serif size=2>John Hancock Income Securities Trust (the &#147;Fund&#148;) is a closed-end diversified investment management company registered under the Investment Company Act of 1940 (the &#147;1940 Act&#148;), as amended.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Significant accounting policies of the Fund are as follows:</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=1>Valuation of investments</FONT></B></P>
<P align=left><FONT face=serif size=2>Securities in the Fund&#146;s portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments which have a remaining maturity of 60 days or less may be valued at amortized cost, which approximates market value. The Fund determines the net asset value of the common shares each business day.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Joint repurchase agreement</FONT></B></P>
<P align=left><FONT face=serif size=2>Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the &#147;Adviser&#148;), a wholly owned subsidiary of John Hancock Financial Services, Inc., a subsidiary of Manulife Financial Corporation (&#147;MFC&#148;), may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund&#146;s custodian bank receives delivery of the underlying securities for the joint account on the Fund&#146;s behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Investment transactions</FONT></B></P>
<P align=left><FONT face=serif size=2>Investment 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. Net realized gains and losses on sales of investments are determined on the identified cost basis. Some securities may be purchased on a &#147;when-issued&#148; or &#147;forward commitment&#148; basis, which means that the securities will be delivered to the Fund at a future date, usually beyond the customary settlement date.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Discount and premium on securities</FONT></B></P>
<P align=left><FONT face=serif size=2>The Fund accretes discount and amortizes premium from par value on securities from either the date of issue or the date of purchase over the life of the security.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Expenses</FONT></B></P>
<P align=left><FONT face=serif size=2>The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Securities lending</FONT></B></P>
<P align=left><FONT face=serif size=2>The Fund may lend securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. As with other extensions of credit, the Fund may bear the risk of delay of the loaned securities in recovery or even loss of rights in the collateral, should the borrower of the securities fail financially.&nbsp; </FONT><FONT face=serif size=2>At December 31, 2006, the Fund loaned securities having a market value of $6,502,546 collateralized by securities in the amount of $6,753,184. Securities lending expenses are paid by the Fund to the lending agent.</FONT></P>
<P align=left><FONT face=sans-serif size=2>24&nbsp;&nbsp; </FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
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<P align=left><B><FONT face=sans-serif size=1>Financial futures contracts</FONT></B></P>
<P align=left><FONT face=serif size=2>The Fund may buy and sell financial futures contracts. Buying futures tends to increase the Fund&#146;s exposure to the underlying instrument. Selling futures tends to decrease the Fund&#146;s exposure to the underlying instrument or hedge other Fund&#146;s instruments. At the time the Fund enters into financial futures contracts, it is required to deposit with its custodian a specified amount of cash or U.S. government securities, known as &#147;initial margin,&#148; equal to a certain percentage of the value of the financial futures contract being traded. Each day, the futures contract is valued at the official settlement price of the board of trade or U.S. commodities exchange on which it trades. Subsequent payments to and from the broker, known as &#147;variation margin,&#148; are made on a daily basis as the market price of the financial futures contract fluctuates. Daily variation margin adjustments arising from this &#147;mark to market&#148; are recorded by the F
und as unrealized gains or losses.</FONT></P>
<P align=left><FONT face=serif size=2>When the contracts are closed, the Fund recognizes a gain or loss. Risks of entering into financial futures contracts include the possibility that there may be an illiquid market and/or that a change in the value of the contracts may not correlate with changes in the value of the underlying securities. In addition, the Fund could be prevented from opening or realizing the benefits of closing out financial futures positions because of position limits or limits on daily price fluctuation imposed by an exchange.</FONT></P>
<P align=left><FONT face=serif size=2>For federal income tax purposes, the amount, character and timing of the Fund&#146;s gains and/or losses can be affected as a result of financial futures contracts.</FONT></P>
<P align=left><FONT face=serif size=2>On December 31, 2006, the Fund had deposited $185,250 in a segregated account to cover margin requirements on open financial futures contracts.</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="96%" colSpan=5><B><FONT face=sans-serif size=1>The Fund had the following financial futures contracts open on December 31, 2006:</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD noWrap align=left width="16%"><FONT face=sans-serif size=1>NUMBER OF</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD>
     <TD noWrap align=left width="18%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%"><FONT face=sans-serif size=1>OPEN CONTRACTS</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%"><FONT face=sans-serif size=1>CONTRACTS</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%"><FONT face=sans-serif size=1>POSITION</FONT>&nbsp; </TD>
     <TD noWrap align=left width="19%"><FONT face=sans-serif size=1>EXPIRATION</FONT>&nbsp; </TD>
     <TD noWrap align=center width="18%"><FONT face=sans-serif size=1>APPRECIATION</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="96%" colSpan=5>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%"><FONT face=sans-serif size=1>U.S. 10-year Treasury Note</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%"><FONT face=sans-serif size=1>285</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%"><FONT face=sans-serif size=1>Short</FONT>&nbsp; </TD>
     <TD noWrap align=left width="19%"><FONT face=sans-serif size=1>Mar 07</FONT>&nbsp; </TD>
     <TD noWrap align=center width="18%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $245,154</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=sans-serif size=1>Federal income taxes</FONT></B></P>
<P align=left><FONT face=serif size=2>The Fund qualifies as a &#147;regulated investment company&#148; 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. For federal income tax purposes, the Fund has $7,909,723 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carry-forward expires as follows: December 31, 2012 &#151; $2,123,466, December 31, 2013 &#151; $2,443,482 and December 31, 2014 &#151; $3,342,775. Net capital losses of $328,913 that are attributable to security transactions incurred after October 31, 2005, are treated as arising on January 1, 2006, the first day of the Fund&#146;s next taxable year.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>New accounting pronouncements</FONT></B></P>
<P align=left><FONT face=serif size=2>In June 2006, Financial Accounting Standards Board (&#147;FASB&#148;) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (the &#147;Interpretation&#148;) was issued, and is effective for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. The Interpretation prescribes a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return, and requires certain expanded disclosures. Management is currently evaluating the application of the Interpretation to the Fund, and has not at this time quantified the impact, if any, resulting from the adoption of the Interpretation on the Fund&#146;s financial statements. The Fund will implement this pronouncement no later than June 29, 2007 and the effects will be noted in the Funds semiannual financial statements.</FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>25</FONT></P>
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<P align=left><FONT face=serif size=2>In September 2006, FASB Standard No. 157, Fair Value Measurements (&#147;FAS 157&#148;) was issued, and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishing a framework for measuring fair value and expands disclosure about fair value measurements. Management is currently evaluating the application of FAS 157 to the Fund, and its impact, if any, resulting from the adoption of FAS 157 on the Fund&#146;s financial statements.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Dividends, interest and distributions</FONT></B></P>
<P align=left><FONT face=serif size=2>Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. The Fund may place a security on non-accrual status and reduce related interest income by ceasing current accruals and writing off interest receivables when the collection of interest has become doubtful. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable.</FONT></P>
<P align=left><FONT face=serif size=2>The Fund records distributions to shareholders from net investment income and net realized gains, if any, on the ex-dividend date. During the year ended December 31, 2005, the tax character of distributions paid was as follows: ordinary income $14,334,991. During the year ended December 31, 2006, the tax character of distributions paid was as follows: ordinary income $14,667,522.</FONT></P>
<P align=left><FONT face=serif size=2>As of December 31, 2006, the components of distributable earnings on a tax basis included $43,637 of undistributed ordinary income.</FONT></P>
<P align=left><FONT face=serif size=2>Such distributions and distributable earnings, 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. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund&#146;s financial statements as a return of capital.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Use of estimates</FONT></B></P>
<P align=left><FONT face=serif size=2>The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Note 2 <BR>
</FONT></B><B><FONT face=sans-serif size=2>Management fee and transactions with <BR>
affiliates and others</FONT></B></P>
<P align=left><FONT face=serif size=2>The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a quarterly management fee to the Adviser, equivalent on an annual basis, to the sum of (a) 0.650% of the first $150,000,000 of the Fund&#146;s average weekly net asset value and the value attributable to the Auction Preferred Shares (collectively, &#147;managed assets&#148;), (b) 0.375% of the next $50,000,000, (c) 0.350% of the next $100,000,000 and (d) 0.300% of the Fund&#146;s average daily managed assets in excess of $300,000,000.</FONT></P>
<P align=left><FONT face=serif size=2>Effective December 31, 2005, the investment management teams of the Adviser were reorganized into Sovereign Asset Management LLC (&#147;Sovereign&#148;), a wholly owned indirect subsidiary of John Hancock Life Insurance Company (&#147;JHLICO&#148;), a subsidiary of MFC. The Adviser remains the principal advisor on the Fund and Sovereign acts as subadviser under the supervision of the Adviser. The restructuring did not have an impact on the Fund, which continues to be managed using the same investment philosophy and process. The Fund is not responsible for payment of the subadvisory fees.</FONT></P>
<P align=left><FONT face=serif size=2>Effective October 1, 2006, Sovereign changed its name to MFC Global Investment Management (U.S.), LLC.</FONT></P>
<P align=left><FONT face=serif size=2>The Fund has an agreement with the Adviser and affiliates to perform necessary tax, accounting and legal services for the Fund. The compensation for the year amounted to $40,280. The Fund also paid the Adviser the amount of $100 for certain publishing </FONT></P>
<P align=left><FONT face=sans-serif size=2>26&nbsp; &nbsp;</FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
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<P align=left><FONT face=serif size=2>services, included in the printing fees. The Fund reimbursed JHLICO for certain compliance costs, included in the Fund&#146;s Statement of Operations.</FONT></P>
<P align=left><FONT face=serif size=2>Mr. James R. Boyle is Chairman of the Adviser, as well as affiliated Trustee of the Fund, and is compensated by the Adviser and/or its affiliates. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer, for tax purposes, their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund&#146;s deferred compensation liability are </FONT><FONT face=serif size=2>recorded on the Fund&#146;s books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investments, as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund.</FONT></P>
<P align=left><FONT face=serif size=2>The Fund is listed for trading on the New York Stock Exchange (&#147;NYSE&#148;) and has filed with the NYSE its chief executive officer certification regarding compliance with the NYSE&#146;s listing standards. The Fund also files with the Securities and Exchange Commission the certification of its chief executive officer and chief financial officer required by Section 302 of the Sarbanes-Oxley Act.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Note 3 </FONT></B><BR>
<B><FONT face=sans-serif size=2>Fund share transactions</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=1>Common shares</FONT></B><FONT face=serif size=2> </FONT></P>
<P align=left><FONT face=serif size=2>This listing illustrates the reclassification of the Fund&#146;s capital accounts, dividend reinvestments and the number of common shares outstanding at the beginning and end of the last two periods, along with the corresponding dollar value.</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="27%">&nbsp; </TD>
     <TD noWrap align=right width="37%" colSpan=2><B><FONT face=sans-serif size=1>Year ended 12-31-05</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><B><FONT face=sans-serif size=1>Year ended 12-31-06</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="27%">&nbsp; </TD>
     <TD noWrap align=right width="18%"><B><FONT face=sans-serif size=1>Shares</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="19%"><B><FONT face=sans-serif size=1>Amount</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>Shares</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="19%"><B><FONT face=sans-serif size=1>Amount</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="27%"><FONT face=sans-serif size=1>Beginning of period</FONT>&nbsp; </TD>
     <TD noWrap align=right width="18%"><FONT face=sans-serif size=1>11,141,310</FONT>&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=sans-serif size=1>$176,262,151</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>11,215,223</FONT>&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=sans-serif size=1>$177,367,356</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="27%"><FONT face=sans-serif size=1>Distributions reinvested</FONT>&nbsp; </TD>
     <TD noWrap align=right width="18%"><FONT face=sans-serif size=1>73,913</FONT>&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=sans-serif size=1>1,074,345</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>66,816</FONT>&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=sans-serif size=1>932,358</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="27%"><FONT face=sans-serif size=1>Reclassification of</FONT>&nbsp; </TD>
     <TD noWrap align=left width="18%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="27%"><FONT face=sans-serif size=1>capital accounts</FONT>&nbsp; </TD>
     <TD noWrap align=right width="18%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=sans-serif size=1>30,860</FONT>&nbsp; </TD>
     <TD noWrap align=right width="15%"><FONT face=sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=sans-serif size=1>561,137</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="27%"><B><FONT face=sans-serif size=1>End of period</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="18%"><B><FONT face=sans-serif size=1>11,215,223</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="19%"><B><FONT face=sans-serif size=1>$177,367,356</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="15%"><B><FONT face=sans-serif size=1>11,282,039</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="19%"><B><FONT face=sans-serif size=1>$178,860,851</FONT></B>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=sans-serif size=1>Auction preferred shares</FONT></B></P>
<P align=left><FONT face=serif size=2>The Fund issued a total of 3,560 Auction Preferred Shares: 1,780 shares of Series A Auction Preferred Shares and 1,780 shares of Series B Auction Preferred Shares (collectively, the &#147;Preferred Shares&#148; or &#147;APS&#148;) on November 4, 2003, in a public offering. The total offering costs of $188,388 and the total underwriting discount of $890,000 has been charged to capital paid-in of common shares during the years ended December 31, 2003 and December 31, 2004.</FONT></P>
<P align=left><FONT face=serif size=2>Dividends on the APS, which accrue daily, are cumulative at a rate that was established at the offering of the APS and has been reset every seven days thereafter by an auction. Dividend rates on APS Series A ranged from 3.95% to 5.30% and Series B from 4.00% to 5.30%&nbsp; </FONT><FONT face=serif size=2>during the year ended December 31, 2006. Accrued dividends on APS are included in the value of APS on the Fund&#146;s Statement of Assets and Liabilities.</FONT></P>
<P align=left><FONT face=serif size=2>The APS are redeemable at the option of the Fund, at a redemption price equal to $25,000 per share, plus accumulated and unpaid dividends on any dividend payment date. The APS are also subject to mandatory redemption at a redemption price equal to $25,000 per share, plus accumulated and unpaid dividends, if the Fund is in default on its asset coverage requirements with respect to the APS as defined in the Fund&#146;s by-laws. If the dividends on the APS shall remain unpaid in an amount equal to two full years&#146; dividends, the holders of the APS, as a class, have the right to elect a majority of the Board of Trustees. In general, the holders of the </FONT></P>
<P align=left><FONT face=sans-serif size=1>Income Securities Trust&nbsp;&nbsp; </FONT><FONT face=sans-serif size=2>27</FONT></P>
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<P align=left><FONT face=serif size=2>APS and the common shareholders have equal voting rights of one vote per share, except that the holders of the APS, as a class, vote to elect two members of the Board of Trustees, and separate class votes are required on certain matters that affect the respective interests of the APS and common shareholders.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Note 4 <BR>
</FONT></B><B><FONT face=sans-serif size=2>Investment transactions</FONT></B></P>
<P align=left><FONT face=serif size=2>Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the year ended December 31, 2006, aggregated $209,772,252 and $179,966,481, respectively. Purchases and proceeds from sales or maturities of obligations of the U.S. government aggregated $34,346,618 and $60,829,522, respectively, during the year ended December 31, 2006.</FONT></P>
<P align=left><FONT face=serif size=2>The cost of investments owned on December 31, 2006, including short-term investments, for federal income tax purposes was $257,841,702. Gross unrealized appreciation and depreciation of investments aggregated $2,909,908 and $2,561,543, respectively, resulting in net unrealized appreciation of $348,365. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on certain sales of securities and amortization of premiums and accretion of discount on debt securities.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Note 5 <BR>
</FONT></B><B><FONT face=sans-serif size=2>Reclassification of accounts</FONT></B></P>
<P align=left><FONT face=serif size=2>During the year ended December 31, 2006, the Fund reclassified amounts to reflect an increase in accumulated net realized loss on investments of $974,822, a decrease in accumulated net investment loss of $413,685 and an increase in capital paid-in of $561,137. This represents the amounts necessary to report these balances on a tax basis, excluding certain temporary differences, as of December 31, 2006. Additional adjustments may be needed in subsequent reporting periods. These reclassifications, which have no impact on the net asset value of the Fund, are primarily attributable to certain differences in the computation of distributable income </FONT><FONT face=sans-serif size=2><FONT face=serif size=2>and capital gains under federal tax rules versus accounting principles generally accepted in the United States of America, book and tax differences in accounting for amortization of premium and REIT adjustments. The calculation of net investment income per share in the Fund
&#146;s Financial Highlights excludes these adjustments.</FONT></P></FONT>
<P align=left><FONT face=sans-serif size=2>28&nbsp; &nbsp;</FONT><FONT face=sans-serif size=1>Income Securities Trust</FONT></P>
<P align=left><FONT face=serif size=2></FONT>&nbsp;</P>
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<P align=left><FONT face=sans-serif size=4>Auditors&#146; report</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Report of Independent Registered Public Accounting Firm</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=1>To the Board of Trustees and Shareholders of John Hancock Income Securities Trust, </FONT></B></P>
<P align=left><FONT face=serif size=2>In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of John Hancock Income Securities Trust Fund (the &#147;Fund&#148;) at December 31, 2006, the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as &#147;financial statements&#148;) are the responsibility of the Fund&#146;s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).
 Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2006, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for each of the periods ended on or before December 31, 2002, were audited by other independent auditors, whose report dated February 7, 2003, expressed an unqualified opinion thereon.</FONT></P>
<P align=left><FONT face=serif size=2>PricewaterhouseCoopers LLP</FONT><BR>
<FONT face=serif size=2>Boston, Massachusetts </FONT><BR>
<FONT face=serif size=2>February 16, 2007</FONT></P>
<P align=left><FONT face=sans-serif size=2>29</FONT></P>
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<P align="left">
<FONT size=4 face="sans-serif">Tax information</FONT></P>
<P align="left">
<B><FONT size=1 face="sans-serif">Unaudited</FONT></B></P>
<P align="left">
<FONT size=2 face="serif">For federal income tax purposes, the following information is furnished with respect to the distributions of the Fund, if any, paid during its taxable year ended December 31, 2006.</FONT></P>
<P align="left">
<FONT size=2 face="serif">With respect to the ordinary dividends paid by the Fund for the fiscal year ended December 31, 2006, 2.78% of the dividends qualifies for the corporate dividends-received deduction.</FONT></P>
<P align="left">
<FONT size=2 face="serif">The Fund hereby designates the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003. This amount will be reflected on Form
1099-DIV for the calendar year 2006.</FONT></P>
<P align="left">
<FONT size=2 face="serif">Shareholders were mailed a 2006 U.S. Treasury Department Form 1099-DIV in January 2007. This will reflect the total of all distributions that are taxable for calendar year 2006. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">30</FONT></P>

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<P align=left><B><FONT face=sans-serif size=2>Investment objective and policy </FONT></B></P>
<P align=left><FONT face=serif size=2>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 NYSE. The Fund&#146;s investment objective is to generate a high level of current income consistent with prudent investment risk. The Fund invests in a diversified portfolio of freely marketable debt securities and may invest an amount not exceeding 20% of its assets in income-producing preferred and common stock. Under normal circumstances, the Fund will invest at least 80% of net assets in income securities. Income securities will consist of the following: (i) marketable corporate debt securities, (ii) governmental obligations and (iii) cash and commercial paper. &#147;Net assets&#148; 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.</FONT></P>
<P align=left><FONT face=serif size=2>It is contemplated that at least 75% of the value of the Fund&#146;s total assets will be represented by debt securities, which have at the time of purchase a rating within the four highest grades as determined by Moody&#146;s Investors Service, Inc., or Standard &amp; Poor&#146;s Corporation. The Fund intends to engage in short-term trading and may invest in repurchase agreements. The Fund may issue a single class of senior securities not to exceed 33</FONT><FONT face=serif size=1><SUP> 1 </SUP>/<SUB> 3 </SUB></FONT><FONT face=serif size=2>% of its net assets at market value and may borrow from banks as a temporary measure for emergency purposes in amounts not to exceed 5% of the total assets at cost. The Fund may lend portfolio securities not to exceed 33</FONT><FONT face=serif size=1><SUP> 1 </SUP>/<SUB> 3 </SUB></FONT><FONT face=serif size=2>% of total assets. </FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Bylaws</FONT></B></P>
<P align=left><FONT face=serif size=2>In November 2002, the Board of Trustees adopted several amendments to the Fund&#146;s bylaws, including provisions relating to the calling of a special meeting and requiring advance notice of shareholder proposals or nominees for Trustee. The advance notice provisions in the bylaws require shareholders to notify the Fund in writing of any proposal which they intend to present at an annual </FONT><FONT face=serif size=2>meeting of shareholders, including any nominations for Trustee, between 90 and 120 days prior to the first anniversary of the mailing date of the notice from the prior year&#146;s annual meeting of shareholders. The notification must be in the form prescribed by the bylaws. The advance notice provisions provide the Fund and its Trustees with the opportunity to thoughtfully consider and address the matters proposed before the Fund prepares and mails its proxy statement to shareholders. Other amendments set forth the procedures that must be followed in order
 for a shareholder to call a special meeting of shareholders. Please contact the Secretary of the Fund for additional information about the advance notice requirements or the other amendments to the bylaws.</FONT></P>
<P align=left><FONT face=serif size=2>On August 21, 2003, shareholders approved the amendment of the Fund&#146;s bylaws effective August 26, 2003, to provide for the issuance of preferred shares. Effective March 9, 2004, the Trustees approved additional changes to conform with the Fund&#146;s maximum dividend rate on the preferred shares with the rate used by other John Hancock funds.</FONT></P>
<P align=left><FONT face=serif size=2>On September 14, 2004, the Trustees approved an amendment to the Fund&#146;s bylaws increasing the maximum applicable dividend rate ceiling on the preferred shares to conform with the modern calculation methodology used by the industry and other John Hancock funds.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Financial futures contracts and options</FONT></B></P>
<P align=left><FONT face=serif size=2>The Fund may buy and sell financial futures contracts and options on futures contracts to hedge against the effects of fluctuations in interest rates and other market conditions. The Fund&#146;s ability to hedge successfully will depend on the Adviser&#146;s ability to predict accurately the future direction of interest rate changes and other market factors. There is no assurance that a liquid market for futures and options will always exist. In addition, the Fund could be prevented from opening, or realizing the benefits of closing out a futures or options position because of position limits or limits on daily price fluctuations imposed by an exchange.</FONT></P>
<P align=left><FONT face=sans-serif size=2>31</FONT></P>
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<P align=left><FONT face=serif size=2>The Fund will not engage in transactions in futures contracts and options on futures for speculation, but only for hedging or other permissible risk management purposes. All of the Fund&#146;s futures contracts and options on futures will be traded on a U.S. commodity exchange or board of trade. The Fund will not engage in a transaction in futures or options on futures if, immediately thereafter, the sum of initial margin deposits on existing positions and premiums paid for options on futures would exceed 5% of the Fund&#146;s total assets.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Dividends and distributions</FONT></B></P>
<P align=left><FONT face=serif size=2>During the year ended December 31, 2006, dividends from net investment income totaling $0.9263 per share were paid to shareholders. The dates of payments and the amounts per share are as follows:</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="63%">&nbsp; </TD>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>&nbsp; INCOME&nbsp; </FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="63%"><FONT face=sans-serif size=1>PAYMENT DATE</FONT>&nbsp; </TD>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>DIVIDEND</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="63%"><FONT face=sans-serif size=1>March 31, 2006</FONT>&nbsp; </TD>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>&nbsp;&nbsp; $0.2450</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="63%"><FONT face=sans-serif size=1>June 30, 2006</FONT>&nbsp; </TD>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; 0.2275</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="63%"><FONT face=sans-serif size=1>September 29, 2006</FONT>&nbsp; </TD>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; 0.2325</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="63%"><FONT face=sans-serif size=1>December 29, 2006</FONT>&nbsp; </TD>
     <TD noWrap align=left width="36%"><FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp; 0.2213</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><B><FONT face=sans-serif size=2>Dividend reinvestment plan</FONT></B></P>
<P align=left><FONT face=serif size=2>The Fund offers its common shareholders a Dividend Reinvestment Plan (the &#147;Plan&#148;), which offers the opportunity to earn compounded yields. Any holder of common shares of record of the Fund may elect to participate in the Plan and receive the Fund&#146;s common shares in lieu of all or a portion of the cash dividends. The Plan is available to all common shareholders without charge. Mellon Investor Services (the &#147;Plan Agent&#148;) will act as agent for participating shareholders.</FONT></P>
<P align=left><FONT face=serif size=2>Shareholders may join the Plan by notifying the Plan Agent by telephone, in writing or by visiting the Plan Agent&#146;s Web site at www. melloninvestor.com showing an election to reinvest all or a portion of dividend payments. If received in proper form by the Plan Agent prior to the record date for a dividend, the election will be effective with respect to all dividends paid after such record date. Shareholders whose shares are held in the </FONT><FONT face=serif size=2>name of a broker or nominee should contact the broker or nominee to determine whether and how they may participate in the Plan.</FONT></P>
<P align=left><FONT face=serif size=2>The Board of Trustees of the Fund will declare dividends from net investment income payable in cash or, in the case of shareholders participating in the Plan, partially or entirely in the Fund&#146;s common shares. The number of shares to be issued for the benefit of each shareholder will be determined by dividing the amount of the cash dividend, otherwise payable to such shareholder on shares included under the Plan, by the per share net asset value of the common shares on the date for payment of the dividend, unless the net asset value per share on the payment date is less than 95% of the market price per share on that date, in which event the number of shares to be issued to a shareholder will be determined by dividing the amount of the cash dividend payable to such shareholder, by 95% of the market price per share of the common shares on the payment date. The market price of the common shares on a particular date shall be the mean between the highest and lowest sales
 price on the NYSE on that date. Net asset value will be determined in accordance with the established procedures of the Fund. However, if as of such payment date the market price of the common shares is lower than such net asset value per share, the number of shares to be issued will be determined on the basis of such market price. Fractional shares, carried out to four decimal places, will be credited to the shareholder&#146;s account. Such fractional shares will be entitled to future dividends. </FONT></P>
<P align=left><FONT face=serif size=2>The shares issued to participating shareholders, including fractional shares, will be held by the Plan Agent in the name of the participant. A confirmation will be sent to each shareholder promptly, normally within five to seven days, after the payment date of the dividend. The confirmation will show the total number of shares held by such shareholder before and after the dividend, the amount of the most recent cash dividend that the shareholder has elected to reinvest and the number of shares acquired with such dividend.</FONT></P>
<P align=left><FONT face=sans-serif size=2>32</FONT></P>
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<P align=left><FONT face=serif size=2>Participation in the Plan may be terminated at any time by contacting the Plan Agent by telephone, in writing or by visiting the Plan Agent&#146;s Web site, and such termination will be effective immediately. However, notice of termination must be received prior to the record date of any distribution to be effective for that distribution. Upon termination, certificates will be issued representing the number of full shares of common shares held by the Plan Agent. A shareholder will receive a cash payment for any fractional share held. </FONT></P>
<P align=left><FONT face=serif size=2>The reinvestment of dividends will not relieve participants of any federal, state or local income tax, which may be due with respect to such dividend. Dividends reinvested in common shares will be treated on your federal income tax return as though you had received a dividend in cash in an amount equal to the fair market value of the shares received, as determined by the prices for common shares of the Fund on the NYSE as of the dividend payment date. Distributions from the Fund&#146;s long-term capital gains will be processed as noted above for those electing to reinvest in common shares and will be taxable to you as long-term capital gains. The confirmation referred to above will contain all the information you will require for determining the cost basis of shares acquired and should be retained for that purpose. At year end, each account will be supplied with detailed information necessary to determine total tax liability for the calendar year.</FONT></P>
<P align=left><FONT face=serif size=2>All correspondence or additional information concerning the Plan should be directed to the Plan Agent, Mellon Bank, N.A., c/o Mellon Investor Services, P.O. Box 3338, South Hackensack, New Jersey 07606-1938 (Telephone: 1-800-852-0218).</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Shareholder communication and assistance</FONT></B></P>
<P align=left><FONT face=serif size=2>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: </FONT></P>
<P align=left><FONT face=sans-serif size=1>Mellon Investor Services </FONT><BR>
<FONT face=sans-serif size=1>Newport Office Center VII </FONT><BR>
<FONT face=sans-serif size=1>480 Washington Boulevard </FONT><BR>
<FONT face=sans-serif size=1>Jersey City, NJ 07310 </FONT><BR>
<FONT face=sans-serif size=1>Telephone: 1-800-852-0218</FONT></P>
<P align=left><FONT face=serif size=2>If your shares are held with a brokerage firm, you should contact that firm, bank or other nominee for assistance.</FONT></P>
<P align=left><FONT face=sans-serif size=2>33</FONT></P>
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<P align=left><B><FONT face=sans-serif size=2>Shareholder meeting</FONT></B></P>
<P align=left><FONT face=serif size=2>On March 22, 2006, the Annual Meeting of the Fund was held to elect nine Trustees and to ratify the actions of the Trustees in selecting independent auditors for the Fund. </FONT></P>
<P align=left><FONT face=serif size=2>Proxies covering 9,671,478 shares of beneficial interest were voted at the meeting. The common shareholders elected the following Trustees to serve until their respective successors are duly elected and qualified, with the votes for each Trustee tabulated as follows:</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%">&nbsp; </TD>
     <TD noWrap align=left width="35%">&nbsp; </TD>
     <TD noWrap align=left width="27%"><FONT face=sans-serif size=1>WITHHELD</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%">&nbsp; </TD>
     <TD noWrap align=left width="35%"><FONT face=sans-serif size=1>FOR</FONT>&nbsp; </TD>
     <TD noWrap align=left width="27%"><FONT face=sans-serif size=1>AUTHORITY</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=serif size=2>James R. Boyle</FONT>&nbsp; </TD>
     <TD noWrap align=left width="35%"><FONT face=serif size=2>9,660,004</FONT>&nbsp; </TD>
     <TD noWrap align=left width="27%"><FONT face=serif size=2>11,474</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=serif size=2>James F. Carlin</FONT>&nbsp; </TD>
     <TD noWrap align=left width="35%"><FONT face=serif size=2>9,652,639</FONT>&nbsp; </TD>
     <TD noWrap align=left width="27%"><FONT face=serif size=2>18,839</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=serif size=2>Richard P. Chapman, Jr.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="35%"><FONT face=serif size=2>9,650,601</FONT>&nbsp; </TD>
     <TD noWrap align=left width="27%"><FONT face=serif size=2>20,877</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=serif size=2>William H. Cunningham</FONT>&nbsp; </TD>
     <TD noWrap align=left width="35%"><FONT face=serif size=2>9,650,599</FONT>&nbsp; </TD>
     <TD noWrap align=left width="27%"><FONT face=serif size=2>20,879</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=serif size=2>Richard Dion</FONT>&nbsp; </TD>
     <TD noWrap align=left width="35%"><FONT face=serif size=2>9,655,228</FONT>&nbsp; </TD>
     <TD noWrap align=left width="27%"><FONT face=serif size=2>16,250</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=serif size=2>Charles Ladner</FONT>&nbsp; </TD>
     <TD noWrap align=left width="35%"><FONT face=serif size=2>9,661,778</FONT>&nbsp; </TD>
     <TD noWrap align=left width="27%"><FONT face=serif size=2>&nbsp; 9,700</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="36%"><FONT face=serif size=2>Stephan Pruchansky</FONT>&nbsp; </TD>
     <TD noWrap align=left width="35%"><FONT face=serif size=2>9,653,607</FONT>&nbsp; </TD>
     <TD noWrap align=left width="27%"><FONT face=serif size=2>17,871</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=serif size=2>The preferred shareholders elected Dr. John A. Moore and Patti McGill Peterson to serve as the Fund&#146;s Trustees until their successors are duly elected and qualified, with the votes tabulated as follows: 2,982 FOR, 0 AGAINST, 7 ABSTAINING.</FONT></P>
<P align=left><FONT face=serif size=2>The common and preferred shareholders ratified the Trustees&#146; selection of PricewaterhouseCoopers LLP as the Fund&#146;s independent auditor for the fiscal year ending December 31, 2006, with votes tabulated as follows: 9,670,637 FOR, 49,203 AGAINST and 69,358 ABSTAINING.</FONT></P>
<P align=left><FONT face=sans-serif size=2>34</FONT></P>
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<P align=left><B><FONT face=sans-serif size=2>Board Consideration of and </FONT></B><BR>
<B><FONT face=sans-serif size=2>Continuation of Investment Advisory </FONT></B><BR>
<B><FONT face=sans-serif size=2>Agreement and Subadvisory </FONT></B><BR>
<B><FONT face=sans-serif size=2>Agreement: John Hancock Income </FONT></B><BR>
<B><FONT face=sans-serif size=2>Securities Trust</FONT></B></P>
<P align=left><FONT face=serif size=2>The Investment Company Act of 1940 (the &#147;1940 Act&#148;) requires the Board of Trustees (the &#147;Board&#148;) of John Hancock Income Securities Trust (the &#147;Fund&#148;), including a majority of the Trustees who have no direct or indirect interest in the investment advisory agreement and are not &#147;interested persons&#148; of the Fund, as defined in the 1940 Act (the &#147;Independent Trustees&#148;), annually to review and consider the continuation of: (i) the investment advisory agreement (the &#147;Advisory Agreement&#148;) with John Hancock Advisers, LLC (the &#147;Adviser&#148;) and (ii) the investment subadvisory agreement (the &#147;Subadvisory Agreement&#148;) with Sovereign Asset Management LLC (the &#147;Subadviser&#148;). The Advisory Agreement and the Subadvisory Agreement are collectively referred to as the &#147;Advisory Agreements.&#148;</FONT></P>
<P align=left><FONT face=serif size=2>At meetings held on May 1&#150;2 and June 5&#150;6, 2006,</FONT><SUP><FONT face=serif size=2>1</FONT></SUP><FONT face=serif size=2> the Board considered the factors and reached the conclusions described below relating to the selection of the Adviser and Subadviser and the continuation of the Advisory Agreements. During such meetings, the Board&#146;s Contracts/Operations Committee and the Independent Trustees also met in executive sessions with their independent legal counsel.</FONT></P>
<P align=left><FONT face=serif size=2>In evaluating the Advisory Agreements, the Board, including the Contracts/ Operations Committee and the Independent Trustees, reviewed a broad range of information requested for this purpose by the Independent Trustees, including: (i) the investment performance of the Fund relative to a category of relevant funds (the &#147;Category&#148;) and a peer group of comparable funds (the &#147;Peer Group&#148;) each selected by Morningstar Inc. (&#147;Morningstar&#148;), an independent provider of investment company data, for a range of periods ended December 31, 2005, (ii) advisory and other fees incurred by, and the expense ratios of, the Fund relative to a Category and a Peer Group, (iii) the advisory fees of comparable portfolios of other clients of the Adviser and the Subadviser, (iv) the Adviser&#146;s financial </FONT><FONT face=serif size=2>results and condition, including its and certain of its affiliates&#146; profitability from services performed for the Fund, (v) br
eakpoints in the Fund&#146;s and the Peer Group&#146;s fees, and information about economies of scale, (vi) the Adviser&#146;s and Subadviser&#146;s record of compliance with applicable laws and regulations, with the Fund&#146;s investment policies and restrictions, and with the applicable Code of Ethics, and the structure and responsibilities of the Adviser&#146;s and Subadviser&#146;s compliance department, (vii) the background and experience of senior management and investment professionals, and (viii) the nature, cost and character of advisory and non-investment management services provided by the Adviser and its affiliates and by the Subadviser.</FONT></P>
<P align=left><FONT face=serif size=2>The Board&#146;s review and conclusions were based on a comprehensive consideration of all information presented to the Board and not the result of any single controlling factor. It was based on performance and other information as of December 31, 2005; facts may have changed between that date and the date of this shareholders report. The key factors considered by the Board and the conclusions reached are described below.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Nature, extent and quality of services </FONT></B></P>
<P align=left><FONT face=serif size=2>The Board considered the ability of the Adviser and the Subadviser, based on their resources, reputation and other attributes, to attract and retain qualified investment professionals, including research, advisory, and supervisory personnel. The Board further considered the compliance programs and compliance records of the Adviser and Subadviser. In addition, the Board took into account the administrative services provided to the Fund by the Adviser and its affiliates. </FONT></P>
<P align=left><FONT face=serif size=2>Based on the above factors, together with those referenced below, the Board concluded that, within the context of its full deliberations, the nature, extent and quality of the investment advisory services provided to the Fund by the Adviser and Subadviser were sufficient to support renewal of the Advisory Agreements.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Fund performance </FONT></B></P>
<P align=left><FONT face=serif size=2>The Board considered the performance results for the Fund over various time periods </FONT></P>
<P align=left><FONT face=sans-serif size=2>35</FONT></P>
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<P align=left><FONT face=serif size=2>ended December 31, 2005. The Board also considered these results in comparison to the performance of the Category, as well as the Fund&#146;s Peer Group and benchmark index. Morningstar determined the Category and Peer Group for the Fund. The Board reviewed with a representative of Morningstar the methodology used by Morningstar to select the funds in the Category and the Peer Group. </FONT></P>
<P align=left><FONT face=serif size=2>The Board noted the Fund&#146;s performance was lower than the performance of the Category and Peer Group medians and its benchmark index, the Lehman Brothers Aggregate Bond Index, over the 1- and 10- year periods. The Board also noted that the Fund&#146;s performance for the 3- and 5- year periods was lower than the median performance of its Category and Peer Group, but higher than its benchmark index. The Board indicated its intent to continue to monitor the Fund&#146;s performance trends.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Investment advisory fee and subadvisory fee rates and expenses </FONT></B></P>
<P align=left><FONT face=serif size=2>The Board reviewed and considered the contractual investment advisory fee rate payable by the Fund to the Adviser for investment advisory services (the &#147;Advisory Agreement Rate&#148;). The Board received and considered information comparing the Advisory Agreement Rate with the advisory fees for the Category and Peer Group. The Board noted that the Advisory Agreement Rate was higher than the median rate of the Peer Group and equal to the median rate of the Category.</FONT></P>
<P align=left><FONT face=serif size=2>The Board received and considered expense information regarding the Fund&#146;s various components, including advisory fees, and other non-advisory fees, including transfer agent fees, custodian fees, and other miscellaneous fees (e.g., fees for accounting and legal services). The Board considered comparisons of these expenses to the Peer Group median. The Board also received and considered expense information regarding the Fund&#146;s total operating expense ratio (&#147;Expense Ratio&#148;). The Board received and considered information comparing the Expense Ratio of the Fund to that of the Category and Peer Group medians. The Board noted that the Fund&#146;s Expense Ratio was not appreciably higher than the Category and Peer Group medians. </FONT></P>
<P align=left><FONT face=serif size=2>The Adviser also discussed the Morningstar data and rankings, and other relevant information, for the Fund. Based on the above-referenced considerations and other factors, the Board concluded that the Fund&#146;s overall expense results and performance supported the re-approval of the Advisory Agreements.</FONT></P>
<P align=left><FONT face=serif size=2>The Board also received information about the investment subadvisory fee rate (the &#147;Subadvisory Agreement Rate&#148;) payable by the Adviser to the Subadviser for investment subadvisory services. The Board concluded that the Subadvisory Agreement Rate was fair and equitable, based on its consideration of the factors described here.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Profitability </FONT></B></P>
<P align=left><FONT face=serif size=2>The Board received and considered a detailed profitability analysis of the Adviser based on the Advisory Agreements, as well as on other relationships between the Fund and the Adviser and its affiliates, including the Subadviser. The Board concluded that, in light of the costs of providing investment management and other services to the Fund, the profits and other ancillary benefits reported by the Adviser were not unreasonable. </FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Economies of scale </FONT></B></P>
<P align=left><FONT face=serif size=2>The Board received and considered general information regarding economies of scale with respect to the management of the Fund, including the Fund&#146;s ability to appropriately benefit from economies of scale under the Fund&#146;s fee structure. The Board recognized the inherent limitations of any analysis of economies of scale, stemming largely from the Board&#146;s understanding that most of the Adviser&#146;s and Subadviser&#146;s costs are not specific to individual Funds, but rather are incurred across a variety of products and services.</FONT></P>
<P align=left><FONT face=serif size=2>The Board noted that the Advisory Agreements offered breakpoints. However, the Board considered the limited relevance of economies of scale in the context of a closed-end fund that, unlike an open-end fund, does not continuously offer its shares. The Board noted that the Fund, as a closed-end investment company, was not expected to increase materially in size and that its assets would grow (if at all) through the investment performance of the </FONT></P>
<P align=left><FONT face=sans-serif size=2>36</FONT></P>
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<P align=left><FONT face=serif size=2>Fund. Therefore, the Board did not consider potential economies of scale as a principal factor in assessing the fees payable under the Agreements, but concluded that the fees were fair and equitable based on relevant factors.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Other benefits to the Adviser </FONT></B></P>
<P align=left><FONT face=serif size=2>The Board received information regarding potential &#147;fall-out&#148; or ancillary benefits received by the Adviser and its affiliates as a result of the Adviser&#146;s relationship with the Fund. Such benefits could include, among others, benefits directly attributable to the relationship of the Adviser with the Fund and benefits potentially derived from an increase in the business of the Adviser as a result of its relationship with the Fund (such as the ability to market to shareholders other financial products offered by the Adviser and its affiliates).</FONT></P>
<P align=left><FONT face=serif size=2>The Board also considered the effectiveness of the Adviser&#146;s, Subadviser&#146;s and Fund&#146;s policies and procedures for complying with the requirements of the federal securities laws, including those relating to best execution of portfolio transactions and brokerage allocation.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Other factors and broader review </FONT></B></P>
<P align=left><FONT face=serif size=2>As discussed above, the Board reviewed detailed materials received from the Adviser and Subadviser as part of the annual re-approval process. The Board also regularly reviews and assesses the quality of the services that the Fund receives throughout the year. In this regard, the Board reviews reports of the Adviser and Subadviser at least quarterly, which include, among other things, fund performance reports and compliance reports. In addition, the Board meets with portfolio managers and senior investment officers at various times throughout the year.</FONT></P>
<P align=left><FONT face=serif size=2>After considering the above-described factors and based on its deliberations and its evaluation of the information described above, the Board concluded that approval of the continuation of the Advisory Agreements for the Fund was in the best interest of the Fund and its shareholders. Accordingly, the Board unanimously approved the continuation of the Advisory Agreements.</FONT></P>
<P align=left><SUP><FONT face=sans-serif size=1>1</FONT></SUP><FONT face=sans-serif size=1> The Board previously considered information about the Subadvisory Agreement at the September and December 2005 Board meetings in connection with the Adviser&#146;s reorganization. </FONT></P>
<P align=left><FONT face=sans-serif size=2>37</FONT></P>
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<P align=left><B><FONT face=sans-serif size=2>Information about the portfolio managers</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=1>Management Biographies and Fund ownership</FONT></B></P>
<P align=left><FONT face=serif size=2>Below is an alphabetical list of the portfolio managers who share joint responsibility for the day-to-day investment management of the Fund. It provides a brief summary of their business careers over the past five years and their range of beneficial share ownership in the Fund as of December 31, 2006. </FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Barry H. Evans, CFA</FONT></B><BR>
<FONT face=serif size=2>President, Chief Fixed Income Officer and Chief Operating Officer, MFC Global Investment </FONT><BR>
<FONT face=serif size=2>Management (U.S.), LLC since 2005</FONT><BR>
<FONT face=serif size=2>Senior Vice President, John Hancock Advisers LLC (1986&#150;2005) </FONT><BR>
<FONT face=serif size=2>Began business career in 1986 </FONT><BR>
<FONT face=serif size=2>Joined fund team in 2002 </FONT><BR>
<FONT face=serif size=2>Fund ownership &#151; $1-$10,000</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Jeffrey N. Given, CFA</FONT></B><BR>
<FONT face=serif size=2>Vice president, MFC Global Investment Management (U.S.), LLC since 2005 </FONT><BR>
<FONT face=serif size=2>Second Vice President, John Hancock Advisers LLC (1993&#150;2005) </FONT><BR>
<FONT face=serif size=2>Began business career in 1993 </FONT><BR>
<FONT face=serif size=2>Joined fund team in 1999 </FONT><BR>
<FONT face=serif size=2>Fund ownership &#151; $1-$10,000</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Howard C. Greene, CFA </FONT></B><BR>
<FONT face=serif size=2>Senior Vice President, MFC Global Investment Management (U.S.), LLC since 2005</FONT><BR>
<FONT face=serif size=2>Senior Vice President, John Hancock Advisers LLC (2002&#150;2005)</FONT><BR>
<FONT face=serif size=2>Vice President at Sun Life Financial Services Company of Canada (1987&#150;2002)</FONT><BR>
<FONT face=serif size=2>Began business career in 1979</FONT><BR>
<FONT face=serif size=2>Joined fund team in 2005</FONT><BR>
<FONT face=serif size=2>Fund ownership &#151; None </FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Other Accounts the Portfolio Managers are Managing</FONT></B></P>
<P align=left><FONT face=serif size=2>The table below indicates for each portfolio manager information about the accounts over which the portfolio manager has day-to-day investment responsibility. All information on the number of accounts and total assets in the table is as of December 31, 2006. For purposes of the table, &#147;Other Pooled Investment Vehicles&#148; may include investment partnerships and group trusts, and &#147;Other Accounts&#148; may include separate accounts for institutions or individuals, insurance company general or separate accounts, pension funds and other similar institutional accounts.</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%"><FONT face=sans-serif size=1>P O R T F O L I O&nbsp; M A N A G E R</FONT>&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=sans-serif size=1>O T H E R&nbsp; A C C O U N T S&nbsp; M A N A G E D&nbsp; B Y&nbsp; T H E&nbsp; P O R T F O L I O&nbsp; M A N A G E R S</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=2>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%"><FONT face=serif size=2>Barry H. Evans, CFA</FONT>&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=serif size=2>Other Investment Companies: 5 funds with assets of</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center width="29%">&nbsp;</TD>
     <TD align=left width="70%" background=""><FONT face=serif size=2>approximately $3.6 billion.</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=serif size=2>Other Pooled Investment Vehicles: 2 accounts with assets of</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=serif size=2>approximately $103 million.</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=serif size=2>Other Accounts: 121 accounts with assets of</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center width="29%">&nbsp;</TD>
     <TD align=left width="70%" background=""><FONT face=serif size=2>approximately $5.5 billion.</FONT>&nbsp;</TD></TR>
<TR>
     <TD width="99%" colSpan=2>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%"><FONT face=serif size=2>Jeffrey N. Given, CFA</FONT>&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=serif size=2>Other Investment Companies: 5 funds with assets of</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center width="29%">&nbsp;</TD>
     <TD align=left width="70%" background=""><FONT face=serif size=2>approximately $1.9 million.</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=serif size=2>Other Pooled Investment Vehicles: None</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD noWrap align=left width="70%"><FONT face=serif size=2>Other Accounts: 20 accounts with assets of</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center width="29%">&nbsp;</TD>
     <TD align=left width="70%" background=""><FONT face=serif size=2>approximately $4.7 million.</FONT>&nbsp;</TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=2>38</FONT></P>
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<TR vAlign=bottom>
     <TD noWrap align=left width="33%"><FONT face=serif size=2>Howard C. Greene, CFA</FONT>&nbsp; </TD>
     <TD noWrap align=left width="66%"><FONT face=serif size=2>Other Investment Companies: 3 funds with assets of</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%">&nbsp; </TD>
     <TD noWrap align=left width="66%"><FONT face=serif size=2>approximately $1.5 billion.</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%">&nbsp; </TD>
     <TD noWrap align=left width="66%"><FONT face=serif size=2>Other Pooled Investment Vehicles: None</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%">&nbsp; </TD>
     <TD noWrap align=left width="66%"><FONT face=serif size=2>Other Accounts: 20 accounts with assets</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="33%">&nbsp; </TD>
     <TD noWrap align=left width="66%"><FONT face=serif size=2>of approximately $4.7 billion.</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=serif size=2>Neither the Adviser nor Subadviser receive a fee based upon the investment performance of any of the accounts included under &#147;Other Accounts Managed by the Portfolio Managers&#148; in the table above.</FONT></P>
<P align=left><FONT face=serif size=2>When a portfolio manager is responsible for the management of more than one account, the potential arises for the portfolio manager to favor one account over another. For the reasons outlined below, the Fund does not believe that any material conflicts are likely to arise out of a portfolio manager&#146;s responsibility for the management of the Fund as well as one or more other accounts. The Adviser and the Subadviser have adopted procedures, overseen by the Chief Compliance Officer, that are intended to monitor compliance with the policies referred to in the following paragraphs.</FONT></P>
<P align=left><FONT face=serif size=2>&#149; The Subadviser has policies that require a portfolio manager to allocate investment opportunities in an equitable manner and generally to allocate such investments proportionately among all accounts with similar investment objectives.</FONT></P>
<P align=left><FONT face=serif size=2>&#149; When a portfolio manager intends to trade the same security for more than one account, the policies of the Subadviser generally require that such trades for the individual accounts are aggregated so each account receives the same price. Where not possible or may not result in the best possible price, the Subadviser will place the order in a manner intended to result in as favorable a price as possible for such client.</FONT></P>
<P align=left><FONT face=serif size=2>&#149; The investment performance on specific accounts is not a factor in determining the portfolio manager&#146;s compensation. See &#147;Compensation of Portfolio Managers&#148; below. Neither the Adviser nor the Subadviser receives a performance-based fee with respect to other accounts managed by the Fund&#146;s portfolio managers.</FONT></P>
<P align=left><FONT face=serif size=2>&#149; The Subadviser imposes certain trading restrictions and reporting requirements for accounts in which a portfolio manager or certain family members have a personal interest in order to confirm that such accounts are not favored over other accounts.</FONT></P>
<P align=left><FONT face=serif size=2>&#149; The Subadviser seeks to avoid portfolio manager assignments with potentially conflicting situations. However, where a portfolio manager is responsible for accounts with differing investment objectives and policies, it is possible that the portfolio manager will conclude that it is in the best interest of one account to sell a portfolio security while another account continues to hold or increase the holding in such security.</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>Compensation of Portfolio Managers</FONT></B></P>
<P align=left><FONT face=serif size=2>The Subadviser has adopted a system of compensation for portfolio managers and others involved in the investment process that is applied consistently among investment professionals. At the Subadviser, the structure of compensation of investment professionals is currently comprised of the following basic components: fixed base salary, and an annual investment bonus plan, as well as customary benefits that are offered generally to all full-time employees of the Subadviser. A limited number of senior portfolio managers, who serve as officers of both the Subadviser and its parent company, may also receive options or restricted stock grants of common shares of Manulife Financial.</FONT></P>
<P align=left><FONT face=sans-serif size=2>39</FONT></P>
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<P align="left">
<FONT size=2 face="serif">Only investment professionals are eligible to participate in the Investment Bonus Plan on an annual basis. While the amount of any bonus is discretionary, the following factors are generally used in determining bonuses: 1)
The investment performance of all accounts managed by the investment professional over one and three-year periods are considered. The pre-tax performance of each account is measured relative to an appropriate peer group benchmark. 2) The
profitability of the Subadviser and its parent company are also considered in determining bonus awards, with greater emphasis placed upon the profitability of the Adviser. 3) The more intangible contributions of an investment professional to the
Subadviser&#146;s business, including the investment professional&#146;s support of sales activities, new fund/strategy idea generation, professional growth and development, and management, where applicable, are evaluating in determining the amount
of any bonus award.</FONT></P>
<P align="left">
<FONT size=2 face="serif">While the profitability of the Subadviser and the investment performance of the accounts that the investment professionals maintain are factors in determining an investment professional&#146;s overall compensation, the
investment professional&#146;s compensation is not linked directly to the net asset value of any fund.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">40</FONT></P>

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<P align=left><FONT face=serif size=7>Trustees and Officers</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the Fund and execute policies formulated by the Trustees. </FONT></B></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Independent Trustees</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Name, age</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>Number of</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><I><FONT face=sans-serif size=1>Position(s) held with Fund</FONT></I></B>&nbsp; </TD>
     <TD noWrap align=left width="9%"><B><FONT face=sans-serif size=1>Trustee</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>John Hancock</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Principal occupation(s) and other</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%"><B><FONT face=sans-serif size=1>of Fund</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>funds overseen</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>directorships during past 5 years</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%"><B><FONT face=sans-serif size=1>since</FONT></B><B><SUP><FONT face=sans-serif size=1>1</FONT></SUP></B>&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>by Trustee</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Ronald R. Dion </FONT></B><FONT face=sans-serif size=1>, Born: 1946</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%"><FONT face=sans-serif size=1>2005</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>64&nbsp;&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><I><FONT face=sans-serif size=1>Independent Chairman (since 2005); </FONT></I><FONT face=sans-serif size=1>Chairman and Chief Executive Officer,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>R.M. Bradley &amp; Co., Inc.; Director, The New England Council and Massachusetts</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Roundtable; Trustee, North Shore Medical Center; Director, Boston Stock</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Exchange; Director, BJ&#146;s Wholesale Club, Inc. and a corporator of the Eastern</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>Bank; Trustee, Emmanuel College; Director, Boston Municipal Research Bureau;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Member of the Advisory Board, Carroll Graduate School of Management at</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Boston College.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>James F. Carlin </FONT></B><FONT face=sans-serif size=1>, Born: 1940</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%"><FONT face=sans-serif size=1>2005</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>64&nbsp;&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Director and Treasurer, Alpha Analytical Laboratories Inc. (chemical analysis)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(since 1985); Part Owner and Treasurer, Lawrence Carlin Insurance Agency,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Inc. (since 1995); Part Owner and Vice President, Mone Lawrence Carlin</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Insurance Agency, Inc. (until 2005); Director and Treasurer, Rizzo Associates</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(engineering) (until 2000); Chairman and Chief Executive Officer, Carlin</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Consolidated, Inc. (management/investments) (since 1987); Director and</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Partner, Proctor Carlin &amp; Co., Inc. (until 1999); Trustee, Massachusetts Health</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>and Education Tax Exempt Trust (since 1993); Director of the following:</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Uno Restaurant Corp. (until 2001), Arbella Mutual (insurance) (until 2000),</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>HealthPlan Services, Inc. (until 1999), Flagship Healthcare, Inc. (until 1999),</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Carlin Insurance Agency, Inc. (until 1999); Chairman, Massachusetts Board</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>of Higher Education (until 1999).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Richard P. Chapman, Jr.,</FONT></B><B><SUP><FONT face=sans-serif size=1>2 </FONT></SUP></B><FONT face=sans-serif size=1>Born: 1935</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%"><FONT face=sans-serif size=1>1975</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>64&nbsp;&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>President and Chief Executive Officer, Brookline Bancorp, Inc. (lending) (since</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>1972); Chairman and Director, Lumber Insurance Co. (insurance) (until 2000);</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Chairman and Director, Northeast Retirement Services, Inc. (retirement</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>administration) (since 1998); Vice Chairman, Northeastern University Board</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>of Trustees (since 2004).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>William H. Cunningham </FONT></B><FONT face=sans-serif size=1>, Born: 1944</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%"><FONT face=sans-serif size=1>2005</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>64&nbsp;&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Former Chancellor, University of Texas System and former President of the</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>University of Texas, Austin, Texas; Chairman and Chief Executive Officer,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>IBT Technologies (until 2001); Director of the following: Hire.com (until 2004),</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>STC Broadcasting, Inc. and Sunrise Television Corp. (until 2001), Symtx, Inc.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(electronic manufacturing) (since 2001), Adorno/Rogers Technology, Inc. (until</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>2004), Pinnacle Foods Corporation (until 2003), rateGenius (until 2003), Lincoln</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>National Corporation (insurance) (since 2006), Jefferson-Pilot Corporation</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(diversified life insurance company) (until 2006), New Century Equity Holdings</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=2>41</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_44"></A>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Independent Trustees </FONT></B><FONT face=sans-serif size=1>(continued)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Name, age</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>Number of</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><I><FONT face=sans-serif size=1>Position(s) held with Fund</FONT></I></B>&nbsp; </TD>
     <TD noWrap align=left width="10%"><B><FONT face=sans-serif size=1>Trustee</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>John Hancock</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Principal occupation(s) and other</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="10%"><B><FONT face=sans-serif size=1>of Fund</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>funds overseen</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>directorships during past 5 years</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="10%"><B><FONT face=sans-serif size=1>since</FONT></B><B><SUP><FONT face=sans-serif size=1>1</FONT></SUP></B>&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>by Trustee</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>William H. Cunningham </FONT></B><FONT face=sans-serif size=1>, Born: 1944 (continued)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%"><FONT face=sans-serif size=1>2005</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>64&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(formerly Billing Concepts) (until 2001), eCertain (until 2001), ClassMap.com</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(until 2001), Agile Ventures (until 2001), AskRed.com (until 2001), Southwest</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Airlines, Introgen and Viasystems Group, Inc. (electronic manufacturer) (until</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>2003); Advisory Director, Interactive Bridge, Inc. (college fundraising) (until</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>2001); Advisory Director, Q Investments (until 2003); Advisory Director,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="83%" colSpan=2><FONT face=sans-serif size=1>JPMorgan Chase Bank (formerly Texas Commerce Bank &#150; Austin), LIN Television</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(since 2002), WilTel Communications (until 2003) and Hayes Lemmerz</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>International, Inc. (diversified automotive parts supply company) (since 2003).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Charles L. Ladner,</FONT></B><B><SUP><FONT face=sans-serif size=1>2 </FONT></SUP></B><FONT face=sans-serif size=1>Born: 1938</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%"><FONT face=sans-serif size=1>2004</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>64&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="83%" colSpan=2><FONT face=sans-serif size=1>Chairman and Trustee, Dunwoody Village, Inc. (retirement services) (until 2003);</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="83%" colSpan=2><FONT face=sans-serif size=1>Senior Vice President and Chief Financial Officer, UGI Corporation (public utility</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>holding company) (retired 1998); Vice President and Director, AmeriGas, Inc.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(retired 1998); Director, AmeriGas Partners, L.P. (gas distribution) (until 1997);</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="83%" colSpan=2><FONT face=sans-serif size=1>Director, EnergyNorth, Inc. (until 1995); Director, Parks and History Association</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(until 2007).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>John A. Moore,</FONT></B><B><SUP><FONT face=sans-serif size=1>2 </FONT></SUP></B><FONT face=sans-serif size=1>Born: 1939</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%"><FONT face=sans-serif size=1>1996</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>64&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>President and Chief Executive Officer, Institute for Evaluating Health Risks,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(nonprofit institution) (until 2001); Senior Scientist, Sciences International</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(health research) (until 2003); Former Assistant Administrator and Deputy</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Administrator, Environmental Protection Agency; Principal, Hollyhouse</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(consulting) (since 2000); Director, CIIT Center for Health Science Research</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(nonprofit research) (since 2002).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Patti McGill Peterson,</FONT></B><B><SUP><FONT face=sans-serif size=1>2 </FONT></SUP></B><FONT face=sans-serif size=1>Born: 1943</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%"><FONT face=sans-serif size=1>1996</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>64&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Executive Director, Council for International Exchange of Scholars and Vice</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="83%" colSpan=2><FONT face=sans-serif size=1>President, Institute of International Education (since 1998); Senior Fellow, Cornell</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Institute of Public Affairs, Cornell University (until 1998); Former President of</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Wells College and St. Lawrence University; Director, Niagara Mohawk Power</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Corporation (until 2003); Director, Ford Foundation, International Fellowships</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Program (since 2002); Director, Lois Roth Endowment (since 2002); Director,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Council for International Educational Exchange (since 2003).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Steven R. Pruchansky, </FONT></B><FONT face=sans-serif size=1>Born: 1944</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%"><FONT face=sans-serif size=1>2005</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>64&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(since 2000); Director and President, Greenscapes of Southwest Florida, Inc.</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(until 2000); Managing Director, JonJames, LLC (real estate) (since 2001);</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Director, First Signature Bank &amp; Trust Company (until 1991); Director, Mast</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=2>42</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_45"></A>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Non-Independent Trustee</FONT></B><B><SUP><FONT face=sans-serif size=1>3</FONT></SUP></B>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Name, age</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>Number of</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><I><FONT face=sans-serif size=1>Position(s) held with Fund</FONT></I></B>&nbsp; </TD>
     <TD noWrap align=left width="9%"><B><FONT face=sans-serif size=1>Trustee</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>John Hancock</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Principal occupation(s) and other</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%"><B><FONT face=sans-serif size=1>of Fund</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>funds overseen</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>directorships during past 5 years</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%"><B><FONT face=sans-serif size=1>since</FONT></B><B><SUP><FONT face=sans-serif size=1>1</FONT></SUP></B>&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>by Trustee</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="73%" background=""></TD>
     <TD noWrap align=left width="9%" background=""></TD>
     <TD noWrap align=right width="16%" background=""></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>James R. Boyle</FONT></B><FONT face=sans-serif size=1>, Born: 1959</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%"><FONT face=sans-serif size=1>2005</FONT>&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>259&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>President, John Hancock Annuities; Executive Vice President, John Hancock</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Life Insurance Company (since June 2004); Chairman and Director, John</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Hancock Advisers, LLC (the &#147;Adviser&#148;), John Hancock Funds, LLC and The</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>Berkeley Financial Group, LLC (&#147;The Berkeley Group&#148;) (holding company) (since</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>2005); President, U.S. Annuities; Senior Vice President, The Manufacturers</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Life Insurance Company (U.S.A.) (until 2004).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Principal officers who are not Trustees</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Name, age</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><I><FONT face=sans-serif size=1>Position(s) held with Fund</FONT></I></B>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>Officer</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Principal occupation(s) and</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>of Fund</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>directorships during past 5 years</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><B><FONT face=sans-serif size=1>since</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="73%" background=""></TD>
     <TD noWrap align=left width="9%" background=""></TD>
     <TD noWrap align=right width="16%" background=""></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Keith F. Hartstein</FONT></B><FONT face=sans-serif size=1>, Born: 1956</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>2005&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><I><FONT face=sans-serif size=1>President and Chief Executive Officer</FONT></I>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Senior Vice President, Manulife Financial Corporation (since 2004); Director,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>President and Chief Executive Officer, the Adviser, The Berkeley Group, John</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>Hancock Funds, LLC (since 2005); Director, MFC Global Investment Management</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>(U.S.), LLC (&#147;MFC Global (U.S.)&#148;) (since 2005); Director, John Hancock Signature</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>Services, Inc. (since 2005); President and Chief Executive Officer, John Hancock</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>Investment Management Services, LLC (since 2006); President and Chief Executive</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>Officer, John Hancock Funds II, John Hancock Funds III and John Hancock Trust;</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Director, Chairman and President, NM Capital Management, Inc. (since 2005);</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Chairman, Investment Company Institute Sales Force Marketing Committee</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>(since 2003); Director, President and Chief Executive Officer, MFC Global (U.S.)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(2005&#150;2006); Executive Vice President, John Hancock Funds, LLC (until 2005).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Thomas M. Kinzler</FONT></B><FONT face=sans-serif size=1>, Born: 1955</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>2006&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><I><FONT face=sans-serif size=1>Secretary and Chief Legal Officer</FONT></I>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Vice President and Counsel, John Hancock Life Insurance Company (U.S.A.)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>(since 2006); Secretary and Chief Legal Officer, John Hancock Funds, John</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>Hancock Funds II, John Hancock Funds III and John Hancock Trust (since 2006);</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Vice President and Associate General Counsel, Massachusetts Mutual Life</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Insurance Company (1999&#150;2006); Secretary and Chief Legal Counsel, MML</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Series Investment Fund (2000&#150;2006); Secretary and Chief Legal Counsel,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="82%" colSpan=2><FONT face=sans-serif size=1>MassMutual Institutional Funds (2000&#150;2004); Secretary and Chief Legal Counsel,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>MassMutual Select Funds and MassMutual Premier Funds (2004&#150;2006).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><B><FONT face=sans-serif size=1>Francis V. Knox</FONT></B><FONT face=sans-serif size=1>, Jr., Born: 1947</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=right width="16%"><FONT face=sans-serif size=1>2005&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="98%" background="" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><I><FONT face=sans-serif size=1>Chief Compliance Officer</FONT></I>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Vice President and Chief Compliance Officer, John Hancock Investment</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Management Services, LLC, the Adviser and MFC Global (U.S.) (since 2005);</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Vice President and Chief Compliance Officer, John Hancock Funds II, John</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Hancock Funds III and John Hancock Trust (since 2005); Vice President and</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Assistant Treasurer, Fidelity Group of Funds (until 2004); Vice President and</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="73%"><FONT face=sans-serif size=1>Ethics &amp; Compliance Officer, Fidelity Investments (until 2001).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="9%">&nbsp; </TD>
     <TD noWrap align=left width="16%">&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=2>43</FONT></P>
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<A name="page_46"></A>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><B><FONT face=sans-serif size=1>Principal officers who are not Trustees (continued)</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><B><FONT face=sans-serif size=1>Name, age</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><B><I><FONT face=sans-serif size=1>Position(s) held with Fund</FONT></I></B>&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>Officer</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><B><FONT face=sans-serif size=1>Principal occupation(s) and</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>of Fund</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><B><FONT face=sans-serif size=1>directorships during past 5 years</FONT></B>&nbsp; </TD>
     <TD noWrap align=right width="14%"><B><FONT face=sans-serif size=1>since</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="85%" background=""></TD>
     <TD noWrap align=right width="14%" background=""></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><B><FONT face=sans-serif size=1>Gordon M. Shone</FONT></B><FONT face=sans-serif size=1>, Born: 1956</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>2006&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><I><FONT face=sans-serif size=1>Treasurer</FONT></I>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>Treasurer, John Hancock Funds (since 2006), John Hancock Funds II, John</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>Hancock Funds III and John Hancock Trust (since 2005); Vice President and</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>Chief Financial Officer, John Hancock Trust (2003&#150;2005); Senior Vice President,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>John Hancock Life Insurance Company (U.S.A.) (since 2001); Vice President,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>John Hancock Investment Management Services, Inc., John Hancock Advisers,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>LLC (since 2006) and The Manufacturers Life Insurance Company (U.S.A.)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>(1998&#150;2000).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=2>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><B><FONT face=sans-serif size=1>John G. Vrysen</FONT></B><FONT face=sans-serif size=1>, Born: 1955</FONT>&nbsp; </TD>
     <TD noWrap align=right width="14%"><FONT face=sans-serif size=1>2005&nbsp; </FONT>&nbsp; </TD></TR>
<TR>
     <TD noWrap align=left width="99%" background="" colSpan=2>
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><I><FONT face=sans-serif size=1>Chief Financial Officer</FONT></I>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>Senior Vice President, Manulife Financial Corporation (since 2006); Director,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>Executive Vice President and Chief Financial Officer, the Adviser, The Berkeley</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>Group and John Hancock Funds, LLC (since 2005); Executive Vice President and</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>Chief Financial Officer, John Hancock Investment Management Services, LLC</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>(since 2005); Vice President and Chief Financial Officer, MFC Global (U.S.)</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>(since 2005); Director, John Hancock Signature Services, Inc. (since 2005);</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>Chief Financial Officer, John Hancock Funds II, John Hancock Funds III and John</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>Hancock Trust (since 2005); Vice President and General Manager, Fixed Annuities,</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>U.S. Wealth Management (until 2005); Vice President, Operations, Manulife</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="85%"><FONT face=sans-serif size=1>Wood Logan (2000&#150;2004).</FONT>&nbsp; </TD>
     <TD noWrap align=left width="14%">&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805. </FONT></P>
<P align=left><FONT face=sans-serif size=1>The Statement of Additional Information of the Fund includes additional information about members of the Board of Trustees of the Fund and is available, without charge, upon request, by calling 1-800-225-5291.</FONT></P>
<P align=left><SUP><FONT face=sans-serif size=1>1</FONT></SUP><FONT face=sans-serif size=1>Each Trustee serves until resignation, retirement age or until his or her successor is elected. </FONT></P>
<P align=left><SUP><FONT face=sans-serif size=1>2</FONT></SUP><FONT face=sans-serif size=1>Member of Audit Committee.</FONT></P>
<P align=left><SUP><FONT face=sans-serif size=1>3</FONT></SUP><FONT face=sans-serif size=1>Non-Independent Trustee holds positions with the Fund&#146;s investment adviser, underwriter and certain other affiliates.</FONT></P>
<P align=left><FONT face=sans-serif size=2>44</FONT></P>
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<P align=left><FONT face=serif size=7>For more information</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>The Fund&#146;s proxy voting policies, procedures and records are available without charge, upon request:</FONT></B></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><B><FONT face=sans-serif size=1>By phone</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>On the Fund&#146;s Web site</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>On the SEC&#146;s Web site</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>1-800-225-5291</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>www.jhfunds.com/proxy</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%"><FONT face=serif size=2>www.sec.gov</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><B><FONT face=sans-serif size=1>Investment adviser</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>Transfer agent for</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>Independent registered</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>John Hancock Advisers, LLC</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>common shareholders</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>public accounting firm</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>601 Congress Street</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>Mellon Investor Services</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%"><FONT face=serif size=2>PricewaterhouseCoopers LLP</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>Boston, MA 02210-2805</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>Newport Office Center VII</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%"><FONT face=serif size=2>125 High Street</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%">&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>480 Washington Boulevard</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%"><FONT face=serif size=2>Boston, MA 02110</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><B><FONT face=sans-serif size=1>Subadviser</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>Jersey City, NJ 07310</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>MFC Global Investment</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%">&nbsp; </TD>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>Stock symbol</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>Management (U.S.), LLC</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>Transfer agent for</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="33%"><FONT face=serif size=2>Listed New York Stock</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>101 Huntington Avenue</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>preferred shareholders</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="33%"><FONT face=serif size=2>Exchange:</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>Boston, MA 02199</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>Deutsche Bank Trust</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%"><FONT face=serif size=2>JHS</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%">&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>Company Americas</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%">&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>280 Park Avenue</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>For shareholder assistance</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><B><FONT face=sans-serif size=1>Custodian</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>New York, NY 10017</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%"><B><FONT face=sans-serif size=1>refer to page 33</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>The Bank of New York</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%">&nbsp; </TD>
     <TD noWrap align=left width="33%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>One Wall Street</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%"><B><FONT face=sans-serif size=1>Legal counsel</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="33%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%"><FONT face=serif size=2>New York, NY 10286</FONT>&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>Kirkpatrick &amp; Lockhart</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%">&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>Preston Gates Ellis LLP</FONT>&nbsp; </TD>
     <TD noWrap align=left width="33%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%">&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>1 Lincoln Street</FONT> </TD>
     <TD noWrap align=left width="33%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%">&nbsp; </TD>
     <TD noWrap align=left width="34%"><FONT face=serif size=2>Boston, MA 02111-2950</FONT> </TD>
     <TD noWrap align=left width="33%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="32%">&nbsp; </TD>
     <TD noWrap align=left width="34%">&nbsp; </TD>
     <TD noWrap align=left width="33%">&nbsp; </TD></TR></TABLE><BR>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="70%" colSpan=2><B><FONT face=sans-serif size=2>How to contact us</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="15%"><B><FONT face=sans-serif size=1>Internet</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="55%"><FONT face=sans-serif size=1>www.jhfunds.com</FONT>&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="15%"><B><FONT face=sans-serif size=1>Mail</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="55%"><B><FONT face=sans-serif size=1>Regular mail:</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="55%"><FONT face=sans-serif size=1>Mellon Investor Services</FONT>&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="55%"><FONT face=sans-serif size=1>Newport Office Center VII</FONT>&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="55%"><FONT face=sans-serif size=1>480 Washington Boulevard</FONT>&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="55%"><FONT face=sans-serif size=1>Jersey City, NJ 07310</FONT>&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD></TR>
<TR>
     <TD width="99%" colSpan=3>
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="99%" colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="15%"><B><FONT face=sans-serif size=1>Phone</FONT></B>&nbsp; </TD>
     <TD noWrap align=left width="55%"><FONT face=sans-serif size=1>Customer service representatives</FONT>&nbsp; </TD>
     <TD noWrap align=left width="29%"><FONT face=sans-serif size=1>1-800-852-0218</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="55%"><FONT face=sans-serif size=1>Portfolio commentary</FONT>&nbsp; </TD>
     <TD noWrap align=left width="29%"><FONT face=sans-serif size=1>1-800-344-7054</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="55%"><FONT face=sans-serif size=1>24-hour automated information</FONT>&nbsp; </TD>
     <TD noWrap align=left width="29%"><FONT face=sans-serif size=1>1-800-843-0090</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD noWrap align=left width="55%"><FONT face=sans-serif size=1>TDD line</FONT>&nbsp; </TD>
     <TD noWrap align=left width="29%"><FONT face=sans-serif size=1>1-800-231-5469</FONT>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=1>A listing of month-end portfolio holdings is available on our Web site, www.jhfunds.com. A more detailed portfolio holdings summary is available on a quarterly basis 60 days after the fiscal quarter on our Web site or upon request by calling 1-800-225-5291, or on the Securities and Exchange Commission&#146;s Web site, www.sec.gov.</FONT></P>
<P align=left><FONT face=sans-serif size=2>48</FONT></P>
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<P align=left><B><FONT face=sans-serif size=2>J O H N&nbsp; H A N C O C K&nbsp; F A M I L Y&nbsp; O F &nbsp;F U N D S</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=1>EQUITY<BR>
</FONT></B><FONT face=sans-serif size=1>Balanced Fund </FONT><BR>
<FONT face=sans-serif size=1>Classic Value Fund </FONT><BR>
<FONT face=sans-serif size=1>Classic Value Fund II </FONT><BR>
<FONT face=sans-serif size=1>Core Equity Fund </FONT><BR>
<FONT face=sans-serif size=1>Focused Equity Fund </FONT><BR>
<FONT face=sans-serif size=1>Growth Fund </FONT><BR>
<FONT face=sans-serif size=1>Growth Opportunities Fund </FONT><BR>
<FONT face=sans-serif size=1>Growth Trends Fund </FONT><BR>
<FONT face=sans-serif size=1>Intrinsic Value Fund </FONT><BR>
<FONT face=sans-serif size=1>Large Cap Equity Fund </FONT><BR>
<FONT face=sans-serif size=1>Large Cap Select Fund </FONT><BR>
<FONT face=sans-serif size=1>Mid Cap Equity Fund </FONT><BR>
<FONT face=sans-serif size=1>Mid Cap Growth Fund </FONT><BR>
<FONT face=sans-serif size=1>Multi Cap Growth Fund </FONT><BR>
<FONT face=sans-serif size=1>Small Cap Equity Fund </FONT><BR>
<FONT face=sans-serif size=1>Small Cap Fund </FONT><BR>
<FONT face=sans-serif size=1>Small Cap Intrinsic Value Fund </FONT><BR>
<FONT face=sans-serif size=1>Sovereign Investors Fund </FONT><BR>
<FONT face=sans-serif size=1>U.S. Core Fund </FONT><BR>
<FONT face=sans-serif size=1>U.S. Global Leaders Growth Fund </FONT><BR>
<FONT face=sans-serif size=1>Value Opportunities Fund</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>ASSET ALLOCATION</FONT></B><BR>
<FONT face=sans-serif size=1>Allocation Core Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Allocation Growth + Value Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifecycle 2010 Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifecycle 2015 Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifecycle 2020 Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifecycle 2025 Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifecycle 2030 Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifecycle 2035 Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifecycle 2040 Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifecycle 2045 Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifecycle Retirement Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifestyle Aggressive Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifestyle Balanced Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifestyle Conservative Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifestyle Growth Portfolio </FONT><BR>
<FONT face=sans-serif size=1>Lifestyle Moderate Portfolio</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>SECTOR<BR>
</FONT></B><FONT face=sans-serif size=1>Financial Industries Fund </FONT><BR>
<FONT face=sans-serif size=1>Health Sciences Fund </FONT><BR>
<FONT face=sans-serif size=1>Real Estate Fund </FONT><BR>
<FONT face=sans-serif size=1>Regional Bank Fund </FONT><BR>
<FONT face=sans-serif size=1>Technology Fund </FONT><BR>
<FONT face=sans-serif size=1>Technology Leaders Fund</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>INTERNATIONAL<BR>
</FONT></B><FONT face=sans-serif size=1>Greater China Opportunities Fund </FONT><BR>
<FONT face=sans-serif size=1>International Allocation Portfolio</FONT><BR>
<FONT face=sans-serif size=1>International Classic Value Fund </FONT><BR>
<FONT face=sans-serif size=1>International Core Fund </FONT><BR>
<FONT face=sans-serif size=1>International Fund </FONT><BR>
<FONT face=sans-serif size=1>International Growth Fund</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>INCOME<BR>
</FONT></B><FONT face=sans-serif size=1>Bond Fund </FONT><BR>
<FONT face=sans-serif size=1>Government Income Fund </FONT><BR>
<FONT face=sans-serif size=1>High Yield Fund </FONT><BR>
<FONT face=sans-serif size=1>Investment Grade Bond Fund </FONT><BR>
<FONT face=sans-serif size=1>Strategic Income Fund</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>TAX-FREE INCOME<BR>
</FONT></B><FONT face=sans-serif size=1>California Tax-Free Income Fund </FONT><BR>
<FONT face=sans-serif size=1>High Yield Municipal Bond Fund </FONT><BR>
<FONT face=sans-serif size=1>Massachusetts Tax-Free Income Fund </FONT><BR>
<FONT face=sans-serif size=1>New York Tax-Free Income Fund </FONT><BR>
<FONT face=sans-serif size=1>Tax-Free Bond Fund</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>MONEY MARKET<BR>
</FONT></B><FONT face=sans-serif size=1>Money Market Fund </FONT><BR>
<FONT face=sans-serif size=1>U.S. Government Cash Reserve</FONT></P>
<P align=left><B><FONT face=sans-serif size=1>CLOSED-END<BR>
</FONT></B><FONT face=sans-serif size=1>Bank and Thrift Opportunity Fund </FONT><BR>
<FONT face=sans-serif size=1>Financial Trends Fund, Inc. </FONT><BR>
<FONT face=sans-serif size=1>Income Securities Trust </FONT><BR>
<FONT face=sans-serif size=1>Investors Trust </FONT><BR>
<FONT face=sans-serif size=1>Patriot Global Dividend Fund </FONT><BR>
<FONT face=sans-serif size=1>Patriot Preferred Dividend Fund </FONT><BR>
<FONT face=sans-serif size=1>Patriot Premium Dividend Fund I </FONT><BR>
<FONT face=sans-serif size=1>Patriot Premium Dividend Fund II </FONT><BR>
<FONT face=sans-serif size=1>Patriot Select Dividend Fund </FONT><BR>
<FONT face=sans-serif size=1>Preferred Income Fund </FONT><BR>
<FONT face=sans-serif size=1>Preferred Income II Fund </FONT><BR>
<FONT face=sans-serif size=1>Preferred Income III Fund </FONT><BR>
<FONT face=sans-serif size=1>Tax-Advantaged Dividend Income Fund</FONT></P>
<P align=left><FONT face=sans-serif size=2>For more complete information on any John Hancock Fund and an Open-End fund prospectus, which includes charges and expenses, call your financial professional, or John Hancock Funds at 1-800-225-5291 for Open-End fund information and 1-800-852-0218 for Closed-End fund information. Please read the Open-End fund prospectus carefully before investing or sending money.</FONT></P>
<P align=left><FONT size=2>49</FONT></P>
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<BR>
<P align=left><FONT face=sans-serif size=1>1-800-852-0218 </FONT><BR>
<FONT face=sans-serif size=1>1-800-231-5469 TDD</FONT><BR>
<FONT face=sans-serif size=1>1-800-843-0090 EASI-Line</FONT><BR>
<FONT face=sans-serif size=1>www.</FONT><FONT face=sans-serif size=1>jhfunds. </FONT><FONT face=sans-serif size=1>com</FONT></P>
<P align=left><FONT face=sans-serif size=2>PRESORTED</FONT><BR>
<FONT face=sans-serif size=2>STANDARD</FONT><BR>
<FONT face=sans-serif size=2>U.S. </FONT><FONT face=sans-serif size=2>POSTAGE</FONT><BR>
<FONT face=sans-serif size=2>PAID</FONT><BR>
<FONT face=sans-serif size=2>MIS</FONT></P>
<P align=left><FONT face=sans-serif size=1>P600A 12/06</FONT><BR>
<FONT face=sans-serif size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2/07</FONT></P>
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<FONT size=2 face="sans-serif">ITEM 2. CODE OF ETHICS.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">As of the end of the period, December 31, 2006, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief Executive Officer, Chief Financial Officer and Treasurer
(respectively, the principal executive officer, the principal financial officer and the principal accounting officer, the &#147;Senior Financial Officers&#148;). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Charles L. Ladner is the audit committee financial expert and is &#147;independent&#148;, pursuant to general instructions on Form N-CSR Item 3. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(a) Audit Fees </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The aggregate fees billed for professional services rendered by the principal accountant(s) for the audit of the registrant&#146;s annual financial statements or services that are normally provided by the accountant(s)
in connection with statutory and regulatory filings or engagements amounted to &#36;34,535 for the fiscal year ended December 31, 2005 and &#36;26,250 for the fiscal year ended December 31, 2006. These fees were billed to the registrant and were
approved by the registrant&#146;s audit committee. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(b) Audit-Related Services </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">There were no audit-related fees during the fiscal year ended December 31, 2005 and fiscal year ended December 31, 2006 billed to the registrant or to the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant
("control affiliates"). </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(c) Tax Fees </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The aggregate fees billed for professional services rendered by the principal accountant(s) for the tax compliance, tax advice and tax planning (&#147;tax fees&#148;) amounted to &#36;4,400 for the fiscal year ended
December 31, 2005 and &#36;3,500 for the fiscal year ended December 31, 2006. The nature of the services comprising the tax fees was the review of the registrant&#146;s income tax returns and tax distribution requirements. These fees were billed to
the registrant and were approved by the registrant&#146;s audit committee. There were no tax fees billed to the control affiliates. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(d) All Other Fees </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The all other fees billed to the registrant for products and services provided by the principal accountant were &#36;3,100 for the fiscal year ended December 31, 2005 and &#36;3,000 for the fiscal year ended December
31, 2006. There were no other fees during the fiscal year ended December 31, 2005 and December 31, 2006 billed to control affiliates for products and services provided by the principal accountant. The nature of the services comprising the all other
fees was related to the principal accountant&#146;s report on the registrant&#146;s Eligible Asset Coverage. These fees were approved by the registrant&#146;s audit committee. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(e)(1) See attachment "Approval of Audit, Audit-related, Tax and Other Services", with the audit committee pre-approval policies and procedures. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(e)(2) There were no fees that were approved by the audit committee pursuant to the de minimis exception for the fiscal years ended December 31, 2005 and December 31, 2006 on behalf of the registrant or on behalf of
the control affiliates that relate directly to the operations and financial reporting of the registrant. </FONT></P>

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<FONT size=2 face="sans-serif">(f) According to the registrant&#146;s principal accountant, for the fiscal year ended December 31, 2005, the percentage of hours spent on the audit of the registrant's financial statements for the most recent fiscal
year that were attributed to work performed by persons who were not full-time, permanent employees of principal accountant was less than 50%. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(g) The aggregate non-audit fees billed by the registrant's accountant(s) for services rendered to the registrant and rendered to the registrant's control affiliates for each of the last two fiscal years of the
registrant were &#36;29,500 for the fiscal year ended December 31, 2005, and &#36;872,192 for the fiscal year ended December 31, 2006. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(h) The audit committee of the registrant has considered the non-audit services provided by the registrant&#146;s principal accountant(s) to the control affiliates and has determined that the services that were not
pre-approved are compatible with maintaining the principal accountant(s)' independence.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The registrant has a separately-designated standing audit committee comprised of independent trustees. The members of the audit committee are as follows: </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Dr. John A. Moore - Chairman </FONT><BR>
<FONT size=2 face="sans-serif">Richard P. Chapman, Jr. </FONT><BR>
<FONT size=2 face="sans-serif">Charles L. Ladner </FONT><BR>
<FONT size=2 face="sans-serif">Patti McGill Peterson </FONT><BR>
<BR>
<FONT size=2 face="sans-serif">ITEM 6. SCHEDULE OF INVESTMENTS.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Not applicable.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">See attached Exhibit &#147;Proxy Voting Policies and Procedures&#148;. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. </FONT></P>
<P align="left">
<FONT size=1 face="sans-serif">Not applicable.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Not applicable.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">There were no material changes to previously disclosed John Hancock Funds &#150; Governance Committee Charter. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">ITEM 11. CONTROLS AND PROCEDURES.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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 </FONT></P>

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<FONT size=2 face="sans-serif">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. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">ITEM 12. EXHIBITS.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(a)(1) Code of Ethics for Senior Financial Officers is attached. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(a)(2) 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. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(b)(1) 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. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(c)(1) Proxy Voting Policies and Procedures are attached. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(c)(2) Approval of Audit, Audit-related, Tax and Other Services is attached. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(c)(3) Submission of Matters to a Vote of Security Holders is attached. See attached &#147;John Hancock Funds &#150; Governance Committee Charter&#148;. </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(c)(4) Contact person at the registrant.</FONT></P>

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<P align=center><FONT face=sans-serif size=2>SIGNATURES</FONT></P>
<P align=left><FONT face=sans-serif size=2>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. </FONT></P>
<P align=left><FONT face=sans-serif size=2>John Hancock Income Securities Trust</FONT></P>
<P align=left><FONT face=sans-serif size=2>By: /s/ Keith F. Hartstein </FONT><BR>
<FONT face=sans-serif size=2>------------------------------------- </FONT><BR>
<FONT face=sans-serif size=2>Keith F. Hartstein </FONT><BR>
<FONT face=sans-serif size=2>President and Chief Executive Officer</FONT><BR>
<BR>
<FONT face=sans-serif size=2>Date: February 27, 2007 </FONT></P>
<P align=left><FONT face=sans-serif size=2>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. </FONT></P>
<P align=left><FONT face=sans-serif size=2>By: /s/ Keith F. Hartstein </FONT><BR>
<FONT face=sans-serif size=2>------------------------------------- </FONT><BR>
<FONT face=sans-serif size=2>Keith F. Hartstein </FONT><BR>
<FONT face=sans-serif size=2>President and Chief Executive Officer</FONT><BR>
<BR>
<FONT face=sans-serif size=2>Date: February 27, 2007 </FONT></P>
<P align=left><FONT face=sans-serif size=2>By: /s/ John G. Vrysen </FONT><BR>
<FONT face=sans-serif size=2>-------------------------------------</FONT><BR>
<FONT face=sans-serif size=2>John G. Vrysen </FONT><BR>
<FONT face=sans-serif size=2>Chief Financial Officer </FONT><BR>
<BR>
<FONT face=sans-serif size=2>Date: February 27, 2007 </FONT></P>
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<TYPE>EX-99.CERT
<SEQUENCE>2
<FILENAME>b_xnn1.htm
<DESCRIPTION>CERTIFICATION
<TEXT>

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<B><U><FONT size=2 face="sans-serif">CERTIFICATION</FONT></U></B><BR>
<BR>
<FONT size=2 face="sans-serif">I, Keith F. Hartstein, certify that:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">1. I have reviewed this report on Form N-CSR of the John Hancock Income Securities Trust (the &#147;registrant&#148;);</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">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;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">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;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">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:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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; </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">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):</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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</FONT></P>

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<FONT size=2 face="sans-serif">(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.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">By: /s/ Keith F. Hartstein </FONT><BR>
<FONT size=2 face="sans-serif">------------------------------------- </FONT><BR>
<FONT size=2 face="sans-serif">Keith F. Hartstein </FONT><BR>
<FONT size=2 face="sans-serif">President and Chief Executive Officer</FONT><BR>
<BR>
<FONT size=2 face="sans-serif">Date: February 27, 2007 </FONT></P>

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<B><U><FONT size=2 face="sans-serif">CERTIFICATION</FONT></U></B><BR>
<BR>
<FONT size=2 face="sans-serif">I, John G. Vrysen, certify that:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">1. I have reviewed this report on Form N-CSR of the John Hancock Income Securities Trust (the &#147;registrant&#148;);</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">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;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">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;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">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:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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; </FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">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):</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(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</FONT></P>

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<FONT size=2 face="sans-serif">(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.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">By: /s/ John G. Vrysen </FONT><BR>
<FONT size=2 face="sans-serif">-------------------------------------</FONT><BR>
<FONT size=2 face="sans-serif">John G. Vrysen </FONT><BR>
<FONT size=2 face="sans-serif">Chief Financial Officer </FONT><BR>
<BR>
<FONT size=2 face="sans-serif">Date: February 27, 2007 </FONT></P>

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<TYPE>EX-99.906 CERT
<SEQUENCE>3
<FILENAME>c_xnnos1.htm
<DESCRIPTION>CERTIFICATION 906
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<P align=center><B><FONT face=sans-serif size=2>Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of <BR>
the Sarbanes-Oxley Act of 2002 </FONT></B></P>
<P align=left><FONT face=sans-serif size=2>In connection with the attached Report of John Hancock Income Securities Trust (the &#147;registrant&#148;) 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:</FONT></P>
<P align=left><FONT face=sans-serif size=2>1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</FONT></P>
<P align=left><FONT face=sans-serif size=2>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.</FONT></P>
<P align=left><FONT face=sans-serif size=2>/s/ Keith F. Hartstein </FONT><BR>
<FONT face=sans-serif size=2>------------------------------------- </FONT><BR>
<FONT face=sans-serif size=2>Keith F. Hartstein </FONT><BR>
<FONT face=sans-serif size=2>President and Chief Executive Officer</FONT><BR>
<BR>
<FONT face=sans-serif size=2>Dated: February 27, 2007 </FONT></P>
<P align=left><FONT face=sans-serif size=2>/s/ John G. Vrysen </FONT><BR>
<FONT face=sans-serif size=2>-------------------------------------</FONT><BR>
<FONT face=sans-serif size=2>John G. Vrysen </FONT><BR>
<FONT face=sans-serif size=2>Chief Financial Officer </FONT><BR>
<BR>
<FONT face=sans-serif size=2>Dated: February 27, 2007 </FONT></P>
<P align=left><FONT face=sans-serif size=2>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.</FONT></P>
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<TYPE>EX-99.CODE ETH
<SEQUENCE>4
<FILENAME>d_codeofethics.htm
<DESCRIPTION>CODE OF ETHICS
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<P align=left><B><FONT face=sans-serif size=2>JOHN HANCOCK FUNDS</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=2>CODE OF ETHICS</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>This is the code of ethics
of:</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149; </FONT>John Hancock Advisers, LLC</FONT><BR><BR><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
      </FONT>MFC Global Investment Management (U.S.), LLC (formerly known as Sovereign Asset Management LLC)</FONT><BR><BR><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149; </FONT>each open-end and
      closed-end fund advised by John Hancock Advisers, LLC</FONT><BR><BR><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149; </FONT>John
      Hancock Funds, LLC </FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>(together, called "John Hancock
Funds" or "JHF")</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>1. General
Principles</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>Each person within the John Hancock
Funds organization is responsible for maintaining the very highest ethical
standards when conducting our business.</FONT></P>
<P align=left><FONT face=sans-serif size=2>This means that:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>You have a fiduciary duty at all times to place the interests of our
clients and fund investors first.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>All of your personal securities transactions must be conducted consistent
with the provisions of this code of ethics that apply to you and in such a
manner as to avoid any actual or potential conflict of interest or other abuse
of your position of trust and responsibility.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>You should not take inappropriate advantage of your position or engage in
any fraudulent or manipulative practice (such as front-running or manipulative
market timing) with respect to our clients' accounts or fund
investors.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>You must treat as confidential any information concerning the identity of
security holdings and financial circumstances of clients or fund
investors.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>You must comply with all applicable federal securities laws.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>You must promptly report any violation of this code of ethics that comes
to your attention to the Chief Compliance Officer of your company -see Appendix
F.</FONT></P>
<P align=left><FONT face=sans-serif size=2>The General Principles discussed
above govern all conduct, whether or not</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_2></A>
<P align=left><FONT face=sans-serif size=2>The General Principles discussed
above govern all conduct, whether or not the conduct is also covered by more
specific standards and procedures in this code of ethics. As described below
under the heading "Interpretation and Enforcement", failure to comply with the
code of ethics may result in disciplinary action, including termination of
employment.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>2. To Whom Does This Code
Apply?</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>This code of ethics applies to you if
you are a director, officer or employee of John Hancock Advisers, LLC, MFC Global Investment Management (U.S.), LLC, John Hancock Funds, LLC or a John Hancock open-end or
closed-end fund registered under the Investment Company Act of 1940 (the "'40
Act") and advised by John Hancock Advisers, LLC ("John Hancock funds"). It also
applies to you if you are trustee of the John Hancock Financial Trends Fund,
Inc. or an employee of Manulife Financial Corporation or its subsidiaries who
participates in making recommendations for, or receives information about,
portfolio trades or holdings of the John Hancock funds or accounts. However,
notwithstanding anything herein to the contrary, it does not apply to any
trustees/directors of any open-end or closed-end funds advised by John Hancock
Advisers, LLC who are not "interested persons" of such funds as defined in
Section 2(a)(19) of the '40 Act, so long as they are subject to a separate Code
of Ethics (each, an "Excluded Independent Director"). Also, in some cases only a
limited number of provisions will apply to you, based on your access category.
For example, only a limited number of provisions apply to directors of the John
Hancock open-end funds and closed-end funds who are not Excluded Independent
Directors-- see Appendix C for more information.</FONT></P>
<P align=left><FONT face=sans-serif size=2>Please note that if a policy
described below applies to you, it also applies to all accounts over which you
have a beneficial interest. </FONT><FONT face=sans-serif size=2>Normally, you
will be deemed to have a beneficial interest in your personal accounts, those of
a spouse, "significant other," minor children or family members sharing a
household, as well as all accounts over which you have discretion or give advice
or information. "Significant others" are defined for these purposes as two
people who (1) share the same primary residence; (2) share living expenses; and
(3) are in a committed relationship and intend to remain in the relationship
indefinitely.</FONT></P>
<P align=left><FONT face=sans-serif size=2>There are three main categories for
persons covered by this code of ethics, taking into account their positions,
duties and access to information regarding fund portfolio trades. You have been
notified about which of these categories applies to you, based on the JHF
Investment Compliance Department's understanding of your current role. If you
have a level of investment access beyond your assigned category, or if you are
promoted or change duties and as a result should more appropriately be included
in a different category, it is your responsibility to notify the Chief
Compliance Officer of your company.</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_3></A>
<P align=left><FONT face=sans-serif size=2>The basic definitions of the three
main categories, with examples, are provided below. The more detailed
definitions of each category are attached as Appendix A.</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="28%" colSpan=3><B><FONT face=sans-serif size=2>&#147;Investment Access&#148;
      person</FONT></B>&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=left width="35%" colSpan=3><B><FONT face=sans-serif size=2>&#147;Regular Access&#148;
      person</FONT></B>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=left width="29%" colSpan=3><B><FONT face=sans-serif size=2>&#147;Non-Access&#148;
      person</FONT></B>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%">&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=left width="35%" colSpan=3><FONT face=sans-serif size=2>A person who regularly has access</FONT>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%">&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=left width="35%" colSpan=3><FONT face=sans-serif size=2>to (1) fund portfolio trades or (2)</FONT>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=left width="29%" colSpan=3><FONT face=sans-serif size=2>A person who does not regularly</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="28%" colSpan=3><FONT face=sans-serif size=2>A person who regularly participates</FONT>&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=left width="35%" colSpan=3><FONT face=sans-serif size=2>non-public information regarding</FONT>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=left width="29%" colSpan=3><FONT face=sans-serif size=2>participate in a fund&#146;s investment</FONT>&nbsp;
  </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="28%" colSpan=3><FONT face=sans-serif size=2>in a fund&#146;s investment process or</FONT>&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD align=left width="35%" colSpan=3><FONT face=Arial size=2>holdings or
      securities</FONT>&nbsp;&nbsp;&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=left width="29%" colSpan=3><FONT face=sans-serif size=2>process or obtain information</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="28%" colSpan=3><FONT face=sans-serif size=2>makes securities recommendations</FONT>&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=left width="35%" colSpan=3><FONT face=sans-serif size=2>recommendations to clients.</FONT>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=left width="29%" colSpan=3><FONT face=sans-serif size=2>regarding fund portfolio trades</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD align=left width="28%" colSpan=3><FONT face=sans-serif size=2>to clients.</FONT>&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD align=left width="35%" colSpan=3></TD>
    <TD width="3%">&nbsp; </TD>
    <TD align=left width="29%" colSpan=3></TD></TR>
  <TR>
    <TD width="1%">&nbsp; </TD>
    <TD width="2%"></TD>
    <TD width="25%" background="">&nbsp;</TD>
    <TD width="4%"></TD>
    <TD width="3%" background="">&nbsp;</TD>
    <TD width="2%"></TD>
    <TD width="30%" background=""><EM><U><FONT face=Arial size=2>examples:</FONT></U></EM>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="3%"></TD>
    <TD width="4%" background="">&nbsp;</TD>
    <TD width="1%"></TD>
    <TD width="24%" background=""><EM><U><FONT face=Arial size=2>examples:</FONT></U></EM>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>
  <TR>
    <TD noWrap align=left width="1%" background=""></TD>
    <TD width="2%" background=""></TD>
    <TD noWrap align=left width="25%" background=""><EM><U><FONT face=Arial size=2>examples:</FONT></U></EM>&nbsp; </TD>
    <TD width="4%" background=""></TD>
    <TD noWrap align=right width="3%" background=""></TD>
    <TD width="2%" background=""></TD>
    <TD noWrap align=left width="30%" background=""></TD>
    <TD width="3%" background=""></TD>
    <TD noWrap align=right width="4%" background=""></TD>
    <TD width="1%" background=""></TD>
    <TD noWrap align=left width="24%" background=""></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%">&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=right width="3%"><FONT face=serif>&#149;</FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="30%"><I><FONT face=sans-serif size=2>personnel in
      Investment</FONT></I>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="4%"><FONT face=serif>&#149;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%"><I><FONT face=sans-serif size=2>wholesalers</FONT></I>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp; &#149;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%"><EM><FONT face=Arial size=2>portfolio
      managers</FONT></EM>&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=right width="3%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="30%"><I><FONT face=sans-serif size=2>Operations or
      Compliance</FONT></I>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="4%"></TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%"></TD></TR>
  <TR>
    <TD noWrap align=right width="1%" background=""></TD>
    <TD width="2%" background=""></TD>
    <TD noWrap align=left width="25%" background=""></TD>
    <TD width="4%" background=""></TD>
    <TD noWrap align=right width="3%" background=""></TD>
    <TD width="2%" background=""></TD>
    <TD noWrap align=left width="30%" background=""></TD>
    <TD width="3%" background=""></TD>
    <TD noWrap align=right width="4%" background="">&#149;</TD>
    <TD width="1%" background=""></TD>
    <TD noWrap align=left width="24%" background=""><EM><FONT face=Arial size=2>inside wholesalers who</FONT></EM>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=right width="1%"><FONT face=serif>&#149;</FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%"><EM><FONT face=Arial size=2>analysts</FONT></EM>&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=right width="3%"><FONT face=serif>&#149;</FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="30%"><I><FONT face=sans-serif size=2>most FFM
      personnel</FONT></I>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="4%"></TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%"><I><FONT face=sans-serif size=2>don&#146;t attend
      investment</FONT></I>&nbsp; </TD></TR>
  <TR>
    <TD noWrap align=right width="1%" background=""></TD>
    <TD width="2%" background=""></TD>
    <TD noWrap align=left width="25%" background=""></TD>
    <TD width="4%" background=""></TD>
    <TD noWrap align=right width="3%" background=""></TD>
    <TD width="2%" background=""></TD>
    <TD noWrap align=left width="30%" background=""></TD>
    <TD width="3%" background=""></TD>
    <TD noWrap align=right width="4%" background=""></TD>
    <TD width="1%" background=""></TD>
    <TD noWrap align=left width="24%" background=""><EM><FONT face=Arial size=2>&#147;morning meetings&#148;</FONT></EM>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=right width="1%"><FONT face=serif>&#149;</FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%"><EM><FONT face=Arial size=2>traders</FONT></EM>&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=right width="3%"><FONT face=serif>&#149;</FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="30%"><I><FONT face=sans-serif size=2>Technology personnel
      with</FONT></I>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="4%">&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=right width="1%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%">&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=right width="3%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="30%"><I><FONT face=sans-serif size=2>access to
      investment</FONT></I>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="4%"><FONT face=serif>&#149;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%"><I><FONT face=sans-serif size=2>certain
      administrative</FONT></I>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=right width="1%"></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%"></TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=right width="3%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="30%"><I><FONT face=sans-serif size=2>systems</FONT></I>&nbsp;
    </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="4%">&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%"><I><FONT face=sans-serif size=2>personnel</FONT></I>&nbsp; </TD></TR>
  <TR>
    <TD noWrap align=left width="1%" background=""></TD>
    <TD width="2%" background=""></TD>
    <TD noWrap align=left width="25%" background=""></TD>
    <TD width="4%" background=""></TD>
    <TD noWrap align=right width="3%" background=""></TD>
    <TD width="2%" background=""></TD>
    <TD noWrap align=left width="30%" background="">&nbsp;&nbsp; </TD>
    <TD width="3%" background=""></TD>
    <TD noWrap align=right width="4%" background=""></TD>
    <TD width="1%" background=""></TD>
    <TD noWrap align=left width="24%" background=""></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%">&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=right width="3%"><FONT face=serif>&#149;</FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="30%"><I><FONT face=sans-serif size=2>attorneys and some
      legal</FONT></I>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="4%">&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%">&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=right width="3%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="30%"><I><FONT face=sans-serif size=2>administration
      personnel</FONT></I>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="4%">&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=11>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%">&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=right width="3%"><FONT face=serif>&#149;</FONT></TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="30%"><I><FONT face=sans-serif size=2>investment
      admin.</FONT></I>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="4%">&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="25%">&nbsp; </TD>
    <TD width="4%">&nbsp; </TD>
    <TD noWrap align=right width="3%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD noWrap align=left width="30%"><I><FONT face=sans-serif size=2>personnel</FONT></I>&nbsp; </TD>
    <TD width="3%">&nbsp; </TD>
    <TD noWrap align=right width="4%">&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD noWrap align=left width="24%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=11>
      <HR noShade SIZE=1>
    </TD></TR></TABLE><BR>
<P align=left><B><FONT face=sans-serif size=2>3. Which Accounts and Securities
are Subject to the Code's Personal Trading Restrictions?</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>If this code of ethics describes
"Personal Trading Requirements" (i.e. John Hancock Mutual Fund reporting
requirement and holding period, the preclearance requirement, the ban on
short-term profits, the ban on IPOs, the disclosure of private placement
conflicts and the reporting requirements) that apply to your access category as
described above, then the requirements apply to trades for any account in which
you have a beneficial interest. Normally, this includes your personal accounts,
those of a spouse, "significant other," minor children or family members sharing
your household, as well as all accounts over which you have discretion or give
advice or information. This includes all brokerage accounts that contain
securities (including brokerage accounts that only contain securities exempt
from reporting). Accounts over which you have no direct or indirect influence or
control are exempt. To prevent potential violations of this code of ethics, you
are strongly encouraged to request clarification for any accounts that are in
question.</FONT></P>
<P align=left><FONT face=sans-serif size=2>These personal trading requirements
do not apply to the following securities:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;</FONT> Direct obligations of the U.S. government (e.g., treasury
securities);</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;</FONT> Bankers' acceptances, bank certificates of deposit, commercial
paper, and high quality short-term debt obligations, including repurchase
agreements;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;</FONT> Shares of open-end mutual funds registered under the '40 Act
that are not advised or sub-advised by John Hancock Advisers, John Hancock
Investment Management Services or another Manulife entity;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;</FONT> Shares issued by money market funds; and</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_4></A>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Securities in accounts over which you have no direct or indirect
influence or control.</FONT></P>
<P align=left><FONT face=sans-serif size=2>Except as noted above, the Personal
Trading Requirements apply to all securities, including:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Stocks;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Bonds;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Government securities that are not direct obligations of the U.S.
government, such as Fannie Mae or municipal securities;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Closed-end funds;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Options on securities, on indexes, and on currencies;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Limited partnerships;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Domestic unit investment trusts;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Exchange traded funds;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Non-US unit investment trusts and Non-US mutual funds;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Private investment funds and hedge funds; and</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Futures, investment contracts or any other instrument that is considered
a "security" under the Investment Advisers Act.</FONT></P>
<P align=left><FONT face=sans-serif size=2>Different requirements apply to
shares of open-end mutual funds that are advised or sub-advised by John Hancock
Advisers, LLC or another Manulife entity--see the section below titled "John
Hancock Mutual Funds Reporting Requirement and Holding Period".</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>4. Overview of
Policies</FONT></B></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="42%">&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>Investment Access</FONT>&nbsp;
    </TD>
    <TD width="5%">&nbsp; </TD>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>Regular Access </FONT></TD>
    <TD width="9%"></TD>
    <TD noWrap align=left width="18%" background=""><FONT face=Arial size=2>Non-Access Person</FONT>&nbsp;&nbsp;&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="42%">&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>Person</FONT>&nbsp; </TD>
    <TD width="5%">&nbsp; </TD>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>Person</FONT>&nbsp; </TD>
    <TD width="9%">&nbsp; </TD>
    <TD noWrap align=left width="18%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="42%"><FONT face=sans-serif size=2>General principles</FONT>&nbsp;
    </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="5%">&nbsp; </TD>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="9%">&nbsp; </TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="42%"><FONT face=sans-serif size=2>Policies outside the
      code</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="18%">&nbsp; </TD>
    <TD width="5%">&nbsp; </TD>
    <TD noWrap align=left width="6%">&nbsp; </TD>
    <TD width="9%">&nbsp; </TD>
    <TD noWrap align=left width="18%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="42%"><FONT face=sans-serif size=2>Conflict of interest
      policy</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="5%">&nbsp; </TD>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="9%">&nbsp; </TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="42%"><FONT face=sans-serif size=2>Inside information
      policy</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="5%">&nbsp; </TD>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="9%">&nbsp; </TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="42%"><FONT face=sans-serif size=2>Policy regarding dissemination
      of mutual fund</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="5%">&nbsp; </TD>
    <TD noWrap align=left width="6%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="9%">&nbsp; </TD>
    <TD noWrap align=left width="18%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="42%"><FONT face=sans-serif size=2>portfolio
      information</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="18%">&nbsp; </TD>
    <TD width="5%">&nbsp; </TD>
    <TD noWrap align=left width="6%">&nbsp; </TD>
    <TD width="9%">&nbsp; </TD>
    <TD noWrap align=left width="18%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_5></A>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Policies in the
      code</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Restriction on
      gifts</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>John Hancock mutual funds
      reporting</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>requirement and holding
      period</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Pre-clearance
      requirement</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>Limited</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Heightened preclearance of
      securities</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>transactions for &#147;Significant
      Personal</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Positions&#148;</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Ban on short-term
      profits</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Ban on IPOs</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Disclosure of private placement
      conflicts</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Seven day blackout
      period</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Reports and other disclosures
      outside the code</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Broker letter/duplicate
      confirms</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Reports and other disclosures in
      the code</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%">&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%">&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Annual recertification
      form</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Initial/annual holdings
      reports</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="50%"><FONT face=sans-serif size=2>Quarterly transaction
      reports</FONT>&nbsp; </TD>
    <TD width="1%">&nbsp; </TD>
    <TD noWrap align=left width="3%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="22%">&nbsp; </TD>
    <TD noWrap align=left width="4%"><FONT face=sans-serif size=2>yes</FONT>&nbsp; </TD>
    <TD width="12%">&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face=sans-serif size=2>no</FONT>&nbsp; </TD></TR>
  <TR>
    <TD align=left width="99%" background="" colSpan=7>
      <HR noShade SIZE=1>
    </TD></TR></TABLE><BR>
<P align=left><B><FONT face=sans-serif size=2>5. Policies Outside of the Code of
Ethics</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>John Hancock Funds have certain
policies that are not part of the code of ethics, but are equally important. The
two most important of these policies are (1) the Company Conflict and Business
Practice Policy; and (2) the Inside Information Policy.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Company Conflict &amp;
Business Practice Policy</FONT></B></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR><FONT face=sans-serif size=2>Applies to: Investment Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Regular Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Non-Access
      Persons</FONT><BR><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR></TD></TR></TABLE><FONT face=sans-serif size=2>A conflict of interest occurs when your private interests
interfere or could potentially interfere with your responsibilities at work. You
must not place yourself or the company in a position of actual or potential
conflict.</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_6></A>
<P align=left><FONT face=sans-serif size=2>This Policy covers a number of
important issues for officers and employees of John Hancock Funds. For example,
you cannot serve as a director of any company without first obtaining the
required written executive approval.</FONT></P>
<P align=left><FONT face=sans-serif size=2>This Policy includes significant
requirements to be followed if your personal securities holdings overlap with
John Hancock funds investment activity. For example, if you or a member of your
family own:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>a 5% or greater interest in a company, John Hancock Funds and its
affiliates may not make any investment in that company;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>a 1% or greater interest in a company, you cannot participate in any
decision by John Hancock Funds and its affiliates to buy or sell that company's
securities;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>ANY interest in a company, you cannot recommend or participate in a
decision by John Hancock Funds and its affiliates to buy or sell that company's
securities unless your personal interest is fully disclosed at all stages of the
investment decision.</FONT></P>
<P align=left><FONT face=sans-serif size=2>(This is just a summary of these
requirements--please read Section IV of the Company Conflict and Business
Practices Policy for more detailed information.)</FONT></P>
<P align=left><FONT face=sans-serif size=2>Other important issues in this Policy
include:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>personal investments or business relationships</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>misuse of inside information </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>receiving or giving of gifts, entertainment or favors </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>misuse or misrepresentation of your corporate position </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>disclosure of confidential or proprietary information </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>antitrust activities</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>political campaign contributions and expenditures on public
officials</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Inside Information Policy
and Procedures</FONT></B></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR><FONT face=sans-serif size=2>Applies to: Investment Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Regular Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Non-Access
      Persons</FONT><BR><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR></TD></TR></TABLE></P>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_7></A><FONT face=sans-serif size=2>
<P align=left><FONT face=sans-serif size=2>The antifraud provisions of the
federal securities laws generally prohibit persons with material non-public
information from trading on or </FONT>communicating the information to others.
Sanctions for violations can include civil injunctions, permanent bars from the
securities industry, civil penalties up to three times the profits made or
losses avoided, criminal fines and jail sentences. While Investment Access
persons are most likely to come in contact with material non-public information,
the rules (and sanctions) in this area apply to all John Hancock Funds personnel
and extend to activities both related and unrelated to your job
duties.</FONT></P>
<P align=left><FONT face=sans-serif size=2>The Inside Information Policy and
Procedures covers a number of important issues, such as:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>The misuse of material non-public information</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>The information barrier procedure</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>The "restricted list" and the "watch list"</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>broker letters and duplicate confirmation statements (see section 7 of
this code of ethics)</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Policy Regarding
Dissemination of Mutual Fund Portfolio Information</FONT></B></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR><FONT face=sans-serif size=2>Applies to: Investment Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Regular Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Non-Access
      Persons</FONT><BR><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>Information about securities held in
a mutual fund cannot be disclosed except in accordance with this Policy, which
generally requires time delays of approximately one month and public posting of
the information to ensure that it uniformly enters the public domain.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>6. Policies in the Code of
Ethics</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Restriction on
Gifts</FONT></B></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR><FONT face=sans-serif size=2>Applies to: Investment Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Regular Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Non-Access
      Persons</FONT><BR><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>You and your family cannot accept
preferential treatment or favors (for example, gifts) from securities brokers or
dealers or other organizations with which John Hancock Funds might transact
business, except in accordance with the Company Conflict and Business Practice
Policy. For the protection of both you and John Hancock Funds, the appearance of
a possible conflict of interest must be avoided. You should exercise caution in
any</FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<!--$$/page=--><A name=page_8></A>
<P align=left><FONT face=sans-serif size=2>instance in which business travel and
lodging are paid for by someone other than John Hancock Funds. The purpose of
this policy is to minimize the basis for any charge that you used your John
Hancock Funds position to obtain for yourself opportunities which otherwise
would not be offered to you. Please see the Company Conflict and Business
Practice Policy's "Compensation and Gifts" section for additional details
regarding restrictions on gifts and exceptions for "nominal value"
gifts.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; John Hancock Mutual Funds
Reporting Requirement and Holding Period</FONT></B></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR><FONT face=sans-serif size=2>Applies to: Investment Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Regular Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Non-Access
      Persons</FONT><BR><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>You must follow the reporting
requirement and the holding period requirement specified below if you purchase
either:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>a "John Hancock Mutual Fund" (i.e. a '40 Act mutual fund that is advised
by </FONT><FONT face=sans-serif size=2>John Hancock Advisers, LLC, John Hancock
Investment Management Services LLC or by another Manulife entity); or</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>a "John Hancock Variable Product" (i.e. contracts funded by insurance
company separate accounts that use one or more portfolios of John Hancock
Trust). </FONT><FONT face=sans-serif size=2>The John Hancock Mutual Funds
reporting requirement and the holding period requirement are excluded for the
money market funds and any dividend reinvestment, payroll deduction, systematic
investment/withdrawal and/or other program trades.</FONT></P>
<P align=left><FONT face=sans-serif size=2>Reporting Requirement: You must
report your holdings and your trades in a John Hancock Mutual Fund or a John
Hancock Variable Product. This is not a preclearance requirement--you can report
your holdings after you trade by submitting duplicate confirmation statements to
the JHF Investment Compliance Department. If you are an Investment Access Person
or a Regular Access Person, you must also make sure that your holdings in a John
Hancock fund or a John Hancock variable product are included in your Initial
Holdings Report (upon hire) and Annual Holdings Report (each year
end).</FONT></P>
<P align=left><FONT face=sans-serif size=2>If you purchase a John Hancock
Variable Product, you must notify the JHF Investment Compliance Department. The
JHF Investment Compliance Department will then obtain directly from the contract
administrators the personal trade and holdings information regarding the
portfolios underlying the Manulife or John Hancock variable insurance
contracts.</FONT></P>
<P align=left><FONT face=sans-serif size=2>The JHF Investment Compliance
Department will obtain personal securities trades and holdings information in
the 401(k) plan for John Hancock funds directly from the plan
administrators.</FONT></P>
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<P align="left">
<FONT size=2 face="sans-serif">Holding Requirement: You cannot profit from the purchase and sale of a John Hancock Mutual Fund within 30 calendar days. The purpose of this policy is to address the risk, real or perceived, of manipulative market
timing or other abusive practices involving short-term personal trading in the John Hancock Mutual Funds. Any profits realized on short-term trades must be surrendered by check payable to John Hancock Advisers, LLC and will be contributed by John
Hancock Advisers, LLC to a charity, upon determination by the Compliance and Business Practices Committee. If you donate or gift a security, it is considered a sale. You may request an exemption from this policy for involuntary sales due to
unforeseen corporate activity (such as a merger), or for sales due to hardship reasons (such as unexpected medical expenses) by sending an e-mail to the Chief Compliance Officer of your company.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">&gt;&gt; Preclearance of Securities Transactions</FONT></B></P>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=2 face="sans-serif">--------------------------------------------------------------------------------</FONT><BR>
<FONT size=2 face="sans-serif">Applies to: Investment Access Persons</FONT><BR>
<FONT size=2 face="sans-serif">Regular Access Persons</FONT><BR>
<BR>
<FONT size=2 face="sans-serif">Also, for a limited category of trades:</FONT><BR>
<FONT size=2 face="sans-serif">------------------------------------</FONT><BR>
<FONT size=2 face="sans-serif">Non-Access Persons</FONT><BR>
<FONT size=2 face="sans-serif">--------------------------------------------------------------------------------</FONT><BR>
</TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="sans-serif">Limited Category of Trades for Non-Access Persons: If you are a Non-Access person, you must preclear transactions in securities of any closed-end funds advised by John Hancock Advisers, LLC. A Non-Access person is not
required to preclear other trades. However, please keep in mind that a Non-Access person is required to report securities transactions after every trade (even those that are not required to be precleared) by requiring your broker to submit duplicate
confirmation statements, as described in section 7 of this code of ethics.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Investment Access persons and Regular Access persons: If you are an Investment Access person or Regular Access person, you must "preclear" (i.e.: receive advance approval of) any personal securities transactions in the
categories described above in the section "Which Accounts and Securities are Subject to the Code's Personal Trading Restrictions". Due to this preclearance requirement, participation in investment clubs is prohibited.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Preclearance of private placements requires some special considerations--the decision will take into account whether, for example: (1) the investment opportunity should be reserved for John Hancock Funds clients; and
(2) it is being offered to you because of your position with John Hancock Funds.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">How to preclear: You preclear a trade by following the steps outlined in the preclearance procedures, which are attached as Appendix B. Please note that:</FONT></P>

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<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>You may not trade until clearance is received.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Clearance approval is valid only for the date granted (i.e. the
preclearance date and the trade date should be the same).</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>A separate procedure should be followed for requesting preclearance of a
private placement or a derivative, as detailed in Appendix B. The JHF Investment
Compliance Department must maintain a five-year record of all clearances of
private placement purchases by Investment Access persons, and the reasons
supporting the clearances.</FONT></P>
<P align=left><FONT face=sans-serif size=2>The preclearance policy is designed
to proactively identify potential "problem trades" that raise front-running,
manipulative market timing or other conflict of interest concerns (example: when
an Investment Access person trades a security on the same day as a John Hancock
fund).</FONT></P>
<P align=left><FONT face=sans-serif size=2>Certain transactions in securities
that would normally require pre-clearance are exempt from the pre-clearance
requirement in the following situations; (1) shares are being purchased as part
of an automatic investment plan; (2) shares are being purchased as part of a
dividend reinvestment plan; or (3) transactions are being made in an account
over which you have designated a third party as having discretion to trade (you
must have approval from the Chief Compliance Officer to establish a
discretionary account).</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Heightened Preclearance
of Securities Transactions for "Significant Personal Positions"</FONT></B></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR><FONT face=sans-serif size=2>Applies to: Investment Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Regular Access
      Persons</FONT><BR><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>If you are an Investment Access
person or Regular Access person with a personal securities position that is
worth $100,000 or more, this is deemed to be a "Significant Personal Position".
This applies to any personal securities positions in the categories described
above in the section "Which Accounts and Securities are Subject to the Code's
Personal Trading Restrictions". Before you make personal trades to establish,
increase or decrease a Significant Personal Position, you must notify either the
Chief Fixed Income Officer or the Chief Equity Officer that (1) you intend to
trade in a Significant Personal Position and (2) confirm that you are not aware
of any clients for whom related trades should be completed first. You must
receive their pre-approval to proceed--their approval will be based on their
conclusion that your personal trade in a Significant Personal Position will not
"front-run" any action that John Hancock Funds should take for a client. This
Heightened Preclearance requirement is in addition to, not in place of, the
regular preclearance requirement described above--you must also receive the
regular preclearance before you trade.</FONT></P>
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<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="sans-serif">&gt;&gt; Ban on Short-Term Profits</FONT></B><BR>
</TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="sans-serif">--------------------------------------------------------------------------------<BR>Applies to: Investment Access Persons <BR>--------------------------------------------------------------------------------</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">If you are an Investment Access person, you cannot profit from the purchase and sale (or sale and purchase) of the same (or equivalent) securities within 60 calendar days. This applies to any personal securities trades
in the categories described above in the section "Which Accounts and Securities are Subject to the Code's Personal Trading Restrictions".</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">You may invest in derivatives or sell short provided the transaction period exceeds the 60-day holding period (30 days for '40 Act mutual funds advised by John Hancock Advisers, LLC, John Hancock Investment Management
Services LLC or another Manulife entity). If you donate or gift a security, it is considered a sale.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The purpose of this policy is to address the risk, real or perceived, of front-running, manipulative market timing or other abusive practices involving short-term personal trading. Any profits realized on short-term
trades must be surrendered by check payable to John Hancock Advisers, LLC and will be contributed by John Hancock Advisers, LLC to a charity, upon determination by the Compliance and Business Practices Committee.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">You may request an exemption from this policy for involuntary sales due to unforeseen corporate activity (such as a merger), or for sales due to hardship reasons (such as unexpected medical expenses) from the JHF
Investment Compliance Department.</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="sans-serif">&gt;&gt; Ban on IPOs</FONT></B><BR>
</TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="sans-serif">--------------------------------------------------------------------------------<BR>Applies to: Investment Access Persons <BR>--------------------------------------------------------------------------------</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">If you are an Investment Access person, you may not acquire securities in an initial public offering (IPO). You may not purchase any newly-issued securities until the next business (trading) day after the offering
date. This applies to any personal securities trades in the categories described above in the section "Which Accounts and Securities are Subject to the Code's Personal Trading Restrictions".</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">There are two main reasons for this prohibition: (1) these purchases may suggest that persons have taken inappropriate advantage of their positions for personal profit; and (2) these purchases may create at least the
appearance that an investment opportunity that should have been available to the John Hancock funds was diverted to the personal benefit of an individual employee.</FONT></P>

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<P align=left><FONT face=sans-serif size=2>You may request an exemption for
certain investments that do not create a potential conflict of interest, such
as: (1) securities of a mutual bank or mutual insurance company received as
compensation in a demutualization and other similar non-voluntary stock
acquisitions; (2) fixed rights offerings; or (3) a family member's participation
as a form of employment compensation in their employer's IPO.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Disclosure of Private
Placement Conflicts</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>--------------------------------------------------------------------------------<BR>Applies
to: Investment Access Persons
<BR>--------------------------------------------------------------------------------</FONT></P>
<P align=left><FONT face=sans-serif size=2>If you are an Investment Access
person and you own securities purchased in a private placement, you must
disclose that holding when you participate in a decision to purchase or sell
that same issuer's securities for a John Hancock fund. This applies to any
private placement holdings in the categories described above in the section
"Which Accounts and Securities are Subject to the Code's Personal Trading
Restrictions". Private placements are securities exempt from SEC registration
under section 4(2), section 4(6) or rules 504 -506 of the Securities Act of
1933.</FONT></P>
<P align=left><FONT face=sans-serif size=2>The investment decision must be
subject to an independent review by investment personnel with no personal
interest in the issuer.</FONT></P>
<P align=left><FONT face=sans-serif size=2>The purpose of this policy is to
provide appropriate scrutiny in situations in which there is a potential
conflict of interest.</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><B><FONT face=sans-serif size=2>&gt;&gt; Seven Day Blackout
      Period</FONT></B><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>--------------------------------------------------------------------------------<BR>Applies
to: Investment Access Persons
<BR>--------------------------------------------------------------------------------</FONT></P>
<P align=left><FONT face=sans-serif size=2>If you are a portfolio manager (or
were identified to the JHF Investment Compliance Department as part of a
portfolio management team) you are prohibited from buying or selling a security
within seven calendar days before and after that security is traded for a fund
that you manage unless no conflict of interest exists in relation to that
security (as determined by the Compliance and Ethics Committee).</FONT></P>
<P align=left><FONT face=sans-serif size=2>In addition, all investment access
persons are prohibited from knowingly buying or selling a security within seven
calendar days before and after that security is traded for a John Hancock fund
unless no conflict of interest exists in relation to that security. This applies
to any personal securities trades in the categories described above in the
section "Which Accounts and Securities are Subject to the Code's Personal
Trading Restrictions". If a John Hancock fund trades in a security within seven
calendar days before or after you trade in that security, you may be required to
demonstrate that you did not know that the trade was being <FONT face=sans-serif size=2>considered for that John Hancock fund.</FONT></P></FONT>
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<P align=left><FONT face=sans-serif size=2>You will be required to sell any
security purchased in violation of this policy unless it is determined that no
conflict of interest exists in relation to that security (as determined by the
Compliance and Ethics Committee). Any profits realized on trades determined by
the Compliance and Ethics Committee to be in violation of this policy must be
surrendered by check payable to John Hancock Advisers, LLC and will be
contributed by John Hancock Advisers, LLC to a charity.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>7. Reports and Other Disclosures
Outside the Code of Ethics </FONT></B></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Broker Letter/Duplicate
Confirm Statements</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>--------------------------------------------------------------------------------<BR>Applies
to: Investment Access Persons<BR>Regular Access Persons <BR>Non-Access Persons
<BR>--------------------------------------------------------------------------------</FONT></P>
<P align=left><FONT face=sans-serif size=2>As required by the Inside Information
Policy, you must inform your stockbroker that you are employed by an investment
adviser or broker. Your broker is subject to certain rules designed to prevent
favoritism toward your accounts. You may not accept negotiated commission rates
that you believe may be more favorable than the broker grants to accounts with
similar characteristics.</FONT></P>
<P align=left><FONT face=sans-serif size=2>When a brokerage account is opened
for which you have a beneficial interest, before any trades are made, you
must:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Notify the broker-dealer with which you are opening an account that you
are a registered associate of John Hancock Funds;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Ask the firm in writing to have duplicate written confirmations of any
trade, as well as statements or other information concerning the account, sent
to the John Hancock Funds Investment Compliance Department (contact: Fred
Spring), 8th Floor, 101 Huntington Avenue, Boston, MA 02199; and</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Notify the JHF Investment Compliance Department, in writing, that you
have an account before you place any trades.</FONT></P>
<P align=left><FONT face=sans-serif size=2>This applies to any personal
securities trades in the categories described above in the section "Which
Accounts and Securities are Subject to the Code's Personal Trading Restrictions"
as well as trades in John Hancock Mutual Funds and John Hancock Variable
Products. The JHF Investment Compliance Department may rely on information
submitted by your broker as part of your reporting requirements under this code
of ethics.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>8. Reports and Other Disclosures
In the Code of Ethics</FONT></B></P>
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<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Initial Holdings Report
and Annual Holdings Report</FONT></B></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR><FONT face=sans-serif size=2>Applies to: Investment Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Regular Access
      Persons</FONT><BR><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>You must file an initial holdings
report within 10 calendar days after becoming an Investment Access person or a
Regular Access person. The information must be current as of a date no more than
45 days prior to your becoming an Investment Access person or a Regular Access
person.</FONT></P>
<P align=left><FONT face=sans-serif size=2>You must also file an annual holdings
report (as of December 31st) within 45 calendar days after the calendar year
end. This applies to any personal securities holdings in the categories
described above in the section "Which Accounts and Securities are Subject to the
Code's Personal Trading Restrictions" as well as holdings in John Hancock Mutual
Funds and John Hancock Variable Products.</FONT></P>
<P align=left><FONT face=sans-serif size=2>Your reports must include:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>the title and type of security, and as applicable the exchange ticker
symbol or CUSIP number, number of shares, and principal amount of each
reportable security;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>the name of any broker, dealer or bank with which you maintain an
account; and</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>the date that you submit the report.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Quarterly Transaction
Certification</FONT></B></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR><FONT face=sans-serif size=2>Applies to: Investment Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Regular Access
      Persons</FONT><BR><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>On a quarterly basis, Investment
Access Persons and Regular Access persons are required to certify transactions
in their brokerage accounts and the John Hancock Funds 401(k) Plan. Within 30
calendar days after the end of each calendar quarter you will be asked to log
into the John Hancock Personal Trading and Reporting System to verify that the
system has captured accurately all transactions for the preceding calendar
quarter for accounts and trades which are required to be reported pursuant to
the above noted section entitled "Which Accounts and Securities are Subject to
the Code's Personal Trading Restrictions". Even if you have no transactions to
report you will be asked to complete the certification.</FONT></P>
<P align=left><FONT face=sans-serif size=2>For each transaction you must report
the following information:</FONT></P>
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<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>the date of the transaction, the title, and as applicable the exchange
</FONT>ticker symbol or CUSIP number, interest rate and maturity date, number of
shares, and principal amount of each reportable security involved;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;</FONT> the nature of the transaction (i.e. purchase, sale or any other
type of acquisition or disposition);</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;</FONT> the price at which the transaction was effected;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;</FONT> the name of the broker, dealer or bank with or through which the
transaction was effected; and</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Quarterly Brokerage
Account Certification</FONT></B></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR><FONT face=sans-serif size=2>Applies to: Investment Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Regular Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Non-Access
      Persons</FONT><BR><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>Each quarter, all Investment Access
Persons, Regular Access Persons and Non-Access Persons will be required to
provide a complete list of all brokerage accounts as described above in the
section entitled "Which Accounts and Securities are Subject to the Code's
Personal Trading Restrictions". This includes all brokerage accounts, including
brokerage accounts that only contain securities exempt from
reporting.</FONT></P>
<P align=left><FONT face=sans-serif size=2>You will be asked to log into the
John Hancock Personal Trading and Reporting System and verify that all brokerage
accounts are listed and the following information is accurate:</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;</FONT> Account number;</FONT><BR><BR><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;</FONT> Account
      registration;</FONT><BR><BR><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;</FONT> Brokerage
  firm</FONT><BR></TD></TR></TABLE></P>
<P align=left><B><FONT face=sans-serif size=2>&gt;&gt; Annual
Certification</FONT></B></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR><FONT face=sans-serif size=2>Applies to: Investment Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Regular Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Non-Access
      Persons</FONT><BR><FONT face=sans-serif size=2>Limited Access
      Persons</FONT><BR><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT><BR></TD></TR></TABLE></P>
<P align=left><FONT face=sans-serif size=2>At least annually (or additionally
when the code of ethics has been significantly changed), you must provide a
certification at a date designated by the Investment Compliance Department
that:</FONT></P>
<P align=left><FONT face=sans-serif size=2>(1) you have read and understood this
code of ethics;</FONT></P>
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<P align="left">
<FONT size=2 face="sans-serif">(2) you recognize that you are subject to its policies; and</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(3) you have complied with its requirements.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">You are required to make this certification to demonstrate that you understand the importance of these policies and your responsibilities under the code of ethics.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">9. Limited Access Persons</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">There is an additional category of persons called "Limited Access" persons. This category consists only of directors of John Hancock Advisers, LLC, trustees of the John Hancock Financial Trends Fund, Inc. or an
"interested person" of the John Hancock funds who:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(a) are not also officers of John Hancock Advisers, LLC; and</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(b) do not ordinarily obtain information about fund portfolio trades</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">An "interested person" of the John Hancock funds has the meaning given to the term in Section 2(a)(19) of the '40 Act.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">A more detailed definition of Limited Access persons, and a list of the policies that apply to them, is attached as Appendix C.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">10. Subadvisers</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">A subadviser to a John Hancock fund has a number of code of ethics responsibilities, as described in Appendix D.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">11. Reporting Violations</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">If you know of any violation of our code of ethics, you have a responsibility to promptly report it to the Chief Compliance Officer of your company. You should also report any deviations from the controls and
procedures that safeguard John Hancock Funds and the assets of our clients. You can request confidential treatment of your reporting action.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">12. Interpretation and Enforcement</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">This code of ethics cannot anticipate every situation in which personal interests may be in conflict with the interests of our clients and fund investors. You should be responsive to the spirit and intent of this code
of ethics as well as its specific provisions.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">When any doubt exists regarding any code of ethics provision or whether a conflict of interest with clients or fund investors might exist, you should</FONT></P>

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<P align=left><FONT face=sans-serif size=2>discuss the situation in advance with
the Chief Compliance Officer of your company. The code of ethics is designed to
detect and prevent fraud against clients and fund investors, and to avoid the
appearance of impropriety. If you feel inequitably burdened by any policy, you
should feel free to contact your Chief Compliance Officer or the Compliance and
Business Practices Committee. Exceptions may be granted where warranted by
applicable facts and circumstances. For example, exemption from some Personal
Trading Requirements may be granted for transactions effected pursuant to an
automatic investment plan.</FONT></P>
<P align=left><FONT face=sans-serif size=2>To provide assurance that policies
are effective, the JHF Investment Compliance Department will monitor and check
personal securities transaction reports and certifications against fund
portfolio transactions. Additional administration and recordkeeping procedures
are described in Appendix E.</FONT></P>
<P align=left><FONT face=sans-serif size=2>The Chief Compliance Officer of your
company has general administrative responsibility for this code of ethics as it
applies to the access persons of your company; an appropriate Compliance
Department will administer procedures to review personal trading reports. The
Compliance and Business Practices Committee of John Hancock Funds approves
amendments to the code of ethics and dispenses employee/officer sanctions for
violations of the code of ethics. The Boards of Trustees/Directors of the
open-end mutual funds and closed-end funds also approve amendments to the code
of ethics and dispenses sanctions for access persons of the Funds who are not
employees/officers. Accordingly, the Investment Compliance Department will refer
violations to the Compliance and Business Practices Committee and/or the Boards
of Trustees/Directors of the John Hancock '40 Act funds, respectively, for
review and appropriate action. The following factors will be considered when
determining a fine or other disciplinary action:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>the person's position and function (senior personnel may be held to a
higher standard);</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>the amount of the trade;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>whether the funds or accounts hold the security and were trading the same
day;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>whether the violation was by a family member.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>whether the person has had a prior violation and which policy was
involved.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>whether the employee self-reported the violation.</FONT></P>
<P align=left><FONT face=sans-serif size=2>You can request reconsideration of
any disciplinary action by submitting a written request.</FONT></P>
<P align=left><FONT face=sans-serif size=2>No less frequently than annually, a
written report of all material violations and sanctions, significant conflicts
of interest and other related issues will be submitted to the boards of
directors of the John</FONT></P>
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<P align=left><FONT face=sans-serif size=2>Hancock funds for their review.
Sanctions for violations could include (but are not limited to) fines,
limitation of personal trading activity, suspension or termination of the
violator's position with John Hancock Funds and/or a report to the appropriate
regulatory authority.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>13. Education of
Employees</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>The JHF Investment Compliance
Department will provide a paper copy or electronic version of the Code of Ethics
(and any amendments) to each person subject to this Code of Ethics. The JHF
Investment Compliance Department will also administer training of employees on
the principles and procedures of the code of ethics.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Appendix A: Categories of
Personnel</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>You have been notified about which of
these categories applies to you, based on the JHF Investment Compliance
Department's understanding of your current role. If you have a level of
investment access beyond that category, or if you are promoted or change duties
and as a result should more appropriately be included in a different category,
it is your responsibility to immediately notify the Chief Compliance Officer of
your company.</FONT></P>
<P align=left><FONT face=sans-serif size=2>1) Investment Access person: You are
an Investment Access person if you are an employee of John Hancock Advisers,
LLC, MFC Global Investment Management (U.S.), LLC, a John Hancock fund, or Manulife Financial
Corporation or its subsidiaries who, in connection with your regular functions
or duties, makes or participates in making recommendations regarding the
purchase or sale of securities by a John Hancock fund.</FONT></P>
<P align=left><FONT face=sans-serif size=2>(examples: portfolio managers,
analysts, traders)</FONT></P>
<P align=left><FONT face=sans-serif size=2>2) Regular Access person: You are a
Regular Access person if you do not fit the definition of Investment Access
Person, but you do fit one of the following two sub-categories:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>You are an officer (vice president and higher) or director of John
Hancock Advisers, LLC, MFC Global Investment Management (U.S.), LLC or a John Hancock fund,
unless you qualify as a Limited Access person--please see Appendix C for this
definition.)</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>You are an employee of John Hancock Advisers, LLC, MFC Global Investment Management (U.S.), LLC, a John Hancock fund or Manulife Financial Corporation or its
subsidiaries , or a director, officer (vice president and higher) or employee of
John Hancock Funds, LLC who has access to nonpublic information regarding any
clients' purchase or sale of securities, or nonpublic information regarding the
portfolio holdings of any reportable fund or who is involved in making
securities recommendations to clients, or who has access to such recommendations
that are nonpublic.</FONT></P>
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<P align=left><FONT face=sans-serif size=2>(examples: Investment Operations
personnel, Investment Compliance </FONT><FONT face=sans-serif size=2>Department
personnel, most Fund Financial Management personnel, investment administrative
personnel, Technology Resources personnel with access to investment systems,
attorneys and some legal administration personnel)</FONT></P>
<P align=left><FONT face=sans-serif size=2>3) Non-Access person: You are a
non-access person if you are an employee of John Hancock Advisers, LLC,
MFC Global Investment Management (U.S.), LLC, John Hancock Funds, LLC or a John Hancock fund
who does not fit the definitions of any of the other three categories
(Investment Access Person, Regular Access Person or Limited Access Person). To
be a non-access person, you must not have access to information regarding the
purchase or sale of securities by a John Hancock fund or nonpublic information
regarding the portfolio holdings in connection with your regular functions or
duties.</FONT></P>
<P align=left><FONT face=sans-serif size=2>(examples: wholesalers, inside
wholesalers, certain administrative staff)</FONT></P>
<P align=left><FONT face=sans-serif size=2>4) Limited Access Person: Please see
Appendix C for this definition.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Appendix B: Preclearance
Procedures</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>You should read the Code of Ethics to
determine whether you must obtain a preclearance before you enter into a
securities transaction. If you are required to obtain a preclearance, you should
follow the procedures detailed below.</FONT></P>
<P align=left><FONT face=sans-serif size=2>1. Pre-clearance for Public
Securities including Derivatives, Futures, Options and Selling Short:</FONT></P>
<P align=left><FONT face=sans-serif size=2>A request to pre-clear should be
entered into the John Hancock Personal Trading &amp; Reporting
System.</FONT></P>
<P align=left><FONT face=sans-serif size=2>The John Hancock Personal Trading
&amp; Reporting System is located under your Start Menu on your Desktop. It can
be accessed by going to Programs/Personal Trading &amp; Reporting/ Personal
Trading &amp; Reporting and by entering your Web Security Services user id and
password.</FONT></P>
<P align=left><FONT face=sans-serif size=2>If the John Hancock Personal Trading
&amp; Reporting System is not on your Desktop, please contact the HELP Desk at
(617) 572-6950 for assistance.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>The Trade Request
Screen:</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>At times you may receive a message
like "System is currently unavailable". The system is scheduled to be offline
from 8:00 PM until 7:00 AM each night.</FONT></P>
<P align=left><FONT face=sans-serif size=2>[GRAPHIC: Trade Request
Screen]</FONT></P>
<P align=left><FONT face=sans-serif size=2>Ticker/Security Cusip: Fill in either
the ticker, cusip or security name with the proper information of the security
you want to buy or sell. Then</FONT></P>
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<P align="left">
<FONT size=2 face="sans-serif">click the [Lookup] button. Select one of the hyperlinks for the desired security, and the system will populate the proper fields Ticker, Security Cusip, Security Name and Security Type automatically on the Trade
Request Screen.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">If You Don't Know the Ticker, Cusip, or Security Name:</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">If you do not know the full ticker, you may type in the first few letters followed by an asterisk * and click the [Lookup] button. For example, let's say you want to buy some shares of Intel, but all you can remember
of the ticker is that it begins with int, so you enter int* for Ticker. If any tickers beginning with int are found, they are displayed on a new screen. Select the hyperlink of the one you want, and the system will populate Security Cusip, Security
Name and Security Type automatically on the Trade Request Screen. If you do not know the full cusip, you may type in the first few numbers followed by an asterisk * and click the [Lookup] button. For example, let's say you want to buy some shares of
Microsoft, but all you can remember of the cusip is that it begins with 594918, so you enter 594918* for Ticker. If any cusips beginning with 594918 are found, they are displayed on a new screen. Select the hyperlink of the one you want, and the
system will fill in Ticker, Security Name and Security Type automatically on the Trade Request Screen. If you do not know the Ticker but have an idea of what the Security Name is, you may type in an asterisk, a few letters of the name and an
asterisk * and click the [Lookup] button. For example, let's say you want to buy some shares of American Brands, so you enter *amer* for Security Name. Any securities whose names have amer in them are displayed on a new screen, where you are asked
to select the hyperlink of the one you want, and the system will fill in Ticker, Cusip and Security Type automatically on the Trade Request Screen.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Other Items on the Trade Request Screen:</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">Brokerage Account: Click on the dropdown arrow to the right of the Brokerage Account field to choose the account to be used for the trade.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Transaction Type: Choose one of the values displayed when you click the dropdown arrow to the right of this field.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Trade Date: You may only submit trade requests for the current date.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Note: One or more of these fields may not appear on the Request Entry screen if the information is not required. Required fields are determined by the Investment Compliance Department.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Click the [Submit Request] button to send the trade request to your Investment Compliance department.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Once you click the [Submit Request] button, you will be asked to confirm the values you have entered. Review the information and click the [Confirm] button if all the information is correct. After which, you will
receive</FONT></P>

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<P align="left">
<FONT size=2 face="sans-serif">immediate feedback in your web browser. (Note: We suggest that you print out this confirmation and keep it as a record of the trade you have made). After this, you can either submit another trade request or
logout.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Attention Investment Access Persons: If the system identifies a potential violation of the Ban on Short Term Profits Rule, your request will be sent to the Investment Compliance Department for review and you will
receive feedback via the e-mail system.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Starting Over:</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">To clear everything on the screen and start over, click the [Clear Screen] button.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Exiting Without Submitting the Trade Request:</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">If you decide not to submit the trade request before clicking the [Submit Request] button, simply exit from the browser by clicking the [X] button on the upper right or by pressing [Alt+F4], or by clicking the Logout
hyperlink on the lower left side of the screen.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Ticker/Security Name Lookup Screen:</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">You arrive at this screen from the Trade Request Screen, where you've clicked the [Lookup] button (see above, "If You Don't Know the Ticker, Cusip, or Security Name"). If you see the security you want to trade, you
simply select its corresponding hyperlink, and you will automatically return to the Trade Request Screen, where you finish making your trade request. If the security you want to trade is not shown, that means that it is not recognized by the system
under the criteria you used to look it up. Keep searching under other names (click the [Return to Request] button) until you are sure that the security is not in the system. If you determine that the desired security is not in the system, please
contact a member of the Investment Compliance department to add the security for you. Contacts are listed below:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Fred Spring (617) 375-4987</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Adding Brokerage Accounts:</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">To access this functionality, click on the Add Brokerage Account hyperlink on the left frame of your browser screen. You will be prompted to enter the Brokerage Account Number, Brokerage Account Name, Date Opened, and
Broker. When you click the [Create New Brokerage Account] button, you will receive a message that informs you whether the account was successfully created.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">[GRAPHIC: Add Brokerage Account screen]</FONT></P>

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<P align="left">
<B><FONT size=2 face="sans-serif">3. Pre-clearance for Private Placements and Initial Public Offerings:</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">You may request a preclearance of private placement securities or an Initial Public Offering by contacting Fred Spring via email (please "cc." Frank Knox on all such requests). Please keep in mind that the code of
ethics prohibits Investment Access persons from purchasing securities in an initial public offering.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The request must include:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">|_| the associate's name;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">|_| the associate's John Hancock Funds' company;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">|_| the complete name of the security;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">|_| the seller (i.e the selling party if identified and/or the broker-dealer or placement agent) and whether or not the associate does business with those individuals or entities on a regular basis;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">|_| the basis upon which the associate is being offered this investment opportunity;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">|_| any potential conflict, present or future, with fund trading activity and whether the security might be offered as inducement to later recommend publicly traded securities for any fund or to trade through a
particular broker-dealer or placement agent; and</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">|_| the date of the request.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Clearance of private placements or initial public offerings may be denied for any appropriate reason, such as if the transaction could create the appearance of impropriety. Clearance of initial public offerings will
also be denied if the transaction is prohibited for a person due to his or her access category under the code of ethics.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Appendix C: Limited Access Persons</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">There are three types of Limited Access Persons--(1) Certain directors of the Adviser and (2) the trustees of the John Hancock Financial Trends Fund, Inc. and (3) the directors of the John Hancock open-end funds and
closed-end funds who are not Excluded Independent Directors</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(1) Certain Directors of the Adviser:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">You are a Limited Access person if you are a director of John Hancock Advisers, LLC or MFC Global Investment Management (U.S.), LLC and you meet the three following criteria:</FONT></P>

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<P align=left><FONT face=sans-serif size=2>(a) you are not also an officer of
John Hancock Advisers, LLC, MFC Global Investment Management (U.S.), LLC or a John Hancock
fund;</FONT></P>
<P align=left><FONT face=sans-serif size=2>(b) you do not have access to
nonpublic information regarding any clients' purchase or sale of securities, or
nonpublic information regarding the portfolio holdings of any John Hancock fund
or account; and</FONT></P>
<P align=left><FONT face=sans-serif size=2>(c) you are not involved in making
securities recommendations to clients and do not have access to such
recommendations that are nonpublic.</FONT></P>
<P align=left><FONT face=sans-serif size=2>(examples: directors of John Hancock
Advisers, LLC or MFC Global Investment Management (U.S.), LLC who are not involved in the
daily operations of the adviser)</FONT></P>
<P align=left><FONT face=sans-serif size=2>If you are a Limited Access Person
who fits this definition, the following policies apply to your category. These
policies are described in detail in the code of ethics.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>General principles</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Inside information policy and procedures</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Broker letter/Duplicate Confirms*</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Initial/annual holdings reports*</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Quarterly transaction reports*</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Annual recertification</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Preclearance requirement LIMITED: You only need to preclear any direct or
indirect acquisition of beneficial ownership in any security in an initial
public offering (an IPO) or in a limited offering (i.e. a private placement). To
request preclearance of these securities, contact </FONT></P>
<P align=left><FONT face=sans-serif size=2>Fredrick Spring at
fspring@jhancock.com and/or Frank Knox at Frank_Knox@manulifeusa.com.</FONT></P>
<P align=left><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT></P>
<P align=left><FONT face=sans-serif size=2>*A Limited Access Person may complete
this requirement under the code of<BR> ethics of another Manulife/John Hancock
adviser or fund by the applicable<BR> regulatory deadlines and arrange for
copies of the required information to<BR> be sent to the John Hancock Funds
Compliance Department.</FONT></P>
<P align=left><FONT face=sans-serif size=2>--------------------------------------------------------------------------------</FONT></P>
<P align=left><FONT face=sans-serif size=2>(2) The Independent Directors of the
Funds: If you are a trustee of the John Hancock Financial Trends Fund, Inc. or a
director to a John Hancock fund and an "interested person" of the fund within
the meaning of the Investment Company Act of 1940, the following policies apply
to your category. These policies are described in detail in the code of
ethics.</FONT></P>
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<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>General principles</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Annual recertification</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Quarterly transaction report, but only if you knew (or should have known)
that during the 15 calendar days before or after you trade a security,
either:</FONT></P>
<P align=left><FONT face=sans-serif size=2>(i) a John Hancock fund purchased or
sold the same security, or</FONT></P>
<P align=left><FONT face=sans-serif size=2>(ii) a John Hancock fund or John
Hancock Advisers, LLC considered purchasing or selling the same
security.</FONT></P>
<P align=left><FONT face=sans-serif size=2>This policy applies to holdings in
your personal accounts, those of a spouse, "significant other" or family members
sharing your household, as well as all accounts over which you have discretion
or give advice or information. If this situation occurs, it is your
responsibility to contact the Chief Compliance Officer of your company and he
will assist you with the requirements of the quarterly transaction
report.</FONT></P>
<P align=left><FONT face=sans-serif size=2>This means that the independent
directors of the funds will not usually be required to file a quarterly
transaction report--they are only required to file in the situation described
above and only if they are not Excluded Independent Directors.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Appendix D:
Subadvisers</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>Each subadviser to a John Hancock
fund is subject to its own code of ethics, which must meet the requirements of
Rule 17j-1 and Rule 204A-1.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Approval of Code of
Ethics</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>Each subadviser to a John Hancock
fund must provide a copy of its code of ethics to the trustees of the relevant
John Hancock funds for approval initially and within 60 calendar days of any
material amendment. The trustees will give their approval if they determine that
the code:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>contains provisions reasonably necessary to prevent the subadviser's
Access Persons (as defined in Rule 17j-1) from engaging in any conduct
prohibited by Rule 17j-1;</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>requires the subadviser's Access Persons to make reports to at least the
extent required in Rule 17j-1(d);</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>requires the subadviser to institute appropriate procedures for review of
these reports by management or compliance personnel (as contemplated by Rule
17j-1(d)(3));</FONT></P>
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<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>provides for notification of the subadviser's Access Persons in
accordance with Rule 17j-1(d)(4); and</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>requires the subadviser's Access Persons who are Investment Personnel to
obtain the pre-clearances required by Rule 17j-1(e);</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Reports and
Certifications</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>Each subadviser must provide an
annual report and certification to John Hancock Advisers, LLC and the fund's
trustees in accordance with Rule 17j-1(c)(2)(ii). The subadviser must also
provide other reports or information that John Hancock Advisers, LLC may
reasonably request.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Recordkeeping
Requirements</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>The subadviser must maintain all
records for its Access Persons as required by Rule 17j-1(f).</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Appendix E: Administration and
Recordkeeping</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=2>Adoption and
Approval</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>The trustees of a John Hancock fund
must approve the code of ethics of an adviser, subadviser or affiliated
principal underwriter before initially retaining its services.</FONT></P>
<P align=left><FONT face=sans-serif size=2>Any material change to a code of
ethics of a John Hancock fund, John Hancock Funds, LLC, John Hancock Advisers,
LLC or a subadviser to a fund must be approved by the trustees of the John
Hancock funds, including a majority of trustees who are not interested persons,
no later than six months after adoption of the material change.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Administration</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>No less frequently than annually,
John Hancock Funds, LLC, John Hancock Advisers, LLC, each subadviser and each
John Hancock fund will furnish to the trustees of each John Hancock fund a
written report that:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>describes issues that arose during the previous year under the code of
ethics or the related procedures, including, but not limited to, information
about material code or procedure violations, and</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>certifies that each entity has adopted procedures reasonably necessary to
prevent its access persons from violating its code of ethics.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Recordkeeping</FONT></B></P>
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<P align=left><FONT face=sans-serif size=2>The Investment Compliance Department
will maintain:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>a copy of the current code of ethics for John Hancock Funds, LLC, John
Hancock Advisers, LLC, MFC Global Investment Management (U.S.), LLC, and each John Hancock
fund, and a copy of each code of ethics in effect at any time within the past
five years.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>a record of any violation of the code of ethics, and of any action taken
as a result of the violation, for six years.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>a copy of each report made by an Access person under the code of ethics,
for six years (the first two years in a readily accessible place).</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>a record of all persons, currently or within the past five years, who are
or were required to make reports under the code of ethics. This record will also
indicate who was responsible for reviewing these reports.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>a copy of each code of ethics report to the trustees, for six years (the
first two years in a readily accessible place).</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>a record of any decision, and the reasons supporting the decision, to
approve the acquisition by an Investment Access person of initial public
offering securities or private placement securities, for six years.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Appendix F: Chief Compliance
Officers</FONT></B></P>
<TABLE cellSpacing=1 cellPadding=0 width="80%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="58%"><B><FONT face=sans-serif size=2>Entity</FONT></B>&nbsp; </TD>
    <TD width="6%">&nbsp; </TD>
    <TD noWrap align=left width="35%"><B><FONT face=sans-serif size=2>Chief Compliance Officer</FONT></B>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=3>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="58%"><FONT face=sans-serif size=2>John Hancock Advisers,
      LLC</FONT>&nbsp; </TD>
    <TD width="6%">&nbsp; </TD>
    <TD noWrap align=left width="35%"><FONT face=sans-serif size=2>Frank Knox</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=3>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="58%"><FONT face=sans-serif size=2>MFC Global Investment Management (U.S.), LLC</FONT>&nbsp; </TD>
    <TD width="6%">&nbsp; </TD>
    <TD noWrap align=left width="35%"><FONT face=sans-serif size=2>Frank Knox</FONT>&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=3>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="58%"><FONT face=sans-serif size=2>Each open-end and closed-end
      fund advised</FONT>&nbsp; </TD>
    <TD width="6%">&nbsp; </TD>
    <TD noWrap align=left width="35%"><FONT face=sans-serif size=2>Frank Knox</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="58%"><FONT face=sans-serif size=2>by John Hancock Advisers,
      LLC</FONT>&nbsp; </TD>
    <TD width="6%">&nbsp; </TD>
    <TD noWrap align=left width="35%">&nbsp; </TD></TR>
  <TR>
    <TD width="99%" colSpan=3>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="58%"><FONT face=sans-serif size=2>John Hancock Funds,
      LLC</FONT>&nbsp; </TD>
    <TD width="6%">&nbsp; </TD>
    <TD noWrap align=left width="35%"><FONT face=sans-serif size=2>Michael Mahoney</FONT>&nbsp;
  </TD></TR>
  <TR>
    <TD width="99%" colSpan=3>
      <HR noShade SIZE=1>
    </TD></TR></TABLE><BR>
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<DESCRIPTION>AUDIT COMMITTEE CHARTER
<TEXT>

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<B><FONT size=2 face="sans-serif">JOHN HANCOCK FUNDS</FONT></B></P>
<P align="left">
<B><FONT size=2 face="sans-serif">AUDIT COMMITTEE CHARTER</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">A. Membership. The Audit Committee shall be composed exclusively of Trustees who are not "interested persons" as defined in the Investment Company Act of 1940 of any of the funds, or of any fund's investment adviser or
principal underwriter (the "Independent Trustees") and who satisfy the independence and financial literacy requirements in this charter. The Audit Committee shall be composed of at least three Independent Trustees who are designated for membership
from time to time by the Board of Trustees of Trustees. In selecting Independent Trustees to serve on the Audit Committee, the Board should select members who are free of any relationship that, in the opinion of the Board, may interfere or give the
appearance of interfering with such member's individual exercise of independent judgment. Unless otherwise determined by the Board, no member of the Audit Committee may serve on the audit committee of more than two other public companies (other than
another John Hancock Fund). Except as otherwise permitted by the applicable rules of the New York Stock Exchange, each member of the Audit Committee shall be independent as defined by such rules and Rule 10A-3(b)(1) of the Exchange Act. Each member
of the Audit Committee must be financially literate, as such qualification is interpreted by the Board of Trustees in its business judgment, or must become financially literate within a reasonable period of time after his or her appointment to the
Audit Committee. At least one member of the Audit Committee must have accounting or related financial management expertise, as the Board of Trustees interprets such qualification in its business judgment.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">B. Overview. The Audit Committee's purpose is to:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">1. assist the Board of Trustee's oversight of (1) the integrity of the funds' financial statements, (2) the funds' compliance with legal and regulatory requirements (except to the extent such responsibility is
delegated to another committee), (3) the independent auditor's qualifications and independence, and (4) the performance of the funds' internal audit function and independent auditors;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">2. act as a liaison between the funds' independent accountants and the Board of Trustees;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">3. prepare an Audit Committee Report as required by the Securities and Exchange Commission (the "SEC") to the extent required to be included in the funds' annual proxy statement or other filings;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The Audit Committee shall discharge its responsibilities, and shall access</FONT></P>

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<P align=left><FONT face=sans-serif size=2>the information provided by the
funds' management and independent auditors, in accordance with its business
judgment. Management is responsible for the preparation of the fund's financial
statements and the independent auditors are responsible for auditing those
financial statements. The Audit Committee and the Board of Trustees recognize
that management (including the internal audit staff) and the independent
auditors have more experience, expertise, resources and time, and more detailed
knowledge and information regarding a fund's accounting, auditing, internal
control and financial reporting practices than the Audit Committee does.
Accordingly, the Audit Committee's oversight role does not provide any expert or
special assurance as to the financial statements and other financial information
provided by a fund to its shareholders and others. The independent auditors are
responsible for auditing the funds' annual financial statements. The authority
and responsibilities set forth in this charter do not reflect or create any duty
or obligation of the Audit Committee to plan or conduct any audit, to determine
or certify that any fund's financial statements are complete, accurate, fairly
presented, or in accordance with generally accepted accounting principles or
applicable law, or to guarantee any independent auditor's report.</FONT></P>
<P align=left><FONT face=sans-serif size=2>C. Oversight. The independent
auditors shall report directly to the </FONT><FONT face=sans-serif size=2>Audit
Committee, and the Audit Committee shall be responsible for oversight of the
work of the independent auditors, including resolution of any disagreements
between any fund's management and the independent auditors regarding financial
reporting. In connection with its oversight role, the Audit Committee should
also review with the independent auditors, from time to time as appropriate:
significant risks and uncertainties with respect to the quality, accuracy or
fairness of presentation of a fund's financial statements; recently disclosed
problems with respect to the quality, accuracy or fairness of presentation of
the financial statements of companies similarly situated to the funds and
recommended actions which might be taken to prevent or mitigate the risk of
problems at the funds arising from such matters; accounting for unusual
transactions; adjustments arising from audits that could have a significant
impact on the funds' financial reporting process; and any recent SEC comments on
the funds' SEC reports, including, in particular, any compliance comments. The
Audit Committee should inquire of the independent auditor concerning the
quality, not just the acceptability, of the funds' accounting determinations and
other judgmental areas and question whether management's choices of accounting
principles are, as a whole, conservative, moderate or aggressive.</FONT></P>
<P align=left><FONT face=sans-serif size=2>D. Specific Responsibilities. The
Audit Committee shall have the following duties and powers, to be exercised at
such times and in such manner as the Committee shall deem necessary or
appropriate:</FONT></P>
<P align=left><FONT face=sans-serif size=2>1. To oversee the funds' auditing and
accounting process.</FONT></P>
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<FONT size=2 face="sans-serif">2. To approve, and recommend to the Board of Trustees of Trustees for its ratification and approval in accord with applicable law, the selection, appointment and retention of an independent auditor for each fund prior
to the engagement of such independent auditor and, at an appropriate time, its compensation. The Committee should meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit. The Committee should
periodically consider whether, in order to assure continuing auditor independence, there should be regular rotation of the independent audit firm and obtain and review a copy of the most recent report on the independent auditor issued by the Public
Company Accounting Oversight Board pursuant to Section 104 of the Sarbanes-Oxley Act.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">3. To periodically review and evaluate the lead partner and other senior members of the independent auditor's team and confirm the regular rotation of the lead audit partner and reviewing partner as required by Section
203 of the Sarbanes-Oxley Act.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">4. To confirm that the officers of the funds were not employed by the independent auditor, or if employed, did not participate in any capacity in the audit of the funds, in each case, during the one-audit-year period
preceding the date of initiation of the audit, as required by Section 206 of the Sarbanes-Oxley Act.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">5. To pre-approve all non-audit services provided by the independent auditor to the fund or to the fund's investment adviser and any entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the fund, if the engagement relates directly to the operations and financial reporting of the fund.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">6. The Committee is authorized to delegate, to the extent permitted by law, pre-approval responsibilities to one or more members of the Committee who shall report to the Committee regarding approved services at the
Committee's next regularly scheduled meeting. The Committee is also authorized to adopt policies and procedures which govern the pre-approval of audit, audit-related, tax and other services provided by the independent accountants to the funds or to
a service provider as referenced in Paragraph 5, provided however, that any such policies and procedures are detailed as to particular services, the Audit Committee is informed of each service, and any such policies and procedures do not include the
delegation of the Audit Committee's responsibilities under the Securities Exchange Act of 1934 or applicable rules or listing requirements.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">7. To monitor the independent auditor of each fund throughout the engagement to attempt to identify: conflicts of interest between management and the independent auditor as a result of employment relationships; the
provision of prohibited non-audit services to a fund by its independent</FONT></P>

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<FONT size=2 face="sans-serif">auditor; violations of audit partner rotation requirements; and prohibited independent auditor compensation arrangements whereby individuals employed by the auditor are compensated based on selling non-audit services
to the fund. The independent auditors should promptly contact the Audit Committee or its Chair about any significant issue or disagreement concerning a fund's accounting practices or financial statements that is not resolved to their satisfaction or
if Section 10A(b) of the Exchange Act has been implicated.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">8. To meet with independent auditors, including private meetings, as necessary, management's internal auditors, and the funds' senior management (i) to review the arrangements for and scope of the annual audit and any
special audits; (ii) to review the form and substance of the funds' financial statements and reports, including each fund's disclosures under "Management's Discussion of Fund Performance" and to discuss any matters of concern relating to the funds'
financial statements, including any adjustments to such statements recommended by the independent accountants, or other results of an audit; (iii) to consider the independent accountants' comments with respect to the funds' financial policies,
procedures and internal accounting controls and management's responses thereto; (iv) to review the resolution of any disagreements between the independent accountants and management regarding the funds' financial reporting; and (v) to review the
form of opinion the independent accountants propose to render to the Board and shareholders. The Audit Committee should request from the independent auditors a frank assessment of management.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">9. With respect to any listed fund, to consider whether it will recommend to the Board of Trustees that the audited financial statements be included in a fund's annual report. The Board delegates to the Audit Committee
the authority to release the funds' financial statements for publication in the annual and semi-annual report, subject to the Board's right to review and ratify such financial statements following publication.  With respect to each fund, to review
and discuss with each fund's management and independent auditor the funds' audited financial statements and the matters about which Statement on Auditing Standards No. 61 (Codification of Statements on Auditing Standards, AU 380) requires
discussion. The Audit Committee shall prepare an annual committee report for inclusion where necessary in the proxy statement of a fund relating to its annual meeting of security holders or in any other filing required by the SEC's rules.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">10. To receive and consider reports on the audit functions of the independent auditors and the extent and quality of their auditing programs.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">11. To assist the Board of Trustees in monitoring the Office of the Chief Compliance Officer (the "CCO") by:</FONT></P>

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<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Reviewing, no less frequently than annually, the CCO's report on the
operation of the compliance programs of the funds and compliance programs of the
funds' adviser, sub-advisers, principal underwriter, administrator, and transfer
agent (collectively, "service providers").</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Reviewing matters relating to the compliance programs of the funds and
the compliance programs of their service providers and compliance matters
relating to the funds and their service providers as may be presented to the
Committee by the CCO.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Making recommendations to the Board of Trustees regarding changes to the
funds' compliance program, as may be necessary or appropriate from time to
time.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Reviewing the compliance programs for proposed service providers to the
funds, including subadvisers, and making recommendations regarding approval of
such compliance programs to the Board of Trustees.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Reviewing regulatory inquiries relating to the funds and their service
providers as may be presented to the Committee by the CCO.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Reviewing the CCO's goals and objectives and making recommendations to
the Board of Trustees regarding the CCO's compensation, including bonus and
merit components.</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>Reviewing the CCO's annual budget and making recommendations to the Board
of Trustees regarding its approval and the amount of such budget that should be
an expense of the funds.</FONT></P>
<P align=left><FONT face=sans-serif size=2>12. To obtain and review, at least
annually, a report by the independent auditor describing: the firm's internal
quality-control procedures; any material issues raised by the most recent
internal quality-control review, or peer review, of the firm, or by any inquiry
or investigation by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits carried out by
the firm, and any steps taken to deal with any such issues; and all
relationships between the independent auditor and each fund, including the
disclosures required by any applicable Independence Standards Board Standard.
The Audit Committee shall engage in an active dialogue with each independent
auditor concerning any disclosed relationships or services that might impact the
objectivity and independence of the auditor.</FONT></P>
<P align=left><FONT face=sans-serif size=2>13. To review with the independent
auditor any problems that may be reported to it arising out of a fund's
accounting, auditing or financial reporting functions and management's response,
and to receive and consider reports on critical accounting policies and
practices and alternative</FONT></P>
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<P align=left><FONT face=sans-serif size=2>treatments discussed with
management.</FONT></P>
<P align=left><FONT face=sans-serif size=2>14. To review the procedures for
allocating fund brokerage, the allocation of trades among various accounts under
management and the fees and other charges for fund brokerage.</FONT></P>
<P align=left><FONT face=sans-serif size=2>15. To receive and consider reports
from the independent auditors regarding reviews of the operating and internal
control structure of custodian banks and transfer agents, including procedures
to safeguard fund assets.</FONT></P>
<P align=left><FONT face=sans-serif size=2>16. To monitor securities pricing
procedures and review their implementation with management, management's
internal auditors, independent auditors and others as may be
required.</FONT></P>
<P align=left><FONT face=sans-serif size=2>17. To establish and monitor, or
cause to be established and monitored, procedures for the receipt, retention,
and treatment of complaints received by a fund regarding accounting, internal
accounting controls, or auditing matters, and the confidential, anonymous
submission by employees of the investment adviser, administrator, principal
underwriter or any other provider of accounting-related services for a listed
fund, as well as employees of the fund, if any, regarding questionable
accounting or auditing matters, as and when required by applicable rules or
listing requirements. The procedures currently in effect are attached as Exhibit
A.</FONT></P>
<P align=left><FONT face=sans-serif size=2>18. To report regularly to the Board
of Trustees, including providing the Audit Committee's conclusions with respect
to the independent auditor and the funds' financial statements and accounting
controls.</FONT></P>
<P align=left><FONT face=sans-serif size=2>E. Subcommittees. The Audit Committee
may, to the extent permitted by applicable law, form and delegate authority to
one or more subcommittees (including a subcommittee consisting of a single
member), as it deems appropriate from time to time under the circumstances. Any
decision of a subcommittee to preapprove audit or non-audit services shall be
presented to the full Audit Committee at its next meeting.</FONT></P>
<P align=left><FONT face=sans-serif size=2>F. Additional Responsibilities. The
Committee shall serve as the </FONT><FONT face=sans-serif size=2>"qualified
legal compliance committee" (as such term is defined in 17 CFR Part
205)("QLCC"), the duties of which are listed on Exhibit B to this charter; and
shall also perform other tasks assigned to it from time to time by the Board of
Trustees, and will report findings and recommendations to the Board of Trustees,
as appropriate.</FONT></P>
<P align=left><FONT face=sans-serif size=2>G. Funding. Each fund shall provide
for appropriate funding, as determined by the Audit Committee, in its capacity
as a committee of the Board of Trustees, for payment of:</FONT></P>
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<FONT size=2 face="sans-serif">1. Compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the fund.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">2. Compensation to any counsel, advisers, experts or consultants engaged by the Audit Committee under Paragraph J of this charter.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">3. Ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">H. Governance. One member of the Committee shall be appointed as chair. 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, and making reports to the Board of Trustees, as appropriate. The designation of a person as an "audit committee financial expert", within the meaning of the
rules under Section 407 of the Sarbanes-Oxley Act of 2002, shall not impose any greater responsibility or liability on that person than the responsibility and liability imposed on such person as a member of the Committee, nor shall it decrease the
duties and obligations of other Committee members or the Board of Trustees. Any additional compensation of Audit Committee members shall be as determined by the Board of Trustees. No member of the Audit Committee may receive, directly or indirectly,
any consulting, advisory or other compensatory fee from a fund, other than fees paid in his or her capacity as a member of the Board of Trustees or a committee of the Board of Trustees. The members of the Audit Committee should confirm that the
minutes of the Audit Committee's meetings accurately describe the issues considered by the Committee, the process the Committee used to discuss and evaluate such issues and the Committee's final determination of how to proceed. The minutes should
document the Committee's consideration of issues in a manner that demonstrates that the Committee acted with due care.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">I. Evaluation. At least annually, the Audit Committee shall evaluate its own performance, including whether the Audit Committee is meeting frequently enough to discharge its responsibilities appropriately.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">J. Miscellaneous. The Committee shall meet as often as it deems appropriate, with or without management, as circumstances require. 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 to carry out its duties. The Committee shall have direct access to such officers of and
service providers to the funds as it deems desirable.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">K. Review. The Committee shall review this charter at least annually</FONT></P>

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<P align=left><FONT face=sans-serif size=2>and shall recommend such changes to
the Board of Trustees as it deems desirable.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>EXHIBIT A</FONT></B></P>
<P align=left><B><FONT face=sans-serif size=2>Policy for Raising and
Investigating Complaints or Concerns About Accounting or Auditing
Matters</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>As contemplated by the Audit
Committee Charter, the Committee has established the following procedures
for:</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>the receipt, retention and treatment of complaints received by a fund
regarding accounting, internal accounting controls or auditing matters;
and</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>the confidential, anonymous submission by employees of the investment
adviser, administrator, principal underwriter or any other provider of
accounting-related services for a listed fund, as well as employees of the fund
("covered persons") of concerns regarding questionable accounting or auditing
matters.</FONT></P>
<P align=left><FONT face=sans-serif size=2>A. Policy Objectives</FONT></P>
<P align=left><FONT face=sans-serif size=2>The objective of this policy is to
provide a mechanism by which complaints and concerns regarding accounting,
internal accounting controls or auditing matters may be raised and addressed
without the fear or threat of retaliation. The funds desire and expect that
covered persons will report any complaints or concerns they may have regarding
accounting, internal accounting controls or auditing matters.</FONT></P>
<P align=left><FONT face=sans-serif size=2>B. Procedures for Raising Complaints
and Concerns</FONT></P>
<P align=left><FONT face=sans-serif size=2>The funds' Secretary shall be
responsible for communicating these procedures to covered persons. Covered
persons with complaints regarding accounting, internal accounting controls or
auditing matters or concerns regarding questionable accounting or auditing
matters may submit such complaints or concerns to the attention of the funds'
Secretary by sending a letter or other writing to the funds' principal executive
offices.&nbsp;</FONT><FONT face=sans-serif size=2>Complaints and concerns may be
made anonymously. Alternatively, any complaints or concerns may also be
communicated anonymously directly to any member of the Audit
Committee.</FONT></P>
<P align=left><FONT face=sans-serif size=2>C. Procedures for Investigating and
Resolving Complaints and Concerns</FONT></P>
<P align=left><FONT face=sans-serif size=2>If any complaints or concerns
regarding internal accounting controls or auditing matters that could affect the
funds are received through the</FONT></P>
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<FONT size=2 face="sans-serif">Ethics Line or any other similar facility maintained by John Hancock Financial Services, they shall be communicated promptly to the funds' Secretary and shall be reported by the funds' Secretary to the Audit Committee,
promptly or quarterly according to the guidelines set forth below.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The funds' Secretary shall report to the Audit Committee as to whether those responsible for the Ethics Line or similar facility have a procedure in place to communicate promptly any such complaints or concerns to the
funds' Secretary, and whether any such communication would violate the terms thereof.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">All complaints and concerns received will be promptly forwarded to the Audit Committee or the chair of the Audit Committee, unless they are determined to be without merit by Secretary of the funds. If sent only to the
chair, the chair may determine the appropriate response or may refer the issues to the entire Audit Committee. In any event, the funds' Secretary will provide a record of all complaints and concerns received (whether or not determined to have merit)
to the Audit Committee quarterly.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The Audit Committee will evaluate any complaints or concerns received (including those reported to the committee on a quarterly basis and which the funds' Secretary has previously determined to be without merit). If
the Audit Committee requires additional information to evaluate any complaint or concern, it may conduct an investigation, including interviews of persons believed to have relevant information. The Audit Committee may, in its discretion, assume
responsibility for directing or conducting any investigation or may delegate such responsibility to another person or entity.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">After its evaluation of the complaint or concern, the Audit Committee will authorize such follow-up actions, if any, as deemed necessary and appropriate to address the substance of the complaint or concern. The funds
reserve the right to take whatever action the Audit Committee believes appropriate, up to and including discharge of any employee deemed to have engaged in improper conduct.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Regardless of whether a complaint or concern is submitted anonymously, the Audit Committee will strive to keep all complaints and concerns and the identity of those who submit them and participate in any investigation
as confidential as possible, limiting disclosure to those with a business need to know or as required by law or recommended by legal counsel.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">No covered person shall penalize or retaliate against any other covered person for reporting a complaint or concern, unless it is determined that the complaint or concern was made with knowledge that it was false. The
funds will not tolerate retaliation against any covered person for</FONT></P>

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<FONT size=2 face="sans-serif">submitting, or for cooperating in the investigation of, a complaint or concern. Moreover, any such retaliation is unlawful and may result in criminal action. Any retaliation will warrant disciplinary action against the
offending party, up to and including termination of employment.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">John Hancock Advisers, LLC shall include this policy in its employee manual and shall distribute, at least annually, the policy to all of its employees.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The funds' Secretary shall retain records of all complaints and concerns received, and the disposition thereof, for five years.</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=2 face="sans-serif">D. Notification of Others</FONT><BR>
</TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="sans-serif">At any time during an evaluation or investigation of a complaint or concern, the chair of the Audit Committee may notify the funds' CCO, the QLCC, or any other party with a need to know of the receipt of a complaint or
concern and/or the progress or results of any review and/or investigation of a complaint or concern. The chair of the Audit Committee may provide such level of detail as may be necessary to allow the appropriate consideration by such parties in
light of the funds' ongoing obligations, including, but not limited to, disclosure obligations or any required officer certifications.</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="sans-serif">EXHIBIT B</FONT></B><BR>
</TD></TR></TABLE>
</P>
<P align="left">
<B><FONT size=2 face="sans-serif">QLCC DUTIES AND RESPONSIBILITIES</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">The QLCC shall adopt written procedures for the confidential receipt, retention, and consideration of any report of evidence of a material violation.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">The QLCC has the authority and responsibility, once a report of evidence of a material violation by a fund, its officers, directors, employees or agents has been received by the QLCC:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">1. to inform the CLO and CEO of such report (except in the case where the reporting attorney reasonably believes that it would be futile to report evidence of a material violation to the CLO and CEO, and has informed
the QLCC of such belief); and</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">2. to determine whether an investigation is necessary or appropriate, and, if it determines an investigation is necessary or appropriate, to:</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=2 face="sans-serif">(A) notify the Board of Trustees;</FONT><BR>
</TD></TR></TABLE>
</P>

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<FONT size=2 face="sans-serif">(B) notify the funds' CCO;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(C) initiate an investigation, which may be conducted either by the CLO or by outside attorneys; and</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(D) retain such additional expert personnel as the QLCC deems necessary;</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">and, at the conclusion of such investigation, to:</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(A) recommend, by majority vote, that the fund implement an appropriate response to evidence of a material violation; and</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">(B) inform the CLO, CEO the funds' CCO and the Board of Trustees of the results of any such investigation and the appropriate remedial measures.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">3. by majority vote, to take all other appropriate action, including notifying the U.S. Securities and Exchange Commission in the event that the fund fails in any material respect to implement an appropriate response
that the QLCC has recommended.</FONT></P>

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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>6
<FILENAME>f_governcommcharter.htm
<DESCRIPTION>GOVERNANCE COMMITTEE CHARTER
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  <TR>
    <TD noWrap><B><FONT face=sans-serif size=2>JOHN HANCOCK
      FUNDS</FONT></B><BR></TD></TR></TABLE></P>
<P align=left><B><FONT face=sans-serif size=2>GOVERNANCE COMMITTEE
CHARTER</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>A. Composition. The Governance
Committee shall be composed entirely of Trustees who are "independent" as
defined in the rules of the New York Stock Exchange ("NYSE") and the NASDAQ
Stock Market, Inc. ("NASDAQ") or any other exchange, as applicable, and are not
"interested persons" as defined in the Investment Company Act of 1940 of any of
the funds, or of any fund's investment adviser or principal underwriter (the
"Independent Trustees") who are designated for membership from time to time by
the Board of Trustees. The Chairman of the Board shall be a member of the
Governance Committee.</FONT></P>
<P align=left><FONT face=sans-serif size=2>B. Overview. The overall charter of
the Governance Committee is to make recommendations to the Board on issues
related to corporate governance applicable to the Independent Trustees and to
the composition and operation of the Board, and to assume duties,
responsibilities and functions to recommend nominees to the Board, together with
such additional duties, responsibilities and functions as are delegated to it
from time to time.</FONT></P>
<P align=left><FONT face=sans-serif size=2>C. Specific Responsibilities. The
Governance Committee shall have the following duties and powers, to be exercised
at such times and in such manner as the Committee shall deem necessary or
appropriate:</FONT></P>
<P align=left><FONT face=sans-serif size=2>1. Except where the funds are legally
required to nominate individuals recommended by others, to recommend to the
Board of Trustees individuals for nomination to serve as Trustees.</FONT></P>
<P align=left><FONT face=sans-serif size=2>2. To consider, as it deems necessary
or appropriate, the criteria for persons to fill existing or newly created
Trustee vacancies. The Governance Committee shall use the criteria and
principles set forth in Annex A to guide its Trustee selection
process.</FONT></P>
<P align=left><FONT face=sans-serif size=2>3. To consider and recommend the
amount of compensation to be paid by the funds to the Independent Trustees,
including incremental amounts, if any, payable to Committee Chairmen, and to
address compensation-related matters.</FONT></P>
<P align=left><FONT face=sans-serif size=2>4. To consider and recommend the
duties and compensation of the Chairman of the Board.</FONT></P>
<P align=left><FONT face=sans-serif size=2>5. To consider and recommend changes
to the Board regarding the size, structure, and composition of the
Board.</FONT></P>
<P align=left><FONT face=sans-serif size=2>6. To evaluate, from time to time,
the retirement policies for the Independent Trustees.</FONT></P>
<P align=left><FONT face=sans-serif size=2>7. To develop and recommend to the
Board guidelines for corporate governance ("Corporate Governance Guidelines")
for the funds that take into account the rules of the NYSE and any applicable
law or regulation, and to periodically review and assess the Corporate
Governance Guidelines and recommend any proposed changes to the Board for
approval.</FONT></P>
<P align=left><FONT face=sans-serif size=2>8. To monitor all expenditures of the
Board or the Committees or the Independent Trustees not otherwise incurred
and/or monitored by a particular Committee, including, but not limited to:
legal, consulting, and D&amp;O insurance costs; association dues, including
Investment Company Institute membership dues; meeting expenditures and policies
relating to</FONT></P>
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<FONT size=2 face="sans-serif">reimbursement of travel expenses and expenses associated with offsite meetings; expenses associated with Trustee attendance at educational or informational conferences; and publication expenses.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">9. To consider, evaluate and make recommendations and necessary findings regarding independent legal counsel and any other advisers, experts or consultants, that may be engaged by the Board of Trustees, by the Trustees
who are not "interested persons" as defined in the Investment Company Act of 1940 of any of the funds or any fund's investment adviser or principal underwriter, or by the Governance Committee, from time to time, other than as may be engaged directly
by another Committee.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">10. To periodically review the Board's committee structure and the charters of the Board's committees, and recommend to the Board of Trustees changes to the committee structure and charters as it deems
appropriate.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">11. 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.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">12. To report its activities to Board of Trustees and to make such recommendations with respect to the matters described above and other matters as the Governance Committee may deem necessary or appropriate.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">D. Additional Responsibilities. The Committee will also perform other tasks assigned to it from time to time by the Chairman of the Board or by the Board of Trustees, and will report findings and recommendations to the
Board of Trustees, as appropriate.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">E. Governance. One member of the Committee shall be appointed as chair. 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, and making reports to the Board of Trustees, as appropriate.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">F. Miscellaneous. The Committee shall meet as often as it deems appropriate, with or without management, as circumstances require. 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 to carry out its duties. The Committee shall have direct access to such officers of and
service providers to the funds as it deems desirable.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">G. Review. The Committee shall review this Charter periodically and recommend such changes to the Board of Trustees as it deems desirable.</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="sans-serif">ANNEX A</FONT></B><BR>
<BR>
<B><FONT size=2 face="sans-serif">General Criteria</FONT></B><BR>
</TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="sans-serif">1. Nominees should have a reputation for integrity, honesty and adherence to high ethical standards.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">2. Nominees should have demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the funds and should be willing and able to
contribute positively to the decision-making process of the funds.</FONT></P>

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<FONT size=2 face="sans-serif">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.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">4. Nominees should have the ability to understand the sometimes conflicting interests of the various constituencies of the funds, including shareholders and the management company, and to act in the interests of all
shareholders.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">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
director/trustee.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Application of Criteria to Existing Trustees</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">The renomination of existing Trustees should not be viewed as automatic, but should be based on continuing qualification under the criteria set forth above. In addition, the Governance Committee shall consider the
existing Trustee's performance on the Board and any committee.</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="sans-serif">Review of Shareholder Nominations</FONT></B><BR>
</TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="sans-serif">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 Governance Committee. In
evaluating a nominee recommended by a shareholder, the Governance 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 funds' 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 funds' proxy statement.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">As long as an existing Independent Trustee continues, in the opinion of the Governance Committee, to satisfy the criteria listed above, the Committee generally would favor the re-nomination of an existing Trustee
rather than a new candidate. Consequently, while the Governance Committee will consider nominees recommended by shareholders to serve as trustees, the Governance Committee may only act upon such recommendations if there is a vacancy on the Board, or
the Governance Committee determines that the selection of a new or additional Trustee is in the best interests of the fund. In the event that a vacancy arises or a change in Board membership is determined to be advisable, the Governance Committee
will, in addition to any shareholder recommendations, consider candidates identified by other means, including candidates proposed by members of the Governance Committee. The Governance Committee may retain a consultant to assist the Committee in a
search for a qualified candidate.</FONT></P>

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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>7
<FILENAME>g_proxyvotingpolicies.htm
<DESCRIPTION>PROXY VOTING POLICIES
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<B><FONT size=2 face="sans-serif">JOHN HANCOCK FUNDS</FONT></B></P>
<P align="left">
<B><FONT size=2 face="sans-serif">PROXY VOTING POLICIES</FONT></B></P>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=2 face="sans-serif">John Hancock Advisers, LLC</FONT><BR>
<FONT size=2 face="sans-serif">MFC Global Investment Management (U.S.), LLC</FONT><BR>
<FONT size=2 face="sans-serif">(formerly known as Sovereign Asset Management LLC)</FONT><BR>
<FONT size=2 face="sans-serif">Proxy Voting Guidelines</FONT><BR>
</TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="sans-serif">We believe in placing our clients' interests first. Before we invest in a particular stock or bond, our team of portfolio managers and research analysts look closely at the company by examining its earnings history,
its management team and its place in the market. Once we invest, we monitor all our clients' holdings, to ensure that they maintain their potential to produce results for investors.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">As part of our active investment management strategy, we keep a close eye on each company we invest in. Routinely, companies issue proxies by which they ask investors like us to vote for or against a change, such as a
new management team, a new business procedure or an acquisition. We base our decisions on how to vote these proxies with the goal of maximizing the value of our clients' investments.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Currently, John Hancock Advisers, LLC ("JHA") and MFC Global Investment Management (U.S.), LLC ("MFC") manage open-end funds, closed-end funds and portfolios for institutions and high-net-worth investors. Occasionally,
we utilize the expertise of an outside asset manager by means of a subadvisory agreement. In all cases, JHA or MFC makes the final decision as to how to vote our clients' proxies. There is one exception, however, and that pertains to our
international accounts. The investment management team for international investments votes the proxies for the accounts they manage. Unless voting is specifically retained by the named fiduciary of the client, JHA and MFC will vote proxies for
ERISA clients.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">In order to ensure a consistent, balanced approach across all our investment teams, we have established a proxy oversight group comprised of associates from our investment, operations and legal teams. The group has
developed a set of policies and procedures that detail the standards for how JHA and MFC vote proxies. The guidelines of JHA have been approved and adopted by each fund client's board of trustees who have voted to delegate proxy voting
authority to their investment adviser, JHA. JHA and MFC's other clients have granted us the authority to vote proxies in our advisory contracts or comparable documents.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">JHA and MFC have hired a third party proxy voting service which has been instructed to vote all proxies in accordance with our established guidelines except as otherwise instructed.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">In evaluating proxy issues, our proxy oversight group may consider information</FONT></P>

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<FONT size=2 face="sans-serif">from many sources, including the portfolio manager, management of a company presenting a proposal, shareholder groups, and independent proxy research services. Proxies for securities on loan through securities lending
programs will generally not be voted, however a decision may be made to recall a security for voting purposes if the issue is material.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">Below are the guidelines we adhere to when voting proxies. Please keep in mind that these are purely guidelines. Our actual votes will be driven by the particular circumstances of each proxy. From time to time votes
may ultimately be cast on a case-by-case basis, taking into consideration relevant facts and circumstances at the time of the vote. Decisions on these matters (case-by-case, abstention, recall) will normally be made by a portfolio manager under the
supervision of the chief investment officer and the proxy oversight group. We may abstain from voting a proxy if we conclude that the effect on our clients' economic interests or the value of the portfolio holding is indeterminable or
insignificant.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Proxy Voting Guidelines</FONT></B></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Board of Directors</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">We believe good corporate governance evolves from an independent board.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">We support the election of uncontested director nominees, but will withhold our vote for any nominee attending less than 75% of the board and committee meetings during the previous fiscal year. Contested elections will
be considered on a case by case basis by the proxy oversight group, taking into account the nominee's qualifications. We will support management's ability to set the size of the board of directors and to fill vacancies without shareholder approval
but will not support a board that has fewer than 3 directors or allows for the removal of a director without cause.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">We will support declassification of a board and block efforts to adopt a classified board structure. This structure typically divides the board into classes with each class serving a staggered term.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">In addition, we support proposals for board indemnification and limitation of director liability, as long as they are consistent with corporate law and shareholders' interests. We believe that this is necessary to
attract qualified board members.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Selection of Auditors</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">We believe an independent audit committee can best determine an auditor's qualifications.</FONT></P>

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<FONT size=2 face="sans-serif">We will vote for management proposals to ratify the board's selection of auditors, and for proposals to increase the independence of audit committees.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Capitalization</FONT></B><BR></P>
<P align="left">
<FONT size=2 face="sans-serif">We will vote for a proposal to increase or decrease authorized common or preferred stock and the issuance of common stock, but will vote against a proposal to issue or convert preferred or multiple classes of stock if
the board has unlimited rights to set the terms and conditions of the shares, or if the shares have voting rights inferior or superior to those of other shareholders.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">In addition, we will support a management proposal to: create or restore preemptive rights; approve a stock repurchase program; approve a stock split or reverse stock split; and, approve the issuance or exercise of
stock warrants</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Acquisitions, mergers and corporate restructuring</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">Proposals to merge with or acquire another company will be voted on a case-by-case basis, as will proposals for recapitalization, restructuring, leveraged buyout, sale of assets, bankruptcy or liquidation. We will vote
against a reincorporation proposal if it would reduce shareholder rights. We will vote against a management proposal to ratify or adopt a poison pill or to establish a supermajority voting provision to approve a merger or other business combination.
We would however support a management proposal to opt out of a state takeover statutory provision, to spin-off certain operations or divisions and to establish a fair price provision.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Corporate Structure and Shareholder Rights</FONT></B></P>
<P align="left">
<FONT size=2 face="sans-serif">In general, we support proposals that foster good corporate governance procedures and that provide shareholders with voting power equal to their equity interest in the company.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">To preserve shareholder rights, we will vote against a management proposal to restrict shareholders' right to: call a special meeting and to eliminate a shareholders' right to act by written consent. In addition, we
will not support a management proposal to adopt a supermajority vote requirement to change certain by-law or charter provisions or a non-technical amendment to by-laws or a charter that reduces shareholder rights.</FONT></P>
<P align="left">
<B><FONT size=2 face="sans-serif">Equity-based compensation</FONT></B></P>

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<P align=left><FONT face=sans-serif size=2>Equity-based compensation is designed
to attract, retain and motivate talented executives and independent directors,
but should not be so significant as to materially dilute shareholders'
interests.</FONT></P>
<P align=left><FONT face=sans-serif size=2>We will vote against the adoption or
amendment of a stock option plan if the: </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>plan dilution is more than 10% of outstanding common stock,</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>plan allows for non-qualified options to be priced at less than 85% of
the fair market value on the grant date,</FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>company allows or has allowed the re-pricing or replacement of underwater
options in the past fiscal year (or the exchange of underwater
options).</FONT></P>
<P align=left><FONT face=sans-serif size=2>With respect to the adoption or
amendment of employee stock purchase plans or a stock award plan, we will vote
against management if: </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>the plan allows stock to be purchased at less than 85% of fair market
value; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>this plan dilutes outstanding common equity greater than 10%; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>all stock purchase plans, including the proposed plan, exceed 15% of
outstanding common equity.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Other Business</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>For routine business matters which
are the subject of many proxy related questions, we will vote with management
proposals to: </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>change the company name; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>approve other business; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>adjourn meetings; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>make technical amendments to the by-laws or charters; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>approve financial statements; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>approve an employment agreement or contract.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Shareholder
Proposals</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>Shareholders are permitted per SEC
regulations to submit proposals for inclusion in a company's proxy statement. We
will generally vote against shareholder proposals and in accordance with the
recommendation of management except as</FONT></P>
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<!--$$/page=--><A name=page_5></A>
<P align=left><FONT face=sans-serif size=2>follows where we will vote for
proposals:; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>calling for shareholder ratification of auditors; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>calling for auditors to attend annual meetings; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>seeking to increase board independence; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>requiring minimum stock ownership by directors; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>seeking to create a nominating committee or to increase the independence
of the nominating committee; </FONT></P>
<P align=left><FONT face=sans-serif size=2><FONT face="Times New Roman" size=3>&#149;
</FONT>seeking to increase the independence of the audit committee.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Corporate and social policy
issues</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>We believe that "ordinary business
matters" are primarily the responsibility of management and should be approved
solely by the corporation's board of directors.</FONT></P>
<P align=left><FONT face=sans-serif size=2>Proposals in this category, initiated
primarily by shareholders, typically request that the company disclose or amend
certain business practices. We generally vote against business practice
proposals and abstain on social policy issues, though we may make exceptions in
certain instances where we believe a proposal has substantial economic
implications.</FONT></P>
<P align=left>
<TABLE>

  <TR>
    <TD noWrap><B><FONT face=sans-serif size=2>John Hancock Advisers,
      LLC</FONT></B><BR><B><FONT face=sans-serif size=2>MFC Global Investment Management (U.S.), LLC</FONT></B><BR><B><FONT face=sans-serif size=2>(formerly known as Sovereign Asset Management LLC)</FONT></B><BR><B><FONT face=sans-serif size=2>Proxy
      Voting Procedures</FONT></B><BR></TD></TR></TABLE></P>
<P align=left><B><FONT face=sans-serif size=2>The role of the proxy voting
service</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>John Hancock Advisers, LLC ("JHA")
and MFC Global Investment Management (U.S.), LLC ("MFC") have hired a proxy
voting service to assist with the voting of client proxies. The proxy service
coordinates with client custodians to ensure that proxies are received for
securities held in client accounts and acted on in a timely manner. The proxy
service votes all proxies received in accordance with the proxy voting
guidelines established and adopted by JHA and MFC. When it is unclear how
to apply a particular proxy voting guideline or when a particular proposal is
not covered by the guidelines, the proxy voting service will contact the proxy
oversight group coordinator for a resolution.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>The role of the proxy oversight
group and coordinator</FONT></B></P>
<HR align=center width="100%" noShade SIZE=2>


<!--$$/page=-->
<A name="page_6"></A>

<P align="left">
<FONT size=2 face="sans-serif">The coordinator will interact directly with the proxy voting service to resolve any issues the proxy voting service brings to the attention of JHA or MFC. When a question arises regarding how a proxy should be
voted the coordinator contacts the firm's investment professionals and the proxy oversight group for a resolution. In addition the coordinator ensures that the proxy voting service receives responses in a timely manner. Also, the coordinator is
responsible for identifying whether, when a voting issue arises, there is a potential conflict of interest situation and then escalating the issue to the firm's Executive Committee. For securities out on loan as part of a securities lending program,
if a decision is made to vote a proxy, the coordinator will manage the return/recall of the securities so the proxy can be voted.</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="sans-serif">The role of mutual fund trustees</FONT></B><BR>
</TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="sans-serif">The boards of trustees of our mutual fund clients have reviewed and adopted the proxy voting guidelines of the funds' investment adviser, JHA. The trustees will periodically review the proxy voting guidelines and
suggest changes they deem advisable.</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<B><FONT size=2 face="sans-serif">Conflicts of interest</FONT></B><BR>
</TD></TR></TABLE>
</P>
<P align="left">
<FONT size=2 face="sans-serif">Conflicts of interest are resolved in the best interest of clients.</FONT></P>
<P align="left">
<FONT size=2 face="sans-serif">With respect to potential conflicts of interest, proxies will be voted in accordance with JHA's or MFC's predetermined policies. If application of the predetermined policy is unclear or does not address a
particular proposal, a special internal review by the JHA Executive Committee or MFC Executive Committee will determine the vote. After voting, a report will be made to the client (in the case of an investment company, to the fund's board of
trustees), if requested. An example of a conflict of interest created with respect to a proxy solicitation is when JHA or MFC must vote the proxies of companies that they provide investment advice to or are currently seeking to provide
investment advice to, such as to pension plans.</FONT></P>

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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
