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<SEC-DOCUMENT>0000928816-10-000020.txt : 20100104
<SEC-HEADER>0000928816-10-000020.hdr.sgml : 20100101
<ACCEPTANCE-DATETIME>20100104155918
ACCESSION NUMBER:		0000928816-10-000020
CONFORMED SUBMISSION TYPE:	N-CSR
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20091031
FILED AS OF DATE:		20100104
DATE AS OF CHANGE:		20100104
EFFECTIVENESS DATE:		20100104

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:		10502237

	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_incomesecurities.htm
<DESCRIPTION>JOHN HANCOCK INCOME SECURITIES TRUST
<TEXT>
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     <TD colSpan=2 noWrap align=center><FONT face=sans-serif>UNITED STATES</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=center><FONT face=sans-serif>SECURITIES AND EXCHANGE COMMISSION</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=center><FONT face=sans-serif>Washington, D.C. 20549</FONT>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=center><B><FONT face=sans-serif>FORM N-CSR</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=center>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=center><B><FONT face=sans-serif>CERTIFIED SHAREHOLDER REPORT OF REGISTERED</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=center><B><FONT face=sans-serif>MANAGEMENT INVESTMENT COMPANIES</FONT></B>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=center>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=center><FONT face=sans-serif>Investment Company Act file number </FONT><U><FONT face=sans-serif>811- 4186</FONT></U>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=center><U><FONT face=sans-serif>John Hancock Income Securities Trust</FONT></U>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=center><FONT face=sans-serif>(Exact name of registrant as specified in charter)</FONT>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=center><U><FONT face=sans-serif>601 Congress Street, Boston, Massachusetts 02210</FONT></U>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=center><FONT face=sans-serif>(Address of principal executive offices) (Zip code)</FONT>&nbsp;</TD></TR>
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     <TD colSpan=2 align=center><FONT face=sans-serif>Salvatore Schiavone</FONT></TD></TR>
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     <TD colSpan=2 align=center><FONT face=sans-serif>Treasurer</FONT></TD></TR>
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     <TD colSpan=2 noWrap align=center><FONT face=sans-serif>601 Congress Street</FONT>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=center><U><FONT face=sans-serif>Boston, Massachusetts 02210</FONT></U>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=center><FONT face=sans-serif>(Name and address of agent for service)</FONT>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=center></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT face=sans-serif>Registrant's telephone number, including area code:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT face=sans-serif>617-663-4497</FONT></U>&nbsp;</TD>
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     <TD noWrap align=left><FONT face=sans-serif>Date of fiscal year end:</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT face=sans-serif>October 31</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face=sans-serif>Date of reporting period:</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT face=sans-serif>October 31, 2009</FONT>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>ITEM 1. REPORT TO SHAREHOLDERS.</FONT></P>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Management&#146;s discussion of</FONT></B><BR>
<FONT size=7 face=serif>Fund performance</FONT><BR>
<BR>
<FONT size=2 face=sans-serif>By MFC Global Investment Management (U.S.), LLC</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>U.S. bonds </FONT></B><FONT size=2 face=serif>generated double-digit gains for the 12 months ended October 31, 2009. The period began with the U.S. economy in the throes of a severe recession and the financial sector struggling with a liquidity crisis in the credit markets. As 2009 began, however, market conditions changed dramatically as efforts by the federal government to ease the credit crisis and stimulate the economy began to bear fruit. Improving economic and credit conditions led to a resurgence in corporate bonds, which were the best performers in the bond market for the 12-month period.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>For the year ended October 31, 2009, John Hancock Income Securities Trust produced a total return of 39.06% at net asset value (NAV) and 47.95% at market value. The Fund&#146;s NAV return and its market performance differ because the market 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 UBS leveraged closed-end investment-grade bond fund returned 33.13% at NAV and 38.60% at market value, while the Barclays Capital Government/Credit Bond Index returned 14.60%.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund&#146;s outperformance of the broad bond market indexes and its peer group average resulted primarily from a significant increase in the Fund&#146;s exposure to corporate bonds. With corporate bonds trading at severely distressed prices in late 2008, we took advantage of the depressed valuations to substantially increase our holdings, and we were rewarded as corporate bonds rebounded sharply in 2009. The increase in corporate bonds was matched by a corresponding decrease in the portfolio&#146;s mortgage-backed securities, where the risk/reward trade-off had become unfavorable. Contributors among the Fund&#146;s corporate bond holdings included insurance company Genworth Financial, Inc., broadcaster Nexstar Broadcasting, Inc. and telecommunication services provider West Corp. On the downside, telephone directory publisher R.H. Donnelley Corp. and casino operator Little Traverse Bay Band of Odawa Indians were the weakest performers.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>This commentary reflects the views of the portfolio 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 style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Past performance is no guarantee of future results.</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>The major factors in this Fund&#146;s performance are interest rate and credit risk. When interest rates rise, bond prices usually fall. Generally, an increase in the Fund&#146;s average maturity will make it more sensitive to interest-rate risk. Higher-yielding bonds are riskier than lower-yielding bond, and their value may fluctuate more in response to market conditions.</FONT></P>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>6</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=7 face=serif>Portfolio summary</FONT></P>
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     <TD width="8%"></TD>
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<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Portfolio Diversification</FONT></B><SUP><FONT size=1 face=sans-serif>1</FONT></SUP>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Corporate Bonds</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>68%</FONT>&nbsp;</TD></TR>
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</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>U.S. Government &amp; Agency Obligations</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>19%</FONT>&nbsp;</TD></TR>
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</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Collateralized Mortgage Obligations</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>9%</FONT>&nbsp;</TD></TR>
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</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Preferred Stocks</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>3%</FONT>&nbsp;</TD></TR>
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</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Other Securities</FONT>&nbsp;</TD>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>1%</FONT>&nbsp;</TD></TR>
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</TD></TR>
<TR>
     <TD colSpan=5>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Sector Composition</FONT></B><SUP><FONT size=1 face=sans-serif>1,2</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
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</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Financials</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>22%</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Materials</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp; &nbsp; &nbsp;<FONT size=1 face=sans-serif>5%</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>U.S. Government &amp; Agency</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>18%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Consumer Staples</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp; &nbsp; &nbsp;<FONT size=1 face=sans-serif>5%</FONT>&nbsp;</TD></TR>
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</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Collateralized Mortgage Obligations</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9%</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Telecommunication Services</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp; &nbsp; &nbsp;<FONT size=1 face=sans-serif>5%</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Energy</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Health Care</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp; &nbsp; &nbsp;<FONT size=1 face=sans-serif>3%</FONT>&nbsp;</TD></TR>
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<HR SIZE=1 noShade>
</TD>
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</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Consumer Discretionary</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Information Technology</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp; &nbsp; &nbsp;<FONT size=1 face=sans-serif>2%</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Utilities</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7%</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Asset-Backed Securities</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp; &nbsp; &nbsp;<FONT size=1 face=sans-serif>1%</FONT>&nbsp;</TD></TR>
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</TD>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Industrials</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6%</FONT>&nbsp;</TD>
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</TD>
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     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Quality Composition</FONT></B><SUP><FONT size=1 face=sans-serif>1</FONT></SUP>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>AAA</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>20%</FONT>&nbsp;</TD>
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     <TD></TD>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>AA</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5%</FONT>&nbsp;</TD>
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     <TD></TD>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>A</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>21%</FONT>&nbsp;</TD>
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     <TD></TD>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>BBB</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>30%</FONT>&nbsp;</TD>
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     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>BB</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8%</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>B</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7%</FONT>&nbsp;</TD>
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<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CCC</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6%</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Short-Term Investments and Other</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3%</FONT>&nbsp;</TD>
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     <TD></TD>
     <TD colSpan=2>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>1 </FONT></SUP><FONT size=1 face=sans-serif>As a percentage of the Fund&#146;s total investments on October 31, 2009.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>2 </FONT></SUP><FONT size=1 face=sans-serif>Sector investing is subject to greater risks than the market as a whole. Because the Fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors.</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>7</FONT>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=7 face=serif>Fund&#146;s investments</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=4 face=sans-serif>Securities owned by the Fund on 10-31-09</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="10%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Corporate Bonds 92.73%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$142,866,237</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=6 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(Cost $141,904,288)</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Consumer Discretionary 10.03%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>15,449,835</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Auto Components 0.80%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Allison Transmission, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11.000%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-01-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$485,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>494,700</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Exide Technologies,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note Ser B (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>445,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>442,775</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Tenneco Automotive, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Sub Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>320,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>301,600</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Hotels, Restaurants &amp; Leisure 2.92%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Arcos Dorados BV,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>265,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>255,725</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Chukchansi Economic Development Authority,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>460,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>299,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Fontainebleau Las Vegas,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note (H)(S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>705,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>24,675</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Greektown Holdings LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (H)(S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,015,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>203,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Jacobs Entertainment, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>600,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>546,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Little Traverse Bay Bands of Odawa Indians,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (H)(S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>500,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>157,500</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>MGM Mirage, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>80,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>85,200</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>MTR Gaming Group, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>12.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>175,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>171,500</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Sub Note Ser B (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>390,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>323,700</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Seminole Indian Tribe of Florida,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Bond (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.535</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-01-20</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>650,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>585,410</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Turning Stone Resort Casino,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,540,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,470,700</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Waterford Gaming LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>290,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>185,600</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Yonkers Racing Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>180,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>187,200</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Household Durables 0.49%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Whirlpool Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.600</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>335,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>382,419</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>335,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>364,321</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>8</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
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     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Media 5.16%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>AMC Entertainment, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>8.750%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$125,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$128,125</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Cablevision Systems Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-15-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>135,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>139,725</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Canadian Satellite Radio Holdings, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>12.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>979,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>594,742</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Charter Communications Holdings II LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (H)(S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>447,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>502,875</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Cinemark USA, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>180,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>186,300</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CSC Holdings, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>390,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>401,700</FONT>&nbsp;</TD></TR>
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     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>DirecTV Holdings LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>350,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>379,750</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>280,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>285,648</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>News America Holdings, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-20-24</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,020,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,068,625</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.600</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-11-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,145,247</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>News America, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.900</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>205,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>229,830</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Nexstar Broadcasting, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note PIK (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>254,089</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>170,557</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Nexstar Finance, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sub Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>84,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>56,490</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>R.H. Donnelley Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Disc Note Ser A&#150;1 (H)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>200,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11,500</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Disc Note Ser A&#150;2 (H)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>300,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>17,250</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note Ser A&#150;4 (H)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>495,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>28,463</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Regal Cinemas Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>115,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>119,025</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>TCI Communications, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.800</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,500,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,718,172</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Time Warner Cable, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-01-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>605,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>666,023</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>XM Satellite Radio, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>100,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>105,000</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Specialty Retail 0.39%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Staples, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>500,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>605,926</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Textiles, Apparel &amp; Luxury Goods 0.27%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Burlington Coat Factory Warehouse Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>395,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>407,837</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Consumer Staples 6.30%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>9,706,920</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Beverages 1.66%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Anheuser-Busch InBev Worldwide, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-20</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>250,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>254,151</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>355,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>357,942</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Dr. Pepper Snapple Group, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.820</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>280,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>319,904</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.120</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>200,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>219,063</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Miller Brewing Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>365,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>390,259</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>9</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_6"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Beverages 1.66%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>PepsiCo, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>7.900%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-01-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$395,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$496,415</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>SABMiller PLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>465,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>517,480</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Food &amp; Staples Retailing 0.55%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CVS Caremark Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Bond (6.302% to 6-1-12 then</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>variable) (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.302</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>990,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>851,400</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Food Products 1.66%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Bunge, Ltd. Finance Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>210,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>244,751</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.350</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,040,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,067,103</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Kraft Foods, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-11-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>685,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>738,028</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Smithfield Foods, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Sec Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>300,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>315,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Tyson Foods, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>170,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>193,800</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Household Products 0.28%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Yankee Acquisition Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Sub Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>455,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>434,525</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Tobacco 2.15%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Alliance One International, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>245,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>248,675</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,040,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Altria Group, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-10-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>800,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>928,170</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Reynolds American, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,090,254</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Energy 11.81%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>18,190,314</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Energy Equipment &amp; Services 1.59%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Drummond Co., Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>290,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>265,350</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>NGPL Pipeco LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.119</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-15-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,580,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,746,365</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Petrobras International Finance Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-20-20</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>215,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>215,648</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Questar Market Resources, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.800</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-01-20</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>205,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>214,412</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Oil, Gas &amp; Consumable Fuels 10.22%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Arch Coal, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>100,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>102,500</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Cenovus Energy, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.700</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>205,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>213,005</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>385,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>395,317</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>ConocoPhillips,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.400</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,064,359</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Devon Energy Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,025,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,113,032</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Energy Transfer Partners LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.700</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>330,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>408,606</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>330,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>383,520</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>10</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_7"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Oil, Gas &amp; Consumable Fuels (continued)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Enterprise Products Operating LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Jr Sub Note (7.000% to 6-1-17</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>7.000%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-67</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$695,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$608,257</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Jr Sub Note (7.034% to 1-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable) (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.034</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-68</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>590,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>542,800</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note Ser G (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.600</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>650,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>696,547</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Gulf South Pipeline Co. LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,056,377</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Kinder Morgan Energy Partners LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>505,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>615,664</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-32</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>195,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>218,047</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>740,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>770,907</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>MarkWest Energy Partners LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note Ser B (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>545,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>553,175</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>McMoRan Exploration Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>340,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>342,550</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Nustar Logistics,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.650</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>345,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>380,594</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>ONEOK Partners LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.150</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>705,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>741,661</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>350,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>419,224</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Petro-Canada,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Debenture (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-21</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,250,606</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.050</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>400,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>425,956</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Petroleos Mexicanos,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>490,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>482,699</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Plains All American Pipeline LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>345,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>372,036</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>600,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>616,523</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Regency Energy Partners LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>280,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>295,400</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Southern Union Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Note, Ser A (7.200% to 11-01-11</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable) (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.200</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-01-66</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>360,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>295,200</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Williams Partners Finance Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>800,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>795,792</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>XTO Energy, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.900</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>545,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>588,185</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Financials 28.10%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>43,284,525</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Capital Markets 3.12%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Charles Schwab Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.950</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>350,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>372,935</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Goldman Sachs Group, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>485,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>567,159</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>760,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>800,763</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Jefferies Group, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>490,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>529,847</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Macquarie Group, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.300</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>270,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>293,067</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Morgan Stanley Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.300</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-13-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>485,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>543,392</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,037,259</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>11</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_8"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Capital Markets (continued)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Northern Trust Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sub Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>6.500%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$225,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$258,808</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Northern Trust Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>370,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>397,100</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Commercial Banks 4.06%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Barclays Bank PLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Note (6.860% to 6-15-32</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable) (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.860</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-32</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,655,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,340,550</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Chuo Mitsui Trust &amp; Banking Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Note (5.506% to 4-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable) (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.506</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>940,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>817,800</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Credit Suisse New York,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.300</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-13-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>415,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>429,207</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Groupe BPCE,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sub Bond (12.500% to 9-30-19</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable) (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>12.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-30-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>330,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>392,581</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Mizuho Financial Group, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sub Bond</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-29-49</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>260,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>260,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Royal Bank of Scotland Group PLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Bond Ser MTN (7.640% to</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>9-29-17 then variable) (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.640</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-31-49</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>400,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>196,000</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.400</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-21-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>375,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>382,064</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Santander Issuances S.A. Unipersonal,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sub Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-11-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,200,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,268,998</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Sovereign Capital Trust VI,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.908</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-13-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>480,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>427,899</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Wachovia Bank NA,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>BKNT (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.600</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-38</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>325,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>353,943</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sub Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.850</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>390,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>384,981</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Consumer Finance 3.06%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>American Express Credit Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note Ser C (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.300</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-20-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>670,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>752,460</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Capital One Financial Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-23-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>990,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,123,634</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-15-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,062,333</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Discover Financial Services,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>585,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>686,131</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Ford Motor Credit Co. LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>140,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>135,241</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>90,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>87,647</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Nelnet, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note (7.400% to 9-1-11 then variable) (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.400</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-29-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>715,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>519,552</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>SLM Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note Ser MTN (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.450</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>395,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>347,878</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Diversified Financial Services 9.77%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>American Honda Finance Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-01-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>655,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>752,723</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Astoria Depositor Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser B (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.144</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-21</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>750,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Bear Stearns Companies, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,143,815</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Beaver Valley Funding Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sec Lease Obligation Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>598,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>657,489</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>12</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
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<A name="page_9"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%" align=right></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Diversified Financial Services (continued)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Bosphorus Financial Services, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sec Floating Rate Note (P)(S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.240%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$312,500</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$297,116</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Citigroup, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.850</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-11-34</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>300,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>273,589</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-12-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>810,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>859,308</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-21-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,935,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,974,733</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CME Group, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>490,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>537,456</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>ERAC USA Finance Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>465,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>476,351</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>ESI Tractebel Acquisition Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sec Bond Ser B (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.990</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-30-11</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>617,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>617,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>General Electric Capital Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note Ser MTN (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-07-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>335,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>352,115</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Hyundai Capital Services,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-05-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>430,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>428,035</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>JPMorgan Chase &amp; Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Note Ser 1 (7.900% to 4-30-18</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable) (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.900</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-30-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>655,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>658,622</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>765,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>819,053</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.650</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>590,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>622,373</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Merrill Lynch &amp; Co., Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-14-38</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>495,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>557,230</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note Ser MTN (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.150</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-25-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,071,955</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>PNC Funding Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-21-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>695,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>697,136</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>SMFG Preferred Capital,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sub Bond (6.078% to 1-25-17 then</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>variable) (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.078</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-25-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>590,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>509,624</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>USB Realty Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Perpetual Bond (6.091% to 1-15-12 then</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>variable) (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.091</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>800,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>558,400</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Voto-Votorantim Overseas Trading</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Operations NV,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-25-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>450,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>432,000</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Insurance 4.66%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Aflac, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>335,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>393,370</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Genworth Financial, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Note (6.150% to 11-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable) (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.150</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-66</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>430,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>288,100</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Horace Mann Educators Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.850</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>395,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>388,607</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Liberty Mutual Group, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Bond (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.300</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>750,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>753,106</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Bond (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.800</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>705,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>592,200</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Bond (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>885,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>771,968</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Lincoln National Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Bond (6.050% to 4-20-17</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable) (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.050</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-20-67</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>250,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>193,750</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>510,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>593,797</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Massachusetts Mutual Life Insurance Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-39</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>210,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>255,811</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>13</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_10"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Insurance (continued)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>MetLife, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>6.750%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$335,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$374,611</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>New York Life Insurance Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sub Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-39</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>540,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>547,579</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Progressive Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Debenture (6.700% to 6-1-17</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable) (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.700</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>330,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>289,063</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Prudential Financial, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note Ser MTND</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>210,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>234,628</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>QBE Insurance Group, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-14-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>486,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>555,182</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Symetra Financial Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Jr Sub Bond (8.300% to 10-1-17</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>then variable) (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.300</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>235,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>195,050</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Unum Group,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-30-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>390,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>400,915</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>W.R. Berkley Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.600</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>365,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>351,465</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Real Estate Investment Trusts (REIT&#146;s) 3.43%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Boston Properties LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>265,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>267,343</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Brandywine Operating Partnership LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>345,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>345,208</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Dexus Finance Pty, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>495,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>499,800</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Duke Realty LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>500,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>532,597</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Health Care, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.200</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>505,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>504,872</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Healthcare Realty Trust, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-11</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>175,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>183,665</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>HRPT Properties Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.650</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>285,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>266,996</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Mack-Cali Realty Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>330,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>348,698</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Plum Creek Timberlands LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>365,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>376,017</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>ProLogis,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>605,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>583,659</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>385,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>367,525</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Simon Property Group LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.350</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>345,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>434,013</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>WEA Finance LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-02-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>290,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>295,339</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.400</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>275,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>284,239</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Health care 4.24%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>6,532,458</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Health Care Equipment &amp; Supplies 1.30%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Covidien International Finance SA,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.450</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>930,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,011,063</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Hospira, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.050</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-30-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>485,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>511,037</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note Ser GMTN (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.400</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>170,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>188,917</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>14</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
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<A name="page_11"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>Health Care Equipment &amp; Supplies (continued)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Inverness Medical Innovations, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>7.875%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$305,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$300,425</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Health Care Providers &amp; Services 2.54%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CareFusion Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>225,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>236,413</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CIGNA Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-11</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>640,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>681,576</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Express Scripts, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>935,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,027,325</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Medco Health Solutions, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>850,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>953,346</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Sun Healthcare Group, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Sub Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,012,500</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Pharmaceuticals 0.40%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Elan Corp. PLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>195,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>180,862</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Watson Pharmaceuticals, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>415,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>428,994</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Industrials 8.43%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>12,995,701</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Aerospace &amp; Defense 0.23%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Embraer Overseas, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-20</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>380,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>360,050</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Airlines 2.10%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Continental Airlines, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 1981-1 Class A</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.648</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-15-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>172,260</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>161,924</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2000-2 Class B (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.307</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-02-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>365,717</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>330,059</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2001-1 Class C (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.033</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-11</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>97,742</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>87,968</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.545</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-02-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>278,199</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>265,680</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Delta Air Lines, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2002-1 Class G2 (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.417</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-02-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>825,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>775,500</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>360,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>367,200</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-1 Class A (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.821</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-10-22</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>704,658</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>650,047</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Northwest Airlines, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Collateralized Note Ser 2007-1 (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.027</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>443,607</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>397,028</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>United Air Lines, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.400</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>195,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>201,825</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Commercial Services &amp; Supplies 0.10%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>ACCO Brands Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>80,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>85,600</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>The Geo Group, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>70,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>71,050</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Electrical Equipment 0.65%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Roper Industries, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>205,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>215,103</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Thomas &amp; Betts Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>775,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>792,536</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Industrial Conglomerates 0.53%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Hutchison Whampoa International, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-13-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>365,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>396,941</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-11-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>415,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>419,882</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>15</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_12"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Machinery 1.82%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Case New Holland, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>7.750%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$335,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$332,487</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Ingersoll-Rand Global Holding Co., Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>545,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>602,973</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>540,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>585,849</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Manitowoc, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>500,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>448,750</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Terex Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>250,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>270,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Volvo Treasury AB,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.950</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-01-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>555,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>564,207</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Marine 0.64%&nbsp;</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Navios Maritime Holdings, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>980,000</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Road &amp; Rail 1.61%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CSX Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>620,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>665,013</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.300</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,081,703</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Kansas City Southern,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>445,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>453,900</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>RailAmerica, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-01-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>265,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>276,925</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Trading Companies &amp; Distributors 0.49%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>GATX Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>550,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>624,376</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>United Rentals North America, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>125,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>135,625</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Transportation Infrastructure 0.26%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CMA CGM SA,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>700,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>395,500</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Information Technology 2.36%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>3,629,879</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>Electronic Equipment, Instruments &amp; Components 1.34%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Amphenol Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>540,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>543,002</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Freescale Semiconductor, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>812,500</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Tyco Electronics Group SA,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>415,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>442,017</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.550</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-01-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>260,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>272,849</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>IT Services 0.34%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Fiserv, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.800</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-20-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>460,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>514,600</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Office Electronics 0.68%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Xerox Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>275,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>316,849</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>670,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>728,062</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Materials 6.55%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>10,087,362</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Chemicals 1.64%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>American Pacific Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>590,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>548,700</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD style="TEXT-INDENT: 0px" noWrap align=left><FONT size=2 face=sans-serif>16</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_13"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Chemicals (continued)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Dow Chemical Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>8.550%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$320,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$365,319</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.900</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>370,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>382,764</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Mosaic Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>480,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>516,741</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>RPM International, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>325,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>329,313</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Sterling Chemicals, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Sec Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-01-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>400,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>379,000</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Construction Materials 0.17%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Holcim US Finance SARL &amp; Cie SCS,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-30-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>260,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>268,112</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Containers &amp; Packaging 1.13%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Bemis Co., Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.650</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>165,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>175,031</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>BWAY Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sub Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>315,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>334,687</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Graphic Packaging International Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>115,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>120,750</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Smurfit-Stone Container Enterprises, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (H)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>782,500</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (H)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>245,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>188,650</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>US Corrugated, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-12-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>160,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>134,400</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Metals &amp; Mining 2.19%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Allegheny Technologies, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>280,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>318,464</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>ArcelorMittal,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.850</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>540,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>636,410</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CII Carbon LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Sub Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,015,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>999,775</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Commercial Metals Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.350</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>310,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>329,720</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Rio Tinto Alcan, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-15-33</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>415,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>419,416</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Rio Tinto Finance USA, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.950</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>365,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>431,383</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Teck Resources, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>200,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>233,000</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Paper &amp; Forest Products 1.42%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>International Paper Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>385,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>466,076</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.950</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>505,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>562,889</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>NewPage Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Sec Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-31-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>135,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>134,662</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>PE Paper Escrow GmbH,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>12.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>100,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>109,500</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Solo Cup Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>85,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>90,100</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Verso Paper Holdings LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note Ser B (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.125</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>830,000</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>17</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
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<A name="page_14"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Telecommunication Services 5.74%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$8,849,440</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=6 noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>Diversified Telecommunication Services 3.71%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Axtel SAB de CV,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>9.000%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-22-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$160,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>164,800</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Bellsouth Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Debenture (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.300</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>774,937</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>834,298</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Cincinnati Bell, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Sub Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,025,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,019,875</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Citizens Communications Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>256,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>252,800</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Intelsat Jackson Holdings, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>365,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>383,250</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Qwest Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>330,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>340,725</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-01-11</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>445,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>459,463</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Telecom Italia Capital SA,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.175</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-18-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,110,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,204,129</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Verizon Wireless Capital LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>355,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>410,348</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>West Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Sub Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>630,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>645,750</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Wireless Telecommunication Services 2.03%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>American Tower Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-01-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>340,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>344,034</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Digicel Group, Ltd.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,080,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,026,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>NII Capital Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>230,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>242,650</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Rogers Cable, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>455,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>511,593</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>SBA Telecommunications, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>135,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>139,725</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Sprint Capital Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.900</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>870,000</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Utilities 9.18%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>14,139,803</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Electric Utilities 5.28%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Allegheny Energy Supply Co. LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>290,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>285,852</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Aquila, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>405,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>470,049</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>BVPS II Funding Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Collateralized Lease Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.890</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>659,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>741,592</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Commonwealth Edison Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sec Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.800</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>705,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>761,011</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Delmarva Power &amp; Light Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>1st Mtg Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.400</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-01-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>345,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>385,610</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Duke Energy Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.300</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>340,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>375,945</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Exelon Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.900</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>985,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,022,165</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>FirstEnergy Solutions Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.800</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>370,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>379,178</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>18</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_15"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Electric Utilities (continued)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>FPL Energy National Wind LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;<FONT size=1 face=sans-serif>5.608%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-10-24</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$297,656</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$277,389</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>ITC Holdings Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-30-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>175,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>177,794</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Monongahela Power Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.950</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>635,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>702,858</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Pepco Holdings, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.450</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>565,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>607,051</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>PNPP II Funding Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Debenture (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.120</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-30-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>367,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>407,260</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Southern Power Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser D (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.875</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-15-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>270,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>282,770</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Texas Competitive Electric Holdings Co. LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser A (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.250</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-01-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>710,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Waterford 3 Funding Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sec Lease Obligation Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.090</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-02-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>523,591</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>545,436</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>Independent Power Producers &amp; Energy Traders 0.58%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>AES Eastern Energy LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Pass Thru Ctf Ser 1999-A (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-02-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>905,884</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>887,767</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Multi-Utilities 2.11%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CalEnergy Co., Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.480</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-15-28</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>550,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>707,456</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>DTE Energy Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>910,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,004,244</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Sempra Energy,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.900</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-13</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>345,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>408,913</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>415,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>455,780</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Teco Finance, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>337,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>361,494</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Gtd Sr Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.572</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-01-17</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>298,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>308,848</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Water Utilities 1.21%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>DCP Midstream LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Note (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.750</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>405,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>483,834</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Indiantown Cogeneration LP,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>1st Mtg Note Ser A&#150;9 (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.260</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-15-10</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>161,446</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>163,086</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Midwest Generation LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note Ser B (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.560</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-02-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>329,746</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>335,517</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Oncor Electric Delivery Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sr Sec Note (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-01-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>820,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>890,904</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>Shares</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Preferred Stocks 3.44%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$5,300,749</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=6 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(Cost $5,800,917)</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Consumer Staples 0.51%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>793,750</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Food &amp; Staples Retailing 0.51%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Ocean Spray Cranberries, Inc., 6.250%, Ser A (S)(Z)</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>12,500</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>793,750</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%"></TD>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>19</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_16"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%" align=right></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%" align=right></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Shares</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Financials 1.70%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$2,626,119</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Diversified Financial Services 0.40%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Bank of America Corp., 8.625% (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>26,575</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>617,869</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Real Estate Investment Trusts (REIT&#146;s) 1.30%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Apartment Investment &amp; Management Co.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>8.000%, Ser T (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>55,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,143,450</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Public Storage, Inc., 6.500%, Depositary</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Shares, Ser W (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>40,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>864,800</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Materials 0.63%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>963,680</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Metals &amp; Mining 0.63%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Freeport-McMoRan Copper &amp; Gold, Inc., 6.750% (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,532</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>377,924</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Vale Capital II, 6.750%</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7,564</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>585,756</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Telecommunication Services 0.60%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>917,200</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Wireless Telecommunication Services 0.60%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Telephone &amp; Data Systems, Inc., 7.600%, Ser A (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>40,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>917,200</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Municipal Bonds 0.24%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$363,161</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(Cost $363,781)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp; </TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>California 0.24%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>363,161</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>State of California,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>General Obligation</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.200%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-01-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$360,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>363,161</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR>
     <TD colSpan=6>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Term Loans 0.20%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$301,836</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(Cost $497,883)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Consumer Discretionary 0.20%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>301,836</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Hotels, Restaurants &amp; Leisure 0.20%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>East Valley Tourist Development</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.775%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-06-12</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$503,060</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>301,836</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR>
     <TD colSpan=6>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>U.S. Government &amp; Agency Obligations 25.80%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$39,752,381</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(Cost $39,081,038)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>U.S. Government 4.79%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>7,379,493</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>U.S. Treasury Bonds,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Bond</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.250%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-15-39</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$1,020,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,022,391</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>U.S. Treasury Notes,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3.625</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-19</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,065,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,085,468</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Note</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.375</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-31-14</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5,245,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5,271,634</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>U.S. Government Agency 21.01%</FONT></B>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>32,372,888</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Federal Home Loan Mortgage Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>30 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-01-39</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4,259,638</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4,309,389</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Federal National Mortgage Assn.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>15 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-24</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,919,575</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,996,436</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>15 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-24</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,673,737</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,745,777</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>15 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-24</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,955,784</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,994,136</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>30 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>02-01-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,256,862</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,440,061</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>30 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,839,898</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,939,655</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>30 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-01-38</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,960,985</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4,175,126</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>30 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-01-38</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2,774,886</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2,811,415</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>30 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-01-39</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>973,814</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>986,633</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>20</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_17"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="46%"></TD>
     <TD width="8%"></TD>
     <TD width="8%"></TD>
     <TD width="10%"></TD>
     <TD width="12%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>U.S. Government Agency (continued)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Government National Mortgage Assn.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>30 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.500%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-15-38</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$929,307</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$983,251</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>30 Yr Pass Thru Ctf</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-15-39</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,927,192</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,991,009</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR>
     <TD colSpan=6>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>Collateralized Mortgage Obligations 12.78%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$19,690,394</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(Cost $29,960,851)</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>Collateralized Mortgage Obligations 12.78%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>19,690,394</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Collateralized Mortgage Obligations 12.78%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>American Home Mortgage Assets,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-6 Class XP IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3.039%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-25-46</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$12,451,523</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>591,447</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-5 Class XP IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3.340</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-25-47</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9,044,273</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>520,046</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>American Home Mortgage Investment Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-1 Class GIOP IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.078</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-25-47</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7,750,510</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>479,563</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>American Tower Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-1A Class D (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.957</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-15-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>865,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>865,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Banc of America Commercial Mortgage, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-6 Class A4 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.179</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-10-47</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>300,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>302,079</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Banc of America Funding Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-B Class 6A1 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.828</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-20-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>772,734</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>548,014</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-D Class 6B2 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.823</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-20-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,821,792</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>15,477</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Bear Stearns Adjustable Rate Mortgage Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-1 Class B2 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.879</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>802,389</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>90,082</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Bear Stearns Alt-A Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-3 Class B2 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.162</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>551,007</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>40,883</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-4 Class 3B1 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.078</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-25-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2,394,748</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10,666</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Bear Stearns Commercial</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Mortgage Securities, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-PW14 Class D (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.412</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-11-38</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>655,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>141,680</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Citigroup Mortgage Loan Trust, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-10 Class 1A5A (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.838</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>628,499</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>411,230</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-5 Class 2A3</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>352,515</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>336,101</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Citigroup/Deutsche Bank Commercial</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Mortgage Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-CD1 Class C (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.225</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-15-44</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>295,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>186,297</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>ContiMortgage Home Equity Loan Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 1995-2 Class A&#150;5</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.100</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-15-25</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>48,843</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>43,221</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Countrywide Alternative Loan Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-59 Class 2X IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.986</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-20-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9,425,617</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>337,060</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-0A12 Class X IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3.413</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-20-46</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>15,678,455</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>685,932</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-11CB Class 3A1</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-25-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2,537,400</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,581,910</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>DB Master Finance LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-1 Class-M1 (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.285</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-20-31</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>340,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>276,539</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>DSLA Mortgage Loan Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-AR5 Class X2 IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.151</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-19-45</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>17,710,683</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>686,289</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>First Horizon Alternative Mortgage Securities,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2004-AA5 Class B1 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.643</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-25-34</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>410,290</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>57,336</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>GSR Mortgage Loan Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2004-9 Class B1 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.100</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-25-34</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>808,895</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>197,212</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-4F Class 6A1 (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-25-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,112,486</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2,625,188</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD style="TEXT-INDENT: 0px" noWrap align=right><FONT size=2 face=sans-serif>21</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_18"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="34%"></TD>
     <TD width="18%" align=right></TD>
     <TD width="11%"></TD>
     <TD width="11%"></TD>
     <TD width="13%"></TD>
     <TD width="12%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=center></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maturity</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Rate</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>date</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>Collateralized Mortgage Obligations (continued)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Harborview Mortgage Loan Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-11 Class X IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.984%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-19-45</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$4,055,268</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$169,814</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-8 Class 1X IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.855</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-19-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6,557,881</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>248,995</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-3 Class ES IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.350</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-19-47</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>19,108,818</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>179,623</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-4 Class ES IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.350</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-19-47</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>19,754,264</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>185,690</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-6 Class ES IO (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.342</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-19-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>14,557,864</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>136,844</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Harborview NIM Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-9A Class N2 (I)(S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.350</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-19-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>323,137</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>IndyMac Index Mortgage Loan Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2004-AR13 Class B1</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.296</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>329,426</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>54,923</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-AR18 Class 1X IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.806</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-25-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>13,375,953</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>409,304</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-AR18 Class 2X IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.521</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-25-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>13,212,349</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>322,381</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-AR5 Class B1 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.396</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>436,436</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>15,408</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>JPMorgan Chase Commercial Mortgage</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Securities Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-LDP4 Class B (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.129</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>10-15-42</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2,035,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,041,247</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>JPMorgan Mortgage Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-S3 Class 2A2</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-25-21</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>572,448</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>545,435</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Merrill Lynch Mortgage Investors Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-AF1 Class MF1 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.209</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-25-36</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,180,857</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>98,736</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>MLCC Mortgage Investors, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-3 Class M1 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.919</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-25-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>419,885</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>128,153</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-3 Class M2 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.919</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-25-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>154,959</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>23,478</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-3 Class M3 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.919</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>09-25-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>104,973</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>34,562</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Morgan Stanley Capital I,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-HQ7 Class A4 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.207</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>11-14-42</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>840,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>847,889</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2006-IQ12 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.538</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-15-43</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>640,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>122,726</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Provident Funding Mortgage Loan Trust,</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-1 Class B1 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.381</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>05-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>408,276</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>104,334</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Residential Accredit Loans, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-QA12 Class NB5 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.941</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>12-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2,763,118</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,654,206</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Washington Mutual, Inc.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-6 Class 1CB</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6.500</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>08-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>381,612</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>276,072</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2005-AR4 Class B1 (P)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4.647</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-25-35</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,508,908</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>436,188</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-0A4 Class XPPP IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.840</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-25-47</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>16,387,664</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>163,877</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-0A5 Class 2XPP IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.072</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-25-47</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>46,640,481</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>757,908</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-0A5 Class 1XPP IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.891</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>06-25-47</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>40,474,041</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>467,981</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-0A6 Class 1XPP IO</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.830</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>07-25-47</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>23,536,783</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>235,368</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR>
     <TD colSpan=6>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>Asset Backed Securities 1.16%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$1,784,904</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(Cost $2,183,221)</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>Asset Backed Securities 1.16%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>1,784,904</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Dominos Pizza Master Issuer LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2007-1 Class M1 (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.629%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>04-25-37</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$1,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>750,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Hertz Vehicle Financing LLC,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Ser 2009-2A Class A2 (S)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5.290</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>03-25-16</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>760,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>762,880</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=6>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>TXU Corp.,</FONT>&nbsp;</TD>
     <TD noWrap align=right>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Sec Bond (Z)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.460</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>01-01-15</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>383,922</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>272,024</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>22</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<A name="page_19"></A><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></FONT>o
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="69%"></TD>
     <TD width="15%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Par value</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Value</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Short-Term Investments 0.19%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$293,000</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(Cost $293,000)</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Short-term investments 0.19%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>293,000</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Repurchase Agreement with State Street Corp. dated 10-30-09</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>at 0.01% to be repurchased at $293,000 on 11-2-09,</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>collateralized by $295,000 Federal Home Loan Bank, 3,375%</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>due 8-13-10 (valued at $303,850, including interest)</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>$293,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>293,000</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total investments (Cost $220,084,979)</FONT></B><FONT size=1 face=sans-serif>&#134; </FONT><B><FONT size=1 face=sans-serif>136.54%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$210,352,662</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Other assets and liabilities, net (36.54%)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>($56,293,800)</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total net assets 100.00%</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$154,058,862</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>The percentage shown for each investment category is the total value of that category as a percentage of the net assets applicable to common shareholders.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>IO Interest Only Security &#151; Interest Tranche of Stripped Mortgage Pool </FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>MTN Medium-Term Note PIK Paid In Kind</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>(H) Non-income-producing issuer filed for protection under the Federal Bankruptcy Code or is in default of interest payment.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>(I) Non-income producing security.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>(P) Variable rate obligation. The coupon rate shown represents the rate at period end.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>(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 $41,168,028 or 26.72% of the Fund&#146;s net assets as of October 31, 2009.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>(Z) All or a portion of this security is segregated as collateral for the Committed Facility Agreement (see Note 9). Total collateral value at October 31, 2009 was $126,387,359.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>&#134; At October 31, 2009, the aggregate cost of investment securities for federal income tax purposes was $220,658,782. Net unrealized depreciation aggregated $10,306,120, of which $15,457,399 related to appreciated investment securities and $25,763,519 related to depreciated investment securities.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>23</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
<!--$$/page=-->
<A name="page_20"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=7 face=serif>Financial statements</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=4 face=sans-serif>Statement of assets and liabilities </FONT><FONT size=2 face=sans-serif>10-31-09</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>This Statement of Assets and Liabilities is the Fund&#146;s balance sheet. It shows the value of what the Fund owns, is due and owes. You&#146;ll also find the net asset value per share.</FONT></B></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="69%"></TD>
     <TD width="31%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Assets</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=left><FONT size=2 face=sans-serif>
<HR SIZE=1 noShade>
</FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Investments, at value (Cost $220,084,979)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$210,352,662</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Cash</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>163</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Cash held at broker for futures contracts</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>62,100</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Receivable for investments sold</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>632,230</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Dividends and interest receivable</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,676,991</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Prepaid Committed Facility Agreement arrangement fees (Note 9)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>63,907</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Other receivables and prepaid assets</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>36,404</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total assets</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>214,824,457</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Liabilities</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Payable for investments purchased</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,390,598</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Committed facility agreement payable (Note 9)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>58,000,000</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Unrealized depreciation of swap contracts (Note 3)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,219,458</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Payable for futures variation margin</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>20,484</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Interest payable (Note 9)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5,285</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Payable to affiliates</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Accounting and legal services fees</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2,795</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Transfer agent fees</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>34,741</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Other liabilities and accrued expenses</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>92,234</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total liabilities</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>60,765,595</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net assets</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Capital paid-in</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$181,978,821</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Undistributed net investment income</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,010,933</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Accumulated net realized loss on investments, futures contracts and</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>swap contracts</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(17,965,025)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net unrealized depreciation on investments, futures contracts and swap</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>contracts</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(10,965,867)</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp; </TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net assets</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$154,058,862</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net asset value per share</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Based on 11,482,332 shares of beneficial interest outstanding &#151; unlimited</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>number of shares authorized with no par value</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$13.42</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>24</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
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<A name="page_21"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=4 face=sans-serif>Statement of operations </FONT><FONT size=2 face=sans-serif>For the year ended 10-31-09</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>This Statement of Operations summarizes the Fund&#146;s investment income earned, expenses incurred in operating the Fund and net gains (losses) for the period stated.</FONT></B></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="69%"></TD>
     <TD width="31%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Investment income</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Interest</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$16,015,905</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Dividends</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>299,550</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Less foreign taxes withheld</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(803)</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total investment income</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>16,314,652</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Expenses</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Investment management fees (Note 5)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,097,547</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Accounting and legal services fees (Note 5)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>28,678</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Interest expense (Note 9)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,077,104</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Transfer agent fees</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>113,990</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Trustees&#146; fees (Note 6)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>50,155</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Printing</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>76,720</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Professional fees</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>315,891</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Custodian fees</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>49,725</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Stock exchange listing fees</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>24,040</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Other</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>26,489</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total expenses</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>2,860,339</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net investment income</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>13,454,313</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Realized and unrealized gain (loss)</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net realized gain (loss) on</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Investments</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(6,132,005)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Financial futures contracts (Note 3)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>11,314</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Swap contracts (Note 3)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(859,732)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(6,980,423)</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Change in net unrealized appreciation (depreciation) of</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Investments</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>38,041,676</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Financial futures contracts (Note 3)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(14,092)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Swap contracts (Note 3)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(93,197)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>37,934,387</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net realized and unrealized gain</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>30,953,964</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Increase in net assets frotm operations</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$44,408,277</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>25</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
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<A name="page_22"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=4 face=sans-serif>Statements of changes in net assets</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>These Statements of Changes in Net Assets show how the value of the Fund&#146;s net assets has changed during the last three 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 border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="54%"></TD>
     <TD width="15%"></TD>
     <TD width="15%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Year</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Period</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Year</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>ended</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>ended</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>ended</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>10-31-09</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>10-31-08</FONT></B><SUP><FONT size=1 face=sans-serif>1</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>12-31-07</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=4>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Increase (decrease) in net assets</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=4>
<HR SIZE=1 noShade>
&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>From operations</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net investment income</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$13,454,313</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$11,880,844</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$15,109,704</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net realized loss</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(6,980,423)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(526,797)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(1,642,786)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Change in net unrealized appreciation</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>(depreciation) of investments, financial futures</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>contracts and swap contracts</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>37,934,387</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(43,911,252)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(6,071,134)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Distributions to Auction Preferred Shares (APS)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(1,747,235)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(4,740,155)</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Increase (decrease) in net assets resulting from</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>operations</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>44,408,277</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(34,304,440)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>2,655,629</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Distributions to shareholders</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>From net investment income</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(12,871,827)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(9,560,908)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(10,400,867)</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>From Fund share transactions (Note 7)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>1,059,251</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>515,172</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>889,931</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total increase (decrease)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>32,595,701</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(43,350,176)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(6,855,307)</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=4>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net assets</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=4 noWrap align=left><FONT size=2 face=sans-serif>
<HR SIZE=1 noShade>
</FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Beginning of period</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>121,463,161</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>164,813,337</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>171,668,644</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>End&nbsp; of period</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$154,058,862</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$121,463,161</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$164,813,337</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Undistributed net investment income</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$1,010,933</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$717,231</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$276,098</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>1 </FONT></SUP><FONT size=1 face=sans-serif>For the ten month period ended October 31, 2008. The Fund changed its fiscal year end from December 31 to October 31.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>26</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
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<A name="page_23"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=4 face=sans-serif>Statement of cash flows </FONT><FONT size=2 face=sans-serif>10-31-09</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>This Statement of Cash Flows shows cash used or provided by operating and financing activities for the period stated.</FONT></B></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="69%"></TD>
     <TD width="31%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>For the</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>year ended</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>10-31-09</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>
<HR SIZE=1 noShade>
</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Cash flows from operating activities</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net increase in net assets from operations</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$44,408,277</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Adjustments to reconcile net increase in net assets from operations to net</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>&nbsp;cash provided by operating activities:</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Long-term investments purchased</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(174,460,005)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Long-term investments sold</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>169,068,314</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Increase in short term investments</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(293,000)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net amortization of premium (discount)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>4,114,494</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Increase in dividends and interest receivable</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(261,139)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Decrease in receivable from affiliates</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>15,854</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Increase in payable for investments purchased</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&nbsp;153,028</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Decrease in receivable for investments sold</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>100,615</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Increase in cash held at broker for futures contracts</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(62,100)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Increase in other receivables and prepaid assets</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(36,404)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Decrease in prepaid arrangement fees</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9,786</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Increase in unrealized depreciation of swap contracts</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>93,197</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Increase in payable for futures variation margin</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>20,484</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Decrease in payable to affiliates</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(69,985)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Decrease in payable for interest</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(17,031)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Increase in accrued expenses</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>5,105</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net change in unrealized (appreciation) depreciation on investments</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(38,041,676)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net realized loss on investments</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6,132,005</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net cash provided by operating activities</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$10,879,819</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Cash flows from financing activities</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Borrowings from committed facility agreement payable</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$66,000,000</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Repayments of committed facility agreement payable</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(66,000,000)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Distributions to common shareholders net of reinvestments</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(11,812,576)</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net cash used in financing activities</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>($11,812,576)</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net decrease in cash</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>($932,757)</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Cash at beginning of period</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$932,920</FONT></B>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Cash at end of period</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$163</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Supplemental disclosure of cash flow information</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Cash paid for interest</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$1,114,028</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Noncash financing activities not included herein consist of</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>reinvestment of distributions</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>1,059,251</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>27</FONT>&nbsp;</TD></TR></TABLE><BR>
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<A name="page_24"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=4 face=sans-serif>Financial highlights</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>The Financial Highlights show how the Fund&#146;s net asset value for a share has changed since the end of the previous period.</FONT></B></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="15%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>COMMON SHARES</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Period ended</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>10-31-09</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>10-31-08</FONT></B><SUP><FONT size=1 face=sans-serif>1</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>12-31-07</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>12-31-06</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>12-31-05</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>12-31-04</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=7>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><B><FONT size=1 face=sans-serif>Per share operating performance</FONT></B></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=7 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net asset value, beginning</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>of year</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$10.67</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$14.53</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$15.22</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$15.30</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$16.19</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$16.53</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net investment income</FONT><SUP><FONT size=1 face=sans-serif>2</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.18</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.05</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.34</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.26</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.20</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.22</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net realized and unrealized gain</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>(loss) on investments</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.70</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(3.92)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.69)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.03)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.81)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.25)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Distributions to APS*</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.15)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.42)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.38)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.25)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.12)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total from investment</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>operations</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>3.88</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(3.02)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>0.23</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>0.85</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>0.14</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>0.85</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Less distributions to common</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>shareholders</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>From net investment income</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(1.13)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.84)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.92)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(0.93)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(1.03)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(1.19)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Net asset value, end of year</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$13.42</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$10.67</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$14.53</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$15.22</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$15.30</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$16.19</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Per share market value, end</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>of year</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$12.94</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$9.67</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$12.85</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$14.75</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$13.68</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$15.68</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total return at net asset</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>value (%)</FONT></B><SUP><FONT size=1 face=sans-serif>3</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>39.06</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(21.36)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>1.97</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>6.24</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>1.36</FONT></B><SUP><FONT size=1 face=sans-serif>5</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>5.70</FONT></B><SUP><FONT size=1 face=sans-serif>5</FONT></SUP>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total return at market</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>value (%)</FONT></B><SUP><FONT size=1 face=sans-serif>3</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>47.95</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(19.41)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(6.94)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>15.15</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(6.42)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>9.95</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=7>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Ratios and supplemental data</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=7 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net assets applicable to common</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>shares, end of year (in millions)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$154</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$121</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$165</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$172</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$172</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$180</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Ratios (as a percentage of average</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>net assets):</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Expenses (excluding interest</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>&nbsp;&nbsp;&nbsp; expense)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.40</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.41</FONT><SUP><FONT size=1 face=sans-serif>6</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.16</FONT><SUP><FONT size=1 face=sans-serif>7</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.17</FONT><SUP><FONT size=1 face=sans-serif>7</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.16</FONT><SUP><FONT size=1 face=sans-serif>7</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.14</FONT><SUP><FONT size=1 face=sans-serif>7</FONT></SUP>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Interest expense (Note 9)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.85</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.76</FONT><SUP><FONT size=1 face=sans-serif>6</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Expenses (including interest</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>&nbsp;&nbsp;&nbsp; expense)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.25</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2.17</FONT><SUP><FONT size=1 face=sans-serif>6</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.16</FONT><SUP><FONT size=1 face=sans-serif>7</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.17</FONT><SUP><FONT size=1 face=sans-serif>7</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.16</FONT><SUP><FONT size=1 face=sans-serif>7</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1.14</FONT><SUP><FONT size=1 face=sans-serif>7</FONT></SUP>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Net investment income</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>10.56</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>9.37</FONT><SUP><FONT size=1 face=sans-serif>6</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.87</FONT><SUP><FONT size=1 face=sans-serif>8</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>8.30</FONT><SUP><FONT size=1 face=sans-serif>8</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.62</FONT><SUP><FONT size=1 face=sans-serif>8</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>7.44</FONT><SUP><FONT size=1 face=sans-serif>8</FONT></SUP>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Portfolio turnover (%)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>94</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>40</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>54</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>94</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>148</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>135</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=7>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Senior securities</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=7 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Total value of APS outstanding</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp; &nbsp;<FONT size=1 face=sans-serif>(in millions)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$90</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$90</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$90</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$90</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Involuntary liquidation preference</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>per unit (in thousands)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>25</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>25</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>25</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>25</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Average market value per unit</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>(in thousands)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>25</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>25</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>25</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>25</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Asset coverage per unit</FONT><SUP><FONT size=1 face=sans-serif>9</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT><SUP><FONT size=1 face=sans-serif>10 </FONT></SUP></TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$71,228</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$73,375</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$72,470</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$75,049</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Total debt outstanding end of</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>year (in millions) (Note 9)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$58</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$58</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Asset coverage per $1,000 of</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>APS</FONT><SUP><FONT size=1 face=sans-serif>11</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$2,851</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$2,928</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$2,928</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$3,027</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Asset coverage per $1,000 of</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>debt</FONT><SUP><FONT size=1 face=sans-serif>12</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$3,656</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$3,094</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>* Auction Preferred Shares (APS)</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>28</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif><FONT size=2 face=sans-serif>&nbsp;</FONT><FONT size=2 face=sans-serif>F I N A N C I A L&nbsp;&nbsp; S T A T E M E N T S</FONT></FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>1 </FONT></SUP><FONT size=1 face=sans-serif>For the ten month period ended October 31, 2008. The Fund changed its fiscal year end from December 31 to October 31.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>2 </FONT></SUP><FONT size=1 face=sans-serif>Based on the average daily shares outstanding.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>3 </FONT></SUP><FONT size=1 face=sans-serif>Total return based on net asset value reflects changes in the Fund&#146;s net asset value during each period. Total return based on market value reflects changes in market value. Each figure assumes that dividend and capital gain distributions, if any, were reinvested. These figures will differ depending upon the level of any discount from or premium to net asset value at which the Fund&#146;s shares traded during the period.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>4 </FONT></SUP><FONT size=1 face=sans-serif>Not annualized. </FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>5 </FONT></SUP><FONT size=1 face=sans-serif>Unaudited.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>6 </FONT></SUP><FONT size=1 face=sans-serif>Annualized.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>7 </FONT></SUP><FONT size=1 face=sans-serif>Ratios calculated on the basis of expenses relative to the average net assets of common shares. Without the exclusion of preferred shares, the annualized ratio of expenses would have been 0.76%, 0.77%, 0.77%, and 0.76% for the periods ended 12-31-07, 12-31-06, 12-31-05 and 12-31-04, respectively.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>8 </FONT></SUP><FONT size=1 face=sans-serif>Ratios calculated on the basis of net investment income relative to the average net assets of common shares. Without the exclusion of preferred shares, the annualized ratio of net investment income would have been 5.82%, 5.45%, 5.06% and 4.99% for the periods ended 12-31-07, 12-31-06, 12-31-05 and 12-31-04, respectively.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>9 </FONT></SUP><FONT size=1 face=sans-serif>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 style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>10 </FONT></SUP><FONT size=1 face=sans-serif>In May 2008, the Fund entered into a Credit Facility Agreement with a third-party commercial bank in order to refinance the APS. The redemption of all APS was completed on June 12, 2008.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>11 </FONT></SUP><FONT size=1 face=sans-serif>Asset coverage equals the total net assets plus APS divided by the APS of the Fund outstanding at period end (Note 8).</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>12 </FONT></SUP><FONT size=1 face=sans-serif>Asset coverage equals the total net assets plus borrowings divided by the borrowing of the Fund outstanding at period end (Note 8).</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>See notes to financial statements</FONT></P>
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     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>29</FONT>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=4 face=sans-serif>Notes to financial statements</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 1<BR>
Organization</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>John Hancock Income Securities Trust (the Fund) is a closed-end diversified investment management company registered under the Investment Company Act of 1940, as amended (the 1940 Act).</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 2<BR>
</FONT></B><B><FONT size=2 face=sans-serif>Significant accounting policies</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after period end through the date that the financial statements were issued, December 18, 2009, have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Security valuation</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 </FONT><FONT size=1 face=serif>P</FONT><FONT size=2 face=serif>.</FONT><FONT size=1 face=serif>M</FONT><FONT size=2 face=serif>., Eastern Time. Equity securities held by the Fund are valued at the last sale price or official closing price (closing bid price or last evaluated price if no sale has occurred) as of the close of business on the principal securities exchange (domestic or foreign) on which they trade. Debt obligations are valued based on the evaluated prices provided by independent pricing services, which utilizes both dealer-supplied quotes and electronic data processing techniques, which take into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Foreign securities and currencies are valued i
n U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing service. Securities traded only in the over-the-counter market are valued at the last bid price quoted by brokers </FONT><FONT size=2 face=serif>making markets in the securities at the close of trading. Equity and debt obligations, for which there are no prices available from an independent pricing service, are valued based on bid quotations, or evaluated prices, as applicable, obtained from broker-dealers or fair valued as described below. Certain short-term debt instruments are valued at amortized cost.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Other assets and securities for which no such quotations are readily available are valued at fair value as determined in good faith by the Fund&#146;s Pricing Committee in accordance with procedures adopted by the Board of Trustees. Generally, trading in non-U.S. securities is substantially completed each day at various times prior to the close of trading on the NYSE. The values of such securities used in computing the net asset value of the Fund&#146;s shares are generally determined as of such times. Occasionally, significant events that affect the values of such securities may occur between the times at which such values are generally determined and the close of the NYSE. Upon such an occurrence, these securities will be valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Fair value measurements</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund uses a three-tier hierarchy to prioritize the assumptions, referred to as inputs, used in valuation techniques to measure fair value. The three-tier hierarchy of inputs and the valuation techniques used are summarized below:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Level 1 &#151; Exchange traded prices in active markets for identical securities. This technique is used for exchange-traded domestic common and preferred equities, certain foreign equities, warrants, rights, options and futures.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Level 2 &#151; Prices determined using significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these techniques are received from independent</FONT></P>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>30</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>pricing vendors and are based on an evaluation of the inputs described. These techniques are used for certain domestic preferred equities, certain foreign equities, unlisted rights and warrants, and fixed income securities. Also, over-the-counter derivative contracts, including swaps and certain options use these techniques.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Level 3 &#151; Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable, such as when there is little or no market activity for an investment, unobservable inputs may be used. Unobservable inputs reflect the Fund&#146;s Pricing Committee&#146;s own assumptions </FONT><FONT size=2 face=serif>about the factors that market participants would use in pricing an investment and would be based on the best information available. Securities using this technique are generally thinly traded or privately placed, and may be valued using broker quotes, which may not only use observable or unobservable inputs but may also include the use of the brokers&#146; own judgments about the assumptions that market participants would use.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The following is a summary of the inputs used to value the Fund&#146;s investments as of October 31, 2009, by major security category or security type. Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures and swap contracts, which are stated at value.</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="20%"></TD>
     <TD width="20%"></TD>
     <TD width="20%"></TD>
     <TD width="20%"></TD>
     <TD width="20%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>INVESTMENTS IN SECURITIES</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>LEVEL 1</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>LEVEL 2</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>LEVEL 3</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>TOTALS</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=5>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Asset Backed Securities</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$1,034,904</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$750,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$1,784,904</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Collateralized Mortgage</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Obligations</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>13,112,272</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>6,578,122</FONT>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>19,690,394</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Corporate Bonds</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>141,981,837</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>884,400</FONT>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>142,866,237</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Municipal Bonds</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>363,161</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>363,161</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Preferred Stocks</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$ 3,921,243</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,379,506</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>5,300,749</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Term Loans</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>301,836</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>301,836</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>U.S. Government &amp;</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>Agency Obligations</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>39,752,381</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>39,752,381</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Short-Term Investments</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>293,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>293,000</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total Investments</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>in Securities</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$3,921,243</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$198,218,897</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$8,212,522</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$210,352,662</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Other Financial</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>Instruments</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(14,092)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(1,219,458)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>&#151;</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>(1,233,550)</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD>&nbsp;</TD>
     <TD colSpan=4>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Totals</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$3,907,151</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$196,999,439</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$8,212,522</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$209,119,112</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>31</FONT>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>COLLATER-</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>ASSET</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>ALIZED</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>BACKED</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>MORTGAGE</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>CORPORATE</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>PREFERRED</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>SECURITIES</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>OBLIGATIONS</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>BONDS</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>STOCKS</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>TERM LOANS</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>TOTAL</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=7>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Balance as of</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>10-31-08</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$615,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$6,631,510</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$890,938</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$1,093,750</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$350,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$9,581,198</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Accrued discounts/</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>premiums</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(274,678)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>308</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(274,370)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Realized gain (loss)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>686,381</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>686,381</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Change in unrealized</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>appreciation</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>(depreciation)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>135,000</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,244,050</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(6,846)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>3,372,204</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net purchases (sales)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(4,927,565)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(4,927,565)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net transfers in</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<FONT size=1 face=sans-serif>and/out of Level 3</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>1,218,424</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(1,093,750)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(350,000)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(225,326)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Balance as of</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;<B><FONT size=1 face=sans-serif>10-31-09</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$750,000</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$6,578,122</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$884,400</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>&#151;</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>&#151;</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>$8,212,522</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Repurchase agreements</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund may enter into repurchase agreements. When the Fund enters into a repurchase agreement through its custodian, it receives delivery of securities, the amount of which at the time of purchase and each subsequent business day is required to be maintained at such a level that the market value is generally at least 102% of the repurchase amount. The Fund will take receipt of all securities underlying the repurchase agreements it has entered into until such agreements expire. If the seller defaults, the Fund would suffer a loss to the extent that proceeds from the sale of underlying securities were less than the repurchase amount. The Fund may enter into repurchase agreements maturing within seven days with domestic dealers, banks or other financial institutions deemed to be creditworthy by the Adviser.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Security transactions and related<BR>
investment income</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Discounts/premiums are accreted/amortized for financial reporting purposes. Debt obligations may be placed in a non-accrual status and related interest </FONT><FONT size=2 face=serif>income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful. The Fund uses the identified cost method for determining realized gain or loss on investments for both financial statement and federal income tax reporting purposes.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Overdrafts</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Pursuant to the custodian agreement, the Fund&#146;s Custodian may, in its discretion, advance funds to the Fund to make properly authorized payments. When such payments result in an overdraft, the Fund is obligated to repay the Custodian for any overdraft, including any costs or expenses associated with the overdraft. The Custodian has a lien, security interest or security entitlement in any Fund property, that is not segregated, to the maximum extent permitted by law to the extent of any overdraft.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Expenses</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The majority of expenses are directly identifiable to an individual fund. Fund expenses that are not readily identifiable to a specific fund are allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative size of the funds. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>32&nbsp;&nbsp;&nbsp;</FONT><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B></P>
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<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Stripped securities</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Stripped mortgage backed securities are finan-cial instruments that derive their value from other instruments so that one class receives all of the principal from the underlying mortgage assets (principal only (PO)), while the other class receives the interest cash flows (interest only (IO)). Both the PO and IO investments represent an interest in the cash flows of an underlying stripped mortgaged backed security. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to fully recoup its initial investment in an interest only security. The market value of these securities can be extremely volatile in response to changes in interest rates. Credit risk reflects the risk that the Fund may not receive all or part of its principal because the issuer or credit enhancer has defaulted on its obligation.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Federal income taxes</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund intends to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>For federal income tax purposes, the Fund has $17,399,381 capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that the carryforward is used by the Fund, it will reduce the amount of capital gain distributions to be paid.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The loss carryforward expires as follows: October 31, 2012 &#151; $2,123,466, October 31, 2013 &#151; $2,443,482, October 31, 2014 &#151;$3,342,775, October 31, 2015 &#151; $1,351,797, October 31, 2016 &#151; $1,367,076 and October 31, 2017 &#151; $6,770,785.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>As of October 31, 2009, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition or disclosure. The Fund&#146;s federal tax return is subject to examination by the Internal Revenue Service for a period of three years.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Distribution of income and gains</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund records distributions to shareholders from net investment income and net realized gains, if any, on the ex-dividend date. The Fund generally declares and pays dividends quarterly. Capital gain distributions, if any, are paid at least annually. During the years or periods ended October 31, 2009 and 2008 and December 31, 2007, the tax character of distributions paid was $12,871,827, $11,308,143 and $15,141,022 of ordinary income, respectively.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>As of October 31, 2009, the components of distributable earnings on a tax basis included $1,020,636 of undistributed ordinary income.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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. Material 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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>Capital accounts within financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period. Permanent book-tax differences are primarily attributable to derivative transactions, amortization and accretion on debt securities, defaulted bonds and paydowns.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Statement of cash flows</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The cash amount shown in the Statement of Cash Flows of the Fund is the amount included in the Fund&#146;s Statement of Assets and Liabilities and represents the cash on hand at its custodian and does not include any short-term investments.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 3<BR>
</FONT></B><B><FONT size=2 face=sans-serif>Financial instruments</FONT></B></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>&nbsp;</FONT></B><B><FONT size=1 face=sans-serif>Futures</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund may purchase and sell financial futures contracts, including index futures and options on these contracts. A future is a contractual agreement to buy or sell a particular commodity, currency, or financial instrument</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>33</FONT>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>at a pre-determined price in the future. The Fund may use futures contracts to manage against a decline in the value of securities owned by the Fund due to anticipated interest rate, currency or market changes. In addition, the Fund will use futures contracts for duration management or to gain exposure to a securities market.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>An index futures contract (index future) is a contract to buy a certain number of units of the relevant index at a fixed price and specific future date. The Fund may invest in index futures as a means of gaining exposure to securities without investing in them directly, thereby allowing the Fund to invest in the underlying securities over time. Investing in index futures also permits the Fund to maintain exposure to common stocks without incurring the brokerage costs associated with investment in individual common stocks.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. Upon entering into a futures contract, initial margin deposits, as set by the exchange or broker to the contract, are required and are met by the delivery of specific securities (or cash) as collateral to the broker. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (&#147;variation margin&#148;) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statements of assets and liabilities.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>During the year ended October 31, 2009, the Fund held futures whose total notional values have ranged from approximately $2.5 to $5.3 million.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>During the year ended October 31, 2009, the Fund used futures to manage duration of the portfolio. The following summarizes the open futures contracts held as of October 31, 2009:</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="15%"></TD>
     <TD width="6%"></TD>
     <TD width="15%"></TD>
     <TD width="16%"></TD>
     <TD width="15%"></TD>
     <TD width="15%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>OPEN</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>NUMBER OF</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>UNREALIZED</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CONTRACTS</FONT>&nbsp;</TD>
     <TD style="TEXT-INDENT: 0px" noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CONTRACTS</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>POSITION</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>EXPIRATION DATE</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>NOTIONAL VALUE</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>DEPRECIATION</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=7>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>U.S. Treasury 10-Year</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Note Futures</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>23</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Short</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Dec 2009</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$2,728,016</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>($14,092)</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Interest rate swap contracts</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund may enter into transactions such as interest rate, credit default, cross-currency, and other forms of swaps to manage its exposure to credit, currency and interest rate risks, to gain exposure in lieu of buying in the physical market, or to enhance the Fund&#146;s income. Interest rate swaps represent an agreement between two counterparties to exchange cash flows based on the difference in the two interest rates, applied to the notional principal amount for a specified period. The payment flows are usually netted against each other, with the difference being paid by one party to the other. The Fund settles accrued net receivable or payable under the swap contracts on a periodic basis. In connection with these agreements, the Fund will hold cash and/or liquid securities equal to the net amount of the Fund&#146;s exposure, in order to satisfy the Fund&#146;s obligations in the event of default or bankruptcy/insolvency.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Swaps are marked to market daily based upon values from third party vendors or quotations from market makers to the extent available, and the change in value, if any, is recorded as unrealized appreciation/depreciation on the Fund&#146;s Statement of Assets and Liabilities. If market quotations are not readily available or deemed reliable, certain swaps may be fair valued in good faith by the Fund&#146;s Pricing Committee in accordance with procedures adopted by the Board of Trustees. Net periodic payments received or paid by the Fund are included as part of realized gains or losses on the Statement of operations.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Entering into swaps involves, to varying degrees, elements of credit, market, counterparty and legal documentation risk in excess of the amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that a counterparty may</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>34</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>default on its obligation under the swap or disagree as to the meaning of swap&#146;s terms, and that there may be unfavorable interest rate changes. The Fund may also suffer losses if it is unable to terminate outstanding swaps or reduce its exposure through offsetting transactions or the Fund may be liable for early termination of the derivative.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund is a party to International Swap Dealers Association, Inc. Master Agreements (ISDA Master Agreements) with select counterparties that govern OTC derivative transactions, which may include foreign exchange derivative transactions, entered into by the Fund and those counterparties. The ISDA Master Agreements typically include standard representations and warranties, as well as a Credit Support Annex</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>(CSA) that accompanies a schedule to ISDA master agreements outlining the general obligations of the Fund and counterparties relating to events of default, termination events and other standard provisions. Termination events may include a decline in the Fund&#146;s net asset value below a certain point over a certain period of time that is specified in the Schedule to the ISDA Master Agreement; such an event may entitle the counterparty to elect to terminate early and calculate damages based on that termination, with respect to some or all outstanding transactions under the applicable damage calculation provisions of the ISDA Master Agreement. An election by one or more counterparties to terminate ISDA Master Agreements could have a material impact in the financial statements of the Fund.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>During the year the Fund entered into interest rate swaps in anticipation of rising interest rates. The following summarizes the contracts held as of October 31, 2009:</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD>
     <TD width="6%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>PAYMENTS</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>USD NOTIONAL</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>PAYMENTS MADE </FONT></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>RECEIVED BY</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>UNREALIZED</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>COUNTERPARTY</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>AMOUNT</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>BY FUND</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>FUND</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>EFFECTIVE DATE</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>MATURITY DATE</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>DEPRECIATION </FONT></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>MARKET VALUE</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=15>
<HR SIZE=1 width="100%">
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>3-month</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Bank of America</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>$29,000,000</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>4.6875%</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>LIBOR (a)</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>9-14-2007</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>9-14-2010</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>($1,219,458)</FONT></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>($1,219,458)</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>(a) At October 31, 2009, the 3-month LIBOR rate was 0.28063%.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Interest rate swap notional amounts at October 31, 2009 are representative of the activity during the year.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Fair value of derivative instruments by risk category</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The table below summarizes the fair values of derivatives held by the Fund at October 31, 2009 by risk category:</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="10%"></TD>
     <TD width="11%"></TD>
     <TD width="11%"></TD>
     <TD width="12%"></TD>
     <TD width="12%"></TD>
     <TD width="12%"></TD>
     <TD width="12%"></TD>
     <TD width="10%"></TD>
     <TD width="10%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>STATEMENT OF ASSETS</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>FINANCIAL</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>ASSET</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>LIABILITY</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>AND LIABILITIES</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>INSTRUMENTS</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>DERIVATIVES FAIR</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>DERIVATIVES</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>LOCATION</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>LOCATION</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>VALUE</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>FAIR VALUE</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=9 noWrap align=left>
<HR SIZE=1 width="100%">
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Interest rate contracts</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Payable for futures</FONT></TD>
     <TD noWrap align=left><FONT size=1 face=Arial>&nbsp;Futures</FONT>&nbsp;&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>($14,092)</FONT><SUP><FONT size=1 face=sans-serif>&#134;</FONT></SUP>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>variation margin;</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net unrealized</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Interest</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>depreciation on</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>rate swaps</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>investments,</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>futures and swap</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>contracts</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>(1,219,458)</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT size=1 face=sans-serif>&#151;</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>($1,233,550)</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>&#134; Reflects cumulative appreciation/depreciation on Futures as disclosed in Note 3. Only the year end variation margin is separately disclosed on the Statement of Assets and Liabilities.</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%"></TD>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>35</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
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<A name="page_32"></A><BR>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Effect of derivative instruments on the Statement of Operations</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The table below summarizes the realized gain (loss) recognized in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category for the year ended October 31, 2009:</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="23%"></TD>
     <TD width="6%"></TD>
     <TD width="23%"></TD>
     <TD width="23%"></TD>
     <TD width="23%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD style="TEXT-INDENT: 0px" noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>FUTURES CONTRACTS</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>SWAP CONTRACTS</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>TOTAL</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=5>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Statement of Operations location &#151;</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Net realized gain (loss) on</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Interest rate contracts</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>$11,314</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>($859,732)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>($848,418)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>$11,314</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>($859,732)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>($848,418)</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The table below summarizes the change in unrealized appreciation (depreciation) recognized in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category for the year ended October 31, 2009:</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="23%"></TD>
     <TD style="TEXT-INDENT: 0px" width="6%"></TD>
     <TD width="23%"></TD>
     <TD width="23%"></TD>
     <TD width="23%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>FUTURES CONTRACTS</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>SWAP CONTRACTS</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>TOTAL</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=5>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Statement of Operations location &#151;</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Change in unrealized appreciation</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(depreciation) of</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Interest rate contracts</FONT>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>($14,092)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>($93,197)</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>($107,289)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Total</FONT></B>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>($14,092)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>($93,197)</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>($107,289)</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 4<BR>
</FONT></B><B><FONT size=2 face=sans-serif>Guarantees and indemnifications</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Under the Fund&#146;s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund&#146;s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 5<BR>
</FONT></B><B><FONT size=2 face=sans-serif>Management fee and transactions with<BR>
affiliates and others</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund has an investment management contract with John Hancock Advisers, LLC (the Adviser), a wholly owned indirect subsidiary of Manulife Financial Corporation (MFC). Under the investment management contract, the Fund pays a daily 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 daily net assets value and the value attributable to the credit facility agreement (collectively, managed assets), (b) 0.375% of the next $50,000,000, (c) 0.350% of the next $100,000,000 and (d) 0.300% of the</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Fund&#146;s average daily managed assets in excess of $300,000,000. The Adviser has a subadvi-sory agreement with MFC Global Investment Management (U.S.), LLC, a subsidiary of MFC and an affiliate of the Adviser. The Fund is not responsible for payment of subadvisory fees.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The investment management fees incurred for the year ended October 31, 2009, were equivalent to an annual effective rate of 0.60% of the Fund&#146;s managed assets.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Pursuant to the Advisory Agreement, the Fund reimburses the Adviser for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services of the Fund, including the preparation of all tax returns, annual, semiannual and periodic reports to shareholders and the preparation of all regulatory reports. The accounting and legal services fees incurred for the year ended October 31, 2009, were equivalent to an annual effective rate of 0.02% of the Fund&#146;s managed assets.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 6<BR>
</FONT></B><B><FONT size=2 face=sans-serif>Trustees&#146; fees</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>36</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
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<A name="page_33"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 recorded on the Fund&#146;s books as an other asset. The </FONT><FONT size=2 face=serif>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 style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 7<BR>
</FONT></B><B><FONT size=2 face=sans-serif>Fund share transactions </FONT></B></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Common shares</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund is authorized to issue an unlimited number of common shares with no par value. Transactions in common shares for the year ended October 31, 2009, the period ended October 31, 2008 and the year ended December 31, 2007, are as follows:</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD>
     <TD width="14%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD colSpan=2 noWrap align=right><B><FONT size=1 face=sans-serif>Year ended 10-31-09</FONT></B>&nbsp;</TD>
     <TD colSpan=2 noWrap align=right><B><FONT size=1 face=sans-serif>Period ended 10-31-08</FONT></B><SUP><FONT size=1 face=sans-serif>1</FONT></SUP>&nbsp;</TD>
     <TD colSpan=2 noWrap align=right><B><FONT size=1 face=sans-serif>Year ended 12-31-07</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD>&nbsp;</TD>
     <TD colSpan=2></TD>
     <TD colSpan=4>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Shares</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Amount</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Shares</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Amount</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Shares</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Amount</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Distributions</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>reinvested</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>95,623</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$1,059,251</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>40,345</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$515,172</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>64,325</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$889,931</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>1</FONT></SUP><FONT size=1 face=sans-serif>For the ten month period ended October 31, 2008. The Fund changed its fiscal year end from December 31 to October 31.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 8<BR>
</FONT></B><B><FONT size=2 face=sans-serif>Leverage</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund utilizes a Committed Facility Agreement (CFA) to increase its assets available for investment. In prior fiscal periods, the Fund used Auctioned Preferred Shares (APS) for leverage. When the Fund leverages its assets, common shareholders pay all fees associated with and have the potential to benefit or be disadvantaged from leverage. The Adviser&#146;s fee is also incurred from the use of leverage. Consequently, the Fund and the Adviser may have differing interests in determining whether to leverage the Fund&#146;s assets. Leverage creates risks which may adversely affect the return for the holders of common shares, including:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>&#149; the likelihood of greater volatility of net asset </FONT><FONT size=2 face=serif>value and market price of common shares</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>&#149; fluctuations in the interest rate paid for </FONT><FONT size=2 face=serif>the use of the CFA</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>&#149; increased operating costs, which may </FONT><FONT size=2 face=serif>reduce the Fund&#146;s total return to the holders of common shares</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>&#149; the potential for a decline in the value of </FONT><FONT size=2 face=serif>an investment acquired through leverage, while the Fund&#146;s obligations under such leverage remains fixed</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>&#149; the fund is more likely to have to sell </FONT><FONT size=2 face=serif>securities in a volatile market in order to meet asset coverage or other debt compliance requirements</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>To the extent the income or capital appreciation derived from securities purchased with funds received from leverage exceeds the cost of leverage, the Fund&#146;s return will be greater than if leverage had not been used, conversely, return would be lower if the cost of the leverage exceeds the income or capital appreciation derived.</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>37</FONT>&nbsp;</TD></TR></TABLE><BR>
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<A name="page_34"></A><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund issued APS on November 4, 2003, in a public offering. Effective May 2, 2008, the Fund&#146;s Trustees approved a plan whereby a third party commercial bank has agreed to provide a revolving credit agreement that will enable a refinancing of the Fund&#146;s APS. The facility was used to redeem the outstanding APS and allowed the Fund to change its form of leverage from APS to debt. The redemption of all series was completed on June 12, 2008. Below is a comparison of the leverage methods utilized by the Fund:</FONT></P>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="33%"></TD>
     <TD width="33%"></TD>
     <TD width="33%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>APS</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>CFA</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Required Asset Coverage</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>200%</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>200% (300% at time of draw)</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Maximum Leverage</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>$90 million</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>$58 million</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>amount</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left></TD>
     <TD noWrap align=left></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Costs Associated with</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Dividends paid to preferred</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Interest expense (one month LIBOR</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Leverage</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>shareholders (maximum rate</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(reset daily) plus 0.85%).*</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>equals the overnight commercial</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>paper rate plus 1.25%)</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>APS auction fees</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Arrangement fee**</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Auction agent expenses</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Commitment fees (0.60%</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>per annum).</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Preferred share transfer agent</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>expenses</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>* Prior to June 2, 2009, the rate was the annualized Eurodollar rate plus 0.95% or alternative rates.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>** Arrangement fee is $145,000 amortized over the first 270 days of the CFA.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 9<BR>
</FONT></B><B><FONT size=2 face=sans-serif>Committed facility agreement</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Effective June 2, 2009, the Fund entered into a CFA with a third party financial institution that allows it to borrow up to an initial limit of $58 million and to invest the borrowings in accordance with its investment practices. Borrowings under the CFA are secured by the assets of the Fund as disclosed in the schedule of investments. Interest is charged at the monthly LIBOR rate (reset daily) plus 0.85% and is payable monthly. Under the terms of the CFA, the Fund also pays an arrangement fee of 0.25% in the first year of the agreement on the committed financing and a commitment fee of 0.60% payable monthly on the unused portion of the commitment. The Fund incurred a $145,000 arrangement fee upon execution of the CFA. The arrangement fee is amortized during the first year of the agreement over 270 days.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Prior to June 2, 2009 the Fund had a Revolving Credit Agreement (RCA) agreement with a third party commercial bank that allowed it to borrow up to $77 million. Interest was charged at the annualized Eurodollar rate plus 0.95% and was payable at least monthly. In addition, the Fund paid a facility fee of 0.20% per annum </FONT><FONT size=2 face=serif>on the unused portion of the facility and an administration fee of $38,500 in each year of the agreement.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Arrangement and commitment fees expensed for the year ended October 31, 2009 amounted to $125,107 and $28,461, respectively, and are included in interest expense in the Statement of Operations. As of October 31, 2009, the Fund had borrowings of $58,000,000 at an interest rate 1.0935%. For the period from November 1, 2008 to October 31, 2009, the average borrowings under the CFA and the effective average interest rate were $55,463,014 and 1.6651%, respectively.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>To renew the CFA, a renewal fee equal to the product of the Maximum Commitment Financing and 0.25% is due on each 540</FONT><SUP><FONT size=2 face=serif>th </FONT></SUP><FONT size=2 face=serif>calendar day (Renewal Due Date) following the date of the CFA, and is payable on the related Renewal Due Date. The Fund may terminate the agreement with 60 days&#146; notice if the Board of Trustees has determined that the elimination of all indebtedness leveraging the Fund&#146;s investments is in the best interest of the Fund&#146;s shareholders. In certain circumstances, the CFA may automatically terminate, and</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>in other specified circumstances it may be reduced to a 30-day facility. In addition, upon the occurrence of certain defaults, the lender may terminate the agreement, and it may modify or terminate the agreement upon 270 days&#146; notice.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 10<BR>
</FONT></B><B><FONT size=2 face=sans-serif>Purchase and sale of securities</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 October 31, 2009, aggregated $146,185,995 and $148,218,463, respectively. Purchases and proceeds from sales or maturities of obligations of the U.S. government aggregated $28,274,010 and $20,849,851, respectively, during the year ended October 31, 2009.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Note 11 <BR>
Subsequent event</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>On December 17, 2009, the Fund entered into an amendment to the CFA, increasing the amount the Fund can borrow under the CFA up to $90 million. Under the terms of the amendment, the Fund pays an arrangement fee of 0.25% on the increased amount of the committed financing upon execution of the amendment.</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=4 face=sans-serif>Auditors&#146; report</FONT><BR>
<BR>
<B><FONT size=1 face=sans-serif>Report of Independent Registered Public Accounting Firm</FONT></B></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>To the Board of Trustees and Shareholders of John Hancock Income Securities Trust:</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of John Hancock Income Securities Trust (the &#147;Fund&#148;) at October 31, 2009, and the results of its operations, the changes in its net assets, its cash flows and the financial highlights for each of 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 audits 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 as of October 31, 2009 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>PricewaterhouseCoopers LLP</FONT><BR>
<FONT size=2 face=serif>Boston, Massachusetts</FONT><BR>
<FONT size=2 face=serif>December 18, 2009</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=4 face=sans-serif>Tax information</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Unaudited</FONT></B></P>
<P style="TEXT-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 October 31, 2009.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>With respect to the ordinary dividends paid by the Fund for the fiscal year ended October 31, 2009, 1.71% of the dividends qualifies for the corporate dividends-received deduction.</FONT></P>
<P style="TEXT-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 2009.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Shareholders will be mailed a 2009 U.S. Treasury Department Form 1099-DIV in January 2010.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>This will reflect the total of all distributions that are taxable for calendar year 2009.</FONT></P>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Investment objective and policy</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>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.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Bylaws and Declaration of Trust</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 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 </FONT><FONT size=2 face=serif>amendments set forth the procedures that must be fol
lowed 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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>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.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>On March 31, 2008, the shareholders approved an amendment to the Fund&#146;s Declaration of Trust to permit the Fund&#146;s Board of Trustees to delegate the authority to declare dividends to a Dividend Committee consisting of officers, employees or agents of the Fund.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Effective September 9, 2008, the Fund&#146;s Bylaws were amended with respect to notice requirements for Trustee nominations and other proposals by the Fund&#146;s shareholders. These provisions require the disclosure of the nominating shareholder and the nominee&#146;s investment interests as they relate to the Fund, as well as the name of any other shareholder supporting the nominee for election as a Trustee or the proposal of other business. In order for notice to be proper, such notice must disclose the economic interests of the nominating shareholder and nominee, including his or her holdings of shares in the Fund, the intent upon which those shares were acquired, and any hedging arrangements (including leveraged or short positions) made with respect to the shares of the Fund. Additionally, any material interest that the shareholder has in the business to be brought before the meeting must be disclosed.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Financial futures contracts and options</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Dividends and distributions</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>During the year ended October 31, 2009, dividends from net investment income totaling $1.1266 per share were paid to shareholders. The dates of payments and the amounts per share were as follows:</FONT></P>
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     <TD noWrap align=right><FONT size=1 face=sans-serif>INCOME</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>PAYMENT DATE</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>DIVIDEND</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>December 31, 2008</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>$0.2672</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>March 31, 2009</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.2601</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>June 30, 2009</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.2791</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD>
     <TD noWrap align=right></TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>September 30, 2009</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>0.3202</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Dividend reinvestment plan</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Fund offers its common shareholders a Dividend Reinvestment Plan (the Plan), 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 Plan Agent) will act as agent for participating shareholders.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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, </FONT><FONT size=2 face=serif>the election will be effective with respect to all dividends paid after such record date. Shareholders whose shares are held in the 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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Board of Trustees of the Fund has authorized the Dividend Committee to 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 shal
l 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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>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</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>elected to reinvest and the number of shares acquired with such dividend.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>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. All corre
spondence 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 style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Shareholder communication and assistance</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>Mellon Investor Services</FONT><BR>
<FONT size=1 face=sans-serif>Newport Office Center VII</FONT><BR>
<FONT size=1 face=sans-serif>480 Washington Boulevard</FONT><BR>
<FONT size=1 face=sans-serif>Jersey City, NJ 07310</FONT><BR>
<FONT size=1 face=sans-serif>Telephone: 1-800-852-0218</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>If your shares are held with a brokerage firm, you should contact that firm, bank or other nominee for assistance.</FONT></P>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Shareholder meeting </FONT></B><FONT size=2 face=sans-serif>(unaudited)</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>On May 18, 2009, an adjourned session of the Annual Meeting of the Shareholders of Income Securities Trust was held at 601 Congress Street, Boston, Massachusetts for the purpose of considering and voting upon the proposals listed below:</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=serif>Proposal 1: </FONT></B><FONT size=2 face=serif>Election of eleven Trustees to serve until their respective successors have been duly elected and qualified.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=serif>PROPOSAL 1 </FONT></B><B><FONT size=2 face=serif><U>PASSED</U> </FONT></B><B><FONT size=2 face=serif>FOR </FONT></B><B><FONT size=2 face=serif><U>ALL</U> </FONT></B><B><FONT size=2 face=serif>TRUSTEES ON MAY 18, 2009.</FONT></B></P>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>WITHHELD</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>FOR</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=2 face=serif>James R. Boyle</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,052,704</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>352,785</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>James F. Carlin</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,143,183</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>262,306</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>William H. Cunningham</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,128,892</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>276,597</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Deborah C. Jackson</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,126,368</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>279,121</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Charles L. Ladner</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,131,790</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>273,699</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Stanley Martin</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,134,723</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>270,766</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Patti McGill Peterson</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,133,457</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>272,032</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>John A. Moore</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,135,268</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>270,221</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Steven R. Pruchansky</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,143,594</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>261,895</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Gregory A. Russo</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,144,372</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>261,117</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>John G. Vrysen</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>7,138,169</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>267,320</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=serif>Proposal 2: </FONT></B><FONT size=2 face=serif>To amend the Fund&#146;s Declaration of Trust to divide the Board into three classes of Trustees and to provide for shareholder approval of each such class every three years.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=serif>Proposal 2 did not receive sufficient votes from the Fund&#146;s shareholders.</FONT></B></P>
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     <TD noWrap align=left><FONT size=2 face=serif>For</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=serif>4,535,325</FONT>&nbsp;</TD>
     <TD noWrap align=right></TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Against</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=serif>1,666,253</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=2 face=serif>Withheld</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=serif>177,377</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=2 face=serif>Broker Non-Votes</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=serif>1,026,534</FONT>&nbsp;</TD>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=serif>Proposal 3: </FONT></B><FONT size=2 face=serif>To adopt a new form of investment advisory agreement.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=serif>PROPOSAL 3 </FONT></B><B><FONT size=2 face=serif><U>PASSED</U> </FONT></B><B><FONT size=2 face=serif>ON MAY 18, 2009.</FONT></B></P>
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     <TD noWrap align=left><FONT size=2 face=serif>For</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=serif>5,833,486</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=2 face=serif>Against</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=serif>269,097</FONT>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=2 face=serif>Withheld</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=serif>255,162</FONT>&nbsp;</TD>
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     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Board Consideration of and Continuation of Investment Advisory Agreement and Subadvisory Agreement</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Investment Company Act of 1940 (the 1940 Act) requires the Board of Trustees (the Board) of John Hancock Income Securities Trust (the Fund), 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 Independent Trustees), annually to meet in person to review and consider the continuation of existing advisory and subadvisory agreements. At meetings held on May 6&#150;7 and June 8&#150;9, 2009, the Board considered the renewal of:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>(i) the investment advisory agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Adviser) and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>(ii) the investment subadvisory agreement (the Subadvisory Agreement) with MFC</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Global Investment Management (U.S.), LLC (the Subadviser) for the Fund.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Advisory Agreement and the Subadvisory Agreement are collectively referred to as the Advisory Agreements. 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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>In evaluating the Advisory Agreements, the Board, including the Contracts/Operations Committee and its Independent Trustees, reviewed a broad range of information requested for this purpose. The Independent Trustees considered the legal advice of independent legal counsel and relied on their own business judgment in determining the factors to be considered in evaluating the materials that were presented to them and the weight to be given to each such factor. 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. The key factors </FONT><FONT size=2 face=serif>considered by the Board and the conclusions reached are described below.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Nature, extent and quality of services</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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. It considered the background and experience of senior management and investment professionals responsible for managing the Fund. The Board considered the investment philosophy, research and investment decision-making processes of the Adviser and the Subadviser responsible for the daily investment activities of the Fund. The Board considered the Subadviser&#146;s history and experience with the Fund. The Board considered the Adviser&#146;s execution of its oversight responsibilities. The Board further considered the culture of compliance, resources dedicated to compliance, compliance programs, record of compliance with applicable laws and regulation, with the Fund&#146;s investment policies and restrictions and with the 
applicable Code of Ethics, and the responsibilities of the Adviser&#146;s and Subadviser&#146;s compliance department.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>In addition, the Board took into account the administrative and other non-advisory services provided to the Fund by the Adviser and its affiliates.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 supported renewal of the Advisory Agreements.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Fund performance</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Board considered the performance results for the Fund over various time periods ended December 31, 2008. The Board also considered these results in comparison to the performance of a category of relevant funds (the Category), a peer group of comparable funds (the Peer Group) and a benchmark index. The funds within each Category and Peer Group were selected by Morningstar Inc. (Morningstar), an independent provider of investment company data. The Board reviewed the methodology</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>used by Morningstar to select the funds in the Category and the Peer Group, and noted the imperfect comparability of the Peer Group. The Board also considered updated performance information at its May and June 2009 meetings. Performance and other information may be quite different as of the date of this shareholders report.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Board noted that the Fund&#146;s performance for the all the time periods under review was lower than the performance of the Category and Peer Group medians, and its benchmark index, the Barclays Capital US Government/Credit Index. The Adviser provided the Board with additional information about the Fund&#146;s recent performance. The Adviser noted that the Fund&#146;s performance as of May 2009 was improved. The Board concluded that the Fund&#146;s underperformance was being responsibly addressed by the Adviser and Subadviser.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Investment advisory fee and subadvisory fee rates and expenses</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Board reviewed and considered the contractual investment advisory fee rate payable by the Fund to the Adviser for investment advisory services (the Advisory Agreement Rate). 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 inline with the Peer Group and Category medians.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 (</FONT><I><FONT size=2 face=serif>e.g.</FONT></I><FONT size=2 face=serif>, 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 (Gross Expense Ratio) and total operating expense ratio after taking the fee waiver arrangement applicable to the Advisory Agreement Rate into account (Net Expense Ratio). The Board received and considered information comparing the Gross Expense Ratio and Net Expense Ratio of the Fund to that of the Peer Group and Category medians. The </FONT><FONT size=2 face=serif>Board noted that the Fund&#146;s Net Expense Ratio was higher t
han the Peer Group and Category medians. The Board also noted that the Gross Expense Ratio was not appreciably higher than the Peer Group median and inline with the Category median. The Board also noted the differences in the funds included in the Peer Group, including a higher percentage of leverage employed by the Fund and differences in the amount of assets under management.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 performance and expense results supported the re-approval of the Advisory Agreements.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Board also received information about the investment subadvisory fee rate (the Subadvisory Agreement Rate) payable by the Adviser to the Subadviser for investment sub-advisory 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 style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Profitability</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 also considered a comparison of the Adviser&#146;s profitability to that of other similar investment advisers whose profitability information is publicly available. 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 style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Economies of scale</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Board observed 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 Fund. Therefore, the Board did not consider potential economies of scale as a principal factor in assessing the fees payable under the Advisory Agreements, but concluded that the fees were fair and equitable based on relevant factors.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Other benefits to the Adviser</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>The Board received information regarding potential &#147;fall-out&#148; or ancillary benefits received by the Adviser and its affiliates, including the Subadviser, as a result of their relationship with the Fund. Such benefits could include, among others, benefits directly attributable to the relationship of the Adviser and Subadviser with the Fund and benefits potentially derived from an increase in business as a result of their 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 style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Other factors and broader review</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 senior investment officers at various times throughout the year.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Information about the portfolio managers</FONT></B></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Management Biographies and Fund ownership</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 October 31, 2009.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Barry H. Evans, CFA</FONT></B><BR>
<FONT size=2 face=serif>President, Chief Fixed Income Officer and Chief Operating Officer, MFC Global Investment</FONT><BR>
<FONT size=2 face=serif>Management (U.S.), LLC since 2005</FONT><BR>
<FONT size=2 face=serif>Senior Vice President, John Hancock Advisers LLC (1986&#150;2005)</FONT><BR>
<FONT size=2 face=serif>Began business career in 1986</FONT><BR>
<FONT size=2 face=serif>Joined fund team in 2002</FONT><BR>
<FONT size=2 face=serif>Fund ownership &#151; $10,001&#150;$50,000</FONT><BR>
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<B><FONT size=1 face=sans-serif>Jeffrey N. Given, CFA</FONT></B><BR>
<FONT size=2 face=serif>Vice President, MFC Global Investment Management (U.S.), LLC since 2005</FONT><BR>
<FONT size=2 face=serif>Second Vice President, John Hancock Advisers LLC (1993&#150;2005)</FONT><BR>
<FONT size=2 face=serif>Began business career in 1993</FONT><BR>
<FONT size=2 face=serif>Joined fund team in 1999</FONT><BR>
<FONT size=2 face=serif>Fund ownership &#151; $1&#150;$10,000</FONT><BR>
<BR>
<B><FONT size=1 face=sans-serif>Howard C. Greene, CFA</FONT></B><BR>
<FONT size=2 face=serif>Senior Vice President, MFC Global Investment Management (U.S.), LLC since 2005</FONT><BR>
<FONT size=2 face=serif>Senior Vice President, John Hancock Advisers LLC (2002&#150;2005)</FONT><BR>
<FONT size=2 face=serif>Vice President at Sun Life Financial Services Company of Canada (1987&#150;2002)</FONT><BR>
<FONT size=2 face=serif>Began business career in 1979</FONT><BR>
<FONT size=2 face=serif>Joined fund team in 2005</FONT><BR>
<FONT size=2 face=serif>Fund ownership &#151; None</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Other Accounts the Portfolio Managers are Managing</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 October 31, 2009. 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>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>P O R T F O L I O&nbsp;&nbsp;&nbsp; M A N A G E R</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>O T H E R&nbsp;&nbsp;&nbsp; A C C O U N T S&nbsp;&nbsp;&nbsp;&nbsp;M A N A G E D&nbsp;&nbsp;&nbsp; B Y&nbsp;&nbsp;&nbsp; T H E&nbsp;&nbsp;&nbsp; P O R T F O L I O&nbsp;&nbsp;&nbsp; M A N A G E R S</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Barry H. Evans, CFA</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>Other Investment Companies: 5 accounts with assets of</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>approximately $3.2 billion.</FONT></TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Other Pooled Investment Vehicles: None</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Other Accounts: 82 accounts with assets of</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>approximately $2.3 billion.</FONT></TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Jeffrey N. Given, CFA</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>Other Investment Companies: 7 accounts with assets of</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>approximately $7.2 billion.</FONT></TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>Other Pooled Investment Vehicles: 2 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>approximately $82.7 million.</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>Other Accounts: 17 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=2 face=serif>approximately $5.0 billion.</FONT></TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 align=center><FONT size=2 face=serif></FONT></TD></TR></TABLE><BR>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%"></TD>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>49</FONT>&nbsp;</TD></TR></TABLE><BR>
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<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="35%"></TD>
     <TD width="65%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=serif>Howard C. Greene, CFA</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>Other Investment Companies: 3 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=2 face=serif>approximately $1.6 billion.</FONT></TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 align=center><FONT size=2 face=serif></FONT></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>Other Pooled Investment Vehicles: 2 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>approximately $82.7 million.</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>Other Accounts: 19 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD noWrap align=left></TD>
     <TD noWrap align=left><FONT size=2 face=serif>approximately $6.8 billion.</FONT></TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 align=center><FONT size=2 face=serif></FONT></TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>Neither the Adviser or the Subadviser receives 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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>&#149; The Subadviser has policies that require a portfolio manager to allocate investment opportuni</FONT><FONT size=2 face=serif>ties in an equitable manner and generally to allocate such investments proportionately among all accounts with similar investment objectives.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>&#149; When a portfolio manager intends to trade the same security for more than one account, the poli</FONT><FONT size=2 face=serif>cies 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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>&#149; The investment performance on specific accounts is not a factor in determining the portfolio </FONT><FONT size=2 face=serif>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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>&#149; The Subadviser imposes certain trading restrictions and reporting requirements for accounts in </FONT><FONT size=2 face=serif>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 style="TEXT-ALIGN: left"><FONT size=2 face=serif>&#149; The Subadviser seeks to avoid portfolio manager assignments with potentially conflicting situa</FONT><FONT size=2 face=serif>tions. 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 style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>Compensation of Portfolio Managers</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>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.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=serif>A limited number of senior investment professionals, 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>
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     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>50</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-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-, three- and five-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 style="TEXT-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>
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     <TD width="96%" align=right></TD>
     <TD style="TEXT-INDENT: 0px" width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>51</FONT>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=7 face=serif>Trustees and Officers</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=1 face=sans-serif>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 border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="69%"></TD>
     <TD width="15%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Independent Trustees</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Name, Year of Birth</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Number of John</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><I><FONT size=1 face=sans-serif>Position(s) held with Fund</FONT></I></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Trustee</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Hancock funds</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Principal occupation(s) and other</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>of Fund</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>overseen by</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>directorships during past 5 years</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>since</FONT></B><SUP><FONT size=1 face=sans-serif>1</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Trustee</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Patti McGill Peterson, </FONT></B><FONT size=1 face=sans-serif>Born: 1943</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>1996</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>47</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Chairperson (since December 2008); Principal, PMP Globalinc (consulting) (since 2007); Senior</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Associate, Institute for Higher Education Policy (since 2007); Executive Director, CIES (international</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>education agency) (until 2007); Vice President, Institute of International Education (until 2007); Senior</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Fellow, Cornell University Institute of Public Affairs, Cornell University (until 1998); Former President</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Wells College, St. Lawrence University and the Association of Colleges and Universities of the State</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>of New York. Director of the following: Niagara Mohawk Power Corporation (until 2003); Security</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Mutual Life (insurance) (until 1997); ONBANK (until 1993). Trustee of the following: Board of Visitors,</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>The University of Wisconsin, Madison (since 2007); Ford Foundation, International Fellowships Program</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>(until 2007); UNCF, International Development Partnerships (until 2005); Roth Endowment (since 2002);</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Council for International Educational Exchange (since 2003).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3></TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>James F. Carlin, </FONT></B><FONT size=1 face=sans-serif>Born: 1940</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>2005</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>47</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Director and Treasurer, Alpha Analytical Laboratories, Inc. (chemical analysis) (since 1985); Part Owner</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>and Treasurer, Lawrence Carlin Insurance Agency, Inc. (since 1995); Part Owner and Vice President,</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Mone Lawrence Carlin Insurance Agency, Inc. (until 2005); Chairman and Chief Executive Officer,</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Carlin Consolidated, Inc. (management/investments) (since 1987); Trustee, Massachusetts Health and</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Education Tax Exempt Trust (1993&#150;2003).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>William H. Cunningham, </FONT></B><FONT size=1 face=sans-serif>Born: 1944</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>2005</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>47</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>and former President of the University of Texas, Austin, Texas; Director of the following: LIN Television</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>(since 2009), Lincoln National Corporation (insurance) (since 2006), Resolute Energy Corporation (oil</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>and gas) (since 2009), Southwest Airlines (since 2000), Hayes Lemmerz International, Inc. (diversified</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>automotive parts supply company) (2003&#150;2009).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Deborah C. Jackson,</FONT></B><SUP><FONT size=1 face=sans-serif>2 </FONT></SUP><FONT size=1 face=sans-serif>Born: 1952</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>2008</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>47</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Chief Executive Officer, American Red Cross of Massachusetts Bay (since 2002); Board of Directors of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>2001); Board of Directors of American Student Association Corp. (since 1996); Board of Directors of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Boston Stock Exchange (2002&#150;2008); Board of Directors of Harvard Pilgrim Healthcare (since 2007).</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3></TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Charles L. Ladner, </FONT></B><FONT size=1 face=sans-serif>Born: 1938</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>2004</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>47</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Chairman and Trustee, Dunwoody Village, Inc. (retirement services); Senior Vice President and Chief</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Financial Officer, UGI Corporation (public utility holding company) (retired 1998); Vice President and</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Director, AmeriGas, Inc. (retired 1998); Director, AmeriGas Partners, L.P. (gas distribution) (until 1997);</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Director, EnergyNorth, Inc. (until 1997); Director, Parks and History Association (until 2005).</FONT>&nbsp;</TD></TR></TABLE><BR>
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<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>52</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
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<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="69%"></TD>
     <TD width="15%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Independent Trustees </FONT></B><FONT size=1 face=sans-serif>(continued)</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Name, Year of Birth</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Number of John</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><I><FONT size=1 face=sans-serif>Position(s) held with Fund</FONT></I></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Trustee</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Hancock funds</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Principal occupation(s) and other</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>of Fund</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>overseen by</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>directorships during past 5 years</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>since</FONT></B><SUP><FONT size=1 face=sans-serif>1</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Trustee</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Stanley Martin,</FONT></B><SUP><FONT size=1 face=sans-serif>2 </FONT></SUP><FONT size=1 face=sans-serif>Born: 1947</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>2008</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>47</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Senior Vice President/Audit Executive, Federal Home Loan Mortgage Corporation (2004&#150;2006);</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Executive Vice President/Consultant, HSBC Bank USA (2000&#150;2003); Chief Financial Officer/Executive</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Vice President, Republic New York Corporation and Republic National Bank of New York (1998&#150;2000);</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Partner, KPMG LLP (1971&#150;1998).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Dr. John A. Moore, </FONT></B><FONT size=1 face=sans-serif>Born: 1939</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>1996</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>47</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>President and Chief Executive Officer, Institute for Evaluating Health Risks (nonprofit institution)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>(until 2001); Senior Scientist, Sciences International (health research) (until 2003); Former</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Assistant Administrator and Deputy Administrator, Environmental Protection Agency; Principal,</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Hollyhouse (consulting) (since 2000); Director, CIIT Center for Health Science Research (nonprofit</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>research) (until 2007).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>
<HR SIZE=1 noShade>
</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Steven R. Pruchansky,</FONT></B><SUP><FONT size=1 face=sans-serif>2 </FONT></SUP><FONT size=1 face=sans-serif>Born: 1944</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>2005</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>47</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>American Bank (since 2008); Managing Director, JonJames, LLC (real estate) (since 2000); Director,</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>First Signature Bank &amp; Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President,</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Maxwell Building Corp. (until 1991).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Gregory A. Russo, </FONT></B><FONT size=1 face=sans-serif>Born: 1949</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>2008</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>47</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Vice Chairman, Risk &amp; Regulatory Matters, KPMG LLP (KPMG) (2002&#150;2006); Vice Chairman, Industrial</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Markets, KPMG (1998&#150;2002).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Non-Independent Trustees</FONT></B><SUP><FONT size=1 face=sans-serif>3</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Name, Year of Birth</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Number of John</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><I><FONT size=1 face=sans-serif>Position(s) held with Fund</FONT></I></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Trustee</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Hancock funds</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Principal occupation(s) and other</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>of Fund</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>overseen by</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>directorships during past 5 years</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>since</FONT></B><SUP><FONT size=1 face=sans-serif>1</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Trustee</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>James R. Boyle, </FONT></B><FONT size=1 face=sans-serif>Born: 1959</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>2005</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>262</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Senior Executive Vice President (since 2009), Executive Vice President (1999&#150;2009), Manulife Financial</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Corporation; Director and President, John Hancock Variable Life Insurance Company (since 2007);</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Director and Executive Vice President, John Hancock Life Insurance Company (since 2004); Chairman</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>and Director, John Hancock Advisers, LLC, The Berkeley Financial Group, LLC (holding company) and</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>John Hancock Funds, LLC (since 2005); Chairman and Director, John Hancock Investment Management</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Services, LLC (since 2006); Senior Vice President, The Manufacturers Life Insurance Company (U.S.A.)</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(until 2004).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR></TABLE><BR>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="96%" align=right></TD>
     <TD width="4%" align=right></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD style="TEXT-INDENT: 0px" noWrap align=right><FONT size=2 face=sans-serif>53</FONT>&nbsp;</TD></TR></TABLE><BR>
<HR align=center SIZE=2 width="100%" noShade>
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<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="69%"></TD>
     <TD width="15%"></TD>
     <TD width="15%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Non-Independent Trustees</FONT></B><SUP><FONT size=1 face=sans-serif>3 </FONT></SUP><FONT size=1 face=sans-serif>(continued)</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Name, Year of Birth</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Number of John</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><I><FONT size=1 face=sans-serif>Position(s) held with Fund</FONT></I></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Trustee</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Hancock funds</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Principal occupation(s) and other</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>of Fund</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>overseen by</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>directorships during past 5 years</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>since</FONT></B><SUP><FONT size=1 face=sans-serif>1</FONT></SUP>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Trustee</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>John G. Vrysen,</FONT></B><SUP><FONT size=1 face=sans-serif>4 </FONT></SUP><FONT size=1 face=sans-serif>Born: 1955</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>2009</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>47</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Senior Vice President (since 2006), Vice President (until 2006), Manulife Financial Corporation;</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Director, Executive Vice President and Chief Operating Officer, John Hancock Advisers, LLC, The</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Berkeley Financial Group, LLC, John Hancock Investment Management Services, LLC (&#147;JHIMS&#148;), and</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>John Hancock Funds, LLC (since 2007); Chief Operating Officer, JHF II and JHT (since 2007); Chief</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Operating Officer, John Hancock Funds and JHF III (2007&#150;2009); Director, John Hancock Signature</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Services, Inc. (&#147;Signature Services&#148;) (since 2005); Chief Financial Officer, John Hancock Advisers, LLC,</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>The Berkeley Financial Group, LLC, MFC Global Investment Management (U.S.) (&#147;MFC Global (U.S.)&#148;),</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>JHIMS, John Hancock Funds, LLC, JHF, JHF II, JHF III and JHT (2005&#150;2007).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Principal officers who are not Trustees</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Name, Year of Birth</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><I><FONT size=1 face=sans-serif>Position(s) held with Fund</FONT></I></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Officer</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Principal occupation(s) and other</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>of Fund</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>directorships during past 5 years</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>since</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Keith F. Hartstein, </FONT></B><FONT size=1 face=sans-serif>Born: 1956</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2005</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><I><FONT size=1 face=sans-serif>President and Chief Executive Officer</FONT></I>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Senior Vice President, Manulife Financial Corporation (since 2004); Director, President and Chief</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Executive Officer, John Hancock Advisers, LLC, The Berkeley Financial Group, LLC, John Hancock Funds,</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>LLC (since 2005); Director, MFC Global (U.S.) (since 2005); Chairman and Director, Signature Services</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>(since 2005); Director, President and Chief Executive Officer, John Hancock Investment Management</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Services, LLC (since 2006); President and Chief Executive Officer, John Hancock Funds (since 2005) and</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>JHF III (since 2006); Executive Vice President (since 2009), President and Chief Executive Officer (until</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>2009), JHT and JHF II; Director, Chairman and President, NM Capital Management, Inc. (since 2005);</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Member and former Chairman, Investment Company Institute Sales Force Marketing Committee (since</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>2003); Director, President and Chief Executive Officer, MFC Global (U.S.) (2005&#150;2006); Executive Vice</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>President, John Hancock Funds, LLC (until 2005).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR>
     <TD colSpan=3>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Andrew G. Arnott, </FONT></B><FONT size=1 face=sans-serif>Born: 1971</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2009</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=3 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><I><FONT size=1 face=sans-serif>Chief Operating Officer</FONT></I>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Senior Vice President, Manulife Financial Corporation (since 2009); Senior Vice President (since 2007),</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>Vice President (2005&#150;2007), John Hancock Advisers, LLC; Senior Vice President (since 2008), Vice</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>President (2006&#150;2008), John Hancock Investment Management Services, LLC; Senior Vice President</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>(since 2006), Vice President (2005&#150;2006), 2nd Vice President (2004&#150;2005), John Hancock Funds,</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>LLC; Chief Operating Officer (since 2009), Vice President (2007&#150;2009), John Hancock Funds and JHF</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>III; Vice President (since 2006), John Hancock Funds II and John Hancock Trust; Senior Vice President</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=3 noWrap align=left><FONT size=1 face=sans-serif>(2005&#150;2009), Product Management and Development for John Hancock Funds, LLC; Vice President and</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Director (1998&#150;2005), Marketing and Product Management for John Hancock Funds, LLC.</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR></TABLE><BR>
<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD style="TEXT-INDENT: 0px" width="4%"></TD>
     <TD width="96%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>54</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
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<TABLE border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="69%"></TD>
     <TD width="31%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Principal officers who are not Trustees </FONT></B><FONT size=1 face=sans-serif>(continued)</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Name, Year of Birth</FONT></B>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><I><FONT size=1 face=sans-serif>Position(s) held with Fund</FONT></I></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Officer</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Principal occupation(s) and other</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>of Fund</FONT></B>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>directorships during past 5 years</FONT></B>&nbsp;</TD>
     <TD noWrap align=right><B><FONT size=1 face=sans-serif>since</FONT></B>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Thomas M. Kinzler, </FONT></B><FONT size=1 face=sans-serif>Born: 1955</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2006</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><I><FONT size=1 face=sans-serif>Secretary and Chief Legal Officer</FONT></I>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Vice President and Counsel for John Hancock Life Insurance Company (U.S.A.) (since 2006); Secretary</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>and Chief Legal Officer, John Hancock Funds, JHF II, JHF III and JHT (since 2006); Secretary and Chief</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Legal Counsel, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>(since 2008); Secretary, John Hancock Funds, LLC and The Berkeley Financial Group, LLC (since 2007);</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Vice President and Associate General Counsel for Massachusetts Mutual Life Insurance Company</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>(1999&#150;2006); Secretary and Chief Legal Counsel for MML Series Investment Fund (2000&#150;2006);</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Secretary and Chief Legal Counsel for MassMutual Institutional Funds (2000&#150;2004); Secretary and</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Chief Legal Counsel for MassMutual Select Funds and MassMutual Premier Funds (2004&#150;2006).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2></TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Francis V. Knox, Jr., </FONT></B><FONT size=1 face=sans-serif>Born: 1947</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2005</FONT>&nbsp;</TD></TR>
<TR height=20>
     <TD colSpan=2 noWrap align=left>
<HR SIZE=1 noShade>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><I><FONT size=1 face=sans-serif>Chief Compliance Officer</FONT></I>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Chief Compliance Officer, John Hancock Funds, JHF II, JHF III and JHT (since 2005); Chief Compliance</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Officer, John Hancock Advisers, LLC and JHIMS (since 2007); Vice President and Chief Compliance</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Officer, John Hancock Advisers, LLC and JHIMS (until 2007); Vice President and Chief Compliance</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Officer, MFC Global (U.S.) (2005&#150;2008); Vice President and Assistant Treasurer, Fidelity Group of</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Funds (until 2005).</FONT>&nbsp;</TD>
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     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Charles A. Rizzo, </FONT></B><FONT size=1 face=sans-serif>Born: 1957</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2007</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><I><FONT size=1 face=sans-serif>Chief Financial Officer</FONT></I>&nbsp;</TD>
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     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services,</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>LLC (since 2007); Chief Financial Officer, John Hancock Funds, JHF II, JHF III and JHT (since 2007);</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Assistant Treasurer, Goldman Sachs Mutual Fund Complex (registered investment companies) (2005&#150;</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>2007); Vice President, Goldman Sachs (2005&#150;2007); Managing Director and Treasurer of Scudder</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Funds, Deutsche Asset Management (2003&#150;2005).</FONT>&nbsp;</TD>
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     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Salvatore Schiavone, </FONT></B><FONT size=1 face=sans-serif>Born: 1965</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=1 face=sans-serif>2009</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><I><FONT size=1 face=sans-serif>Treasurer</FONT></I>&nbsp;</TD>
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     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Treasurer, John Hancock Closed-End Funds (since 2009); Assistant Treasurer, John Hancock Funds,</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>John Hancock Funds II, John Hancock Funds III, and John Hancock Trust (since 2007); Assistant</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Treasurer, Fidelity Group of Funds (2005&#150;2007); Vice President, Fidelity Management Research</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD colSpan=2 noWrap align=left><FONT size=1 face=sans-serif>Company (2005&#150;2007); Assistant Treasurer, Scudder Group of Funds (2003&#150;2005); Director, Deutsche</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Asset Management (2003&#150;2005), Vice President and Head of Fund Reporting, Deutsche Asset</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>Management, previously Scudder, Stevens &amp; Clark (1996&#150;2003).</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805. </FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>1 </FONT></SUP><FONT size=1 face=sans-serif>Each Trustee serves until resignation, retirement age or until his or her successor is elected.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>2 </FONT></SUP><FONT size=1 face=sans-serif>Member of Audit Committee. Mr. Pruchansky was appointed by the Board of Trustees effective September 1, 2009. </FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>3 </FONT></SUP><FONT size=1 face=sans-serif>Non-Independent Trustees hold positions with the Fund&#146;s investment adviser, underwriter and certain other affiliates. </FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=1 face=sans-serif>4 </FONT></SUP><FONT size=1 face=sans-serif>Mr. Vrysen was elected by the shareholders at an annual shareholders meeting on May 18, 2009.</FONT></P>
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     <TD noWrap align=right><B><FONT size=1 face=sans-serif>Annual report | </FONT></B><FONT size=1 face=sans-serif>Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=right><FONT size=2 face=sans-serif>55</FONT>&nbsp;</TD></TR></TABLE><BR>
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<P style="TEXT-ALIGN: left"><FONT size=7 face=serif>More information</FONT></P>
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     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Trustees</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Investment adviser</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Patti McGill Peterson,&nbsp;</FONT><I><FONT size=2 face=serif>Chairperson</FONT></I>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>John Hancock Advisers, LLC</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>James R. Boyle</FONT><FONT size=1 face=sans-serif>&#134;</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>James F. Carlin</FONT>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Subadviser</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>William H. Cunningham</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>MFC Global Investment</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Deborah C. Jackson*</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>&nbsp; Management (U.S.), LLC</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Charles L. Ladner</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Stanley Martin*</FONT>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Custodian</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Dr. John A. Moore</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>State Street Bank and Trust Company</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Steven R. Pruchansky</FONT><FONT size=1 face=sans-serif>&#134;&#134;</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp; </TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Gregory A. Russo</FONT></TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Transfer agent</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>John G. Vrysen</FONT><FONT size=1 face=sans-serif>&#134;</FONT>&nbsp;&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>Mellon Investor Services</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Officers</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Legal counsel</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Keith F. Hartstein</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>K&amp;L Gates LLP</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><I><FONT size=2 face=serif>President and Chief Executive Officer</FONT></I>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Independent registered</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Andrew G. Arnott</FONT><FONT size=1 face=sans-serif>&#135;</FONT>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>public accounting firm</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><I><FONT size=2 face=serif>Chief Operating Officer</FONT></I>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>PricewaterhouseCoopers LLP</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left></TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=serif>Thomas M. Kinzler</FONT>&nbsp;&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Stock symbol</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><I><FONT size=2 face=serif>Secretary and Chief Legal Officer</FONT></I>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=serif>Listed New York Stock Exchange: JHS</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left></TD>
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     <TD noWrap align=left><FONT size=2 face=serif>Francis V. Knox, Jr.</FONT>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>For shareholder assistance</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><I><FONT size=2 face=serif>Chief Compliance Officer</FONT></I>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>refer to page 44</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=2 face=serif>Charles A. Rizzo</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left><I><FONT size=2 face=serif>Chief Financial Officer</FONT></I>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=2 face=serif>Salvatore Schiavone</FONT><FONT size=2 face=sans-serif>&#167;</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left><I><FONT size=2 face=serif>Treasurer</FONT></I>&nbsp;</TD>
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<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>*Member of the Audit Committee</FONT><BR>
<FONT size=1 face=sans-serif>of the Audit Committee effective 9-1-09</FONT><BR>
<FONT size=1 face=sans-serif>&#134;Non-Independent Trustee</FONT><BR>
<FONT size=1 face=sans-serif>&#135;Effective 9-1-09</FONT><BR>
<FONT size=1 face=sans-serif>&#167;</FONT><FONT size=1 face=sans-serif>Effective 5-7-09</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>The Fund is listed for trading on the NYSE 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 SEC the certification of its chief executive officer and chief financial officer required by Section 302 of the Sarbanes-Oxley Act.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>The Fund&#146;s proxy voting policies and procedures, as well as the Fund&#146;s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) Web site at www.sec.gov or on our Web site.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>The Fund&#146;s complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form&nbsp;N-Q. The Fund&#146;s Form N-Q is available on our Web site and the SEC&#146;s Web site, www.sec.gov, and can be reviewed and copied (for a fee) at the SEC&#146;s Public Reference Room in Washington, DC. Call 1-800-SEC-0330 to&nbsp;receive information on the operation of the SEC&#146;s Public Reference Room.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>We make this information on your fund, as well as </FONT><B><FONT size=1 face=sans-serif>monthly portfolio holdings</FONT></B><FONT size=1 face=sans-serif>, and other fund details available on our Web site www.jhfunds.com or by calling 1-800-852-0218.</FONT></P>
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     <TD noWrap align=left><FONT size=1 face=sans-serif>You can also contact us:</FONT>&nbsp;</TD>
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     <TD noWrap align=left><B><FONT size=1 face=sans-serif>1-800-852-0218</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>Regular mail:</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=1 face=sans-serif>jhfunds.com</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Mellon Investor Services</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Newport Office Center VII</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>480 Washington Boulevard</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Jersey City, NJ 07310</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>56</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=1 face=sans-serif>Income Securities Trust </FONT><B><FONT size=1 face=sans-serif>| Annual report</FONT></B>&nbsp;</TD></TR></TABLE><BR>
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&nbsp;<BR>
<P style="TEXT-ALIGN: left"><FONT size=1 face=sans-serif>1-800-852-0218</FONT><BR>
<FONT size=1 face=sans-serif>1-800-231-5469 TDD</FONT><BR>
<FONT size=1 face=sans-serif>1-800-843-0090 EASI-Line</FONT><BR>
<FONT size=1 face=sans-serif>www.</FONT><FONT size=1 face=sans-serif>jhfunds.</FONT><FONT size=1 face=sans-serif>com</FONT><FONT size=1 face=sans-serif></FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>PRESORTED</FONT><BR>
<FONT size=2 face=sans-serif>STANDARD</FONT><BR>
<FONT size=2 face=sans-serif>U.S. </FONT><FONT size=2 face=sans-serif>POSTAGE</FONT><BR>
<FONT size=2 face=sans-serif>PAID</FONT><BR>
<FONT size=2 face=sans-serif>MIS</FONT></P>
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     <TD noWrap align=right><FONT size=1 face=sans-serif>P600A 10/09</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=right><FONT size=1 face=sans-serif>12/09</FONT>&nbsp;</TD></TR></TABLE><BR>
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<P style="text-align: left;"> <FONT size=2 face="sans-serif">ITEM 2. CODE OF ETHICS.</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">As of the end of the period, October 31, 2009, 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 style="text-align: left;"> <FONT size=2 face="sans-serif">ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">Stanley Martin is the audit committee financial expert and is &#147;independent&#148;, pursuant to general instructions on Form N-CSR Item 3.</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">(a) Audit Fees</FONT></P>
<P style="text-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;41,819 for the fiscal year ended October 31, 2009 and &#36;44,920 for the fiscal period ended October 31, 2008. These fees were billed to the registrant and were approved by the registrant&#146;s audit committee.</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">(b) Audit-Related Services</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">Audit-related fees amounted to &#36;0 for the fiscal year ended October 31, 2009 and &#36;18,645 for the fiscal period ended October 31, 2008 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 style="text-align: left;"> <FONT size=2 face="sans-serif">(c) Tax Fees</FONT></P>
<P style="text-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;2,873 for the fiscal year ended October 31, 2009 and &#36;3,500 for the fiscal period ended October 31, 2008. 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 style="text-align: left;"> <FONT size=2 face="sans-serif">(d) All Other Fees</FONT></P>
<P style="text-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;3,555 for the fiscal year ended October 31, 2009 and &#36;0 for the fiscal period ended October 31, 2008 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>
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<P style="text-align: left;"> <FONT size=2 face="sans-serif">(e)(1) Audit Committee Pre-Approval Policies and Procedures:</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">The trust&#146;s Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm (the &#147;Auditor&#148;) relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">The trust&#146;s Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee&#146;s consideration of audit-related and non-audit services by the Auditor. The policies and procedures require that any audit-related and non-audit service provided by the Auditor and any non-audit service provided by the Auditor to a fund service provider that relates directly to the operations and financial reporting of a fund are subject to approval by the Audit Committee before such service is provided. Audit-related services provided by the Auditor that are expected to exceed &#36;25,000 per instance/per fund are subject to specific pre-approval by the Audit Committee. Tax services provided by the Auditor that are expected to exceed &#36;30,000 per instance/per fund are subject to specific pre-approval by the Audit Committee.</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">All audit services, as well as the audit-related and non-audit services that are expected to exceed the amounts stated above, must be approved in advance of provision of the service by formal resolution of the Audit Committee. At the regularly scheduled Audit Committee meetings, the Committee reviews a report summarizing the services, including fees, provided by the Auditor.</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">(e)(2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">Audit-Related Fees, Tax Fees and All Other Fees:</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">(f) According to the registrant&#146;s principal accountant, for the fiscal period ended October 31, 2009, 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 style="text-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;8,200,526 for the fiscal year ended October 31, 2009 and &#36;4,591,272 for the fiscal period ended October 31, 2008.</FONT></P>
<P style="text-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 style="text-align: left;"> <FONT size=2 face="sans-serif">ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.</FONT></P>
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<P style="text-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 style="text-align: left;"> <FONT size=2 face="sans-serif">Stanley Martin - Chairman</FONT><BR>
<FONT size=2 face="sans-serif">Deborah C. Jackson</FONT><BR>
<FONT size=2 face="sans-serif">Steven R. Pruchansky</FONT><BR>
<BR>
<FONT size=2 face="sans-serif">ITEM 6. SCHEDULE OF INVESTMENTS.</FONT><BR>
<BR>
<FONT size=2 face="sans-serif">(a) Not applicable.</FONT><BR>
<FONT size=2 face="sans-serif">(b) Not applicable.</FONT></P>
<P style="text-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 style="text-align: left;"> <FONT size=2 face="sans-serif">See attached exhibit &#147;Proxy Voting Policies and Procedures&#148;.</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.</FONT></P>
<P style="text-align: left;"> <B><FONT size=2 face="sans-serif">Information about the portfolio managers</FONT></B></P>
<P style="text-align: left;"> <B><FONT size=2 face="sans-serif">Management Biographies and Fund ownership</FONT></B></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">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 October 31, 2009.</FONT></P>
<P style="text-align: left;"> <B><FONT size=2 face="sans-serif">Barry H. Evans, CFA</FONT></B><BR>
<FONT size=2 face="sans-serif">President, Chief Fixed Income Officer and Chief Operating Officer, MFC Global Investment</FONT><BR>
<FONT size=2 face="sans-serif">Management (U.S.), LLC since 2005</FONT><BR>
<FONT size=2 face="sans-serif">Senior Vice President, John Hancock Advisers LLC (1986&#150;2005)</FONT><BR>
<FONT size=2 face="sans-serif">Began business career in 1986</FONT><BR>
<FONT size=2 face="sans-serif">Joined fund team in 2002</FONT><BR>
<FONT size=2 face="sans-serif">Fund ownership &#151; &#36;10,001&#150;&#36;50,000</FONT><BR>
<BR>
<B><FONT size=2 face="sans-serif">Jeffrey N. Given, CFA</FONT></B><BR>
<FONT size=2 face="sans-serif">Vice President, MFC Global Investment Management (U.S.), LLC since 2005</FONT><BR>
<FONT size=2 face="sans-serif">Second Vice President, John Hancock Advisers LLC (1993&#150;2005)</FONT><BR>
<FONT size=2 face="sans-serif">Began business career in 1993</FONT><BR>
<FONT size=2 face="sans-serif">Joined fund team in 1999</FONT><BR>
<FONT size=2 face="sans-serif">Fund ownership &#151; &#36;1&#150;&#36;10,000</FONT><BR>
<BR>
<B><FONT size=2 face="sans-serif">Howard C. Greene, CFA</FONT></B><BR>
<FONT size=2 face="sans-serif">Senior Vice President, MFC Global Investment Management (U.S.), LLC since 2005</FONT><BR>
<FONT size=2 face="sans-serif">Senior Vice President, John Hancock Advisers LLC (2002&#150;2005)</FONT><BR>
<FONT size=2 face="sans-serif">Vice President at Sun Life Financial Services Company of Canada (1987&#150;2002)</FONT><BR>
<FONT size=2 face="sans-serif">Began business career in 1979</FONT><BR>
<FONT size=2 face="sans-serif">Joined fund team in 2005</FONT><BR>
<FONT size=2 face="sans-serif">Fund ownership &#151; None</FONT></P>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Other Accounts the Portfolio Managers are Managing</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>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 October 31, 2009. 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 border=0 cellSpacing=0 width="80%">
<TR>
     <TD width="50%"></TD>
     <TD width="50%"></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>PORTFOLIO MANAGER</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>Barry H. Evans, CFA</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>Other Investment Companies: 5 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>approximately $3.2 billion.</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD align=center><FONT size=2 face=sans-serif></FONT></TD>
     <TD align=left><FONT size=2 face=sans-serif>Other Pooled Investment Vehicles: None</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD align=center><FONT size=2 face=sans-serif>&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;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
     <TD align=left><FONT size=2 face=sans-serif>Other Accounts: 82 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>approximately $2.3 billion.</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>Jeffrey N. Given, CFA</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>Other Investment Companies: 7 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>approximately $7.2 billion.</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>Other Pooled Investment Vehicles: 2 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>approximately $82.7 million.</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD align=center><FONT size=2 face=sans-serif>&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;&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></TD>
     <TD align=left><FONT size=2 face=sans-serif>Other Accounts: 17 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>approximately $5.0 billion.</FONT>&nbsp;</TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left><FONT size=2 face=sans-serif>Howard C. Greene, CFA</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>Other Investment Companies: 3 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>approximately $1.6 billion.</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>Other Pooled Investment Vehicles: 2 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>approximately $82.7 million.</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD align=center><FONT size=2 face=sans-serif></FONT></TD>
     <TD align=left><FONT size=2 face=sans-serif>Other Accounts: 19 accounts with assets of</FONT>&nbsp;</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>approximately $6.8 billion.</FONT>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Neither the Adviser or the Subadviser receives 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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#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>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#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 style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Compensation of Portfolio Managers</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>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. </FONT><FONT size=2 face=sans-serif>A limited number of senior investment professionals, 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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-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-, three- and five-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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-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 style="TEXT-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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Not applicable.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.</FONT></P>
<P style="TEXT-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>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>ITEM 11. CONTROLS AND PROCEDURES.</FONT></P>
<P style="TEXT-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 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 style="TEXT-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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>ITEM 12. EXHIBITS.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>(a)(1) Code of Ethics for Senior Financial Officers is attached.</FONT></P>
<P style="TEXT-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 style="TEXT-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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>(c)(1) Proxy Voting Policies and Procedures are attached.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>(c)(2) 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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>(c)(3) Contact person at the registrant.</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>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 style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>John Hancock Income Securities Trust</FONT></P>
<P style="TEXT-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: December 18, 2009</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>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 style="TEXT-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: December 18, 2009</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>By: /s/ Charles A. Rizzo</FONT><BR>
<FONT size=2 face=sans-serif>-------------------------------------</FONT><BR>
<FONT size=2 face=sans-serif>Charles A. Rizzo</FONT><BR>
<FONT size=2 face=sans-serif>Chief Financial Officer</FONT><BR>
<BR>
<FONT size=2 face=sans-serif>Date: December 18, 2009</FONT></P>
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<P style="text-align: left;"> <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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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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<P style="text-align: left;"> <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 style="text-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: December 18, 2009</FONT></P>
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<P style="text-align: left;"> <B><U><FONT size=2 face="sans-serif">CERTIFICATION</FONT></U></B><BR>
<BR>
<FONT size=2 face="sans-serif">I, Charles A. Rizzo, certify that:</FONT></P>
<P style="text-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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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 style="text-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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<P style="text-align: left;"> <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 style="text-align: left;"> <FONT size=2 face="sans-serif">By: /s/ Charles A. Rizzo</FONT><BR>
<FONT size=2 face="sans-serif">-------------------------------------</FONT><BR>
<FONT size=2 face="sans-serif">Charles A. Rizzo</FONT><BR>
<FONT size=2 face="sans-serif">Chief Financial Officer</FONT><BR>
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<FONT size=2 face="sans-serif">Date: December 18, 2009</FONT></P>
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<TYPE>EX-99.906 CERT
<SEQUENCE>3
<FILENAME>c_incsectrustxnnos.htm
<DESCRIPTION>CERTIFICATION 906
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     <TD align=center nowrap> <B><FONT size=2 face="sans-serif">Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of</FONT></B>&nbsp;</TD> </TR>
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     <TD align=center> <B><FONT size=2 face="sans-serif">the Sarbanes-Oxley Act of 2002</FONT></B></TD> </TR> </TABLE><BR>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">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 style="text-align: left;"> <FONT size=2 face="sans-serif">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 style="text-align: left;"> <FONT size=2 face="sans-serif">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 style="text-align: left;"> <FONT size=2 face="sans-serif">/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">Dated: December 18, 2009</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">/s/ Charles A. Rizzo</FONT><BR>
<FONT size=2 face="sans-serif">-------------------------------------</FONT><BR>
<FONT size=2 face="sans-serif">Charles A. Rizzo</FONT><BR>
<FONT size=2 face="sans-serif">Chief Financial Officer</FONT><BR>
<BR>
<FONT size=2 face="sans-serif">Dated: December 18, 2009</FONT></P>
<P style="text-align: left;"> <FONT size=2 face="sans-serif">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_codeofethicsnew.htm
<DESCRIPTION>CODE OF ETHICS
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     <TD align=center><B><FONT face=sans-serif>J</FONT></B><B><FONT size=2 face=sans-serif>OHN </FONT></B><B><FONT face=sans-serif>H</FONT></B><B><FONT size=2 face=sans-serif>ANCOCK </FONT></B><B><FONT face=sans-serif>T</FONT></B><B><FONT size=2 face=sans-serif>RUST</FONT></B></TD></TR>
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     <TD align=center><B><FONT face=sans-serif>J</FONT></B><B><FONT size=2 face=sans-serif>OHN </FONT></B><B><FONT face=sans-serif>H</FONT></B><B><FONT size=2 face=sans-serif>ANCOCK </FONT></B><B><FONT face=sans-serif>F</FONT></B><B><FONT size=2 face=sans-serif>UNDS </FONT></B><B><FONT face=sans-serif>III</FONT></B></TD></TR>
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     <TD align=center><B><U><FONT face=sans-serif>S</FONT></U></B><B><U><FONT size=2 face=sans-serif>ARBANES</FONT></U></B><B><U><FONT face=sans-serif>-O</FONT></U></B><B><U><FONT size=2 face=sans-serif>XLEY </FONT></U></B><B><U><FONT face=sans-serif>C</FONT></U></B><B><U><FONT size=2 face=sans-serif>ODE OF </FONT></U></B><B><U><FONT face=sans-serif>E</FONT></U></B><B><U><FONT size=2 face=sans-serif>THICS</FONT></U></B></TD></TR>
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     <TD align=center><B><U><FONT size=2 face=sans-serif>FOR</FONT></U></B></TD></TR>
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     <TD noWrap align=center><B><U><FONT face=sans-serif>P</FONT></U></B><B><U><FONT size=2 face=sans-serif>RINCIPAL </FONT></U></B><B><U><FONT face=sans-serif>E</FONT></U></B><B><U><FONT size=2 face=sans-serif>XECUTIVE </FONT></U></B><B><U><FONT face=sans-serif>&amp; P</FONT></U></B><B><U><FONT size=2 face=sans-serif>RINCIPAL </FONT></U></B><B><U><FONT face=sans-serif>F</FONT></U></B><B><U><FONT size=2 face=sans-serif>INANCIAL </FONT></U></B><B><U><FONT face=sans-serif>O</FONT></U></B><B><U><FONT size=2 face=sans-serif>FFICERS</FONT></U></B>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>I. Covered Officers/Purpose of the Code</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>This code of ethics (this &#147;Code&#148;) for John Hancock Trust, John Hancock Funds</FONT><SUP><FONT face=sans-serif>1</FONT></SUP><FONT face=sans-serif>, John Hancock Funds II and John Hancock Funds III, each a registered management investment company under the Investment Company Act of 1940, as amended (&#147;1940 Act&#148;), which may issue shares in separate and distinct series (each investment company and series thereunder to be hereinafter referred to as a &#147;Fund&#148;), applies to each Fund&#146;s Principal Executive Officer (&#147;President&#148;) and Principal Financial Officer (&#147;Chief Financial Officer&#148;) (the &#147;Registrant&#146;s Executive Officers&#148; or &#147;Executive Officers&#148; as set forth in </FONT><U><FONT face=sans-serif>Exhibit A</FONT></U><FONT face=sans-serif>) for the purpose of promoting:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>full, fair, accurate, timely and understandable disclosure in reports and documents that the Fund files with, or submits to, the Securities and Exchange Commission (&#147;SEC&#148;) and in other public communications made by the Fund;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>compliance with applicable laws and governmental rules and regulations;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>accountability for adherence to the Code.</FONT></P>
<P style="TEXT-ALIGN: left"><SUP><FONT size=2 face=sans-serif>1 </FONT></SUP><FONT size=2 face=sans-serif>John Hancock Funds includes the following trusts: John Hancock Bank and Thrift Opportunity Fund; John Hancock Bond Trust; John Hancock California Tax-Free Income Fund; John Hancock Capital Series; John Hancock Current Interest; John Hancock Equity Trust; John Hancock Income Securities Trust; John Hancock Investment Trust; John Hancock Investment Trust II; John Hancock Investment Trust III; John Hancock Investors Trust; John Hancock Municipal Securities Trust; John Hancock Patriot Premium Dividend Fund II; Trust; John Hancock Preferred Income Fund; John Hancock Preferred Income Fund II; John Hancock Preferred Income Fund III; John Hancock Series Trust; John Hancock Sovereign Bond Fund; John Hancock Strategic Series; John Hancock Tax-Exempt Series Fund; John Hancock World Fund; John Hancock Tax-Advantaged Dividend Income Fund and John Hancock Tax-Advantaged Global Shareholder Yield Fund.</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT face=sans-serif>Each of the Registrant&#146;s Executive Officers should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest </FONT></B></P>
<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>Overview</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>A &#147;conflict of interest&#148; occurs when an Executive Officer&#146;s private interest interferes with the interests of, or his service to, the Fund. For example, a conflict of interest would arise if a Registrant&#146;s Executive Officers, or a member of his family, receives improper personal benefits as a result of his position with the Fund. Certain conflicts of interest arise out of the relationships between the Executive Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the &#147;Investment Company Act&#148;) and the Investment Advisers Act of 1940, as amended (the &#147;Investment Advisers Act&#148;). For example, Executive Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as &#147;affiliated persons&#148; of the Fund. Each of the Registrant&#146;s Executive
 Officers is an officer or employee of the investment adviser or a service provider (&#147;Service Provider&#148;) to the Fund. The Fund&#146;s, the investment adviser&#146;s and the Service Provider&#146;s compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Fund and the investment adviser and the Service Provider of which the Executive Officers are also officers or employees. As a result, this Code recognizes that the Registrant&#146;s Executive Officers will, in the normal course of their duties (whether formally for the Fund, for the investment adviser or for the Service Provider), be involved in establishing policies and implementing decisions which will have different effects on the investment adviser, the Service Provider and the Fund. The participation of the Executive Officers in such activities is inherent in the contractual relationship between the Fund and the investment adviser and the Service Provider and is consistent with the performance by the Executive Officers of their duties as officers of the Fund. Thus, if such participation is perfo
rmed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, it will be deemed to have been handled ethically. In addition, it is recognized by the Fund&#146;s Board of Trustees/Directors (the &#147;Board&#148;) that the Executive Officers may also be officers or employees of one or more other investment companies covered by other Codes.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but the Registrant&#146;s Executive Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of an Executive Officer should not be placed improperly before the interest of the Fund.</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT face=sans-serif>Each Covered Officer must:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>not use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Executive Officer would benefit personally to the detriment of the Fund;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Executive Officer rather than for the benefit of the Fund; and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>not use material non-public knowledge of portfolio transactions made or contemplated for the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>Additionally, conflicts of interest may arise in other situations, the propriety of which may be discussed, if material, with the Fund&#146;s Chief Compliance Officer (&#147;CCO&#148;). Examples of these include:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>service as a director/trustee on the board of any public or private company;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>the receipt of any non-nominal gifts;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>the receipt of any entertainment from any company with which the Fund has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety (or other formulation as the Fund already uses in another code of conduct);</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>any ownership interest in, or any consulting or employment relationship with, any of the Fund&#146;s service providers, other than its investment adviser, any sub-adviser, principal underwriter, administrator or any affiliated person thereof; and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Executive Officer&#146;s employment, such as compensation or equity ownership.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>III. Disclosure &amp; Compliance</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Each Executive Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Fund;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Each Executive Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund,</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT face=sans-serif>including to the Fund&#146;s directors and auditors, and to governmental regulators and self-regulatory organizations;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Each Executive Officer should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Fund and the Fund&#146;s adviser or any sub-adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund; and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>It is the responsibility of each Executive Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>IV. Reporting &amp; Accountability</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>Each Executive Officer must:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>upon adoption of the Code (or thereafter as applicable, upon becoming an Executive Officer), affirm in writing to the Fund&#146;s CCO that he/she has received, read, and understands the Code;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>annually thereafter affirm to the Fund&#146;s CCO that he/she has complied with the requirements of the Code;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>not retaliate against any employee or Executive Officer or their affiliated persons for reports of potential violations that are made in good faith;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>notify the Fund&#146;s CCO promptly if he/she knows of any violation of this Code (Note: failure to do so is itself a violation of this Code); and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>report at least annually any change in his/her affiliations from the prior year.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>The Fund&#146;s CCO is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers sought by the Principal Executive Officer will be considered by the Fund&#146;s Board or the Compliance Committee thereof (the &#147;Committee&#148;).</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>The Fund will follow these procedures in investigating and enforcing this Code:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>the Fund&#146;s CCO will take all appropriate action to investigate any potential violations reported to him/her;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>if, after such investigation, the CCO believes that no violation has occurred, the CCO is not required to take any further action;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>any matter that the CCO believes is a violation will be reported to the Board or, if applicable, Compliance Committee;</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>if the Board or, if applicable, Compliance Committee concurs that a violation has occurred, the Board, either upon its determination of a violation or upon recommendation of the Compliance Committee, if applicable, will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the Service Provider or the investment adviser or its board; or a recommendation to dismiss the Registrant&#146;s Executive Officer;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>the Board, or if applicable the Compliance Committee, will be responsible for granting waivers, as appropriate; and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>V. Other Policies &amp; Procedures</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>This Code shall be the sole code of ethics adopted by the Fund for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Fund, the Fund&#146;s adviser, any sub-adviser, principal underwriter or other service providers govern or purport to govern the behavior or activities of the Registrant&#146;s Executive Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Fund&#146;s and its investment adviser&#146;s codes of ethics under Rule 204A-1 under the Investment Advisers Act and Rule 17j-1 under the Investment Company Act, respectively, are separate requirements applying to the Registrant&#146;s Executive Officers and others, and are not part of this Code.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>VI. Amendments</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Fund&#146;s Board, including a majority of independent directors.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>VII. Confidentiality</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Fund&#146;s Board and its counsel, the investment adviser and the relevant Service Providers.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>VIII. Internal Use</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT face=sans-serif>The Code is intended solely for the internal use by the Fund and does not constitute an admission, by or on behalf of the Fund, as to any fact, circumstance, or legal conclusion.</FONT></P>
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     <TD align=center><B><U><FONT face=sans-serif>Exhibit A</FONT></U></B></TD></TR>
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     <TD noWrap align=center><B><FONT face=sans-serif>Persons Covered by this Code of Ethics</FONT></B>&nbsp;</TD></TR>
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     <TD align=center><B><FONT face=sans-serif>(As of July 2009)</FONT></B></TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>John Hancock Trust</FONT></B><BR>
<FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Principal Executive Officer and President &#150; Hugh McHaffie</FONT><BR>
<FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Principal Financial Officer and Chief Financial Officer &#150; Charles Rizzo</FONT><BR>
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<B><FONT face=sans-serif>John Hancock Funds</FONT></B><BR>
<FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Principal Executive Officer and President &#150; Keith Hartstein</FONT><BR>
<FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Principal Financial Officer and Chief Financial Officer &#150; Charles Rizzo</FONT><BR>
<BR>
<B><FONT face=sans-serif>John Hancock Funds II</FONT></B><BR>
<FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Principal Executive Officer and President &#150; Hugh McHaffie</FONT><BR>
<FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Principal Financial Officer and Chief Financial Officer &#150; Charles Rizzo</FONT><BR>
<BR>
<B><FONT face=sans-serif>John Hancock Funds III</FONT></B><BR>
<FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Principal Executive Officer and President &#150; Keith Hartstein</FONT><BR>
<FONT face=sans-serif>&#9658; </FONT><FONT face=sans-serif>Principal Financial Officer and Chief Financial Officer &#150; Charles Rizzo</FONT></P>
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<TYPE>EX-99
<SEQUENCE>5
<FILENAME>e_govcomcharter.htm
<DESCRIPTION>GOVERNANCE COMMITTEE CHARTER
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     <TD noWrap align=center><B><FONT face=sans-serif size=2>NOMINATING, GOVERNANCE AND ADMINISTRATION COMMITTEE CHARTER</FONT></B>&nbsp; </TD></TR></TABLE><BR>
<P align=left><FONT face=sans-serif size=2>A. </FONT><U><FONT face=sans-serif size=2>Composition</FONT></U><FONT face=sans-serif size=2>. The Nominating, Governance and Administration Committee (the &#147;Committee&#148;) shall be composed entirely of Trustees who are &#147;independent&#148; as defined in the rules of the New York Stock Exchange (&#147;NYSE&#148;) or any other exchange, as applicable, and are not &#147;interested persons&#148; as defined in the Investment Company Act of 1940 of any of the funds, or of any fund&#146;s investment adviser or principal underwriter (the &#147;Independent Trustees&#148;) 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 Committee.</FONT></P>
<P align=left><FONT face=sans-serif size=2>B. </FONT><U><FONT face=sans-serif size=2>Overview</FONT></U><FONT face=sans-serif size=2>. The overall charter of the Committee is to make determinations and recommendations to the Board on issues related to the composition and operation of the Board and corporate governance matters applicable to the Independent Trustees, as well as issues related to complex-wide matters and practices designed to facilitate uniformity and administration of the Board's oversight of the funds, and to discharge 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. </FONT><U><FONT face=sans-serif size=2>Specific Responsibilities</FONT></U><FONT face=sans-serif size=2>. The 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 consider and determine nominations of individuals 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 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 determine 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. The Chairman of the Board has been granted the authority to approve special compensation to Independent Trustees in recognition of any significant amount of additional time and service to the funds required of them, subject to ratification of any such special compensation by the Committee at the next regular meeting of the Committee.</FONT></P>
<P align=left><FONT face=sans-serif size=2>4. To consider and determine 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>
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<P align=left><FONT face=sans-serif size=2>6. To evaluate, from time to time, and determine changes to the retirement policies for the Independent Trustees, as appropriate.</FONT></P>
<P align=left><FONT face=sans-serif size=2>7. To develop and recommend to the Board, if deemed desirable, guidelines for corporate governance (&#147;Corporate Governance Guidelines&#148;) 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 and practices 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: D&amp;O insurance and fidelity bond coverage and costs; association dues, including Investment Company Institute membership dues; meeting expenditures and policies relating to reimbursement of travel expenses and expenses associated with offsite meetings; expenses and policies associated with Trustee attendance at educational or informational conferences; and publication expenses.</FONT></P>
<P align=left><FONT face=sans-serif size=2>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 &#147;interested persons&#148; as defined in the Investment Company Act of 1940 of any of the funds or any fund&#146;s investment adviser or principal underwriter, or by the Committee, from time to time, other than as may be engaged directly by another Committee.</FONT></P>
<P align=left><FONT face=sans-serif size=2>10. To periodically review the Board&#146;s committee structure and the charters of the Board&#146;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 face=sans-serif size=2>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 face=sans-serif size=2>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 Committee may deem necessary or appropriate.</FONT></P>
<P align=left><FONT face=sans-serif size=2>D. </FONT><U><FONT face=sans-serif size=2>Additional Responsibilities</FONT></U><FONT face=sans-serif size=2>. 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 face=sans-serif size=2>E. </FONT><U><FONT face=sans-serif size=2>Governance</FONT></U><FONT face=sans-serif size=2>. One member of the Committee shall be appointed as chair. The chair shall be responsible for leadership of the Committee, including scheduling meetings or</FONT></P>
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<P align=left><FONT face=sans-serif size=2>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 face=sans-serif size=2>F. </FONT><U><FONT face=sans-serif size=2>Miscellaneous</FONT></U><FONT face=sans-serif size=2>. 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&#146; 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 face=sans-serif size=2>G. </FONT><U><FONT face=sans-serif size=2>Evaluation</FONT></U><FONT face=sans-serif size=2>. At least annually, the Committee shall evaluate its own performance, including whether the Committee is meeting frequently enough to discharge its responsibilities appropriately.</FONT></P>
<P align=left><FONT face=sans-serif size=2>H. </FONT><U><FONT face=sans-serif size=2>Review</FONT></U><FONT face=sans-serif size=2>. 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><FONT face=sans-serif size=2>Last revised: December 9, 2008</FONT></P>
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<P align=left><FONT face=sans-serif size=2>ANNEX A</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>General Criteria</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>1. Nominees should have a reputation for integrity, honesty and adherence to high ethical standards.</FONT></P>
<P align=left><FONT face=sans-serif size=2>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>
<P align=left><FONT face=sans-serif size=2>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 face=sans-serif size=2>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 face=sans-serif size=2>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 face=sans-serif size=2>Application of Criteria to Existing Trustees</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>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 Nominating, Governance and Administration Committee (the &#147;Committee&#148;) shall consider the existing Trustee&#146;s performance on the Board and any committee.</FONT></P>
<P align=left><B><FONT face=sans-serif size=2>Review of Shareholder Nominations</FONT></B></P>
<P align=left><FONT face=sans-serif size=2>Any shareholder nomination must be submitted in compliance with all of the pertinent provisions of Rule 14a-8 under the Securities Exchange Act of 1934 in order to be considered by the Committee. In evaluating a nominee recommended by a shareholder, the Committee, in addition to the criteria discussed above, may consider the objectives of the shareholder in submitting that nomination and whether such objectives are consistent with the interests of all shareholders. If the Board determines to include a shareholder&#146;s candidate among the slate of its designated nominees, the candidate&#146;s name will be placed on the funds&#146; 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&#146;s candidate will be</FONT></P>
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<P align=left><FONT face=sans-serif size=2>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&#146; proxy statement.</FONT></P>
<P align=left><FONT face=sans-serif size=2>As long as an existing Independent Trustee continues, in the opinion of the 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 Committee will consider nominees recommended by shareholders to serve as trustees, the Committee may only act upon such recommendations if there is a vacancy on the Board, or the Committee determines that the selection of a new or additional Trustee is in the best interests of the fund. In the event that a vacancy arises or a change in Board membership is determined to be advisable, the Committee will, in addition to any shareholder recommendations, consider candidates identified by other means, including candidates proposed by members of the Committee. The Committee may retain a consultant to assist the Committee in a search for a qualified candidate.</FONT></P>
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<TYPE>EX-99
<SEQUENCE>6
<FILENAME>f_jhfvotepolicy.htm
<DESCRIPTION>PROXY VOTING POLICY
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     <TD align=center><B><FONT size=2 face=sans-serif>JOHN HANCOCK FUNDS</FONT></B></TD></TR>
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     <TD noWrap align=center><B><FONT size=2 face=sans-serif>PROXY VOTING POLICIES AND PROCEDURES</FONT></B>&nbsp;</TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>POLICY:</FONT></B></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>General</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Board of Trustees (the &#147;Board&#148;) of each registered investment company in the John Hancock family of funds listed on Schedule A (collectively, the &#147;Trust&#148;), including a majority of the Trustees who are not &#147;interested persons&#148; (as defined in the Investment Company Act of 1940, as amended (the &#147;1940 Act&#148;)) of the Trust (the &#147;Independent Trustees&#148;), adopts these proxy voting policies and procedures.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Each fund of the Trust or any other registered investment company (or series thereof) (each, a &#147;fund&#148;) is required to disclose its proxy voting policies and procedures in its registration statement and, pursuant to Rule 30b1-4 under the 1940 Act, file annually with the Securities and Exchange Commission and make available to shareholders its actual proxy voting record. In this regard, the Trust Policy is set forth below.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Delegation of Proxy Voting Responsibilities</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>It is the policy of the Trust to delegate the responsibility for voting proxies relating to portfolio securities held by a fund to the fund&#146;s investment adviser (&#147;adviser&#148;) or, if the fund&#146;s adviser has delegated portfolio management responsibilities to one or more investment subadviser(s), to the fund&#146;s subadviser(s), subject to the Board&#146;s continued oversight. The subadviser for each fund shall vote all proxies relating to securities held by each fund and in that connection, and subject to any further policies and procedures contained herein, shall use proxy voting policies and procedures adopted by each subadviser in conformance with Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended (the &#147;Advisers Act&#148;).</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Except as noted below under Material Conflicts of Interest, the Trust Policy with respect to a fund shall incorporate that adopted by the fund&#146;s subadviser with respect to voting proxies held by its clients (the &#147;Subadviser Policy&#148;). Each Subadviser Policy, as it may be amended from time to time, is hereby incorporated by reference into the Trust Policy. Each subadviser to a fund is directed to comply with these policies and procedures in voting proxies relating to portfolio securities held by a fund, subject to oversight by the fund&#146;s adviser and by the Board. Each adviser to a fund retains the responsibility, and is directed, to oversee each subadviser&#146;s compliance with these policies and procedures, and to adopt and implement such additional policies and procedures as it deems necessary or appropriate to discharge its oversight responsibility. Additionally, the Trust&#146;s Chief Compliance Officer (&#147;CCO&#148;) shall co
nduct such monitoring and supervisory activities as the CCO or the Board deems necessary or appropriate in order to appropriately discharge the CCO&#146;s role in overseeing the subadvisers&#146; compliance with these policies and procedures.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The delegation by the Board of the authority to vote proxies relating to portfolio securities of the funds is entirely voluntary and may be revoked by the Board, in whole or in part, at any time.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Voting Proxies of Underlying Funds of a Fund of Funds</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>A. </FONT><U><FONT size=2 face=sans-serif>Where the Fund of Funds is not the Sole Shareholder of the Underlying Fund</FONT></U></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>With respect to voting proxies relating to the shares of an underlying fund (an &#147;Underlying Fund&#148;) held by a fund of the Trust operating as a fund of funds (a &#147;Fund of Funds&#148;) in reliance on Section 12(d)(1)(G) of the 1940 Act where the Underlying Fund has shareholders other than the Fund of Funds which are not other Fund of Funds, the Fund of Funds will vote proxies relating to shares of the Underlying Fund in the same proportion as the vote of all other holders of such Underlying Fund shares.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>B. </FONT><U><FONT size=2 face=sans-serif>Where the Fund of Funds is the Sole Shareholder of the Underlying Fund</FONT></U></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In the event that one or more Funds of Funds are the sole shareholders of an Underlying Fund, the adviser to the Fund of Funds or the Trust will vote proxies relating to the shares of the Underlying Fund as set forth below unless</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>the Board elects to have the Fund of Funds seek voting instructions from the shareholders of the Funds of Funds in which case the Fund of Funds will vote proxies relating to shares of the Underlying Fund in the same proportion as the instructions timely received from such shareholders.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1. </FONT><U><FONT size=2 face=sans-serif>Where Both the Underlying Fund and the Fund of Funds are Voting on Substantially Identical Proposals</FONT></U></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In the event that the Underlying Fund and the Fund of Funds are voting on substantially identical proposals (the &#147;Substantially Identical Proposal&#148;), then the adviser or the Fund of Funds will vote proxies relating to shares of the Underlying Fund in the same proportion as the vote of the shareholders of the Fund of Funds on the Substantially Identical Proposal.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>2. </FONT><U><FONT size=2 face=sans-serif>Where the Underlying Fund is Voting on a Proposal that is Not Being Voted on By the Fund of Funds</FONT></U></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>a. </FONT><U><FONT size=2 face=sans-serif>Where there is No Material Conflict of Interest Between the Interests of the Shareholders of the Underlying Fund and the Adviser Relating to the Proposal</FONT></U></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In the event that the Fund of Funds is voting on a proposal of the Underlying Fund and the Fund of Funds is not also voting on a substantially identical proposal and there is no material conflict of interest between the interests of the shareholders of the Underlying Fund and the adviser relating to the Proposal, then the adviser will vote proxies relating to the shares of the Underlying Fund pursuant to its Proxy Voting Procedures.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>b. </FONT><U><FONT size=2 face=sans-serif>Where there is a Material Conflict of Interest Between the Interests of the Shareholders of the Underlying Fund and the Adviser Relating to the Proposal</FONT></U></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In the event that the Fund of Funds is voting on a proposal of the Underlying Fund and the Fund of Funds is not also voting on a substantially identical proposal and there is a material conflict of interest between the interests of the shareholders of the Underlying Fund and the adviser relating to the Proposal, then the Fund of Funds will seek voting instructions from the shareholders of the Fund of Funds on the proposal and will vote proxies relating to shares of the Underlying Fund in the same proportion as the instructions timely received from such shareholders. A material conflict is generally defined as a proposal involving a matter in which the adviser or one of its affiliates has a material economic interest.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Material Conflicts of Interest</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>If: (1) a subadviser to a fund becomes aware that a vote presents a material conflict between the interests of: (a) shareholders of the fund; and (b) the fund&#146;s adviser, subadviser, principal underwriter, or any of their affiliated persons, and (2) the subadviser does not propose to vote on the particular issue in the manner prescribed by its Subadviser Policy or the material conflict of interest procedures set forth in its Subadviser Policy are otherwise triggered, then the subadviser will follow the material conflict of interest procedures set forth in its Subadviser Policy when voting such proxies.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>If a Subadviser Policy provides that in the case of a material conflict of interest between fund shareholders and another party, the subadviser will ask the Board to provide voting instructions, the subadviser shall vote the proxies, in its discretion, as recommended by an independent third party, in the manner prescribed by its Subadviser Policy or abstain from voting the proxies.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Securities Lending Program</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Certain of the funds participate in a securities lending program with the Trust through an agent lender. When a fund&#146;s securities are out on loan, they are transferred into the borrower&#146;s name and are voted by the borrower, in its discretion. Where a subadviser determines, however, that a proxy vote (or other shareholder action) is materially important to the client&#146;s account, the subadviser should request that the agent recall the security prior to the record date to allow the subadviser to vote the securities.</FONT></P>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Disclosure of Proxy Voting Policies and Procedures in the Trust&#146;s Statement of Additional Information (&#147;SAI&#148;)</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Trust shall include in its SAI a summary of the Trust Policy and of the Subadviser Policy included therein. (In lieu of including a summary of these policies and procedures, the Trust may include each full Trust Policy and Subadviser Policy in the SAI.)</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Disclosure of Proxy Voting Policies and Procedures in Annual and Semi-Annual Shareholder Reports</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Trust shall disclose in its annual and semi-annual shareholder reports that a description of the Trust Policy, including the Subadviser Policy, and the Trust&#146;s proxy voting record for the most recent 12 months ended June 30 are available on the Securities and Exchange Commission&#146;s (&#147;SEC&#148;) website, and without charge, upon request, by calling a specified toll-free telephone number. The Trust will send these documents within three business days of receipt of a request, by first-class mail or other means designed to ensure equally prompt delivery.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Filing of Proxy Voting Record on Form N-PX</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Trust will annually file its complete proxy voting record with the SEC on Form N-PX. The Form N-PX shall be filed for the twelve months ended June 30 no later than August 31 of that year.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>PROCEDURES:</FONT></B></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Review of Subadvisers&#146; Proxy Voting</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Trust has delegated proxy voting authority with respect to fund portfolio securities in accordance with the Trust Policy, as set forth above.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Consistent with this delegation, each subadviser is responsible for the following:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1) Implementing written policies and procedures, in compliance with Rule 206(4)-6 under the Advisers Act, reasonably designed to ensure that the subadviser votes portfolio securities in the best interest of shareholders of the Trust.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>2) Providing the adviser with a copy and description of the Subadviser Policy prior to being approved by the Board as a subadviser, accompanied by a certification that represents that the Subadviser Policy has been adopted in conformance with Rule 206(4)-6 under the Advisers Act. Thereafter, providing the adviser with notice of any amendment or revision to that Subadviser Policy or with a description thereof. The adviser is required to report all material changes to a Subadviser Policy quarterly to the Board. The CCO&#146;s annual written compliance report to the Board will contain a summary of the material changes to each Subadviser Policy during the period covered by the report.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>3) Providing the adviser with a quarterly certification indicating that the subadviser did vote proxies of the funds and that the proxy votes were executed in a manner consistent with the Subadviser Policy. If the subadviser voted any proxies in a manner inconsistent with the Subadviser Policy, the subadviser will provide the adviser with a report detailing the exceptions.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Adviser Responsibilities</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Trust has retained a proxy voting service to coordinate, collect, and maintain all proxy-related information, and to prepare and file the Trust&#146;s reports on Form N-PX with the SEC.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The adviser, in accordance with its general oversight responsibilities, will periodically review the voting records maintained by the proxy voting service in accordance with the following procedures:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1) Receive a file with the proxy voting information directly from each subadviser on a quarterly basis.</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>2) Select a sample of proxy votes from the files submitted by the subadvisers and compare them against the proxy voting service files for accuracy of the votes.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>3) Deliver instructions to shareholders on how to access proxy voting information via the Trust&#146;s semi-annual and annual shareholder reports.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Proxy Voting Service Responsibilities</FONT></B></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Aggregation of Votes:</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The proxy voting service</FONT><FONT size=2 face=sans-serif>&#146;s proxy disclosure system will collect fund-specific and/or account-level voting records, including votes cast by multiple subadvisers or third party voting services.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Reporting:</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The proxy voting service</FONT><FONT size=2 face=sans-serif>&#146;s proxy disclosure system will provide the following reporting features:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1) multiple report export options;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>2) report customization by fund-account, portfolio manager, security, etc.; and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>3) account details available for vote auditing.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Form N-PX Preparation and Filing:</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The adviser will be responsible for oversight and completion of the filing of the Trust&#146;s reports on Form N-PX with the SEC. The proxy voting service </FONT><FONT size=2 face=sans-serif>will prepare the EDGAR version of Form N-PX and will submit it to the adviser for review and approval prior to filing with the SEC</FONT><FONT size=2 face=sans-serif>. The proxy voting service will file Form N-PX for each twelvemonth period ending on June 30. The filing must be submitted to the SEC on or before August 31 of each year.</FONT></P>
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     <TD align=center><B><FONT size=2 face=sans-serif>Schedule A</FONT></B></TD></TR>
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     <TD noWrap align=center><B><FONT size=2 face=sans-serif>PROXY VOTING POLICIES AND PROCEDURES</FONT></B>&nbsp;</TD></TR></TABLE><BR>
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     <TD noWrap align=left><B><FONT size=2 face=sans-serif>Adopted:</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><B><FONT size=2 face=sans-serif>Amended:</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>September 28, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>March 26, 2008; June 27,</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Funds II</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 28, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>March 26, 2008; June 27,</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Funds III</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock California Tax-Free Income Fund</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Capital Series</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Current Interest</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Equity Trust</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Investment Trust II</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Municipal Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Series Trust</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Sovereign Bond Fund</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Strategic Series</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Tax-Exempt Series</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock World Fund</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Preferred Income Fund</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Preferred Income Fund II</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Preferred Income Fund III</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Patriot Premium Dividend Fund II</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Bank &amp; Thrift Opportunity Fund</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Income Securities Trust</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Investors Trust</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT size=2 face=sans-serif>John Hancock Tax-Advantaged Dividend Income Fund</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 0px" noWrap align=left><FONT size=2 face=sans-serif>John Hancock Tax-Advantaged Global Shareholder Yield Fund</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>September 11, 2007</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT size=2 face=sans-serif>June 10, 2008</FONT>&nbsp;</TD></TR>
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<DESCRIPTION>PROXY VOTING POLICY
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     <TD noWrap align=center><B><FONT face=sans-serif>MFC Global Investment Management (U.S.), LLC</FONT></B>&nbsp;</TD></TR>
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     <TD align=center><B><FONT face=sans-serif>Proxy Voting Policy</FONT></B></TD></TR></TABLE><BR>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>INTRODUCTION</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>MFC Global Investment Management (U.S.), LLC (MFC GIM (US) or the &#147;Firm&#148;) is registered with the U.S. Securities and Exchange Commission (SEC) as an investment adviser. As a registered investment adviser, MFC GIM (US) must comply with the requirements of the SEC Investment Advisers Act of 1940, as amended and the rules there under (Advisers Act). In accordance with Rule 206(4)-7 of the Advisers Act, MFC GIM (US) has adopted policies and procedures reasonably designed to prevent violations of the Advisers Act and designated a Chief Compliance Officer to administer its compliance policies and procedures.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Firm is a wholly owned subsidiary of Manulife Financial Corporation (Manulife Financial) and is affiliated with several SEC-registered and non-SEC registered investment advisers which are also subsidiaries or affiliates of Manulife Financial. Collectively, MFC GIM (US) and its advisory affiliates represent the diversified investment management division of Manulife Financial and they provide comprehensive asset management solutions for institutional investors, retirement and investment funds, and individuals, in key markets around the world. Certain of these companies within Manulife Financial offer a number of products and services designed specifically for various categories of investors in a number of different countries and regions. These products or services are only offered to such investors in those countries and regions in accordance with applicable laws and regulations.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Firm manages assets for a variety of institutional and other types of clients, including public and private pension funds, financial institutions and investment trusts. It also manages registered and private collective funds, including UCITS, US and Canadian open- and closed-end mutual funds. In particular, the Firm is affiliated with, and serves as investment manager or a sub-adviser to, a number of mutual fund families that are sponsored by affiliates (the &#147;Funds&#148;). This investment expertise extends across a full range of asset classes including equity, fixed income and alternative investments such as real estate, as well as asset allocation strategies.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The portfolios under management have a mix of investment objectives and may invest in, or create exposure to, a wide variety of financial instruments in different asset classes, including listed and unlisted equity and fixed income securities, commodities, fixed income instruments, derivatives and structured products, futures and options.</FONT></P>
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<P style="TEXT-ALIGN: left"><B><FONT face=sans-serif>PROXY VOTING POLICY</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>This Proxy Voting Policy (the &#148;Policy&#148;) covers the proxy activities and related disclosure obligations of MFC GIM (US) and applies to all MFC GIM (US) clients for whom MFC GIM (US) has been delegated the authority to vote proxies.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Proxy Voting Policy is designed to meet the needs of MFC GIM (US)&#146;s clients with strict adherence to the highest principles of fiduciary conduct, including minimizing any potential material conflict of interest between the Firm and the Firm&#146;s clients. It is also designed to ensure compliance with the applicable rules and regulations of the various regulators to which MFC GIM (US) is subject. It sets forth the general corporate governance principles of MFC GIM (US) in ensuring that clear guidelines are established for voting proxies and communicating such with our clients, regulators and other relevant parties.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The structure and purpose of the Proxy Voting Policy will continually evolved in alignment with the risk profile of MFC GIM (US), internal standards and requirements, roles and responsibilities of the MFC GIM (US) Board and other relevant oversight committees, and regulatory requirements. The Proxy Voting Policy is not intended to cover every possible situation that may arise in the course of conducting the Firm&#146;s business. It is meant to be subject to change and to interpretation from time to time where facts and circumstances dictate, or where new regulations or guidance become effective, or where the plain language of the Policy appears unclear in light of the particular circumstances.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>All Firm employees are asked to consult with the Chief Compliance Officer of MFC GIM (US) (&#147;Chief Compliance Officer&#148;) if they have any questions concerning this Policy, questions about the standards set forth, or questions about proxy voting in general. Where, however, such obligations are inconsistent with this Policy, then the matter should immediately be referred to the Chief Compliance Officer and the MFC GIM (US) General Counsel (&#147;General Counsel&#148;) who have authority to interpret this Policy or to take appropriate action in accordance with the principles set forth in this Policy in a manner in any situations not specifically covered by guidelines or procedures.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Proxy Policy has the following seven sections:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1. General Principles</FONT><BR>
<FONT size=2 face=sans-serif>2. Standards</FONT><BR>
<FONT size=2 face=sans-serif>3. Administration</FONT><BR>
<FONT size=2 face=sans-serif>4. Potential Conflicts</FONT><BR>
<FONT size=2 face=sans-serif>5. Recordkeeping</FONT><BR>
<FONT size=2 face=sans-serif>6. Policy Administration</FONT><BR>
<FONT size=2 face=sans-serif>Exhibit A- RiskMetrics Proxy Voting Guidelines</FONT></P>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>1. General Principles</FONT></B></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Scope</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>MFC GIM (US) provides investment advisory services to both ERISA and non-ERISA institutional clients, the Funds, and other non-institutional clients (collectively, the &#147;Clients&#148;). MFC GIM (US) understands that proxy voting is an integral aspect of security ownership. Accordingly, in cases where MFC GIM (US) has been delegated authority to vote proxies, that function must be conducted with the same degree of prudence and loyalty accorded any fiduciary or other obligation of an investment manager.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>This Policy permits Clients to:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1. delegate to MFC GIM (US) the responsibility and authority to vote proxies on their behalf according to MFC GIM (US)&#146;s proxy voting polices and guidelines;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>2. delegate to MFC GIM (US) the responsibility and authority to vote proxies on their behalf according to the particular Client&#146;s own proxy voting policies and guidelines, subject to acceptance by the Firm, as mutually agreed upon between the Firm and the Client; or</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>3. elect to vote proxies themselves. In instances where Clients elect to vote their own proxies, MFC GIM (US) shall not be responsible for voting proxies on behalf of such Clients.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Policy Statement</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>MFC GIM (US) seeks to vote proxies in the best economic interests of all of its Clients for whom the Firm has proxy voting authority and responsibilities. In the ordinary course, this entails voting proxies in a way which MFC GIM (US) believes will maximize the monetary value of each portfolio&#146;s holdings. MFC GIM (US) takes the view that this will benefit the Clients.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Firm believes that its Proxy Voting Policy is reasonably designed to ensure that proxy matters are conducted in the best interest of Clients, and in accordance with MFC GIM (US)&#146;s fiduciary duties, applicable rules under the Investment Advisers Act of 1940 and fiduciary standards and responsibilities for ERISA clients set out in the U.S. Department of Labor interpretations.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>To fulfill the Firm&#146;s fiduciary duty to Clients with respect to proxy voting, MFC GIM (US) has contracted with the RiskMetrics Group (RiskMetrics), an independent third party service provider, to vote Clients&#146; proxies according to RiskMetrics&#146; proxy voting recommendations. Proxies will be voted in accordance with the voting recommendations contained in the applicable domestic or global RiskMetrics Proxy Voting Manual, as in effect from time to time. Except in instances where a MFC GIM (US) client retains voting authority, MFC GIM (US) will instruct custodians of client accounts to forward all proxy statements and materials received in respect of client accounts to RiskMetrics.</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Copies of the current domestic and global RiskMetrics proxy voting guidelines are attached as Exhibit A to the Policy. MFC GIM (US) reserves the right to amend any of RiskMetrics&#146;s guidelines in the future. If any such changes are made an amended Proxy Voting Policy will be made available for clients.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Therefore, the Proxy Voting Policy encompasses the following principles:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#149; </FONT><FONT size=2 face=sans-serif>The proxy voting function of MFC GIM (US) Operations (&#147;Proxy Operations&#148;) shall cause the implementation of procedures, practices, and controls (collectively, the &#147;Procedures&#148;) sufficient to promote high quality fiduciary administration of the Proxy Voting Policy, including the proper oversight of any service providers hired by the Firm to assist it in the proxy voting process. Such Procedures shall be reasonably designed to meet all applicable regulatory requirements and highest fiduciary standards.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#149; </FONT><FONT size=2 face=sans-serif>The Chief Compliance Officer makes an annual risk-based assessment of MFC GIM (US)&#146;s proxy voting activities, and may conduct a review of the Procedures to determine that such Procedures are satisfactory to promote high-quality fiduciary administration. The Chief Compliance Officer makes periodic reports to MFC GIM (US) Senior Investment Policy Committee (SIPC) that include a summary of instances where MFC GIM (US) has (i) voted proxies in a manner inconsistent with the recommendation of RiskMetrics, and (ii) voted proxies in circumstances in which a material conflict of interest may exist as set forth in the Conflicts section.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#149; </FONT><FONT size=2 face=sans-serif>Except as otherwise required by law, MFC GIM (US) has a general policy of not disclosing to any issuer or third party how MFC GIM (US) or its voting delegate voted a Client&#146;s proxy.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#149; </FONT><FONT size=2 face=sans-serif>MFC GIM (US) endeavors to show sensitivity to local market practices when voting proxies of non-U.S. issuers. MFC GIM (US) votes in all markets where it is feasible to do so.</FONT></P>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>2. Standards</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>MFC GIM (US) has engaged RiskMetrics as its proxy voting agent to:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1. research and make voting recommendations or, for matters for which MFC GIM (US) has so delegated, to make the voting determinations;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>2. ensure that proxies are voted and submitted in a timely manner;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>3. handle other administrative functions of proxy voting;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>4. maintain records of proxy statements received in connection with proxy votes and provide copies of such proxy statements promptly upon request;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>5. maintain records of votes cast; and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>6. provide recommendations with respect to proxy voting matters in general.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Oversight of the proxy voting process is the responsibility of the SIPC. The SIPC reviews and approves amendments to the Proxy Voting Policy and delegates authority to vote in accordance with this Policy to RiskMetrics.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>MFC GIM (US) does not engage in the practice of &#147;empty voting&#148; ( a term embracing a variety of factual circumstances that result in a partial or total separation of the right to vote at a shareholders meeting from beneficial ownership of the shares on the meeting date). MFC GIM (US) prohibits investment managers from creating large hedge positions solely to gain the vote while avoiding economic exposure to the market. MFC GIM (US) will not knowingly vote borrowed shares (for example, shares borrowed for short sales and hedging transactions) that the lender of the shares is also voting.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>MFC GIM (US) reviews various criteria to determine whether the costs associated with voting the proxy exceeds the expected benefit to Clients and may conduct a cost-benefit analysis in determining whether it is in the best economic interest to vote client proxies. Given the outcome of the cost-benefit analysis, the Firm may refrain from voting a proxy on behalf of the Clients&#146; accounts.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In addition, MFC GIM (US) may refrain from voting a proxy due to logistical considerations that may have a detrimental effect on the Firm&#146;s ability to vote such a proxy. These issues may include, but are not limited to:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1. proxy statements and ballots being written in a foreign language;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>2. underlying securities have been lent out pursuant to a Client&#146;s securities lending program;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>3. untimely notice of a shareholder meeting;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>4. requirements to vote proxies in person;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>5. restrictions on foreigner&#146;s ability to exercise votes;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>6. restrictions on the sale of securities for a period of time in proximity to the shareholder meeting (&#147;share blocking and re-registration&#148;);</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>7. requirements to provide local agents with power of attorney to facilitate the voting instructions. Such proxies are voted on a best-efforts basis; or</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>8. inability of a Client&#146;s custodian to forward and process proxies electronically.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>3. Administration</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Proxy Operations is responsible for administering the proxy voting process, including:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1. Implementing and updating the applicable domestic and global RiskMetrics proxy voting guidelines;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>2. Coordinating and overseeing the proxy voting process performed by RiskMetrics; and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>3. Providing periodic reports to the SIPC, the Chief Compliance Officer and Clients as requested.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>As noted, all proxies received on behalf of Clients are forwarded to RiskMetrics. Any MFC GIM (US) employee that receives a client&#146;s proxy statement should therefore notify Proxy Operations and arrange for immediate delivery to RiskMetrics.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>From time to time, proxy votes will be solicited which (i) involve special circumstances and require additional research and discussion or (ii) are not directly addressed by RiskMetrics. These proxies are identified through a number of methods, including, but not limited to, notification from RiskMetrics, concerns of clients, and questions from consultants.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In such instances of special circumstances or issues not directly addressed by RiskMetrics, a sub-committee of the SIPC (&#147;Proxy Committee&#148;) will be consulted for a determination of the proxy vote. The Proxy Committee is comprised of no fewer than three members of the SIPC. Although the Firm anticipates that such instances will be rare, the Proxy Committee&#146;s first determination is whether there is a material conflict of interest between the interests of a Client and those of MFC GIM (US). If the Proxy Committee determines that there is a material conflict, the process detailed under &#147;Potential Conflicts&#148; below is followed. If there is no material conflict, the Proxy Committee examines each of the issuer&#146;s proposals in detail in seeking to determine what vote would be in the best interests of Clients. At this point, the Proxy Committee will make a voting decision based on maximizing the monetary value of all portfolios&#146;
 holdings.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>There may be circumstances under which a portfolio manager or other MFC GIM (US) investment professional (&#147;MFC GIM (US) Investment Professional&#148;) believes that it is in the best interest of a Client or Clients to vote proxies in a manner inconsistent with the recommendation of RiskMetrics. In such an event, as feasible, the MFC GIM (US) Investment Professional shall inform Proxy Operations of its decision to vote such proxy in a manner inconsistent with the recommendation of RiskMetrics. Proxy Operations will report to the Chief</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>Compliance Officer no less than quarterly any instance where a MFC GIM (US) Investment Professional has decided to vote a proxy on behalf of a Client in that manner.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In addition to voting proxies, MFC GIM (US):</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1. describes its proxy voting procedures to its clients in the relevant or required disclosure document, including Part 2 of its Form ADV;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>2. provides clients with a copy of the Proxy Voting Policy, upon request;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>3. discloses to its clients how they may obtain information on how MFC GIM </FONT><FONT size=2 face=sans-serif>(US) voted the client&#146;s proxies;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>4. generally applies its Proxy Voting Policy consistently and keeps records of votes for each Client;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>5. documents the reason(s) for voting for all non-routine items; and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>6. keeps records of such proxy voting through RiskMetrics available for inspection by the Client or governmental agencies.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>4. Conflict Of Interest</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In instances where MFC GIM (US) has the responsibility and authority to vote proxies on behalf of its clients for which MFC GIM (US) serves as the investment adviser, there may be instances where a material conflict of interest exists. For example, MFC GIM (US) or its affiliates may provide services to a company whose management is soliciting proxies, or to another entity which is a proponent of a particular proxy proposal. Another example could arise when MFC GIM (US) or its affiliates has business or other relationships with participants involved in proxy contests, such as a candidate for a corporate directorship. More specifically, if MFC GIM (US) is aware that one of the following conditions exists with respect to a proxy, MFC GIM (US) shall consider such event a potential material conflict of interest:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>1. MFC GIM (US) has a business relationship or potential relationship with the issuer;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>2. MFC GIM (US) has a business relationship with the proponent of the proxy proposal; or</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>3. MFC GIM (US) members, employees or consultants have a personal or other business relationship with the participants in the proxy contest, such as corporate directors or director candidates.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>As a fiduciary to its clients, MFC GIM (US) takes these potential conflicts very seriously. While MFC GIM (US)&#146;s only goal in addressing any such potential conflict is to ensure that proxy votes are cast in the clients&#146; best interests and are not affected by MFC GIM (US)&#146;s potential conflict, there are a number of courses MFC GIM (US) may take. The final decision as to which course to follow shall be made by the Proxy Committee.</FONT></P>
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<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In the event of a potential material conflict of interest, the SIPC will (i) vote such proxy according to the specific recommendation of RiskMetrics; (ii) abstain; or (iii) request that the Client votes such proxy. All such instances shall be reported to the Chief Compliance Officer at least quarterly.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>As RiskMetrics will vote proxies in accordance with the proxy voting guidelines described in Exhibit A, MFC GIM (US) believes that this process is reasonably designed to address conflicts of interest that may arise between MFC GIM (US) and a Client as to how proxies are voted. When the matter falls clearly within one of the proposals enumerated in RiskMetrics proxy voting policy, casting a vote which simply follows RiskMetrics&#146; pre-determined policy would eliminate MFC GIM (US)&#146;s discretion on the particular issue and hence avoid the conflict.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In other cases, where the matter presents a potential material conflict and is not clearly within one of the RiskMetrics&#146; enumerated recommendations, or is of such a nature that the Proxy Committee believes more active involvement is necessary, the Proxy Committee shall make a decision as to the voting of the proxy. The basis for the voting decision, including the basis for the determination that the decision is in the best interests of Clients, shall be formalized in writing as a part of the minutes of the Proxy Committee. Which action is appropriate in any given scenario would be the decision of the Proxy Committee in carrying out its duty to ensure that the proxies are voted in the Clients&#146;, and not MFC GIM (US)&#146;s, best interests.</FONT></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>5. Recordkeeping</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>In accordance with applicable law, MFC GIM (US) shall retain the following documents on behalf of MFC GIM (US) for not less than five years from the end of the year in which the proxies were voted, the first two years in MFC GIM (US)&#146;s office:</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#149; </FONT><FONT size=2 face=sans-serif>the MFC GIM (US) Proxy Voting Policy and any additional procedures created pursuant to that policy;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#149; </FONT><FONT size=2 face=sans-serif>a copy of each proxy statement MFC GIM (US) receives regarding securities held by Clients (this requirement will be satisfied by RiskMetrics who has agreed in writing to do so or by obtaining a copy of the proxy statement from the EDGAR database);</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#149; </FONT><FONT size=2 face=sans-serif>a record of each vote cast by MFC GIM (US) (this requirement will be satisfied by RiskMetrics who has agreed in writing to do so) on behalf of Clients;</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#149; </FONT><FONT size=2 face=sans-serif>a copy of any document created by MFC GIM (US) that was material in making its voting decision or that memorializes the basis for such decision; and</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>&#149; </FONT><FONT size=2 face=sans-serif>a copy of each written request from a client, and response to the client, for information on how MFC GIM (US) Clients&#146; proxies were voted.</FONT></P>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>6. Policy Administration</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Proxy Voting Policy shall be review and approved by the Chief Compliance Officer at least annually.</FONT></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The Chief Compliance Officer shall make periodic reports to the SIPC covering the effectiveness of the Policy.</FONT></P>
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<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>Exhibit A</FONT></B><FONT size=2 face=sans-serif>: </FONT><B><FONT size=2 face=sans-serif>MFC GIM (US) Proxy Voting Policy</FONT></B></P>
<P style="TEXT-ALIGN: left"><B><FONT size=2 face=sans-serif>RiskMetrics Proxy Voting Guidelines Summary</FONT></B></P>
<P style="TEXT-ALIGN: left"><FONT size=2 face=sans-serif>The following is a concise summary of RiskMetrics&#146; proxy voting policy guidelines.</FONT></P>
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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
