N-CSRS 1 a_highincomesecurities.htm PUTNAM HIGH INCOME SECURITIES FUND a_highincomesecurities.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES



Investment Company Act file number: (811-05133)
Exact name of registrant as specified in charter: Putnam High Income Securities Fund
Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109
Name and address of agent for service: Robert T. Burns, Vice President
One Post Office Square
Boston, Massachusetts 02109
Copy to:         Bryan Chegwidden, Esq.
Ropes & Gray LLP
1211 Avenue of the Americas
New York, New York 10036
Registrant's telephone number, including area code: (617) 292-1000
Date of fiscal year end: August 31, 2017
Date of reporting period: September 1, 2016 — February 28, 2017



Item 1. Report to Stockholders:

The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940:



Putnam
High Income
Securities Fund

Semiannual report
2 | 28 | 17

 

Consider these risks before investing: Lower-rated bonds may offer higher yields in return for more risk. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. Unlike bonds, funds that invest in bonds have fees and expenses. Bond prices may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions (including perceptions about the risk of default and expectations about changes in monetary policy or interest rates), changes in government intervention, and factors related to a specific issuer or industry. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. You can lose money by investing in the fund. The fund’s shares trade on a stock exchange at market prices, which may be lower than the fund’s net asset value.


Message from the Trustees

April 12, 2017

Dear Fellow Shareholder:

The early months of 2017 have been generally positive for investor sentiment and financial market performance. Many market indexes have achieved new record highs with relatively low volatility, in contrast to the bouts of uncertainty and turbulence that tested global financial markets in 2016. It is worth noting, however, that the exuberance that greeted the new year calmed somewhat as investors reconsidered a number of ongoing macroeconomic and political risks. In addition, many bond investors remained cautious as the potential for inflation increased.

As always, we believe investors should continue to focus on time-tested strategies: maintain a well-diversified portfolio, keep a long-term view, and do not overreact to short-term market fluctuations. To help ensure that your portfolio is aligned with your goals, we also believe it is a good idea to speak regularly with your financial advisor. In the following pages, you will find an overview of your fund’s performance for the reporting period as well as an outlook for the coming months.

We would like to take this opportunity to announce the arrival of Catharine Bond Hill and Manoj P. Singh to your fund’s Board of Trustees. Dr. Hill and Mr. Singh bring extensive professional and directorship experience to their role as Trustees, and we are pleased to welcome them.

Thank you for investing with Putnam.






Data are historical. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and net asset value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart are at NAV. See below and pages 10–11 for additional performance information, including fund returns at market price. Index and Lipper results should be compared with fund performance at NAV.

* The fund’s blended benchmark is an unmanaged index administered by Putnam Management, 50% of which is the JPMorgan Developed High Yield Index and 50% of which is the BofA Merrill Lynch Speculative Grade U.S. Convertible Index. The BofA Merrill Lynch Speculative Grade U.S. Convertible Index and the JPMorgan Developed High Yield Index were introduced on 12/31/92 and 12/31/94, respectively, which post-date the inception of the fund.

† Returns for the six-month period are not annualized, but cumulative.


*The fund’s blended benchmark is an unmanaged index administrated by Putnam Management, 50% of which is the JPMorgan Developed High Yield Index and 50% of which is the BofA Merrill Lynch Speculative Grade U.S. Convertible Index.

This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 2/28/17. See above and pages 10–11 for additional fund performance information. Index descriptions can be found on page 12.

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Eric has an M.B.A. from the University of Chicago Booth School of Business and a B.S. from San Diego State University. He joined Putnam in 2000 and has been in the investment industry since 1994.


Rob has an M.B.A. from the University of Chicago Booth School of Business and a B.S. from the University of Pennsylvania Wharton School. He joined Putnam in 2000 and has been in the investment industry since 1986.

How was the market environment for convertible securities and high-yield bonds during the six-month reporting period ended February 28, 2017?

ERIC Convertible securities gained ground during the reporting period — helped in large measure by their underlying equity sensitivity. The surprising results of the U.S. election proved to be an inflection point for the stock market, despite the uncertainty around the effects of President Trump’s policies on the U.S. economy. Speculation that Trump and a Republican-controlled Congress would pursue pro-growth policies, including lower taxes, greater infrastructure spending, and less regulation, helped many equity benchmark indexes add to all-time highs.

ROB High-yield bonds generally rallied during the period, supported by optimism that the Organization of Petroleum Exporting Countries [OPEC] would achieve production cuts. Crude prices rose in late November 2016, reaching their highest level since July 2015, when major producers pledged to curtail production beginning in January 2017. However, increasing prospects for higher interest rates and rising inflation in 2017 was a headwind

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Credit qualities are shown as a percentage of the fund’s net assets as of 2/28/17. A bond rated BBB or higher (A-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor’s, Moody’s, and Fitch. Ratings and portfolio credit quality will vary over time.

Cash and net other assets, if any, represent the market value weights of cash, derivatives, and short-term securities in the portfolio. The fund itself has not been rated by an independent rating agency.

*Equity instruments are a combination of common stocks and convertible preferred stocks.


This table shows the fund’s top 10 individual holdings and the percentage of the fund’s net assets that each represented as of 2/28/17. Short-term investments and derivatives, if any, are excluded. Holdings may vary over time.

6 High Income Securities Fund 

 


for the asset class at points during the period, although record highs for stocks and potentially supportive fiscal and regulatory polices by the Trump administration continued to support demand for high-yields bonds.

What contributed to the fund’s performance during the period?

ERIC The convertibles portion of the portfolio, which represented approximately 54.5% of total net assets on February 28, 2017, had positive absolute performance but underperformed its index, the BofA Merrill Lynch Speculative Grade U.S. Convertible Index [the convertibles index] for the period. Security selection within the consumer cyclicals sector, along with overweight positioning and security selection within health care were the largest contributors on a relative basis. In the technology sector, an overweight position in the graphic processing chip developer, NVIDIA, was the top contributor at the issuer level. The company experienced growth in its underlying equity due to expanding diversification and upgrades to its core products. NVIDIA was sold from the portfolio prior to period-end to lock in profits. Our decision to avoid Cobalt International Energy and underweight positioning in Bank of America were also among the top relative contributors during the period.

ROB The fixed-income portion of the portfolio, which represented approximately 41.3% of total net assets on February 28, 2017, had positive absolute performance but underperformed the JPMorgan Developed High Yield Index [the high-yield index] for the period. Overweight allocations to the financials, housing, and paper/packaging sectors were the largest relative contributors to performance. At the issuer level, overweight positioning in certain commodity-sensitive names, such as Seventy Seven Energy and EP Energy, contributed to performance during the period due to rising commodity prices. An overweight position in Sprint Communications also added to results.


What detracted from the fund’s benchmark-relative performance?

ERIC Security selection within the consumer staples and energy sectors was disappointing, with Tyson Foods and Whiting Petroleum among the top detractors from performance relative to the convertibles index. At the issuer level, an underweight position in Advanced Micro Devices was the largest relative detractor for the period. The underlying equity rallied in unison with the semiconductor market during the period while also benefiting from a few sell-side analysts upgrading the stock. At the sector level, an overweight allocation to the health-care sector also held back performance. Within health care, an out-of-benchmark allocation to the health-care company Teva Pharmaceuticals was among the top detractors at the issuer level. On the heels of a drug-pricing probe and the disputed validity of a drug patent, Teva’s profit and revenue expectations fell, and the price of the underlying equity declined. As a result, the team sold the position before period-end.

ROB The greatest detractors relative to the high-yield index was underweight positioning in the energy, services, and technology sectors. At the issuer level, underweight positioning in Caesars Entertainment was the top detractor as the company benefited from finalizing its $18 billion bankruptcy. A slight overweight position in Neiman Marcus also detracted from performance due to relative weakness in the retail sector.

High Income Securities Fund 7 

 


What is your outlook, and how has this thinking influenced the fund’s positioning?

ROB We have a positive outlook for high-yield bonds. At period-end, we believe the fundamental and supply/demand pictures were positive and valuations were closer to neutral — somewhat less compelling than they were a year ago. However, given the low level of yields worldwide, high-yield bond income levels remain attractive, in our view, making them a competitive option for income-oriented investors.

As for positioning, we will continue to maintain broad diversification across market sectors. At period-end, most of the fund’s holdings were invested in split BB-rated and B-rated bonds, which reside in the middle tier of high-yield credit quality. From a sector and an industry perspective, we currently are favoring gaming, lodging/leisure, and housing, which we believe will perform well in a pro-growth economy. On the other hand, we are seeking to limit the fund’s exposure to energy, technology, services, food/beverage, cable/satellite, transportation, and health care.

ERIC Given the sensitivity of convertibles to their underlying equities, the asset class has performed well in recent months despite company- and sector-specific volatility. The election of President Trump has brought a wave of uncertainty, as his policies could have diverging effects on the economy, in our view. On the one hand, if his fiscal stimulus package comes to fruition, we believe it could result in strong economic growth and some inflationary pressure. However, we also believe his protectionist trade policies, if enacted, could have a negative impact on economic growth. That said, U.S. convertible securities are primarily domestically focused, and thus we expect them to be more insulated from a protectionist stance. The other good news for investors is that convertibles can benefit from upside stock appreciation in a growing economy but also can


This chart shows how the fund’s weightings have changed over the past six months. Allocations are shown as a percentage of the fund’s net assets. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Current period summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.

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provide some downside protection due to their bond-like characteristics should the economy decline, in our view.

Against this backdrop, we are keeping the fund’s overweight positioning in health care, communication services, and transportation sectors for the foreseeable future, while remaining underweight in technology and energy.

Thank you, gentlemen, for this update on the fund.

The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.

Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk.

High Income Securities Fund 9 

 


Your fund’s performance

This section shows your fund’s performance, price, and distribution information for periods ended February 28, 2017, the end of the first half of its current fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance information as of the most recent calendar quarter-end. Performance should always be considered in light of a fund’s investment strategy. Data represent past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return, net asset value, and market price will fluctuate, and you may have a gain or a loss when you sell your shares.

Fund performance Total return for periods ended 2/28/17

  Annual                 
  average                 
  Life of                 
  fund (since    Annual    Annual    Annual     
  7/9/87)  10 years  average  5 years  average  3 years  average  1 year  6 months 
NAV  8.69%  77.91%  5.93%  41.97%  7.26%  12.82%  4.10%  22.51%  6.31% 
Market price  8.49  87.45  6.49  36.03  6.35  18.42  5.80  29.94  10.57 

 

Performance assumes reinvestment of distributions and does not account for taxes.

Performance is shown net of expenses.

Comparative index returns For periods ended 2/28/17

  Annual                 
  average                 
  Life of                 
  fund (since    Annual    Annual    Annual     
  7/9/87)  10 years  average  5 years  average  3 years  average  1 year  6 months 
Fund’s blended                   
benchmark                   
(50% JPMorgan                   
Developed High                   
Yield Index/50%  —†  102.41%  7.31%  47.85%  8.13%  14.19%  4.52%  27.49%  7.85% 
BofA Merrill Lynch                   
Speculative                   
Grade U.S.                   
Convertible Index)                   
Lipper Convertible                   
Securities Funds                   
(closed-end)  8.24%  69.75  5.39  43.57  7.48  8.85  2.83  26.09  7.58 
category average*                   

 

Index and Lipper results should be compared with fund performance at net asset value.

* Over the 6-month, 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 2/28/17, there were 13, 13, 11, 11, 10, and 2 funds, respectively, in this Lipper category.

† The fund’s blended benchmark is an unmanaged index administered by Putnam Management, 50% of which is the JPMorgan Developed High Yield Index and 50% of which is the BofA Merrill Lynch Speculative Grade U.S. Convertible Index. The BofA Merrill Lynch Speculative Grade U.S. Convertible Index and the JPMorgan Developed High Yield Index were introduced on 12/31/92 and 12/31/94, respectively, which post-date the inception of the fund.

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Fund price and distribution information For the six-month period ended 2/28/17

Distributions 
Number  6 
Income  $0.1854 
Capital gains  — 
Total  $0.1854 
Share value  NAV  Market price 
8/31/16  $8.92  $8.02 
2/28/17  9.29  8.67 
Current rate (end of period)  NAV  Market price 
Current dividend rate*  3.99%  4.28% 

 

The classification of distributions, if any, is an estimate. Final distribution information will appear on your year-end tax forms.

* Most recent distribution, including any return of capital and excluding capital gains, annualized and divided by NAV or market price at end of period.

Fund performance as of most recent calendar quarter Total return for periods ended 3/31/17

  Annual                 
  average                 
  Life of                 
  fund (since    Annual    Annual    Annual     
  7/9/87)  10 years  average  5 years  average  3 years  average  1 year  6 months 
NAV  8.68%  77.46%  5.90%  42.03%  7.27%  12.92%  4.13%  17.26%  6.30% 
Market price  8.48  85.00  6.35  32.90  5.85  19.22  6.03  24.00  10.54 

 

See the discussion following the fund performance table on page 10 for information about the calculation of fund performance.

 

High Income Securities Fund 11 

 


Terms and definitions

Important terms

Total return shows how the value of the fund’s shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund.

Net asset value (NAV) is the value of all your fund’s assets, minus any liabilities, divided by the number of outstanding shares.

Market price is the current trading price of one share of the fund. Market prices are set by transactions between buyers and sellers on exchanges such as the New York Stock Exchange.

Fixed-income terms

Current rate is the annual rate of return earned from dividends or interest of an investment. Current rate is expressed as a percentage of the price of a security, fund share, or principal investment.

Yield curve is a graph that plots the yields of bonds with equal credit quality against their differing maturity dates, ranging from shortest to longest. It is used as a benchmark for other debt, such as mortgage or bank lending rates.

Comparative indexes

Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.

The fund’s blended benchmark is an unmanaged index administered by Putnam Management, 50% of which is the JPMorgan Developed High Yield Index and 50% of which is the BofA Merrill Lynch Speculative Grade U.S. Convertible Index.

BofA Merrill Lynch Speculative Grade U.S. Convertible Index is an unmanaged index of U.S. convertible securities.

BofA Merrill Lynch U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.

JPMorgan Developed High Yield Index is an unmanaged index of high-yield fixed-income securities issued in developed countries.

S&P 500 Index is an unmanaged index of common stock performance.

Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.

Lipper is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.

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Other information for shareholders

Important notice regarding share repurchase program

In September 2016, the Trustees of your fund approved the renewal of a share repurchase program that had been in effect since 2005. This renewal allows your fund to repurchase, in the 12 months beginning October 8, 2016, up to 10% of the fund’s common shares outstanding as of October 7, 2016.

Important notice regarding delivery of shareholder documents

In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single copy of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, and Putnam will begin sending individual copies within 30 days.

Proxy voting

Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2016, are available in the Individual Investors section of putnam.com, and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Form N-Q on the SEC’s website at www.sec.gov. In addition, the fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s website or the operation of the Public Reference Room.

Trustee and employee fund ownership

Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of February 28, 2017, Putnam employees had approximately $482,000,000 and the Trustees had approximately $136,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.

High Income Securities Fund 13 

 


Summary of Putnam Closed-End Funds’ Amended and Restated Dividend Reinvestment Plans

Putnam High Income Securities Fund, Putnam Managed Municipal Income Trust, Putnam Master Intermediate Income Trust, Putnam Municipal Opportunities Trust and Putnam Premier Income Trust (each, a “Fund” and collectively, the “Funds”) each offer a dividend reinvestment plan (each, a “Plan” and collectively, the “Plans”). If you participate in a Plan, all income dividends and capital gain distributions are automatically reinvested in Fund shares by the Fund’s agent, Putnam Investor Services, Inc. (the “Agent”). If you are not participating in a Plan, every month you will receive all dividends and other distributions in cash, paid by check and mailed directly to you.

Upon a purchase (or, where applicable, upon registration of transfer on the shareholder records of a Fund) of shares of a Fund by a registered shareholder, each such shareholder will be deemed to have elected to participate in that Fund’s Plan. Each such shareholder will have all distributions by a Fund automatically reinvested in additional shares, unless such shareholder elects to terminate participation in a Plan by instructing the Agent to pay future distributions in cash. Shareholders who were not participants in a Plan as of January 31, 2010, will continue to receive distributions in cash but may enroll in a Plan at any time by contacting the Agent.

If you participate in a Fund’s Plan, the Agent will automatically reinvest subsequent distributions, and the Agent will send you a confirmation in the mail telling you how many additional shares were issued to your account.

To change your enrollment status or to request additional information about the Plans, you may contact the Agent either in writing, at P.O. Box 8383, Boston, MA 02266-8383, or by telephone at 1-800-225-1581 during normal East Coast business hours.

How you acquire additional shares through a Plan If the market price per share for your Fund’s shares (plus estimated brokerage commissions) is greater than or equal to their net asset value per share on the payment date for a distribution, you will be issued shares of the Fund at a value equal to the higher of the net asset value per share on that date or 95% of the market price per share on that date.

If the market price per share for your Fund’s shares (plus estimated brokerage commissions) is less than their net asset value per share on the payment date for a distribution, the Agent will buy Fund shares for participating accounts in the open market. The Agent will aggregate open-market purchases on behalf of all participants, and the average price (including brokerage commissions) of all shares purchased by the Agent will be the price per share allocable to each participant. The Agent will generally complete these open-market purchases within five business days following the payment date. If, before the Agent has completed open-market purchases, the market price per share (plus estimated brokerage commissions) rises to exceed the net asset value per share on the payment date, then the purchase price may exceed the net asset value per share, potentially resulting in the acquisition of fewer shares than if the distribution had been paid in newly issued shares.

How to withdraw from a Plan Participants may withdraw from a Fund’s Plan at any time by notifying the Agent, either in writing or by telephone. Such withdrawal will be effective immediately if notice is received by the Agent with sufficient time prior to any distribution record date; otherwise, such withdrawal will be effective with respect to any subsequent distribution following notice of withdrawal. There is no penalty for withdrawing from or not participating in a Plan.

Plan administration The Agent will credit all shares acquired for a participant under a Plan to the account in which the participant’s common shares are held. Each participant will

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be sent reasonably promptly a confirmation by the Agent of each acquisition made for his or her account.

About brokerage fees Each participant pays a proportionate share of any brokerage commissions incurred if the Agent purchases additional shares on the open market, in accordance with the Plans. There are no brokerage charges applied to shares issued directly by the Funds under the Plans.

About taxes and Plan amendments

Reinvesting dividend and capital gain distributions in shares of the Funds does not relieve you of tax obligations, which are the same as if you had received cash distributions. The Agent supplies tax information to you and to the IRS annually. Each Fund reserves the right to amend or terminate its Plan upon 30 days’ written notice. However, the Agent may assign its rights, and delegate its duties, to a successor agent with the prior consent of a Fund and without prior notice to Plan participants.

If your shares are held in a broker or nominee name If your shares are held in the name of a broker or nominee offering a dividend reinvestment service, consult your broker or nominee to ensure that an appropriate election is made on your behalf. If the broker or nominee holding your shares does not provide a reinvestment service, you may need to register your shares in your own name in order to participate in a Plan.

In the case of record shareholders such as banks, brokers or nominees that hold shares for others who are the beneficial owners of such shares, the Agent will administer the Plan on the basis of the number of shares certified by the record shareholder as representing the total amount registered in such shareholder’s name and held for the account of beneficial owners who are to participate in the Plan.

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Financial statements

These sections of the report, as well as the accompanying Notes, constitute the fund’s financial statements.

The fund’s portfolio lists all the fund’s investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification.

Statement of assets and liabilities shows how the fund’s net assets and share price are determined. All investment and non-investment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of preferred shares.)

Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal period.

Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund’s shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year.

Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlights table also includes the current reporting period.

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The fund’s portfolio 2/28/17 (Unaudited)

  Principal   
CORPORATE BONDS AND NOTES (41.2%)*  amount  Value 
Basic materials (5.5%)     
A Schulman, Inc. 144A company guaranty sr. unsec. unsub. notes     
6.875%, 6/1/23  $60,000  $63,300 
Allegheny Technologies, Inc. sr. unsec. unsub. notes     
9.375%, 6/1/19  115,000  126,952 
Allegheny Technologies, Inc. sr. unsec. unsub. notes     
5.95%, 1/15/21  20,000  20,088 
ArcelorMittal SA sr. unsec. unsub. bonds 10.60%, 6/1/19 (France)  65,000  76,619 
ArcelorMittal SA sr. unsec. unsub. bonds 6.125%, 6/1/25 (France)  100,000  112,875 
ArcelorMittal SA sr. unsec. unsub. notes 7.75%, 10/15/39 (France)  10,000  11,650 
Beacon Roofing Supply, Inc. company guaranty sr. unsec. unsub.     
notes 6.375%, 10/1/23  150,000  162,188 
Blue Cube Spinco, Inc. company guaranty sr. unsec. unsub. notes     
9.75%, 10/15/23  120,000  143,100 
BMC East, LLC 144A company guaranty sr. notes 5.50%, 10/1/24  160,000  164,800 
Boise Cascade Co. 144A company guaranty sr. unsec. notes     
5.625%, 9/1/24  180,000  184,050 
Builders FirstSource, Inc. 144A company guaranty sr. unsec. notes     
10.75%, 8/15/23  189,000  219,240 
Builders FirstSource, Inc. 144A company guaranty sr. unsub. notes     
5.625%, 9/1/24  155,000  159,456 
Cemex Finance, LLC 144A company guaranty sr. notes 6.00%,     
4/1/24 (Mexico)  200,000  207,750 
Chemours Co. (The) company guaranty sr. unsec. unsub. notes     
7.00%, 5/15/25  115,000  124,919 
Chemours Co. (The) company guaranty sr. unsec. unsub. notes     
6.625%, 5/15/23  75,000  79,594 
Compass Minerals International, Inc. 144A company guaranty sr.     
unsec. notes 4.875%, 7/15/24  150,000  146,625 
Coveris Holdings SA 144A company guaranty sr. unsec. notes     
7.875%, 11/1/19 (Luxembourg)  220,000  217,250 
CPG Merger Sub, LLC 144A company guaranty sr. unsec. notes     
8.00%, 10/1/21  60,000  62,850 
First Quantum Minerals, Ltd. 144A company guaranty sr. unsec.     
notes 7.00%, 2/15/21 (Canada)  45,000  46,575 
First Quantum Minerals, Ltd. 144A company guaranty sr. unsec.     
notes 6.75%, 2/15/20 (Canada)  165,000  169,125 
Flex Acquisition Co., Inc. 144A sr. unsec. notes 6.875%, 1/15/25  140,000  143,150 
Freeport-McMoRan, Inc. company guaranty sr. unsec. notes     
3.55%, 3/1/22 (Indonesia)  10,000  9,288 
Freeport-McMoRan, Inc. 144A company guaranty sr. unsec. notes     
6.75%, 2/1/22 (Indonesia)  55,000  57,200 
Freeport-McMoRan, Inc. 144A company guaranty sr. unsec. unsub.     
notes 6.875%, 2/15/23 (Indonesia)  110,000  116,050 
GCP Applied Technologies, Inc. 144A company guaranty sr. unsec.     
notes 9.50%, 2/1/23  230,000  261,004 
Grinding Media, Inc./MC Grinding Media Canada, Inc. 144A sr. sub.     
notes 7.375%, 12/15/23  30,000  32,100 
HudBay Minerals, Inc. 144A company guaranty sr. unsec. notes     
7.625%, 1/15/25 (Canada)  55,000  60,088 

 

High Income Securities Fund 17 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Basic materials cont.     
Huntsman International, LLC company guaranty sr. unsec. notes     
5.125%, 11/15/22  $165,000  $173,250 
Joseph T Ryerson & Son, Inc. 144A sr. notes 11.00%, 5/15/22  95,000  105,925 
Kraton Polymers, LLC/Kraton Polymers Capital Corp. 144A     
company guaranty sr. unsec. notes 10.50%, 4/15/23  115,000  130,238 
Louisiana-Pacific Corp. company guaranty sr. unsec. unsub. notes     
4.875%, 9/15/24  165,000  166,238 
Mercer International, Inc. company guaranty sr. unsec. notes     
7.75%, 12/1/22 (Canada)  150,000  160,875 
Mercer International, Inc. 144A sr. unsec. notes 6.50%,     
2/1/24 (Canada)  25,000  25,500 
New Gold, Inc. 144A company guaranty sr. unsec. unsub. notes     
7.00%, 4/15/20 (Canada)  60,000  61,050 
New Gold, Inc. 144A company guaranty sr. unsec. unsub. notes     
6.25%, 11/15/22 (Canada)  75,000  75,938 
Norbord, Inc. 144A company guaranty sr. notes 6.25%,     
4/15/23 (Canada)  145,000  153,410 
Novelis Corp. 144A company guaranty sr. unsec. bonds     
5.875%, 9/30/26  195,000  200,606 
Novelis Corp. 144A company guaranty sr. unsec. notes     
6.25%, 8/15/24  105,000  111,038 
Pactiv, LLC sr. unsec. unsub. bonds 8.375%, 4/15/27  15,000  16,500 
Platform Specialty Products Corp. 144A sr. unsec. notes     
10.375%, 5/1/21  15,000  16,856 
Platform Specialty Products Corp. 144A sr. unsec. notes     
6.50%, 2/1/22  65,000  67,925 
PQ Corp. 144A company guaranty sr. notes 6.75%, 11/15/22  30,000  32,400 
Sealed Air Corp. 144A company guaranty sr. unsec. notes     
6.875%, 7/15/33  80,000  86,800 
Sealed Air Corp. 144A company guaranty sr. unsec. notes     
6.50%, 12/1/20  75,000  84,375 
Sealed Air Corp. 144A company guaranty sr. unsec. notes     
5.25%, 4/1/23  100,000  104,875 
Sealed Air Corp. 144A company guaranty sr. unsec. notes     
5.125%, 12/1/24  40,000  41,800 
Sealed Air Corp. 144A company guaranty sr. unsec. notes     
4.875%, 12/1/22  35,000  36,181 
Smurfit Kappa Treasury Funding, Ltd. company guaranty sr. unsec.     
unsub. notes 7.50%, 11/20/25 (Ireland)  110,000  133,100 
Steel Dynamics, Inc. company guaranty sr. unsec. unsub. notes     
6.375%, 8/15/22  135,000  141,075 
Steel Dynamics, Inc. company guaranty sr. unsec. unsub. notes     
5.50%, 10/1/24  80,000  85,104 
Steel Dynamics, Inc. company guaranty sr. unsec. unsub. notes     
5.25%, 4/15/23  10,000  10,414 
Steel Dynamics, Inc. 144A sr. unsec. bonds 5.00%, 12/15/26  35,000  36,177 
Teck Resources, Ltd. company guaranty sr. unsec. unsub. notes     
4.75%, 1/15/22 (Canada)  45,000  46,744 
Teck Resources, Ltd. company guaranty sr. unsec. unsub. notes     
3.75%, 2/1/23 (Canada)  40,000  38,992 

 

18 High Income Securities Fund 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Basic materials cont.     
Teck Resources, Ltd. 144A company guaranty sr. unsec. notes     
8.50%, 6/1/24 (Canada)  $15,000  $17,513 
Teck Resources, Ltd. 144A company guaranty sr. unsec. notes     
8.00%, 6/1/21 (Canada)  25,000  27,781 
TMS International Corp. 144A company guaranty sr. unsec. sub.     
notes 7.625%, 10/15/21  165,000  166,238 
Tronox Finance, LLC company guaranty sr. unsec. notes     
6.375%, 8/15/20  45,000  45,788 
Tronox Finance, LLC 144A company guaranty sr. unsec. notes     
7.50%, 3/15/22  60,000  62,700 
U.S. Concrete, Inc. company guaranty sr. unsec. unsub. notes     
6.375%, 6/1/24  85,000  89,888 
U.S. Concrete, Inc. 144A company guaranty sr. unsec. unsub. notes     
6.375%, 6/1/24  50,000  52,875 
Univar USA, Inc. 144A company guaranty sr. unsec. notes     
6.75%, 7/15/23  100,000  104,750 
USG Corp. 144A company guaranty sr. unsec. notes 5.50%, 3/1/25  100,000  106,250 
Weekley Homes, LLC/Weekley Finance Corp. sr. unsec. notes     
6.00%, 2/1/23  150,000  144,750 
WR Grace & Co.- Conn. 144A company guaranty sr. unsec. notes     
5.625%, 10/1/24  175,000  185,938 
Zekelman Industries, Inc. 144A company guaranty sr. notes     
9.875%, 6/15/23  140,000  158,200 
    6,683,943 
Capital goods (3.3%)     
Advanced Disposal Services, Inc. 144A sr. unsec. notes     
5.625%, 11/15/24  180,000  184,050 
American Axle & Manufacturing, Inc. company guaranty sr. unsec.     
notes 7.75%, 11/15/19  105,000  116,419 
Amstead Industries, Inc. 144A company guaranty sr. unsec. sub.     
notes 5.00%, 3/15/22  145,000  146,450 
Ardagh Packaging Finance PLC/Ardagh Holdings USA, Inc. 144A     
company guaranty sr. unsec. notes 7.25%, 5/15/24 (Ireland)  200,000  218,000 
ATS Automation Tooling Systems, Inc. 144A sr. unsec. notes 6.50%,     
6/15/23 (Canada)  95,000  99,245 
Belden, Inc. 144A company guaranty sr. unsec. sub. notes     
5.50%, 9/1/22  140,000  144,375 
Belden, Inc. 144A company guaranty sr. unsec. sub. notes     
5.25%, 7/15/24  80,000  80,300 
Berry Plastics Corp. company guaranty notes 6.00%, 10/15/22  45,000  47,644 
Berry Plastics Corp. company guaranty notes 5.50%, 5/15/22  55,000  57,338 
Berry Plastics Corp. company guaranty unsub. notes     
5.125%, 7/15/23  35,000  36,050 
Bombardier, Inc. 144A sr. unsec. notes 8.75%, 12/1/21 (Canada)  125,000  138,125 
Briggs & Stratton Corp. company guaranty sr. unsec. notes     
6.875%, 12/15/20  150,000  164,250 
Crown Cork & Seal Co., Inc. company guaranty sr. unsec. bonds     
7.375%, 12/15/26  65,000  74,588 
Gates Global, LLC/Gates Global Co. 144A company guaranty sr.     
unsec. notes 6.00%, 7/15/22  350,000  352,625 
KLX, Inc. 144A company guaranty sr. unsec. notes 5.875%, 12/1/22  190,000  200,013 

 

High Income Securities Fund 19 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Capital goods cont.     
Legrand France SA sr. unsec. unsub. notes 8.50%, 2/15/25 (France)  $160,000  $207,088 
Manitowoc Foodservice, Inc. sr. unsec. notes 9.50%, 2/15/24  200,000  231,250 
MasTec, Inc. company guaranty sr. unsec. unsub. notes     
4.875%, 3/15/23  205,000  205,000 
Moog, Inc. 144A company guaranty sr. unsec. notes 5.25%, 12/1/22  115,000  117,875 
Oshkosh Corp. company guaranty sr. unsec. sub. notes     
5.375%, 3/1/25  105,000  108,675 
Oshkosh Corp. company guaranty sr. unsec. sub. notes     
5.375%, 3/1/22  55,000  57,269 
Reynolds Group Issuer, Inc./Reynolds Group Issuer, LLC/Reynolds     
Group Issuer Lu 144A company guaranty sr. unsec. unsub. notes     
7.00%, 7/15/24  100,000  107,563 
Tenneco, Inc. company guaranty sr. unsec. unsub. notes     
5.375%, 12/15/24  95,000  99,275 
Tenneco, Inc. company guaranty sr. unsec. unsub. notes     
5.00%, 7/15/26  45,000  45,113 
TI Group Automotive Systems, LLC 144A sr. unsec. notes     
8.75%, 7/15/23  230,000  247,250 
TransDigm, Inc. company guaranty sr. unsec. sub. notes     
6.375%, 6/15/26  70,000  70,700 
TransDigm, Inc. company guaranty sr. unsec. unsub. notes     
6.50%, 7/15/24  80,000  82,200 
TransDigm, Inc. 144A company guaranty sr. unsec. sub. notes     
6.50%, 5/15/25  35,000  35,831 
ZF North America Capital, Inc. 144A company guaranty sr. unsec.     
unsub. notes 4.75%, 4/29/25  150,000  154,500 
ZF North America Capital, Inc. 144A company guaranty sr. unsec.     
unsub. notes 4.50%, 4/29/22  150,000  155,813 
    3,984,874 
Communication services (4.6%)     
Altice SA 144A company guaranty sr. unsec. notes 7.75%,     
5/15/22 (Luxembourg)  400,000  425,440 
Cablevision Systems Corp. sr. unsec. unsub. notes 8.00%, 4/15/20  35,000  38,675 
CCO Holdings, LLC/CCO Holdings Capital Corp. company guaranty     
sr. unsec. notes 5.25%, 9/30/22  50,000  51,938 
CCO Holdings, LLC/CCO Holdings Capital Corp. 144A company     
guaranty sr. unsec. bonds 5.50%, 5/1/26  65,000  68,981 
CCO Holdings, LLC/CCO Holdings Capital Corp. 144A company     
guaranty sr. unsec. notes 5.875%, 4/1/24  160,000  171,600 
CCO Holdings, LLC/CCO Holdings Capital Corp. 144A sr. unsec.     
notes 5.75%, 2/15/26  90,000  96,300 
CCO Holdings, LLC/CCO Holdings Capital Corp. 144A sr. unsec.     
unsub. notes 5.125%, 5/1/23  125,000  129,688 
CenturyLink, Inc. sr. unsec. unsub. notes 6.75%, 12/1/23  5,000  5,231 
CenturyLink, Inc. sr. unsec. unsub. notes 5.625%, 4/1/20  25,000  26,422 
Cequel Communications Holdings I, LLC/Cequel Capital Corp.     
144A sr. unsec. unsub. notes 5.125%, 12/15/21  240,000  242,477 
Cequel Communications Holdings I, LLC/Cequel Capital Corp.     
144A sr. unsec. unsub. notes 5.125%, 12/15/21  70,000  71,247 
CSC Holdings, LLC sr. unsec. unsub. bonds 5.25%, 6/1/24  300,000  301,875 
CSC Holdings, LLC sr. unsec. unsub. notes 6.75%, 11/15/21  50,000  54,875 

 

20 High Income Securities Fund 

 


    Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.    amount  Value 
Communication services cont.       
CSC Holdings, LLC 144A sr. unsec. unsub. notes 10.125%, 1/15/23    $255,000  $295,163 
Digicel, Ltd. 144A company guaranty sr. unsec. notes 6.75%,       
3/1/23 (Jamaica)    200,000  183,000 
DISH DBS Corp. company guaranty sr. unsec. unsub. notes       
5.875%, 11/15/24    80,000  85,200 
Frontier Communications Corp. sr. unsec. notes 11.00%, 9/15/25    55,000  55,275 
Frontier Communications Corp. sr. unsec. notes 10.50%, 9/15/22    155,000  161,150 
Frontier Communications Corp. sr. unsec. notes 8.875%, 9/15/20    40,000  42,400 
Frontier Communications Corp. sr. unsec. unsub. notes       
7.625%, 4/15/24    30,000  26,775 
Intelsat Jackson Holdings SA company guaranty sr. unsec. notes       
7.50%, 4/1/21 (Bermuda)    80,000  73,200 
Intelsat Jackson Holdings SA 144A company guaranty sr. notes       
8.00%, 2/15/24 (Bermuda)    4,000  4,340 
Intelsat Luxembourg SA company guaranty sr. unsec. bonds       
7.75%, 6/1/21 (Luxembourg)    8,000  4,500 
Intelsat Luxembourg SA company guaranty sr. unsec. sub. bonds       
8.125%, 6/1/23 (Luxembourg)    35,000  18,900 
Quebecor Media, Inc. sr. unsec. unsub. notes 5.75%,       
1/15/23 (Canada)    25,000  26,594 
Quebecor Media, Inc. 144A sr. unsec. notes 7.375%,       
1/15/21 (Canada)  CAD  75,000  58,020 
SFR Group SA 144A company guaranty sr. notes 7.375%,       
5/1/26 (France)    $200,000  207,250 
SFR Group SA 144A company guaranty sr. notes 6.00%,       
5/15/22 (France)    200,000  207,000 
Sprint Capital Corp. company guaranty sr. unsec. unsub. notes       
6.875%, 11/15/28    170,000  181,263 
Sprint Communications, Inc. sr. unsec. notes 7.00%, 8/15/20    60,000  64,725 
Sprint Communications, Inc. sr. unsec. unsub. notes       
8.375%, 8/15/17    80,000  82,200 
Sprint Communications, Inc. 144A company guaranty sr. unsec.       
notes 9.00%, 11/15/18    115,000  125,781 
Sprint Corp. company guaranty sr. unsec. sub. notes       
7.875%, 9/15/23    275,000  305,938 
Sprint Corp. company guaranty sr. unsec. sub. notes       
7.25%, 9/15/21    265,000  288,850 
T-Mobile USA, Inc. company guaranty sr. unsec. notes       
6.625%, 4/1/23    140,000  148,750 
T-Mobile USA, Inc. company guaranty sr. unsec. notes       
6.375%, 3/1/25    220,000  236,496 
T-Mobile USA, Inc. company guaranty sr. unsec. notes       
6.25%, 4/1/21    165,000  170,156 
T-Mobile USA, Inc. company guaranty sr. unsec. unsub. notes       
6.633%, 4/28/21    45,000  46,800 
T-Mobile USA, Inc. company guaranty sr. unsec. unsub. notes       
6.125%, 1/15/22    125,000  132,188 
Videotron, Ltd. company guaranty sr. unsec. unsub. notes 5.00%,       
7/15/22 (Canada)    195,000  205,238 
West Corp. 144A company guaranty sr. unsec. sub. notes       
5.375%, 7/15/22    180,000  172,350 

 

High Income Securities Fund 21 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Communication services cont.     
WideOpenWest Finance, LLC/WideOpenWest Capital Corp.     
company guaranty sr. unsec. sub. notes 10.25%, 7/15/19  $120,000  $126,600 
Windstream Services, LLC company guaranty sr. unsec. notes     
6.375%, 8/1/23  120,000  109,200 
    5,530,051 
Consumer cyclicals (8.1%)     
AMC Entertainment Holdings, Inc. company guaranty sr. unsec.     
sub. notes 5.875%, 2/15/22  40,000  41,850 
AMC Entertainment Holdings, Inc. company guaranty sr. unsec.     
sub. notes 5.75%, 6/15/25  65,000  67,356 
AMC Entertainment Holdings, Inc. 144A sr. unsec. sub. bonds     
5.875%, 11/15/26  35,000  35,700 
American Builders & Contractors Supply Co., Inc. 144A sr. unsec.     
notes 5.75%, 12/15/23  105,000  109,988 
American Tire Distributors, Inc. 144A sr. unsec. sub. notes     
10.25%, 3/1/22  145,000  143,913 
Bon-Ton Department Stores, Inc. (The) company guaranty notes     
8.00%, 6/15/21  100,000  44,625 
Boyd Gaming Corp. company guaranty sr. unsec. sub. notes     
6.875%, 5/15/23  75,000  81,000 
Boyd Gaming Corp. company guaranty sr. unsec. unsub. notes     
6.375%, 4/1/26  35,000  37,844 
Brookfield Residential Properties, Inc. 144A company guaranty sr.     
unsec. notes 6.50%, 12/15/20 (Canada)  100,000  102,940 
Brookfield Residential Properties, Inc./Brookfield Residential     
US Corp. 144A company guaranty sr. unsec. notes 6.125%,     
7/1/22 (Canada)  85,000  86,777 
Caesars Growth Properties Holdings, LLC/Caesars Growth     
Properties Finance, Inc. company guaranty notes 9.375%, 5/1/22  155,000  167,788 
CalAtlantic Group, Inc. company guaranty sr. unsec. sub. notes     
6.25%, 12/15/21  140,000  153,650 
CalAtlantic Group, Inc. company guaranty sr. unsec. sub. notes     
5.875%, 11/15/24  55,000  58,988 
CBS Radio, Inc. 144A company guaranty sr. unsec. notes     
7.25%, 11/1/24  30,000  32,025 
CCM Merger, Inc. 144A company guaranty sr. unsec. notes     
9.125%, 5/1/19  58,000  59,740 
Cedar Fair LP/Canada’s Wonderland Co./Magnum Management     
Corp. company guaranty sr. unsec. notes 5.25%, 3/15/21  60,000  61,725 
Cinemark USA, Inc. company guaranty sr. unsec. notes     
5.125%, 12/15/22  65,000  66,950 
Cinemark USA, Inc. company guaranty sr. unsec. sub. notes     
4.875%, 6/1/23  65,000  66,625 
Clear Channel Worldwide Holdings, Inc. company guaranty sr.     
unsec. sub. notes 7.625%, 3/15/20  190,000  191,425 
Clear Channel Worldwide Holdings, Inc. company guaranty sr.     
unsec. unsub. notes 6.50%, 11/15/22  330,000  341,755 
Diamond Resorts International, Inc. 144A sr. notes 7.75%, 9/1/23  160,000  168,800 
Diamond Resorts International, Inc. 144A sr. unsec. notes     
10.75%, 9/1/24  120,000  127,200 

 

22 High Income Securities Fund 

 


    Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.    amount  Value 
Consumer cyclicals cont.       
Eldorado Resorts, Inc. company guaranty sr. unsec. unsub. notes       
7.00%, 8/1/23    $125,000  $132,813 
EMI Music Publishing Group North America Holdings, Inc. 144A sr.       
unsec. notes 7.625%, 6/15/24    115,000  126,213 
General Motors Co. sr. unsec. notes 5.20%, 4/1/45    20,000  20,125 
General Motors Financial Co., Inc. company guaranty sr. unsec.       
notes 4.00%, 10/6/26    85,000  84,616 
General Motors Financial Co., Inc. company guaranty sr. unsec.       
unsub. notes 3.45%, 4/10/22    70,000  70,995 
GLP Capital LP/GLP Financing II, Inc. company guaranty sr. unsec.       
sub. notes 4.875%, 11/1/20    140,000  147,000 
GLP Capital LP/GLP Financing II, Inc. company guaranty sr. unsec.       
unsub. notes 5.375%, 4/15/26    50,000  52,313 
Gray Television, Inc. 144A company guaranty sr. unsec. notes       
5.875%, 7/15/26    110,000  111,548 
Great Canadian Gaming Corp. 144A company guaranty sr. unsec.       
notes 6.625%, 7/25/22 (Canada)  CAD  170,000  133,112 
Hanesbrands, Inc. 144A company guaranty sr. unsec. unsub. notes       
4.625%, 5/15/24    $70,000  69,388 
Howard Hughes Corp. (The) 144A sr. unsec. notes 6.875%, 10/1/21    220,000  231,275 
iHeartCommunications, Inc. company guaranty sr. notes       
9.00%, 12/15/19    130,000  113,588 
IHS Markit Ltd. 144A company guaranty notes 4.75%, 2/15/25       
(United Kingdom)    45,000  46,125 
Isle of Capri Casinos, Inc. company guaranty sr. unsec. notes       
5.875%, 3/15/21    95,000  98,088 
Jack Ohio Finance, LLC/Jack Ohio Finance 1 Corp. 144A company       
guaranty notes 10.25%, 11/15/22    195,000  209,625 
Jack Ohio Finance, LLC/Jack Ohio Finance 1 Corp. 144A company       
guaranty sr. notes 6.75%, 11/15/21    185,000  191,938 
Jacobs Entertainment, Inc. 144A notes 7.875%, 2/1/24    35,000  35,963 
JC Penney Corp., Inc. company guaranty sr. unsec. bonds       
8.125%, 10/1/19    60,000  63,900 
JC Penney Corp., Inc. company guaranty sr. unsec. unsub. notes       
5.65%, 6/1/20    20,000  19,719 
JC Penney Corp., Inc. 144A company guaranty sr. notes       
5.875%, 7/1/23    25,000  25,047 
Jo-Ann Stores Holdings, Inc. 144A sr. unsec. notes 9.75%,       
10/15/19 ‡‡    80,000  75,800 
L Brands, Inc. company guaranty sr. unsec. notes 6.625%, 4/1/21    95,000  104,500 
L Brands, Inc. company guaranty sr. unsec. sub. notes       
5.625%, 2/15/22    50,000  52,688 
Lamar Media Corp. company guaranty sr. unsec. sub. notes       
5.875%, 2/1/22    75,000  77,363 
Lamar Media Corp. company guaranty sr. unsec. sub. notes       
5.375%, 1/15/24    45,000  47,081 
Lear Corp. company guaranty sr. unsec. notes 5.25%, 1/15/25    15,000  15,975 
Lear Corp. company guaranty sr. unsec. unsub. notes       
5.375%, 3/15/24    35,000  37,144 
Lennar Corp. company guaranty sr. unsec. unsub. notes       
4.75%, 11/15/22    60,000  61,710 

 

High Income Securities Fund 23 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Consumer cyclicals cont.     
Lions Gate Entertainment Corp. 144A sr. unsec. unsub. notes     
5.875%, 11/1/24  $110,000  $112,888 
Live Nation Entertainment, Inc. 144A company guaranty sr. unsec.     
notes 4.875%, 11/1/24  50,000  49,875 
Masonite International Corp. 144A company guaranty sr. unsec.     
notes 5.625%, 3/15/23  140,000  144,550 
Mattamy Group Corp. 144A sr. unsec. notes 6.875%,     
12/15/23 (Canada)  25,000  26,125 
Mattamy Group Corp. 144A sr. unsec. notes 6.50%,     
11/15/20 (Canada)  135,000  138,713 
MGM Resorts International company guaranty sr. unsec. notes     
5.25%, 3/31/20  20,000  21,050 
MGM Resorts International company guaranty sr. unsec. unsub.     
notes 8.625%, 2/1/19  70,000  77,350 
MGM Resorts International company guaranty sr. unsec. unsub.     
notes 6.625%, 12/15/21  65,000  72,556 
Navistar International Corp. company guaranty sr. unsec. notes     
8.25%, 11/1/21  214,000  216,140 
Neiman Marcus Group, LLC (The) company guaranty sr. notes     
7.125%, 6/1/28  125,000  100,000 
Neiman Marcus Group, Ltd. 144A company guaranty sr. unsec. sub.     
notes 8.75%, 10/15/21 ‡‡  70,000  40,250 
Neiman Marcus Group, Ltd. 144A company guaranty sr. unsec. sub.     
notes 8.00%, 10/15/21  60,000  37,650 
Nexstar Broadcasting, Inc. 144A company guaranty sr. unsec.     
notes 5.625%, 8/1/24  105,000  107,363 
Nielsen Co. Luxembourg Sarl (The) 144A company guaranty sr.     
unsec. notes 5.00%, 2/1/25 (Luxembourg)  60,000  60,450 
Nielsen Co. Luxembourg Sarl (The) 144A company guaranty sr.     
unsec. sub. notes 5.50%, 10/1/21 (Luxembourg)  110,000  114,400 
Nielsen Finance, LLC/Nielsen Finance Co. 144A company guaranty     
sr. unsec. sub. notes 5.00%, 4/15/22  75,000  77,250 
Outfront Media Capital, LLC/Outfront Media Capital Corp.     
company guaranty sr. unsec. sub. notes 5.875%, 3/15/25  90,000  94,613 
Outfront Media Capital, LLC/Outfront Media Capital Corp.     
company guaranty sr. unsec. sub. notes 5.625%, 2/15/24  55,000  57,338 
Penn National Gaming, Inc. 144A sr. unsec. notes 5.625%, 1/15/27  75,000  75,281 
Penske Automotive Group, Inc. company guaranty sr. unsec. sub.     
notes 5.75%, 10/1/22  160,000  166,000 
Penske Automotive Group, Inc. company guaranty sr. unsec. sub.     
notes 5.50%, 5/15/26  60,000  59,592 
Penske Automotive Group, Inc. company guaranty sr. unsec. sub.     
notes 5.375%, 12/1/24  70,000  71,050 
PulteGroup, Inc. company guaranty sr. unsec. unsub. notes     
7.875%, 6/15/32  150,000  168,750 
PulteGroup, Inc. company guaranty sr. unsec. unsub. notes     
5.50%, 3/1/26  90,000  93,375 
Realogy Group, LLC/Realogy Co-Issuer Corp. 144A company     
guaranty sr. unsec. notes 4.875%, 6/1/23  55,000  54,175 
Regal Entertainment Group sr. unsec. sub. notes 5.75%, 2/1/25  45,000  46,350 
Regal Entertainment Group sr. unsec. sub. notes 5.75%, 6/15/23  110,000  114,950 

 

24 High Income Securities Fund 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Consumer cyclicals cont.     
Ritchie Bros Auctioneers, Inc. 144A company guaranty sr. unsec.     
notes 5.375%, 1/15/25 (Canada)  $35,000  $36,006 
Rivers Pittsburgh Borrower LP/Rivers Pittsburgh Finance Corp.     
144A sr. notes 6.125%, 8/15/21  140,000  142,975 
Sabre GLBL, Inc. 144A company guaranty sr. notes 5.375%, 4/15/23  130,000  132,275 
Scientific Games International, Inc. company guaranty sr. unsec.     
notes 10.00%, 12/1/22  360,000  382,050 
Scientific Games International, Inc. company guaranty sr. unsec.     
sub. notes 6.25%, 9/1/20  35,000  33,163 
Scientific Games International, Inc. 144A company guaranty sr.     
notes 7.00%, 1/1/22  110,000  117,013 
Scientific Games International, Inc. 144A company guaranty sr.     
notes 7.00%, 1/1/22  45,000  47,813 
Sinclair Television Group, Inc. 144A company guaranty sr. unsec.     
sub. notes 5.625%, 8/1/24  225,000  231,469 
Sirius XM Radio, Inc. 144A company guaranty sr. unsec. sub. notes     
6.00%, 7/15/24  70,000  74,550 
Six Flags Entertainment Corp. 144A company guaranty sr. unsec.     
unsub. notes 5.25%, 1/15/21  175,000  179,900 
Spectrum Brands, Inc. company guaranty sr. unsec. notes     
5.75%, 7/15/25  65,000  69,063 
Spectrum Brands, Inc. company guaranty sr. unsec. sub. notes     
6.625%, 11/15/22  5,000  5,300 
Spectrum Brands, Inc. company guaranty sr. unsec. unsub. notes     
6.125%, 12/15/24  110,000  117,051 
Standard Industries, Inc. 144A sr. unsec. notes 5.375%, 11/15/24  160,000  164,464 
Standard Industries, Inc./NJ 144A sr. unsec. notes 5.00%, 2/15/27  70,000  71,400 
SugarHouse HSP Gaming Prop. Mezz LP/SugarHouse HSP Gaming     
Finance Corp. 144A sr. notes 6.375%, 6/1/21  180,000  181,800 
Taylor Morrison Communities, Inc./Monarch Communities, Inc.     
144A company guaranty sr. unsec. notes 5.25%, 4/15/21  35,000  35,875 
Taylor Morrison Communities, Inc./Monarch Communities, Inc.     
144A company guaranty sr. unsec. sub. notes 5.625%, 3/1/24  45,000  46,463 
Tempur Sealy International, Inc. company guaranty sr. unsec.     
unsub. bonds 5.50%, 6/15/26  55,000  54,038 
Townsquare Media, Inc. 144A company guaranty sr. unsec. notes     
6.50%, 4/1/23  20,000  19,650 
Tribune Media Co. company guaranty sr. unsec. notes     
5.875%, 7/15/22  125,000  127,656 
TRW Automotive, Inc. 144A company guaranty sr. unsec. notes     
4.50%, 3/1/21  30,000  30,975 
Univision Communications, Inc. 144A company guaranty sr. sub.     
notes 5.125%, 2/15/25  105,000  103,556 
WMG Acquisition Corp. 144A company guaranty sr. notes     
5.00%, 8/1/23  105,000  107,363 
Wolverine World Wide, Inc. 144A company guaranty sr. unsec.     
bonds 5.00%, 9/1/26  95,000  90,013 
    9,704,281 

 

High Income Securities Fund 25 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Consumer staples (2.1%)     
1011778 BC ULC/New Red Finance, Inc. 144A company guaranty     
notes 6.00%, 4/1/22 (Canada)  $230,000  $239,844 
1011778 BC ULC/New Red Finance, Inc. 144A company guaranty sr.     
notes 4.625%, 1/15/22 (Canada)  45,000  46,350 
Ashtead Capital, Inc. 144A company guaranty notes     
5.625%, 10/1/24  200,000  211,500 
BlueLine Rental Finance Corp. 144A notes 7.00%, 2/1/19  85,000  86,700 
CEC Entertainment, Inc. company guaranty sr. unsec. sub. notes     
8.00%, 2/15/22  180,000  189,450 
Ceridian HCM Holding, Inc. 144A sr. unsec. notes 11.00%, 3/15/21  275,000  288,063 
Constellation Brands, Inc. company guaranty sr. unsec. unsub.     
notes 6.00%, 5/1/22  115,000  130,840 
Dean Foods Co. 144A company guaranty sr. unsec. notes     
6.50%, 3/15/23  90,000  93,825 
Fresh Market, Inc. (The) 144A company guaranty sr. notes     
9.75%, 5/1/23  80,000  66,800 
JBS USA Lux SA/JBS USA Finance, Inc. 144A sr. unsec. notes 8.25%,     
2/1/20 (Brazil)  40,000  41,000 
KFC Holding Co./Pizza Hut Holdings, LLC/Taco Bell of America, LLC     
144A company guaranty sr. unsec. notes 5.25%, 6/1/26  90,000  93,038 
KFC Holding Co./Pizza Hut Holdings, LLC/Taco Bell of America, LLC     
144A company guaranty sr. unsec. notes 5.00%, 6/1/24  90,000  92,394 
Lamb Weston Holdings, Inc. 144A company guaranty sr. unsec.     
unsub. notes 4.875%, 11/1/26  105,000  106,628 
Lamb Weston Holdings, Inc. 144A company guaranty sr. unsec.     
unsub. notes 4.625%, 11/1/24  25,000  25,438 
Landry’s, Inc. 144A sr. unsec. notes 6.75%, 10/15/24  65,000  67,600 
Pilgrim’s Pride Corp. 144A company guaranty sr. unsec. notes     
5.75%, 3/15/25  55,000  56,513 
Prestige Brands, Inc. 144A company guaranty sr. unsec. notes     
5.375%, 12/15/21  90,000  92,700 
Revlon Consumer Products Corp. company guaranty sr. unsec.     
notes 6.25%, 8/1/24  50,000  51,375 
Revlon Consumer Products Corp. company guaranty sr. unsec.     
sub. notes 5.75%, 2/15/21  165,000  166,238 
Rite Aid Corp. 144A company guaranty sr. unsec. unsub. notes     
6.125%, 4/1/23  150,000  158,948 
Vander Intermediate Holding II Corp. 144A sr. unsec. notes     
9.75%, 2/1/19 ‡‡  22,707  22,821 
WhiteWave Foods Co. (The) company guaranty sr. unsec. notes     
5.375%, 10/1/22  130,000  141,700 
    2,469,765 
Energy (5.5%)     
Alta Mesa Holdings LP/Alta Mesa Finance Services Corp. 144A     
company guaranty sr. unsec. notes 7.875%, 12/15/24  185,000  195,638 
Antero Resources Corp. company guaranty sr. unsec. notes     
5.625%, 6/1/23  50,000  50,625 
Antero Resources Corp. company guaranty sr. unsec. sub. notes     
5.125%, 12/1/22  65,000  65,325 
Antero Resources Finance Corp. company guaranty sr. unsec. sub.     
notes 5.375%, 11/1/21  90,000  92,025 

 

26 High Income Securities Fund 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Energy cont.     
Baytex Energy Corp. 144A company guaranty sr. unsec. sub. notes     
5.625%, 6/1/24 (Canada)  $85,000  $77,769 
Baytex Energy Corp. 144A company guaranty sr. unsec. sub. notes     
5.125%, 6/1/21 (Canada)  15,000  13,781 
Calfrac Holdings LP 144A company guaranty sr. unsec. unsub.     
notes 7.50%, 12/1/20  45,000  41,513 
California Resources Corp. 144A company guaranty notes     
8.00%, 12/15/22  210,000  179,550 
Cenovus Energy, Inc. sr. unsec. bonds 6.75%, 11/15/39 (Canada)  215,000  242,906 
Cenovus Energy, Inc. sr. unsec. bonds 4.45%, 9/15/42 (Canada)  55,000  49,199 
Cheniere Corpus Christi Holdings, LLC 144A company guaranty sr.     
notes 5.875%, 3/31/25  250,000  264,375 
Chesapeake Energy Corp. company guaranty sr. unsec. notes     
5.75%, 3/15/23  20,000  18,200 
Chesapeake Energy Corp. 144A company guaranty notes     
8.00%, 12/15/22  193,000  204,098 
Chesapeake Energy Corp. 144A company guaranty sr. unsec. notes     
8.00%, 1/15/25  45,000  44,663 
Concho Resources, Inc. company guaranty sr. unsec. notes     
5.50%, 4/1/23  180,000  186,750 
Concho Resources, Inc. company guaranty sr. unsec. notes     
4.375%, 1/15/25  55,000  55,825 
Concho Resources, Inc. company guaranty sr. unsec. unsub. notes     
5.50%, 10/1/22  50,000  51,750 
Continental Resources, Inc. company guaranty sr. unsec. bonds     
4.90%, 6/1/44  60,000  52,650 
Continental Resources, Inc. company guaranty sr. unsec. notes     
3.80%, 6/1/24  100,000  92,625 
Continental Resources, Inc. company guaranty sr. unsec. sub.     
notes 5.00%, 9/15/22  150,000  153,000 
Continental Resources, Inc. company guaranty sr. unsec. unsub.     
notes 4.50%, 4/15/23  80,000  78,400 
Denbury Resources, Inc. company guaranty sr. unsec. sub. notes     
6.375%, 8/15/21  85,000  75,863 
Denbury Resources, Inc. 144A company guaranty notes     
9.00%, 5/15/21  122,000  131,455 
Devon Financing Company, LLC company guaranty sr. unsec.     
unsub. bonds 7.875%, 9/30/31  105,000  137,402 
Diamondback Energy, Inc. 144A company guaranty sr. unsec.     
notes 5.375%, 5/31/25  155,000  160,425 
Diamondback Energy, Inc. 144A company guaranty sr. unsec.     
notes 4.75%, 11/1/24  45,000  45,113 
Endeavor Energy Resources LP/EER Finance, Inc. 144A sr. unsec.     
notes 8.125%, 9/15/23  125,000  135,781 
EP Energy, LLC/Everest Acquisition Finance, Inc. company     
guaranty sr. unsec. notes 7.75%, 9/1/22  20,000  17,400 
EP Energy, LLC/Everest Acquisition Finance, Inc. company     
guaranty sr. unsec. sub. notes 9.375%, 5/1/20  290,000  283,475 
EP Energy, LLC/Everest Acquisition Finance, Inc. 144A company     
guaranty notes 8.00%, 2/15/25  110,000  107,250 

 

High Income Securities Fund 27 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Energy cont.     
EP Energy, LLC/Everest Acquisition Finance, Inc. 144A company     
guaranty sr. notes 8.00%, 11/29/24  $60,000  $63,600 
Halcon Resources Corp. 144A company guaranty notes     
12.00%, 2/15/22  25,000  29,313 
Hess Corp. sr. unsec. unsub. notes 7.30%, 8/15/31  65,000  76,471 
Holly Energy Partners LP/Holly Energy Finance Corp. 144A     
company guaranty sr. unsec. notes 6.00%, 8/1/24  145,000  152,250 
Laredo Petroleum, Inc. company guaranty sr. unsec. notes     
7.375%, 5/1/22  185,000  191,475 
Laredo Petroleum, Inc. company guaranty sr. unsec. sub. notes     
5.625%, 1/15/22  35,000  35,263 
MEG Energy Corp. 144A company guaranty sr. unsec. notes 7.00%,     
3/31/24 (Canada)  60,000  54,000 
MEG Energy Corp. 144A company guaranty sr. unsec. notes 6.50%,     
3/15/21 (Canada)  75,000  76,688 
MEG Energy Corp. 144A company guaranty sr. unsec. notes     
6.375%, 1/30/23 (Canada)  25,000  22,188 
MEG Energy Corp. 144A notes 6.50%, 1/15/25 (Canada)  35,000  34,213 
Murphy Oil Corp. sr. unsec. unsub. notes 6.875%, 8/15/24  115,000  123,108 
Newfield Exploration Co. sr. unsec. unsub. notes 5.75%, 1/30/22  210,000  224,175 
Newfield Exploration Co. sr. unsec. unsub. notes 5.375%, 1/1/26  65,000  67,763 
Oasis Petroleum, Inc. company guaranty sr. unsec. sub. notes     
6.875%, 1/15/23  50,000  50,750 
Oasis Petroleum, Inc. company guaranty sr. unsec. unsub. notes     
6.875%, 3/15/22  190,000  193,266 
Parsley Energy LLC/Parsley Finance Corp. 144A company guaranty     
sr. unsec. notes 5.25%, 8/15/25  45,000  45,450 
Parsley Energy LLC/Parsley Finance Corp. 144A company guaranty     
sr. unsec. sub. notes 5.375%, 1/15/25  35,000  35,525 
Precision Drilling Corp. company guaranty sr. unsec. notes 5.25%,     
11/15/24 (Canada)  5,000  4,950 
Precision Drilling Corp. 144A company guaranty sr. unsec. notes     
7.75%, 12/15/23 (Canada)  45,000  48,713 
Range Resources Corp. 144A company guaranty sr. unsec. sub.     
notes 5.75%, 6/1/21  180,000  185,850 
Rose Rock Midstream LP/Rose Rock Finance Corp. company     
guaranty sr. unsec. sub. notes 5.625%, 11/15/23  50,000  48,750 
Rose Rock Midstream LP/Rose Rock Finance Corp. company     
guaranty sr. unsec. sub. notes 5.625%, 7/15/22  45,000  44,213 
Sabine Pass Liquefaction, LLC 144A sr. bonds 5.00%, 3/15/27  50,000  52,926 
Sabine Pass Liquefaction, LLC 144A sr. notes 5.875%, 6/30/26  80,000  89,734 
Seven Generations Energy, Ltd. 144A sr. unsec. bonds 6.75%,     
5/1/23 (Canada)  65,000  68,819 
Seven Generations Energy, Ltd. 144A sr. unsec. sub. notes 8.25%,     
5/15/20 (Canada)  120,000  126,750 
Seventy Seven Energy, Inc. escrow sr. unsec. notes     
6.50%, 7/15/22 F   105,000  11 
Seventy Seven Operating, LLC escrow company guaranty sr.     
unsec. unsub. notes 6.625%, 11/15/19 F   115,000  12 
SM Energy Co. sr. unsec. notes 6.50%, 11/15/21  100,000  102,250 
SM Energy Co. sr. unsec. sub. notes 5.00%, 1/15/24  65,000  60,938 

 

28 High Income Securities Fund 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Energy cont.     
SM Energy Co. sr. unsec. unsub. notes 6.75%, 9/15/26  $60,000  $61,050 
SM Energy Co. sr. unsec. unsub. notes 6.50%, 1/1/23  50,000  50,500 
SM Energy Co. sr. unsec. unsub. notes 6.125%, 11/15/22  95,000  95,713 
Targa Resources Partners LP/Targa Resources Partners Finance     
Corp. 144A company guaranty sr. unsec. bonds 5.375%, 2/1/27  65,000  67,763 
Targa Resources Partners LP/Targa Resources Partners Finance     
Corp. 144A company guaranty sr. unsec. notes 5.125%, 2/1/25  30,000  31,200 
Tesoro Logistics LP/Tesoro Logistics Finance Corp. company     
guaranty sr. unsec. notes 5.25%, 1/15/25  35,000  36,881 
Triangle USA Petroleum Corp. 144A company guaranty sr. unsec.     
notes 6.75%, 7/15/22 (In default) †  55,000  16,225 
Whiting Petroleum Corp. company guaranty sr. unsec. unsub.     
notes 5.75%, 3/15/21  20,000  19,900 
Whiting Petroleum Corp. company guaranty sr. unsec. unsub.     
notes 5.00%, 3/15/19  95,000  95,831 
Williams Cos., Inc. (The) sr. unsec. unsub. notes 8.75%, 3/15/32  45,000  57,769 
Williams Cos., Inc. (The) sr. unsec. unsub. notes 7.875%, 9/1/21  71,000  82,005 
Williams Partners LP/ACMP Finance Corp. sr. unsec. sub. notes     
4.875%, 3/15/24  60,000  61,966 
WPX Energy, Inc. sr. unsec. notes 8.25%, 8/1/23  30,000  33,600 
WPX Energy, Inc. sr. unsec. notes 7.50%, 8/1/20  130,000  140,075 
WPX Energy, Inc. sr. unsec. unsub. notes 6.00%, 1/15/22  150,000  153,188 
    6,617,911 
Financials (4.0%)     
Alliance Data Systems Corp. 144A company guaranty sr. unsec.     
notes 5.375%, 8/1/22  105,000  104,475 
Alliant Holdings Intermediate, LLC 144A sr. unsec. notes     
8.25%, 8/1/23  120,000  126,600 
Ally Financial, Inc. company guaranty sr. unsec. notes     
8.00%, 11/1/31  175,000  215,250 
Ally Financial, Inc. company guaranty sr. unsec. unsub. notes     
8.00%, 3/15/20  60,000  68,618 
Ally Financial, Inc. company guaranty sr. unsec. unsub. notes     
6.25%, 12/1/17  90,000  93,080 
Ally Financial, Inc. sub. unsec. notes 5.75%, 11/20/25  120,000  126,750 
Ally Financial, Inc. unsec. sub. notes 8.00%, 12/31/18  65,000  71,378 
American International Group, Inc. jr. unsec. sub. FRB     
8.175%, 5/15/58  100,000  129,000 
Bank of America Corp. jr. unsec. sub. FRN Ser. AA, 6.10%,     
perpetual maturity  55,000  58,713 
Bank of America Corp. jr. unsec. sub. FRN Ser. Z, 6.50%,     
perpetual maturity  50,000  54,609 
CBRE Services, Inc. company guaranty sr. unsec. notes     
5.25%, 3/15/25  50,000  52,578 
CBRE Services, Inc. company guaranty sr. unsec. unsub. notes     
5.00%, 3/15/23  75,000  77,706 
CIT Group, Inc. sr. unsec. notes 3.875%, 2/19/19  45,000  46,041 
CIT Group, Inc. sr. unsec. sub. notes 5.00%, 8/1/23  65,000  68,900 
CIT Group, Inc. sr. unsec. unsub. notes 5.00%, 8/15/22  100,000  106,000 
CIT Group, Inc. 144A sr. unsec. notes 5.50%, 2/15/19  185,000  194,944 
Citigroup, Inc. jr. unsec. sub. FRN Ser. T, 6.25%, perpetual maturity  25,000  27,214 

 

High Income Securities Fund 29 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Financials cont.     
CNG Holdings, Inc./OH 144A sr. notes 9.375%, 5/15/20  $125,000  $112,969 
CNO Financial Group, Inc. sr. unsec. unsub. notes 5.25%, 5/30/25  155,000  159,650 
Credit Acceptance Corp. company guaranty sr. unsec. notes     
7.375%, 3/15/23  50,000  51,563 
Credit Acceptance Corp. company guaranty sr. unsec. notes     
6.125%, 2/15/21  110,000  111,375 
DFC Finance Corp. 144A company guaranty sr. notes     
10.50%, 6/15/20  85,000  50,575 
Dresdner Funding Trust I 144A jr. unsec. sub. notes 8.151%, 6/30/31  110,000  129,525 
ESH Hospitality, Inc. 144A company guaranty sr. unsec. notes     
5.25%, 5/1/25 R   60,000  60,525 
Hub Holdings, LLC/Hub Holdings Finance, Inc. 144A sr. unsec. sub.     
notes 8.125%, 7/15/19 ‡‡  70,000  70,525 
HUB International, Ltd. 144A sr. unsec. notes 7.875%, 10/1/21  155,000  163,913 
Icahn Enterprises LP/Icahn Enterprises Finance Corp. company     
guaranty sr. unsec. notes 6.00%, 8/1/20  65,000  67,601 
Icahn Enterprises LP/Icahn Enterprises Finance Corp. company     
guaranty sr. unsec. notes 5.875%, 2/1/22  95,000  97,012 
Icahn Enterprises LP/Icahn Enterprises Finance Corp. 144A sr.     
unsec. notes 6.75%, 2/1/24  65,000  67,438 
Icahn Enterprises LP/Icahn Enterprises Finance Corp. 144A sr.     
unsec. notes 6.25%, 2/1/22  60,000  61,950 
Intelsat Connect Finance SA 144A company guaranty sr. unsec.     
sub. notes 12.50%, 4/1/22 (Luxembourg)  9,000  7,853 
International Lease Finance Corp. sr. unsec. unsub. notes     
6.25%, 5/15/19  80,000  86,800 
International Lease Finance Corp. sr. unsec. unsub. notes     
5.875%, 8/15/22  60,000  67,500 
iStar, Inc. sr. unsec. notes 5.00%, 7/1/19 R   5,000  5,088 
Liberty Mutual Group, Inc. 144A company guaranty jr. unsec. sub.     
bonds 7.80%, 3/15/37  75,000  86,625 
Lloyds Banking Group PLC jr. unsec. sub. FRB 7.50%, perpetual     
maturity (United Kingdom)  249,000  264,266 
MGM Growth Properties Operating Partnership LP/MGP     
Finance Co-Issuer, Inc. 144A company guaranty sr. unsec. notes     
5.625%, 5/1/24  45,000  47,588 
Nationstar Mortgage, LLC/Nationstar Capital Corp. company     
guaranty sr. unsec. unsub. notes 6.50%, 7/1/21  130,000  132,925 
Neuberger Berman Group, LLC/Neuberger Berman Finance Corp.     
144A sr. unsec. notes 5.875%, 3/15/22  110,000  113,247 
OneMain Financial Holdings, LLC 144A company guaranty sr.     
unsec. sub. notes 6.75%, 12/15/19  55,000  57,578 
OneMain Financial Holdings, LLC 144A company guaranty sr.     
unsec. unsub. notes 7.25%, 12/15/21  65,000  67,925 
Provident Funding Associates LP/PFG Finance Corp. 144A     
company guaranty sr. unsec. notes 6.75%, 6/15/21  170,000  172,763 
Royal Bank of Scotland Group PLC jr. unsec. sub. FRB 7.648%,     
perpetual maturity (United Kingdom)  265,000  308,063 
Springleaf Finance Corp. company guaranty sr. unsec. unsub.     
notes 8.25%, 12/15/20  40,000  43,950 
Springleaf Finance Corp. sr. unsec. unsub. notes 5.25%, 12/15/19  40,000  40,250 

 

30 High Income Securities Fund 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Financials cont.     
Stearns Holdings, Inc. 144A company guaranty sr. notes     
9.375%, 8/15/20  $90,000  $90,000 
TMX Finance, LLC/TitleMax Finance Corp. 144A company guaranty     
sr. notes 8.50%, 9/15/18  170,000  159,163 
TRI Pointe Group, Inc./TRI Pointe Homes, Inc. company guaranty     
sr. unsec. unsub. notes 5.875%, 6/15/24  100,000  103,500 
USI, Inc./NY 144A sr. unsec. notes 7.75%, 1/15/21  125,000  127,656 
    4,809,217 
Health care (3.5%)     
Acadia Healthcare Co., Inc. company guaranty sr. unsec. sub. notes     
6.125%, 3/15/21  155,000  158,875 
Acadia Healthcare Co., Inc. company guaranty sr. unsec. sub. notes     
5.125%, 7/1/22  75,000  75,563 
AMAG Pharmaceuticals, Inc. 144A company guaranty sr. unsec.     
notes 7.875%, 9/1/23  210,000  202,650 
Centene Corp. sr. unsec. unsub. notes 6.125%, 2/15/24  110,000  119,350 
Centene Corp. sr. unsec. unsub. notes 5.625%, 2/15/21  35,000  36,838 
Centene Corp. sr. unsec. unsub. notes 4.75%, 1/15/25  25,000  25,719 
Centene Corp. sr. unsec. unsub. notes 4.75%, 5/15/22  110,000  113,988 
CHS/Community Health Systems, Inc. company guaranty sr.     
unsec. notes 6.875%, 2/1/22  250,000  219,375 
Concordia International Corp. 144A company guaranty sr. unsec.     
notes 7.00%, 4/15/23 (Canada)  175,000  68,250 
Concordia International Corp. 144A sr. notes 9.00%,     
4/1/22 (Canada)  20,000  17,600 
DPx Holdings BV 144A sr. unsec. sub. notes 7.50%,     
2/1/22 (Netherlands)  135,000  143,184 
Endo Finance, LLC/Endo Finco, Inc. 144A company guaranty sr.     
unsec. unsub. notes 5.375%, 1/15/23  100,000  89,500 
Endo Limited/Endo Finance LLC/Endo Finco, Inc. 144A company     
guaranty sr. unsec. unsub. notes 6.00%, 7/15/23 (Ireland)  210,000  193,200 
Halyard Health, Inc. company guaranty sr. unsec. unsub. notes     
6.25%, 10/15/22  125,000  129,375 
HCA, Inc. company guaranty sr. bonds 5.25%, 6/15/26  100,000  105,625 
HCA, Inc. company guaranty sr. notes 6.50%, 2/15/20  275,000  301,813 
HCA, Inc. company guaranty sr. sub. notes 3.75%, 3/15/19  65,000  66,625 
HCA, Inc. company guaranty sr. unsec. unsub. notes     
7.50%, 2/15/22  30,000  34,650 
HCA, Inc. company guaranty sr. unsec. unsub. notes     
5.375%, 2/1/25  35,000  36,619 
Jaguar Holding Co. II/Pharmaceutical Product Development, LLC     
144A company guaranty sr. unsec. notes 6.375%, 8/1/23  135,000  145,294 
Kinetic Concepts, Inc./KCI USA, Inc. 144A company guaranty sub.     
notes 12.50%, 11/1/21  55,000  61,738 
Mallinckrodt International Finance SA/Mallinckrodt CB,     
LLC 144A company guaranty sr. unsec. unsub. notes 5.50%,     
4/15/25 (Luxembourg)  125,000  116,250 
Molina Healthcare, Inc. company guaranty sr. unsec. notes     
5.375%, 11/15/22  75,000  77,625 
Omega Healthcare Investors, Inc. company guaranty sr. unsec.     
unsub. notes 4.95%, 4/1/24 R   85,000  87,802 

 

High Income Securities Fund 31 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Health care cont.     
Ortho-Clinical Diagnostics, Inc./Ortho-Clinical Diagnostics     
SA 144A sr. unsec. notes 6.625%, 5/15/22  $165,000  $147,263 
Service Corp. International/US sr. unsec. notes 5.375%, 1/15/22  110,000  113,988 
Service Corp. International/US sr. unsec. unsub. notes     
5.375%, 5/15/24  255,000  270,147 
Sterigenics-Nordion Holdings, LLC 144A sr. unsec. notes     
6.50%, 5/15/23  110,000  112,475 
Tenet Healthcare Corp. company guaranty sr. bonds     
4.375%, 10/1/21  60,000  60,450 
Tenet Healthcare Corp. company guaranty sr. FRN 4.463%, 6/15/20  110,000  111,375 
Tenet Healthcare Corp. company guaranty sr. notes     
6.25%, 11/1/18  225,000  238,500 
Tenet Healthcare Corp. company guaranty sr. notes 4.75%, 6/1/20  25,000  25,500 
Tenet Healthcare Corp. company guaranty sr. sub. notes     
6.00%, 10/1/20  140,000  148,400 
Valeant Pharmaceuticals International, Inc. 144A company     
guaranty sr. unsec. notes 6.125%, 4/15/25  100,000  79,625 
Valeant Pharmaceuticals International, Inc. 144A company     
guaranty sr. unsec. notes 5.875%, 5/15/23  225,000  183,094 
Valeant Pharmaceuticals International, Inc. 144A company     
guaranty sr. unsec. notes 5.625%, 12/1/21  10,000  8,425 
Valeant Pharmaceuticals International, Inc. 144A company     
guaranty sr. unsec. notes 5.50%, 3/1/23  55,000  44,344 
Valeant Pharmaceuticals International, Inc. 144A company     
guaranty sr. unsec. notes 5.375%, 3/15/20  105,000  94,106 
    4,265,200 
Technology (2.3%)     
Avaya, Inc. 144A company guaranty sr. notes 7.00%, 4/1/19     
(In default) †  300,000  239,250 
CommScope Technologies Finance, LLC 144A sr. unsec. notes     
6.00%, 6/15/25  180,000  192,600 
Diamond 1 Finance Corp./Diamond 2 Finance Corp. 144A     
company guaranty sr. unsec. notes 7.125%, 6/15/24  295,000  325,950 
Diamond 1 Finance Corp./Diamond 2 Finance Corp. 144A sr. notes     
5.45%, 6/15/23  130,000  140,488 
Diamond 1 Finance Corp./Diamond 2 Finance Corp. 144A sr. unsec.     
notes 5.875%, 6/15/21  20,000  21,163 
First Data Corp. 144A company guaranty sr. unsec. unsub. notes     
7.00%, 12/1/23  165,000  177,375 
First Data Corp. 144A notes 5.75%, 1/15/24  120,000  124,350 
First Data Corp. 144A sr. notes 5.375%, 8/15/23  105,000  109,200 
Inception Merger Sub, Inc./Rackspace Hosting, Inc. 144A sr. unsec.     
notes 8.625%, 11/15/24  140,000  147,525 
Infor Software Parent LLC/Infor Software Parent, Inc. 144A     
company guaranty sr. unsec. notes 7.125%, 5/1/21 ‡‡  225,000  231,188 
Infor US, Inc. company guaranty sr. unsec. notes 6.50%, 5/15/22  155,000  161,200 
Infor US, Inc. 144A company guaranty sr. notes 5.75%, 8/15/20  60,000  62,250 
Iron Mountain, Inc. company guaranty sr. unsec. notes     
6.00%, 8/15/23 R   105,000  111,132 
Iron Mountain, Inc. 144A company guaranty sr. unsec. notes     
6.00%, 10/1/20 R   45,000  47,263 

 

32 High Income Securities Fund 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Technology cont.     
Micron Technology, Inc. company guaranty sr. unsec. unsub. notes     
5.875%, 2/15/22  $105,000  $109,594 
Micron Technology, Inc. 144A sr. unsec. unsub. notes 5.25%, 8/1/23  80,000  80,700 
Plantronics, Inc. 144A company guaranty sr. unsec. notes     
5.50%, 5/31/23  170,000  173,062 
Solera, LLC /Solera Finance, Inc. 144A sr. unsec. notes     
10.50%, 3/1/24  175,000  199,500 
Zebra Technologies Corp. sr. unsec. unsub. bonds 7.25%, 10/15/22  145,000  156,905 
    2,810,695 
Transportation (0.3%)     
Air Medical Merger Sub Corp. 144A sr. unsec. notes 6.375%, 5/15/23  135,000  131,625 
Watco Cos., LLC/Watco Finance Corp. 144A company guaranty sr.     
unsec. notes 6.375%, 4/1/23  205,000  214,738 
    346,363 
Utilities and power (2.0%)     
AES Corp./Virginia (The) sr. unsec. notes 8.00%, 6/1/20  45,000  51,863 
AES Corp./Virginia (The) sr. unsec. notes 5.50%, 4/15/25  270,000  273,375 
AES Corp./Virginia (The) sr. unsec. notes 4.875%, 5/15/23  45,000  44,775 
AES Corp./Virginia (The) sr. unsec. unsub. notes 7.375%, 7/1/21  145,000  163,125 
Boardwalk Pipelines LP company guaranty sr. unsec. unsub.     
bonds 5.95%, 6/1/26  55,000  62,272 
Calpine Corp. sr. unsec. sub. notes 5.75%, 1/15/25  225,000  222,750 
Calpine Corp. 144A company guaranty sr. notes 6.00%, 1/15/22  30,000  31,463 
Calpine Corp. 144A company guaranty sr. sub. notes     
5.875%, 1/15/24  25,000  26,344 
Colorado Interstate Gas Co., LLC company guaranty sr. unsec.     
notes 6.85%, 6/15/37  95,000  101,328 
Dynegy, Inc. company guaranty sr. unsec. notes 7.375%, 11/1/22  105,000  103,163 
Dynegy, Inc. company guaranty sr. unsec. notes 6.75%, 11/1/19  55,000  56,650 
Dynegy, Inc. company guaranty sr. unsec. unsub. notes     
7.625%, 11/1/24  155,000  147,250 
Energy Transfer Equity LP company guaranty sr. notes     
7.50%, 10/15/20  107,000  120,241 
Energy Transfer Equity LP sr. sub. notes 5.875%, 1/15/24  45,000  48,375 
GenOn Americas Generation, LLC sr. unsec. notes 9.125%, 5/1/31  100,000  89,500 
GenOn Energy, Inc. sr. unsec. sub. notes 9.875%, 10/15/20  95,000  69,825 
Hiland Partners Holdings, LLC/Hiland Partners Finance Corp. 144A     
company guaranty sr. unsec. sub. notes 5.50%, 5/15/22  30,000  31,313 
NRG Energy, Inc. company guaranty sr. unsec. notes     
7.25%, 5/15/26  85,000  87,444 
NRG Energy, Inc. company guaranty sr. unsec. sub. notes     
7.875%, 5/15/21  75,000  77,813 
NRG Energy, Inc. 144A company guaranty sr. unsec. bonds     
6.625%, 1/15/27  120,000  117,900 
Regency Energy Partners LP/Regency Energy Finance Corp.     
company guaranty sr. unsec. notes 5.00%, 10/1/22  55,000  58,933 
Regency Energy Partners LP/Regency Energy Finance Corp.     
company guaranty sr. unsec. unsub. notes 5.875%, 3/1/22  140,000  155,261 
Regency Energy Partners LP/Regency Energy Finance Corp.     
company guaranty sr. unsec. unsub. notes 5.50%, 4/15/23  75,000  77,719 

 

High Income Securities Fund 33 

 


  Principal   
CORPORATE BONDS AND NOTES (41.2%)* cont.  amount  Value 
Utilities and power cont.     
Regency Energy Partners LP/Regency Energy Finance Corp.     
company guaranty sr. unsec. unsub. notes 4.50%, 11/1/23  $80,000  $83,241 
Southern Star Central Corp. 144A sr. unsec. notes 5.125%, 7/15/22  130,000  132,275 
Texas Competitive Electric Holdings Co., LLC/TCEH Finance, Inc.     
escrow company guaranty sr. notes 11.50%, 10/1/20  60,000  450 
    2,434,648 
Total corporate bonds and notes (cost $48,311,304)    $49,656,948 

 

  Principal   
CONVERTIBLE BONDS AND NOTES (37.0%)*  amount  Value 
Basic materials (0.3%)     
Cemex SAB de CV cv. unsec. sub. notes 3.75%, 3/15/18 (Mexico)  $325,000  $371,922 
    371,922 
Capital goods (1.6%)     
Aerojet Rocketdyne Holdings, Inc. 144A cv. sr. unsec. sub. notes     
2.25%, 12/15/23  491,000  499,593 
Dycom Industries, Inc. cv. sr. unsec. notes 0.75%, 9/15/21  535,000  587,163 
Greenbrier Cos., Inc. (The) 144A cv. sr. unsec. notes 2.875%, 2/1/24  470,000  475,875 
Horizon Global Corp. cv. sr. unsec. unsub. notes 2.75%, 7/1/22  385,000  390,294 
    1,952,925 
Communication services (2.4%)     
Clearwire Communications, LLC/Clearwire Finance, Inc. 144A cv.     
company guaranty sr. unsec. notes 8.25%, 12/1/40  199,000  206,960 
DISH Network Corp. 144A cv. sr. unsec. bonds 3.375%, 8/15/26  2,230,000  2,684,363 
Powerwave Technologies, Inc. cv. unsec. sub. notes 3.875%,     
10/1/27 (In default) † F  1,160,000  116 
    2,891,439 
Communications equipment (0.7%)     
Ciena Corp. cv. sr. unsec. notes 4.00%, 12/15/20  618,000  897,259 
    897,259 
Components (0.4%)     
Finisar Corp. cv. sr. unsec. unsub. bonds 0.50%, 12/15/36  427,000  450,485 
    450,485 
Computers (1.1%)     
Avid Technology, Inc. cv. sr. unsec. notes 2.00%, 6/15/20  274,000  196,424 
Citrix Systems, Inc. cv. sr. unsec. notes 0.50%, 4/15/19  435,000  523,088 
Inseego Corp. cv. sr. unsec. sub. notes 5.50%, 6/15/22  169,000  167,204 
Verint Systems, Inc. cv. sr. unsec. notes 1.50%, 6/1/21  410,000  388,731 
    1,275,447 
Consumer cyclicals (6.5%)     
CalAtlantic Group, Inc. cv. company guaranty sr. unsec. unsub.     
notes 1.625%, 5/15/18  480,000  583,200 
CalAtlantic Group, Inc. cv. company guaranty sr. unsec. unsub.     
notes 1.25%, 8/1/32  365,000  373,213 
Euronet Worldwide, Inc. cv. sr. unsec. bonds 1.50%, 10/1/44  535,000  666,744 
Liberty Interactive, LLC cv. sr. unsec. notes 3.50%, 1/15/31  890,000  471,700 
Liberty Interactive, LLC 144A cv. sr. unsec. bonds 1.75%, 9/30/46  790,000  881,838 
Liberty Media Corp. cv. sr. unsec. bonds 1.375%, 10/15/23  570,000  642,675 
Liberty Media Corp. 144A cv. sr. unsec. unsub. bonds     
2.25%, 9/30/46  549,000  587,087 

 

34 High Income Securities Fund 

 


  Principal   
CONVERTIBLE BONDS AND NOTES (37.0%)* cont.  amount  Value 
Consumer cyclicals cont.     
Macquarie Infrastructure Corp. cv. sr. unsec. unsub. notes     
2.00%, 10/1/23  $877,000  $861,653 
Navistar International Corp. cv. sr. unsec. sub. bonds     
4.75%, 4/15/19  644,000  623,070 
Priceline Group, Inc. (The) cv. sr. unsec. unsub. notes     
1.00%, 3/15/18  570,000  1,042,031 
Tesla Motors, Inc. cv. sr. unsec. sub. notes 1.25%, 3/1/21  1,170,000  1,102,725 
    7,835,936 
Consumer staples (0.6%)     
Vector Group, Ltd. cv. sr. unsec. sub. notes 1.75%, 4/15/20  610,000  696,544 
    696,544 
Electronics (6.7%)     
Advanced Micro Devices, Inc. cv. sr. unsec. unsub. notes     
2.125%, 9/1/26  213,000  417,224 
Intel Corp. cv. jr. unsec. sub. notes 3.25%, 8/1/39  290,000  509,313 
Microchip Technology, Inc. 144A cv. sr. unsec. sub. notes     
1.625%, 2/15/27  2,641,000  2,665,759 
Micron Technology, Inc. cv. sr. unsec. bonds 3.00%, 11/15/43  890,000  892,781 
Micron Technology, Inc. cv. sr. unsec. bonds Ser. E, 1.625%, 2/15/33  765,000  1,654,313 
ON Semiconductor Corp. cv. company guaranty sr. unsec. unsub.     
notes 1.00%, 12/1/20  685,000  746,650 
OSI Systems, Inc. 144A cv. sr. unsec. unsub. notes 1.25%, 9/1/22  481,000  468,374 
TTM Technologies, Inc. cv. sr. unsec. notes 1.75%, 12/15/20  398,000  698,490 
    8,052,904 
Energy (2.7%)     
Chesapeake Energy Corp. 144A cv. sr. unsec. bonds 5.50%, 9/15/26  1,175,000  1,155,906 
Oasis Petroleum, Inc. cv. sr. unsec. notes 2.625%, 9/15/23  276,000  373,808 
SEACOR Holdings, Inc. cv. sr. unsec. bonds 3.00%, 11/15/28  621,000  549,197 
Stone Energy Corp. cv. company guaranty sr. unsec. sub. notes     
1.75%, 3/1/17 (In default) †  840,000  590,100 
Whiting Petroleum Corp. cv. company guaranty sr. unsec. unsub.     
notes 1.25%, 4/1/20  640,000  570,400 
    3,239,411 
Financials (3.2%)     
Blackstone Mortgage Trust, Inc. cv. sr. unsec. unsub. notes     
5.25%, 12/1/18 R   631,000  712,241 
Colony Starwood Homes 144A cv. sr. unsec. notes 3.50%, 1/15/22 R   434,000  450,546 
Encore Capital Group, Inc. cv. company guaranty sr. unsec. bonds     
3.00%, 7/1/20  135,000  133,988 
Hercules Capital, Inc. 144A cv. sr. unsec. notes 4.375%, 2/1/22  476,000  479,273 
Starwood Property Trust, Inc. cv. sr. unsec. unsub. notes     
4.00%, 1/15/19 R   1,051,000  1,202,081 
TCP Capital Corp. cv. sr. unsec. bonds 5.25%, 12/15/19  827,000  860,080 
    3,838,209 
Health care (4.9%)     
Brookdale Senior Living, Inc. cv. sr. unsec. unsub. notes     
2.75%, 6/15/18  720,000  704,700 
China Medical Technologies, Inc. cv. sr. unsec. bonds Ser. CMT,     
4.00%, 8/15/17 (China) (In default) † F  763,000  61,040 

 

High Income Securities Fund 35 

 


  Principal   
CONVERTIBLE BONDS AND NOTES (37.0%)* cont.  amount  Value 
Health care cont.     
China Medical Technologies, Inc. 144A cv. sr. unsec. notes 6.25%,     
12/15/17 (China) (In default) † F  $445,000  $31,150 
Emergent BioSolutions, Inc. cv. sr. unsec. unsub. bonds     
2.875%, 1/15/21  250,000  312,188 
HealthSouth Corp. cv. sr. unsec. sub. notes 2.00%, 12/1/43  709,000  852,129 
Hologic, Inc. cv. sr. unsec. unsub. notes stepped-coupon 2.00%     
(zero %, 3/1/18) 3/1/42 ††  880,000  1,198,450 
Impax Laboratories, Inc. cv. sr. unsec. notes 2.00%, 6/15/22  365,000  297,247 
Jazz Investments I, Ltd. cv. company guaranty sr. unsec. sub.     
bonds 1.875%, 8/15/21 (Ireland)  951,000  983,096 
Medicines Co. (The) cv. sr. unsec. notes 2.50%, 1/15/22  265,000  441,225 
Medidata Solutions, Inc. cv. sr. unsec. notes 1.00%, 8/1/18  370,000  416,250 
Sucampo Pharmaceuticals, Inc. cv. sr. unsec. notes     
3.25%, 12/15/21  645,000  649,838 
    5,947,313 
Semiconductor (2.5%)     
Cypress Semiconductor Corp. 144A cv. sr. unsec. notes     
4.50%, 1/15/22  395,000  477,456 
Integrated Device Technology, Inc. cv. sr. unsec. unsub. notes     
0.875%, 11/15/22  465,000  476,044 
Jazz US Holdings, Inc. cv. company guaranty sr. unsec. notes     
8.00%, 12/31/18  223,000  513,597 
Novellus Systems, Inc. cv. company guaranty sr. unsec. notes     
2.625%, 5/15/41  280,000  977,900 
Teradyne, Inc. 144A cv. sr. unsec. notes 1.25%, 12/15/23  450,000  502,313 
    2,947,310 
Software (0.8%)     
Safeguard Scientifics, Inc. cv. sr. unsec. bonds 5.25%, 5/15/18  970,000  985,763 
    985,763 
Technology services (1.7%)     
j2 Global, Inc. cv. sr. unsec. notes 3.25%, 6/15/29  570,000  755,250 
Proofpoint, Inc. cv. sr. unsec. unsub. notes 0.75%, 6/15/20  340,000  401,625 
salesforce.com, Inc. cv. sr. unsec. unsub. notes 0.25%, 4/1/18  405,000  521,691 
Twitter, Inc. cv. sr. unsec. unsub. bonds 1.00%, 9/15/21  405,000  371,588 
    2,050,154 
Transportation (0.9%)     
Atlas Air Worldwide Holdings, Inc. cv. sr. unsec. bonds     
2.25%, 6/1/22  319,000  340,333 
Echo Global Logistics, Inc. cv. sr. unsec. notes 2.50%, 5/1/20  385,000  365,269 
Scorpio Tankers, Inc. 144A cv. sr. unsec. sub. notes 2.375%, 7/1/19  462,000  404,828 
    1,110,430 
Total convertible bonds and notes (cost $43,295,720)    $44,543,451 

 

CONVERTIBLE PREFERRED STOCKS (17.4%)*  Shares  Value 
Basic materials (—%)     
Smurfit-Stone Container Corp. escrow zero % cv. pfd. F   65,720  $657 
    657 

 

36 High Income Securities Fund 

 


CONVERTIBLE PREFERRED STOCKS (17.4%)* cont.  Shares  Value 
Capital goods (1.7%)     
Arconic, Inc. $2.688 cv. pfd.  20,158  $889,976 
Belden, Inc. $6.75 cv. pfd.  5,711  572,242 
Rexnord Corp. $2.88 cv. pfd.  11,072  593,791 
    2,056,009 
Communication services (3.3%)     
American Tower Corp. $5.50 cv. pfd. R   12,285  1,321,405 
Cincinnati Bell, Inc. Ser. B, $3.378 cum. cv. pfd.  21,872  1,094,967 
T-Mobile US, Inc. Ser. A, $2.75 cv. pfd.  15,119  1,537,300 
    3,953,672 
Consumer cyclicals (0.8%)     
FelCor Lodging Trust, Inc. Ser. A, $0.488 cum. cv. pfd. R   37,550  925,840 
    925,840 
Consumer staples (0.9%)     
Tyson Foods, Inc. $2.375 cv. pfd.  16,257  1,107,427 
    1,107,427 
Energy (0.8%)     
Hess Corp. $2.00 cv. pfd.  11,340  704,894 
Southwestern Energy Co. Ser. B, $3.125 cv. pfd.  15,795  303,738 
    1,008,632 
Financials (5.9%)     
Alexandria Real Estate Equities, Inc. Ser. D, $1.75 cv. pfd. R   22,100  775,918 
AMG Capital Trust II $2.575 cv. pfd.  14,140  831,609 
Banc of California, Inc. $4.00 cv. pfd.    8,217  733,203 
Bank of America Corp. Ser. L, 7.25% cv. pfd.  773  915,039 
EPR Properties Ser. C, $1.438 cv. pfd. R   37,670  1,145,402 
iStar, Inc. $2.25 cv. pfd. R   7,445  378,653 
Mandatory Exchangeable Trust 144A $5.75 cv. pfd.  4,456  551,876 
Wells Fargo & Co. Ser. L, 7.50% cv. pfd.  790  968,244 
Welltower, Inc. Ser. I, $3.25 cv. pfd. R   12,177  772,478 
    7,072,422 
Health care (1.7%)     
Allergan PLC Ser. A, 5.50% cv. pfd.  1,645  1,411,048 
Anthem, Inc. $2.63 cv. pfd.  12,115  606,113 
    2,017,161 
Utilities and power (2.3%)     
DTE Energy Co. $3.25 cv. pfd.  14,790  790,526 
Dynegy, Inc. $7.00 cv. pfd.  3,046  185,136 
El Paso Energy Capital Trust I $2.375 cv. pfd.  1,069  53,450 
Exelon Corp. $3.25 cv. pfd.  18,828  930,291 
NextEra Energy, Inc. $3.06 cv. pfd.  16,310  853,339 
    2,812,742 
Total convertible preferred stocks (cost $18,939,909)    $20,954,562 

 

High Income Securities Fund 37 

 


COMMON STOCKS (2.2%)*  Shares  Value 
ACC Claims Holdings, LLC Class A (Units) F   199,505  $1,197 
Ally Financial, Inc.  5,435  122,233 
Bank of America Corp.  13,065  322,444 
Berry Plastics Group, Inc. †  1,155  58,131 
Boise Cascade Co. †  1,649  44,688 
CIT Group, Inc.  1,606  68,897 
Eldorado Resorts, Inc. †  5,235  85,331 
Gaming and Leisure Properties, Inc. R   2,520  80,640 
General Motors Co.  1,650  60,786 
Halcon Resources Corp. †  5,898  47,774 
Keane Group, Inc. †  2,526  44,256 
Live Nation Entertainment, Inc. †  1,865  52,985 
Milagro Oil & Gas, Inc. (Units) F   39  3,159 
NVIDIA Corp.  9,545  968,625 
Penn National Gaming, Inc. †  6,025  87,182 
SandRidge Energy, Inc. †  2,270  42,563 
Seventy Seven Energy, Inc. †  3,028  148,372 
Tervita Corp. Class A (Canada)  127  1,028 
Texas Competitive Electric Holdings Co., LLC/TCEH Finance, Inc. (Rights) F   1,028  1,388 
Vistra Energy Corp.  1,027  16,596 
Xilinx, Inc.  5,880  345,862 
Total common stocks (cost $2,106,187)    $2,604,137 

 

  Principal   
SENIOR LOANS (0.1%)*c  amount  Value 
Caesars Entertainment Operating Co., Inc. bank term loan FRN     
Ser. B6, 11.50%, 3/1/18 (In default) †  $121,050  $137,089 
Total senior loans (cost $120,129)    $137,089 

 

  Expiration  Strike     
WARRANTS (—%)* †  date  price  Warrants  Value 
Halcon Resources Corp.  9/9/20  $14.04  1,601  $3,186 
Seventy Seven Energy, Inc.  8/1/21  23.82  905  22,263 
Total warrants (cost $3,620)        $25,449 

 

SHORT-TERM INVESTMENTS (1.7%)*  Shares  Value 
Putnam Short Term Investment Fund 0.76% L   2,013,410  $2,013,410 
Total short-term investments (cost $2,013,410)    $2,013,410 
 
TOTAL INVESTMENTS     
Total investments (cost $114,790,279)    $119,935,046 

 

Key to holding’s currency abbreviations

CAD  Canadian Dollar 
USD /$  United States Dollar 

 

38 High Income Securities Fund 

 


Key to holding’s abbreviations

FRB  Floating Rate Bonds: the rate shown is the current interest rate at the close of the reporting period 
FRN  Floating Rate Notes: the rate shown is the current interest rate or yield at the close of the reporting period 

 

Notes to the fund’s portfolio

Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from September 1, 2016 through February 28, 2017 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures and references to “OTC”, if any, represent over-the-counter.

* Percentages indicated are based on net assets of $120,502,083.

† This security is non-income-producing.

†† The interest rate and date shown parenthetically represent the new interest rate to be paid and the date the fund will begin accruing interest at this rate.

‡‡ Income may be received in cash or additional securities at the discretion of the issuer.

c Senior loans are exempt from registration under the Securities Act of 1933, as amended, but contain certain restrictions on resale and cannot be sold publicly. These loans pay interest at rates which adjust periodically. The interest rates shown for senior loans are the current interest rates at the close of the reporting period. Senior loans are also subject to mandatory and/or optional prepayment which cannot be predicted. As a result, the remaining maturity may be substantially less than the stated maturity shown (Notes 1 and 7).

F This security is valued by Putnam Management at fair value following procedures approved by the Trustees. Securities may be classified as Level 2 or Level 3 for ASC 820 based on the securities’ valuation inputs (Note 1).

L Affiliated company (Note 5). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

R Real Estate Investment Trust.

At the close of the reporting period, the fund maintained liquid assets totaling $2,560 to cover certain derivative contracts.

Debt obligations are considered secured unless otherwise indicated.

144A after the name of an issuer represents securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

The dates shown on debt obligations are the original maturity dates.

FORWARD CURRENCY CONTRACTS at 2/28/17 (aggregate face value $177,492) (Unaudited)   
            Unrealized 
    Contract  Delivery    Aggregate  appreciation/ 
Counterparty  Currency  type  date  Value  face value  (depreciation) 
Bank of America N.A.             
  Canadian Dollar  Buy  4/19/17  $603  $596  $7 
Citibank, N.A.             
  Canadian Dollar  Buy  4/19/17  75  74  1 
JPMorgan Chase Bank N.A.           
  Canadian Dollar  Buy  4/19/17  301  298  3 
State Street Bank and Trust Co.           
  Canadian Dollar  Sell  4/19/17  128,793  127,311  (1,482) 
WestPac Banking Corp.           
  Canadian Dollar  Sell  4/19/17  49,785  49,213  (572) 
Total            $(2,043) 

 

High Income Securities Fund 39 

 


ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:

Level 1: Valuations based on quoted prices for identical securities in active markets.

Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.

The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:

    Valuation inputs   
Investments in securities:  Level 1  Level 2  Level 3 
Common stocks*:       
Basic materials  $44,688  $—­  $—­ 
Capital goods  58,131  —­  —­ 
Communication services  —­  —­  1,197 
Consumer cyclicals  286,284  —­  —­ 
Energy  282,965  1,028  3,159 
Financials  594,214  —­  —­ 
Technology  1,314,487  —­  —­ 
Utilities and power  16,596  1,388  —­ 
Total common stocks  2,597,365  2,416  4,356 
 
Convertible bonds and notes  —­  44,451,145  92,306 
Convertible preferred stocks  1,861,971  19,091,934  657 
Corporate bonds and notes  —­  49,656,925  23 
Senior loans  —­  137,089  —­ 
Warrants  3,186  22,263  —­ 
Short-term investments  2,013,410  —­  —­ 
Totals by level  $6,475,932  $113,361,772  $97,342 
 
    Valuation inputs   
Other financial instruments:  Level 1  Level 2  Level 3 
Forward currency contracts  $—­  $(2,043)  $—­ 
Totals by level  $—­  $(2,043)  $—­ 

 

* Common stock classifications are presented at the sector level, which may differ from the fund’s portfolio presentation.

During the reporting period, transfers within the fair value hierarchy, if any (other than certain transfers involving non-U.S. equity securities as described in Note 1), did not represent, in the aggregate, more than 1% of the fund’s net assets measured as of the end of the period. Transfers are accounted for using the end of period pricing valuation method.

At the start and close of the reporting period, Level 3 investments in securities represented less than 1% of the fund’s net assets and were not considered a significant portion of the fund’s portfolio.

The accompanying notes are an integral part of these financial statements.

40 High Income Securities Fund 

 


Statement of assets and liabilities 2/28/17 (Unaudited)

ASSETS   
Investment in securities, at value (Note 1):   
Unaffiliated issuers (identified cost $112,776,869)  $117,921,636 
Affiliated issuers (identified cost $2,013,410) (Note 5)  2,013,410 
Cash  17,318 
Dividends, interest and other receivables  1,234,993 
Receivable for investments sold  735,959 
Unrealized appreciation on forward currency contracts (Note 1)  11 
Total assets  121,923,327 
 
LIABILITIES   
Payable for investments purchased  622,226 
Payable for compensation of Manager (Note 2)  197,566 
Payable for custodian fees (Note 2)  16,445 
Payable for investor servicing fees (Note 2)  9,955 
Payable for Trustee compensation and expenses (Note 2)  93,187 
Payable for administrative services (Note 2)  439 
Distributions payable to shareholders  400,197 
Unrealized depreciation on forward currency contracts (Note 1)  2,054 
Other accrued expenses  79,175 
Total liabilities  1,421,244 
 
Net assets  $120,502,083 
 
REPRESENTED BY   
Paid-in capital (Unlimited shares authorized) (Note 4)  $133,516,587 
Undistributed net investment income (Note 1)  540,915 
Accumulated net realized loss on investments and foreign currency transactions (Note 1)  (18,698,128) 
Net unrealized appreciation of investments and assets and liabilities in foreign currencies  5,142,709 
Total — Representing net assets applicable to capital shares outstanding  $120,502,083 
 
COMPUTATION OF NET ASSET VALUE   
Net asset value per share   
($120,502,083 divided by 12,977,001 shares)  $9.29 

 

The accompanying notes are an integral part of these financial statements.

High Income Securities Fund 41 

 


Statement of operations Six months ended 2/28/17 (Unaudited)

INVESTMENT INCOME   
Interest (including interest income of $13,117 from investments in affiliated issuers) (Note 5)  $1,935,091 
Dividends (net of foreign tax of $3,108)  769,129 
Total investment income  2,704,220 
 
EXPENSES   
Compensation of Manager (Note 2)  401,275 
Investor servicing fees (Note 2)  29,446 
Custodian fees (Note 2)  12,861 
Trustee compensation and expenses (Note 2)  2,988 
Administrative services (Note 2)  2,065 
Auditing and tax fees  46,780 
Other  45,402 
Total expenses  540,817 
 
Expense reduction (Note 2)  (69) 
Net expenses  540,748 
 
Net investment income  2,163,472 
 
Net realized gain on investments (Notes 1 and 3)  1,460,310 
Net realized gain on foreign currency transactions (Note 1)  1,561 
Net unrealized appreciation of assets and liabilities in foreign currencies during the period  1,030 
Net unrealized appreciation of investments during the period  3,227,564 
Net gain on investments  4,690,465 
 
Net increase in net assets resulting from operations  $6,853,937 

 

The accompanying notes are an integral part of these financial statements.

42 High Income Securities Fund 

 


Statement of changes in net assets

INCREASE (DECREASE) IN NET ASSETS  Six months ended 2/28/17*  Year ended 8/31/16 
Operations     
Net investment income  $2,163,472  $4,824,154 
Net realized gain (loss) on investments     
and foreign currency transactions  1,461,871  (5,043,497) 
Net unrealized appreciation of investments and assets     
and liabilities in foreign currencies  3,228,594  6,865,971 
Net increase in net assets resulting from operations  6,853,937  6,646,628 
Distributions to shareholders (Note 1):     
From ordinary income     
Net investment income  (2,423,256)  (5,117,836) 
Decrease from capital share transactions (Note 4)  (2,458,581)  (10,025,545) 
Total increase (decrease) in net assets  1,972,100  (8,496,753) 
 
NET ASSETS     
Beginning of period  118,529,983  127,026,736 
End of period (including undistributed net investment     
income of $540,915 and $800,699, respectively)  $120,502,083  $118,529,983 
 
NUMBER OF FUND SHARES     
Shares outstanding at beginning of period  13,286,033  14,648,291 
Shares repurchased (Note 4)  (309,032)  (1,362,258) 
Shares outstanding at end of period  12,977,001  13,286,033 

 

*Unaudited.

The accompanying notes are an integral part of these financial statements.

High Income Securities Fund 43 

 


Financial highlights (For a common share outstanding throughout the period)

PER-SHARE OPERATING PERFORMANCE           
  Six months      Year ended     
ended** 
  2/28/17  8/31/16  8/31/15  8/31/14  8/31/13  8/31/12 
Net asset value, beginning of period  $8.92  $8.67  $9.56  $8.76  $8.21  $8.12 
Investment operations:             
Net investment income (loss)a  .17  .35  .35  .36  .44  .49 
Net realized and unrealized             
gain (loss) on investments  .37  .17  (.95)  .82  .56  .13 
Total from investment operations  .54  .52  (.60)  1.18  1.00  .62 
 
Less distributions:             
From net investment income  (.19)  (.37)  (.37)  (.43)  (.48)  (.53) 
Total distributions  (.19)  (.37)  (.37)  (.43)  (.48)  (.53) 
Increase from shares repurchased  .02  .10  .08  .05  .03  — 
Net asset value, end of period  $9.29  $8.92  $8.67  $9.56  $8.76  $8.21 
Market price, end of period  $8.67  $8.02  $7.33  $8.61  $7.68  $8.27 
Total return at market price (%)b  10.57*  14.96  (10.87)  17.94  (1.44)  9.08 
 
RATIOS AND SUPPLEMENTAL DATA             
Net assets, end of period             
(in thousands)  $120,502  $118,530  $127,027  $151,659  $145,549  $141,003 
Ratio of expenses to average             
net assets (%)c  .46*  .94  .90  .94  .90  .93 
Ratio of net investment income             
(loss) to average net assets (%)  1.84*  4.15  3.86  3.91  5.10  6.04 
Portfolio turnover (%)  29*  26  35  41  48  36 

 

* Not annualized.

** Unaudited.

a Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period.

b Total return assumes dividend reinvestment.

c Includes amounts paid through expense offset and brokerage/service arrangements, if any (Note 2).

The accompanying notes are an integral part of these financial statements.

44 High Income Securities Fund 

 


Notes to financial statements 2/28/17 (Unaudited)

Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from September 1, 2016 through February 28, 2017.

Putnam High Income Securities Fund (the fund) is a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as a diversified closed-end management investment company. The goal of the fund is to provide high current income as a primary objective and capital appreciation as a secondary objective. The fund pursues its objective primarily by investing in both convertible bonds and convertible preferred stocks, which share many of the same characteristics as convertible bonds, but offer greater potential for capital appreciation. The fund also invests significantly in high-yielding non-convertible securities with the potential for capital appreciation.

The fund’s shares trade on a stock exchange at market prices, which may be lower than the fund’s net asset value.

In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.

The fund has entered into contractual arrangements with an investment adviser, administrator, transfer agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the fund’s Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

Note 1: Significant accounting policies

The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.

Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.

Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities under Accounting Standards Codification 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.

Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.

Market quotations are not considered to be readily available for certain debt obligations (including short-term investments with remaining maturities of 60 days or less) and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected

High Income Securities Fund 45 

 


by Putnam Management. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities (which consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.

Many securities markets and exchanges outside the U.S. close prior to the scheduled close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the scheduled close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value certain foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. The foreign equity securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.

To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.

To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.

Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.

Interest income, net of any applicable withholding taxes, is recorded on the accrual basis. Dividend income, net of any applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain.

All premiums/discounts are amortized/accreted on a yield-to-maturity basis.

The fund earned certain fees in connection with its senior loan purchasing activities. These fees are treated as market discount and are amortized into income in the Statement of operations.

Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on closed forward currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and

46 High Income Securities Fund 

 


liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.

Forward currency contracts The fund buys and sells forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used for hedging currency exposures and to gain exposure to currencies.

The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The fair value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in fair value is recorded as an unrealized gain or loss. The fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed when the contract matures or by delivery of the currency. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statement of assets and liabilities.

Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio.

Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, is presented in the fund’s portfolio.

Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.

Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.

At the close of the reporting period, the fund had a net liability position of $2,054 on open derivative contracts subject to the Master Agreements. There was no collateral posted by the fund at period end for these agreements.

Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.

Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code.

The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.

The fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any,

High Income Securities Fund 47 

 


are reflected as an asset on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment.

At August 31, 2016, the fund had a capital loss carryover of $15,103,651 available to the extent allowed by the Code to offset future net capital gain, if any. For any carryover, the amount of the carryover and that carryover’s expiration date is:

Loss carryover 
Short-term  Long-term  Total  Expiration 
$580,164  $591,975  $1,172,139  * 
13,931,512  N/A  13,931,512  August 31, 2018 

 

* Under the Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred will be required to be utilized prior to the losses incurred in pre-enactment tax years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer certain capital losses of $4,268,672 recognized during the period between November 1, 2015 and August 31, 2016 to its fiscal year ending August 31, 2017.

The aggregate identified cost on a tax basis is $115,577,950, resulting in gross unrealized appreciation and depreciation of $9,753,284 and $5,396,188, respectively, or net unrealized appreciation of $4,357,096.

Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations.

Note 2: Management fee, administrative services and other transactions

The fund pays Putnam Management for management and investment advisory services quarterly based on the average net assets (including assets, but excluding liabilities, attributable to leverage for investment purposes) of the fund. The fee is based on the following annual rates:

0.700%  of the first $500 million of average  0.430%  of the next $5 billion of average 
  net assets,    net assets, 
0.600%  of the next $500 million of average  0.420%  of the next $5 billion of average 
  net assets,    net assets, 
0.550%  of the next $500 million of average  0.410%  of the next $5 billion of average 
  net assets,    net assets, 
0.500%  of the next $5 billion of average  0.400%  of the next $5 billion of average 
  net assets,    net assets, 
0.475%  of the next $5 billion of average  0.390%  of the next $5 billion of average 
  net assets,    net assets, 
0.455%  of the next $5 billion of average  0.380%  of the next $8.5 billion of average net 
  net assets,    assets and 
0.440%  of the next $5 billion of average  0.370%  of any excess thereafter. 
  net assets,     

 

For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.341% of the fund’s average net assets.

 

48 High Income Securities Fund 

 


Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.40% of the average net assets (including assets, but excluding liabilities, attributable to leverage for investment purposes) of the portion of the fund managed by PIL.

The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.

Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.

Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. was paid a monthly fee for investor servicing at an annual rate of 0.05% of the fund’s average daily net assets. The amounts incurred for investor servicing agent functions during the reporting period are included in Investor servicing fees in the Statement of operations.

The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $69 under the expense offset arrangements.

Each Independent Trustee of the fund receives an annual Trustee fee, of which $91, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.

The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.

Note 3: Purchases and sales of securities

During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:

  Cost of purchases  Proceeds from sales 
Investments in securities (Long-term)  $33,389,473  $32,412,731 
U.S. government securities (Long-term)  —  — 
Total  $33,389,473  $32,412,731 

 

The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.

 

High Income Securities Fund 49 

 


Note 4: Shares repurchased

In September 2016, the Trustees approved the renewal of the repurchase program to allow the fund to repurchase up to 10% of its outstanding common shares over the 12-month period ending October 7, 2017 (based on shares outstanding as of October 7, 2016). Prior to this renewal, the Trustees had approved a repurchase program to allow the fund to repurchase up to 10% of its outstanding common shares over the 12-month period ending October 7, 2016 (based on shares outstanding as of October 7, 2015). Repurchases are made when the fund’s shares are trading at less than net asset value and in accordance with procedures approved by the fund’s Trustees.

For the reporting period, the fund repurchased 309,032 common shares for an aggregate purchase price of $2,458,581, which reflects a weighted-average discount from net asset value per share of 10.58%. The weighted-average discount reflects the payment of commissions by the fund to execute repurchase trades.

For the previous fiscal year, the fund repurchased 1,362,258 common shares for an aggregate purchase price of $10,025,545, which reflected a weighted-average discount from net asset value per share of 12.06%. The weighted-average discount reflected the payment of commissions by the fund to execute repurchase trades.

At the close of the reporting period, Putnam Investments, LLC owned approximately 438 shares of the fund (less than 0.01% of the fund’s shares outstanding), valued at $4,069 based on net asset value.

Note 5: Affiliated transactions

Transactions during the reporting period with any company which is under common ownership or control were as follows:

  Fair value at         
  the beginning        Fair value at 
  of the        the end of the 
  reporting      Investment  reporting 
Name of affiliate  period  Purchase cost  Sale proceeds  income  period 
Putnam Short Term           
Investment Fund**  $4,152,662  $14,546,786  $16,686,038  $13,117  $2,013,410 
Totals  $4,152,662  $14,546,786  $16,686,038  $13,117  $2,013,410 

 

** Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management.

Note 6: Market, credit and other risks

In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations. The fund may invest in higher-yielding, lower-rated bonds that may have a higher rate of default.

Note 7: Senior loan commitments

Senior loans are purchased or sold on a when-issued or delayed delivery basis and may be settled a month or more after the trade date, which from time to time can delay the actual investment of available cash balances; interest income is accrued based on the terms of the securities. Senior loans can be acquired through an agent, by assignment from another holder of the loan, or as a participation interest in another holder’s portion of the loan. When the fund invests in a loan or participation, the fund is subject to the risk that an intermediate participant between the fund and the borrower will fail to meet its obligations to the fund, in addition to the risk that the borrower under the loan may default on its obligations.

50 High Income Securities Fund 

 


Note 8: Summary of derivative activity

The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:

Forward currency contracts (contract amount)  $240,000 
Warrants (number of warrants)  2,000 

 

The following is a summary of the fair value of derivative instruments as of the close of the reporting period:

 

Fair value of derivative instruments as of the close of the reporting period   
  ASSET DERIVATIVES  LIABILITY DERIVATIVES 
Derivatives not         
accounted for as  Statement of    Statement of   
hedging instruments  assets and    assets and   
under ASC 815  liabilities location  Fair value  liabilities location  Fair value 
Foreign exchange         
contracts  Receivables  $11  Payables  $2,054 
Equity contracts  Investments  25,449  Payables  — 
Total    $25,460    $2,054 

 

The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):

 

Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments   
Derivatives not accounted for as  Forward currency   
hedging instruments under ASC 815  contracts  Total 
Foreign exchange contracts  $1,550  $1,550 
Total  $1,550  $1,550 

 

Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss)   
on investments       
Derivatives not accounted for as    Forward currency   
hedging instruments under ASC 815  Warrants  contracts  Total 
Foreign exchange contracts  $—  $1,030  $1,030 
Equity contracts  21,150  —  $21,150 
Total  $21,150  $1,030  $22,180 

 

High Income Securities Fund 51 

 


Note 9: Offsetting of financial and derivative assets and liabilities

The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.

  Bank of America N.A. Citibank, N.A. JPMorgan Chase Bank N.A. State Street Bank and Trust Co. WestPac Banking Corp. Total
Assets:             
Forward currency contracts#  $7  $1  $3  $—  $—  $11 
Total Assets  $7  $1  $3  $—  $—  $11 
Liabilities:             
Forward currency contracts#  $—  $—  $—  $1,482  $572  $2,054 
Total Liabilities  $—  $—  $—  $1,482  $572  $2,054 
Total Financial and Derivative  $7  $1  $3  $(1,482)  $(572)  $(2,043) 
Net Assets             
Total collateral received (pledged)†##  $—  $—  $—  $—  $—   
Net amount  $7  $1  $3  $(1,482)  $(572)   

 

† Additional collateral may be required from certain brokers based on individual agreements.

# Covered by master netting agreement (Note 1).

## Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.

Note 10: New pronouncements

In October 2016, the SEC adopted amendments to rules under the Investment Company Act of 1940 (“final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. The final rules amend Regulation S-X and require funds to provide standardized, enhanced derivative disclosure in fund financial statements in a format designed for individual investors. The amendments to Regulation S-X also update the disclosures for other investments and investments in and advances to affiliates and amend the rules regarding the general form and content of fund financial statements. The compliance date for the amendments to Regulation S-X is August 1, 2017. Putnam Management is currently evaluating the amendments and their impact, if any, on the fund’s financial statements.

52 High Income Securities Fund 

 


Fund information

Founded over 75 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage over 100 funds across income, value, blend, growth, asset allocation, absolute return, and global sector categories.

Investment Manager  Trustees  James F. Clark 
Putnam Investment  Jameson A. Baxter, Chair  Vice President and 
Management, LLC  Kenneth R. Leibler, Vice Chair  Chief Compliance Officer 
One Post Office Square  Liaquat Ahamed   
Boston, MA 02109  Ravi Akhoury  Michael J. Higgins 
  Barbara M. Baumann  Vice President, Treasurer, 
Investment Sub-Advisor  Robert J. Darretta  and Clerk 
Putnam Investments Limited  Katinka Domotorffy   
57–59 St James’s Street  Catharine Bond Hill  Janet C. Smith 
London, England SW1A 1LD  John A. Hill  Vice President, 
  Paul L. Joskow  Principal Financial Officer, 
Marketing Services  Robert E. Patterson  Principal Accounting Officer, 
Putnam Retail Management  George Putnam, III  and Assistant Treasurer 
One Post Office Square  Robert L. Reynolds   
Boston, MA 02109  Manoj P. Singh  Susan G. Malloy 
  W. Thomas Stephens  Vice President and 
Custodian    Assistant Treasurer 
State Street Bank  Officers   
and Trust Company  Robert L. Reynolds  Mark C. Trenchard 
  President  Vice President and 
Legal Counsel    BSA Compliance Officer 
Ropes & Gray LLP  Jonathan S. Horwitz   
  Executive Vice President,  Nancy E. Florek 
  Principal Executive Officer,  Vice President, Director of 
  and Compliance Liaison  Proxy Voting and Corporate 
    Governance, Assistant Clerk, 
  Robert T. Burns  and Associate Treasurer 
  Vice President and   
  Chief Legal Officer   

 

Call 1-800-225-1581 Monday through Friday between 8:00 a.m. and 8:00 p.m. Eastern Time, or visit putnam.com anytime for up-to-date information about the fund’s NAV.



Item 2. Code of Ethics:
Not Applicable
Item 3. Audit Committee Financial Expert:
Not Applicable
Item 4. Principal Accountant Fees and Services:
Not Applicable
Item 5. Audit Committee
Not Applicable
Item 6. Schedule of Investments:
The registrant's schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies:
Not applicable
Item 8. Portfolio Managers of Closed-End Management Investment Companies
(a) Not applicable
(b) There have been no changes to the list of the registrant's identified portfolio managers included in the registrant's report on Form N-CSR for the most recent completed fiscal year.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers:
Registrant Purchase of Equity Securities
Maximum
Total Number Number (or
of Shares Approximate
Purchased Dollar Value)
as Part of Shares
of Publicly that May Yet Be
Total Number Average Announced Purchased
of Shares Price Paid Plans or under the Plans
Period Purchased per Share Programs* or Programs**
September 1 — September 30, 2016 84,277 $7.97 84,277 186,403
October 1 — October 7, 2016 — — — 186,403
October 8 — October 31, 2016 80,357 $7.90 80,357 1,239,819
November 1 — November 30, 2016 88,129 $7.87 88,129 1,151,690
December 1 — December 31, 2016 56,269 $8.15 56,269 1,095,421
January 1 — January 31, 2017 — — — 1,095,421
February 1 — February 28, 2017 — — — 1,095,421


*   In October 2005, the Board of Trustees of the Putnam Funds initiated the closed-end fund share repurchase program, which, as subsequently amended, authorized the fund to repurchase of up to 10% of its fund's outstanding common shares over the two-years ending October 5, 2007. The Trustees have subsequently renewed the program on an annual basis. The program renewed by the Board in September 2015, which was in effect between October 8, 2015 and October 7, 2016, allowed the fund to repurchase up to 1,446,150 of its shares. The program renewed by the Board in September 2016, which is in effect between October 8, 2016 and October 7, 2017, allows the fund to repurchase up to 1,320,176 of its shares.

** Information prior to October 7, 2016 is based on the total number of shares eligible for repurchase under the program, as amended through September 2015. Information from October 8, 2016 forward is based on the total number of shares eligible for repurchase under the program, as amended through September 2016.

Item 10. Submission of Matters to a Vote of Security Holders:
Not applicable
Item 11. Controls and Procedures:
(a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

(b) Changes in internal control over financial reporting: Not applicable
Item 12. Exhibits:
(a)(1) Not applicable
(a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.

(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Putnam High Income Securities Fund
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer

Date: April 27, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title):
/s/ Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer

Date: April 27, 2017
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Financial Officer

Date: April 27, 2017