SEC Form N-CSRS filed by John Hancock Pfd Income Fund II Pfd Income Fund II
SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 1 |
2 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT |
SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 3 |
TOP 10 ISSUERS AS OF 1/31/2024 (% of total investments) | |
Bank of America Corp. | 4.8 |
Citigroup, Inc. | 4.0 |
Edison International | 3.9 |
Wells Fargo & Company | 3.7 |
The PNC Financial Services Group, Inc. | 3.5 |
Morgan Stanley | 3.2 |
CMS Energy Corp. | 3.2 |
Energy Transfer LP | 2.9 |
NextEra Energy, Inc. | 2.6 |
Athene Holding, Ltd. | 2.6 |
TOTAL | 34.4 |
Cash and cash equivalents are not included. |
4 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT |
Shares | Value | ||||
Preferred securities (A) 85.9% (53.9% of Total investments) | $290,512,768 | ||||
(Cost $317,432,356) | |||||
Communication services 5.7% | 19,314,475 | ||||
Diversified telecommunication services 0.4% | |||||
Qwest Corp., 6.750% | 138,925 | 1,298,949 | |||
Media 0.1% | |||||
Paramount Global, 5.750% | 18,800 | 346,860 | |||
Wireless telecommunication services 5.2% | |||||
Telephone & Data Systems, Inc., 6.000% | 314,625 | 5,188,166 | |||
Telephone & Data Systems, Inc., 6.625% | 211,250 | 3,929,250 | |||
U.S. Cellular Corp., 5.500% | 105,000 | 1,943,550 | |||
U.S. Cellular Corp., 5.500% | 110,000 | 2,018,500 | |||
U.S. Cellular Corp., 6.250% | 220,000 | 4,589,200 | |||
Consumer discretionary 1.0% | 3,208,410 | ||||
Broadline retail 1.0% | |||||
Qurate Retail, Inc., 8.000% | 73,500 | 2,907,660 | |||
QVC, Inc., 6.250% | 25,000 | 300,750 | |||
Energy 1.1% | 3,879,000 | ||||
Oil, gas and consumable fuels 1.1% | |||||
NuStar Logistics LP, 12.310% (3 month CME Term SOFR + 6.996%) (B)(C) | 150,000 | 3,879,000 | |||
Financials 53.5% | 181,027,150 | ||||
Banks 20.7% | |||||
Bank of America Corp., 4.250% (B) | 134,925 | 2,622,942 | |||
Bank of America Corp., 6.450% (6.450% to 12-15-66, then 3 month LIBOR + 1.327%) (B)(D) | 95,854 | 2,465,365 | |||
Bank of America Corp., 7.250% (B) | 7,000 | 8,524,950 | |||
Citigroup Capital XIII, 11.949% (3 month CME Term SOFR + 6.632%) (B)(C) | 265,000 | 7,692,950 | |||
Citigroup, Inc., 9.632% (3 month CME Term SOFR + 4.302%) (C) | 165,327 | 4,310,075 | |||
Fifth Third Bancorp, 6.000% (B) | 170,000 | 4,226,200 | |||
First Citizens BancShares, Inc., 5.375% | 90,992 | 1,950,868 | |||
Fulton Financial Corp., 5.125% (B) | 113,025 | 2,006,194 | |||
Huntington Bancshares, Inc., 6.875% (6.875% to 4-15-28, then 5 Year CMT + 2.704%) | 145,550 | 3,539,776 | |||
JPMorgan Chase & Co., 6.000% (B) | 51,675 | 1,297,559 | |||
KeyCorp, 5.650% | 152,983 | 3,257,008 | |||
KeyCorp, 6.200% (6.200% to 12-15-27, then 5 Year CMT + 3.132%) | 48,675 | 1,087,886 | |||
Pinnacle Financial Partners, Inc., 6.750% | 86,350 | 2,087,943 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 5 |
Shares | Value | ||||
Financials (continued) | |||||
Banks (continued) | |||||
Regions Financial Corp., 4.450% | 146,100 | $2,640,027 | |||
Synovus Financial Corp., 8.920% (3 month CME Term SOFR + 3.614%) (C) | 154,500 | 3,802,245 | |||
Truist Financial Corp., 4.750% (B) | 85,725 | 1,844,802 | |||
Wells Fargo & Company, 4.750% | 248,875 | 5,171,623 | |||
Wells Fargo & Company, 7.500% (B)(D) | 7,500 | 9,075,000 | |||
WesBanco, Inc., 6.750% (6.750% to 11-15-25, then 5 Year CMT + 6.557%) | 93,000 | 2,274,780 | |||
Capital markets 6.2% | |||||
Brookfield Finance, Inc., 4.625% (B) | 158,548 | 2,792,030 | |||
Carlyle Finance LLC, 4.625% (B) | 29,926 | 598,221 | |||
Morgan Stanley, 6.375% (B) | 125,000 | 3,136,250 | |||
Morgan Stanley, 6.500% (B) | 208,450 | 5,557,277 | |||
Morgan Stanley, 6.875% (B) | 99,875 | 2,528,835 | |||
Morgan Stanley, 7.125% (B) | 234,147 | 5,944,992 | |||
State Street Corp., 5.350% (B) | 21,650 | 524,147 | |||
Consumer finance 1.3% | |||||
Navient Corp., 6.000% | 200,341 | 4,257,246 | |||
Financial services 4.0% | |||||
Apollo Global Management, Inc., 7.625% (7.625% to 12-15-28, then 5 Year CMT + 3.226%) (B)(D) | 247,375 | 6,701,389 | |||
Federal National Mortgage Association, Series S, 8.250% (E) | 75,000 | 294,750 | |||
Jackson Financial, Inc., 8.000% (8.000% to 3-30-28, then 5 Year CMT + 3.728%) | 20,000 | 540,400 | |||
KKR Group Finance Company IX LLC, 4.625% (B) | 250,474 | 4,959,385 | |||
National Rural Utilities Cooperative Finance Corp., 5.500% (B) | 46,175 | 1,142,831 | |||
Insurance 21.3% | |||||
AEGON Funding Company LLC, 5.100% (B) | 267,925 | 5,950,614 | |||
American Equity Investment Life Holding Company, 6.625% (6.625% to 9-1-25, then 5 Year CMT + 6.297%) (B) | 131,750 | 3,318,783 | |||
American Financial Group, Inc., 5.125% (B)(D) | 123,850 | 2,750,709 | |||
American International Group, Inc., 5.850% (B) | 207,000 | 5,085,990 | |||
Athene Holding, Ltd., 6.350% (6.350% to 6-30-29, then 3 month LIBOR + 4.253%) | 270,000 | 6,420,600 | |||
Athene Holding, Ltd., 7.750% (7.750% to 12-30-27, then 5 Year CMT + 3.962%) (B) | 293,775 | 7,652,839 | |||
Brighthouse Financial, Inc., 6.600% (B) | 306,687 | 7,615,038 | |||
Enstar Group, Ltd., 7.000% (7.000% to 9-1-28, then 3 month LIBOR + 4.015%) (B) | 100,550 | 2,557,992 | |||
F&G Annuities & Life, Inc., 7.950% (B) | 167,850 | 4,412,777 |
6 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Financials (continued) | |||||
Insurance (continued) | |||||
Lincoln National Corp., 9.000% (B)(D) | 220,450 | $6,218,895 | |||
Reinsurance Group of America, Inc., 7.125% (7.125% to 10-15-27, then 5 Year CMT + 3.456%) (B) | 281,925 | 7,403,351 | |||
RenaissanceRe Holdings, Ltd., 4.200% (B) | 169,000 | 3,091,010 | |||
The Allstate Corp., 7.375% (B) | 89,800 | 2,444,356 | |||
The Phoenix Companies, Inc., 7.450% | 216,500 | 3,788,750 | |||
Unum Group, 6.250% | 137,500 | 3,459,500 | |||
Industrials 1.1% | 3,687,045 | ||||
Trading companies and distributors 1.1% | |||||
WESCO International, Inc., 10.625% (10.625% to 6-22-25, then 5 Year CMT + 10.325%) | 137,525 | 3,687,045 | |||
Real estate 2.1% | 7,145,474 | ||||
Hotel and resort REITs 1.0% | |||||
Pebblebrook Hotel Trust, 6.375% | 160,450 | 3,337,360 | |||
Office REITs 0.6% | |||||
Vornado Realty Trust, 5.400% | 116,600 | 1,912,240 | |||
Specialized REITs 0.5% | |||||
Public Storage, 4.625% (B) | 85,825 | 1,895,874 | |||
Utilities 21.4% | 72,251,214 | ||||
Electric utilities 8.0% | |||||
Duke Energy Corp., 5.750% (B) | 224,675 | 5,632,602 | |||
NextEra Energy Capital Holdings, Inc., 5.650% (B) | 3,725 | 94,354 | |||
NextEra Energy, Inc., 6.926% (B)(D) | 237,850 | 8,850,399 | |||
NSTAR Electric Company, 4.780% | 15,143 | 1,139,511 | |||
SCE Trust III, 5.750% (5.750% to 3-15-24, then 3 month CME Term SOFR + 3.252%) | 79,650 | 1,984,878 | |||
SCE Trust VI, 5.000% | 219,975 | 4,395,101 | |||
SCE Trust VII, 7.500% | 192,250 | 5,056,175 | |||
Gas utilities 1.6% | |||||
South Jersey Industries, Inc., 5.625% (B) | 188,875 | 2,294,831 | |||
UGI Corp., 7.250% | 54,000 | 2,916,540 | |||
Multi-utilities 11.8% | |||||
Algonquin Power & Utilities Corp., 6.200% (6.200% to 7-1-24, then 3 month LIBOR + 4.010% to 7-1-29, then 3 month LIBOR + 4.260% to 7-1-49, then 3 month LIBOR + 5.010%) (B) | 314,175 | 7,782,115 | |||
CMS Energy Corp., 5.625% (B) | 187,515 | 4,633,496 | |||
CMS Energy Corp., 5.875% (B) | 100,900 | 2,491,221 | |||
CMS Energy Corp., 5.875% (B) | 272,225 | 6,740,291 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 7 |
Shares | Value | ||||
Utilities (continued) | |||||
Multi-utilities (continued) | |||||
DTE Energy Company, Series E, 5.250% (B) | 160,000 | $3,785,600 | |||
NiSource, Inc., 6.500% (6.500% to 3-15-24, then 5 Year CMT + 3.632% to 3-15-44, then 5 Year CMT + 4.632%) (B)(D) | 308,000 | 7,777,000 | |||
Sempra, 5.750% (B) | 270,000 | 6,677,100 | |||
Common stocks 2.6% (1.6% of Total investments) | $8,771,685 | ||||
(Cost $13,871,108) | |||||
Communication services 0.9% | 3,012,991 | ||||
Diversified telecommunication services 0.9% | |||||
Verizon Communications, Inc. (B) | 71,145 | 3,012,991 | |||
Utilities 1.7% | 5,758,694 | ||||
Multi-utilities 1.7% | |||||
Algonquin Power & Utilities Corp. | 272,150 | 5,758,694 | |||
Rate (%) | Maturity date | Par value^ | Value | ||
Corporate bonds 65.9% (41.3% of Total investments) | $222,950,534 | ||||
(Cost $230,953,460) | |||||
Communication services 1.4% | 4,825,246 | ||||
Media 1.2% | |||||
Paramount Global (6.375% to 3-30-27, then 5 Year CMT + 3.999% to 3-30-32, then 5 Year CMT + 4.249% to 3-30-47, then 5 Year CMT + 4.999%) | 6.375 | 03-30-62 | 4,700,000 | 4,197,406 | |
Wireless telecommunication services 0.2% | |||||
SoftBank Group Corp. (6.875% to 7-19-27, then 5 Year SOFR Spread-Adjusted ICE Swap Rate + 4.854% to 7-19-42, then 5 Year SOFR Spread-Adjusted ICE Swap Rate + 5.604%) (F) | 6.875 | 07-19-27 | 654,000 | 627,840 | |
Consumer discretionary 2.7% | 9,065,299 | ||||
Automobiles 2.7% | |||||
General Motors Financial Company, Inc. (5.700% to 9-30-30, then 5 Year CMT + 4.997%) (F) | 5.700 | 09-30-30 | 2,500,000 | 2,299,687 | |
General Motors Financial Company, Inc. (6.500% to 9-30-28, then 3 month LIBOR + 3.436%) (B)(D)(F) | 6.500 | 09-30-28 | 7,239,000 | 6,765,612 | |
Consumer staples 0.2% | 589,600 | ||||
Food products 0.2% | |||||
Land O’ Lakes, Inc. (B)(D)(F)(G) | 8.000 | 07-16-25 | 670,000 | 589,600 |
8 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
Energy 7.3% | $24,850,286 | ||||
Oil, gas and consumable fuels 7.3% | |||||
Enbridge, Inc. (7.375% to 1-15-28, then 5 Year CMT + 3.708% to 1-15-33, then 5 Year CMT + 3.958% to 1-15-48, then 5 Year CMT + 4.708%) (B)(D) | 7.375 | 01-15-83 | 1,853,000 | 1,849,442 | |
Enbridge, Inc. (7.625% to 1-15-33, then 5 Year CMT + 4.418% to 1-15-53, then 5 Year CMT + 5.168%) (B) | 7.625 | 01-15-83 | 2,500,000 | 2,526,550 | |
Enbridge, Inc. (8.500% to 1-15-34, then 5 Year CMT + 4.431% to 1-15-54, then 5 Year CMT + 5.181%) (B)(D) | 8.500 | 01-15-84 | 4,663,000 | 4,985,190 | |
Energy Transfer LP (6.625% to 2-15-28, then 3 month LIBOR + 4.155%) (B)(F) | 6.625 | 02-15-28 | 6,500,000 | 5,861,038 | |
Energy Transfer LP (7.125% to 5-15-30, then 5 Year CMT + 5.306%) (F) | 7.125 | 05-15-30 | 6,000,000 | 5,799,905 | |
Energy Transfer LP (3 month CME Term SOFR + 3.279%) (B)(C) | 8.586 | 11-01-66 | 4,300,000 | 3,828,161 | |
Financials 42.2% | 142,657,812 | ||||
Banks 32.0% | |||||
Banco Santander SA (9.625% to 11-21-33, then 5 Year CMT + 5.298%) (F) | 9.625 | 05-21-33 | 3,600,000 | 3,861,000 | |
Bank of America Corp. (5.875% to 3-15-28, then 3 month CME Term SOFR + 3.193%) (B)(D)(F) | 5.875 | 03-15-28 | 6,096,000 | 5,913,120 | |
Bank of America Corp. (6.125% to 4-27-27, then 5 Year CMT + 3.231%) (B)(D)(F) | 6.125 | 04-27-27 | 5,750,000 | 5,725,853 | |
Barclays PLC (8.000% to 9-15-29, then 5 Year CMT + 5.431%) (B)(D)(F) | 8.000 | 03-15-29 | 2,240,000 | 2,166,777 | |
Barclays PLC (9.625% to 6-15-30, then 5 Year SOFR ICE Swap Rate + 5.775%) (F) | 9.625 | 12-15-29 | 3,250,000 | 3,347,315 | |
Citigroup, Inc. (7.375% to 5-15-28, then 5 Year CMT + 3.209%) (F) | 7.375 | 05-15-28 | 4,525,000 | 4,600,857 | |
Citigroup, Inc. (7.625% to 11-15-28, then 5 Year CMT + 3.211%) (B)(F) | 7.625 | 11-15-28 | 5,525,000 | 5,648,492 | |
Citizens Financial Group, Inc. (6.375% to 4-6-24, then 3 month CME Term SOFR + 3.419%) (F) | 6.375 | 04-06-24 | 6,000,000 | 5,682,763 | |
CoBank ACB (4.250% to 1-1-27, then 5 Year CMT + 3.049%) (B)(D)(F) | 4.250 | 01-01-27 | 3,900,000 | 3,120,000 | |
CoBank ACB (6.450% to 10-1-27, then 5 Year CMT + 3.487%) (B)(D)(F) | 6.450 | 10-01-27 | 4,250,000 | 4,171,375 | |
Comerica, Inc. (5.625% to 10-1-25, then 5 Year CMT + 5.291%) (F) | 5.625 | 07-01-25 | 4,250,000 | 4,104,226 | |
Huntington Bancshares, Inc. (5.625% to 7-15-30, then 10 Year CMT + 4.945%) (F) | 5.625 | 07-15-30 | 3,711,000 | 3,424,012 | |
JPMorgan Chase & Co. (4.600% to 2-1-25, then 3 month CME Term SOFR + 3.125%) (B)(D)(F) | 4.600 | 02-01-25 | 3,926,000 | 3,824,826 | |
KeyCorp (5.000% to 9-15-26, then 3 month CME Term SOFR + 3.868%) (F) | 5.000 | 09-15-26 | 3,038,000 | 2,717,073 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 9 |
Rate (%) | Maturity date | Par value^ | Value | ||
Financials (continued) | |||||
Banks (continued) | |||||
Lloyds Banking Group PLC (7.500% to 6-27-24, then 5 Year U.S. Swap Rate + 4.760%) (B)(D)(F) | 7.500 | 06-27-24 | 1,250,000 | $1,237,967 | |
M&T Bank Corp. (3.500% to 9-1-26, then 5 Year CMT + 2.679%) (F) | 3.500 | 09-01-26 | 7,200,000 | 5,760,000 | |
Societe Generale SA (10.000% to 5-14-29, then 5 Year CMT + 5.448%) (F)(G) | 10.000 | 11-14-28 | 5,250,000 | 5,601,209 | |
The Bank of Nova Scotia (8.625% to 10-27-27, then 5 Year CMT + 4.389%) (B)(D) | 8.625 | 10-27-82 | 5,240,000 | 5,421,587 | |
The PNC Financial Services Group, Inc. (6.000% to 5-15-27, then 5 Year CMT + 3.000%) (B)(D)(F) | 6.000 | 05-15-27 | 5,965,000 | 5,701,765 | |
The PNC Financial Services Group, Inc. (6.200% to 9-15-27, then 5 Year CMT + 3.238%) (B)(D)(F) | 6.200 | 09-15-27 | 7,031,000 | 6,886,747 | |
The PNC Financial Services Group, Inc. (6.250% to 3-15-30, then 7 Year CMT + 2.808%) (B)(D)(F) | 6.250 | 03-15-30 | 6,000,000 | 5,699,347 | |
The Toronto-Dominion Bank (8.125% to 10-31-27, then 5 Year CMT + 4.075%) (B)(D) | 8.125 | 10-31-82 | 7,867,000 | 8,170,894 | |
Wells Fargo & Company (7.625% to 9-15-28, then 5 Year CMT + 3.606%) (B)(D)(F) | 7.625 | 09-15-28 | 5,008,000 | 5,246,020 | |
Capital markets 3.7% | |||||
State Street Corp. (6.700% to 3-15-29, then 5 Year CMT + 2.613%) (F) | 6.700 | 03-15-29 | 2,488,000 | 2,481,776 | |
The Charles Schwab Corp. (4.000% to 12-1-30, then 10 Year CMT + 3.079%) (B)(D)(F) | 4.000 | 12-01-30 | 2,700,000 | 2,241,411 | |
The Charles Schwab Corp. (5.000% to 6-1-27, then 5 Year CMT + 3.256%) (B)(D)(F) | 5.000 | 06-01-27 | 1,475,000 | 1,370,950 | |
The Goldman Sachs Group, Inc. (7.500% to 2-10-29, then 5 Year CMT + 3.156%) (B)(D)(F) | 7.500 | 02-10-29 | 6,215,000 | 6,528,044 | |
Consumer finance 1.0% | |||||
Discover Financial Services (6.125% to 9-23-25, then 5 Year CMT + 5.783%) (F) | 6.125 | 06-23-25 | 3,400,000 | 3,342,305 | |
Insurance 5.5% | |||||
Enstar Finance LLC (5.750% to 9-1-25, then 5 Year CMT + 5.468%) (B)(D) | 5.750 | 09-01-40 | 3,000,000 | 2,876,906 | |
Markel Group, Inc. (6.000% to 6-1-25, then 5 Year CMT + 5.662%) (F) | 6.000 | 06-01-25 | 2,300,000 | 2,273,802 | |
MetLife, Inc. (5.875% to 3-15-28, then 3 month CME Term SOFR + 3.221%) (B)(D)(F) | 5.875 | 03-15-28 | 5,277,000 | 5,221,453 | |
SBL Holdings, Inc. (6.500% to 11-13-26, then 5 Year CMT + 5.620%) (F)(G) | 6.500 | 11-13-26 | 5,750,000 | 3,637,326 | |
SBL Holdings, Inc. (7.000% to 5-13-25, then 5 Year CMT + 5.580%) (B)(D)(F)(G) | 7.000 | 05-13-25 | 6,890,000 | 4,650,614 |
10 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
Utilities 12.1% | $40,962,291 | ||||
Electric utilities 6.9% | |||||
Edison International (5.000% to 3-15-27, then 5 Year CMT + 3.901% to 3-15-32, then 5 Year CMT + 4.151% to 3-15-47, then 5 Year CMT + 4.901%) (B)(F) | 5.000 | 12-15-26 | 2,790,000 | 2,651,184 | |
Edison International (5.375% to 3-15-26, then 5 Year CMT + 4.698%) (F) | 5.375 | 03-15-26 | 7,500,000 | 7,216,007 | |
Emera, Inc. (6.750% to 6-15-26, then 3 month LIBOR + 5.440% to 6-15-46, then 3 month LIBOR + 6.190%) (B) | 6.750 | 06-15-76 | 2,490,000 | 2,439,948 | |
NextEra Energy Capital Holdings, Inc. (5.650% to 5-1-29, then 3 month LIBOR + 3.156%) (B)(D) | 5.650 | 05-01-79 | 5,500,000 | 5,297,243 | |
NRG Energy, Inc. (10.250% to 3-15-28, then 5 Year CMT + 5.920%) (B)(D)(F)(G) | 10.250 | 03-15-28 | 5,445,000 | 5,738,589 | |
Independent power and renewable electricity producers3.8% | |||||
Vistra Corp. (8.000% to 10-15-26, then 5 Year CMT + 6.930%) (B)(D)(F)(G) | 8.000 | 10-15-26 | 7,250,000 | 7,229,313 | |
Vistra Corp. (8.875% to 1-15-29, then 5 Year CMT + 5.045%) (F)(G) | 8.875 | 01-15-29 | 5,447,000 | 5,610,410 | |
Multi-utilities 1.4% | |||||
CMS Energy Corp. (4.750% to 6-1-30, then 5 Year CMT + 4.116%) (B) | 4.750 | 06-01-50 | 3,500,000 | 3,168,697 | |
Dominion Energy, Inc. (4.350% to 4-15-27, then 5 Year CMT + 3.195%) (F) | 4.350 | 01-15-27 | 1,784,000 | 1,610,900 | |
Capital preferred securities (H) 2.7% (1.7% of Total investments) | $9,212,179 | ||||
(Cost $10,678,500) | |||||
Financials 1.2% | 4,212,179 | ||||
Insurance 1.2% | |||||
MetLife Capital Trust IV (7.875% to 12-15-37, then 3 month LIBOR + 3.960%) (B)(D)(G) | 7.875 | 12-15-67 | 3,900,000 | 4,212,179 | |
Utilities 1.5% | 5,000,000 | ||||
Multi-utilities 1.5% | |||||
Dominion Resources Capital Trust III | 8.400 | 01-15-31 | 5,000,000 | 5,000,000 | |
Yield (%) | Shares | Value | |||
Short-term investments 2.4% (1.5% of Total investments) | $8,204,979 | ||||
(Cost $8,205,537) | |||||
Short-term funds 2.4% | 8,204,979 | ||||
John Hancock Collateral Trust (I) | 5.3658(J) | 820,375 | 8,204,979 |
Total investments (Cost $581,140,961) 159.5% | $539,652,145 | ||||
Other assets and liabilities, net (59.5%) | (201,357,987) | ||||
Total net assets 100.0% | $338,294,158 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 11 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund unless otherwise indicated. | |
^All par values are denominated in U.S. dollars unless otherwise indicated. | |
Security Abbreviations and Legend | |
CME | CME Group Published Rates |
CMT | Constant Maturity Treasury |
ICE | Intercontinental Exchange |
LIBOR | London Interbank Offered Rate |
SOFR | Secured Overnight Financing Rate |
(A) | Includes preferred stocks and hybrid securities with characteristics of both equity and debt that pay dividends on a periodic basis. |
(B) | All or a portion of this security is pledged as collateral pursuant to the Credit Facility Agreement. Total collateral value at 1-31-24 was $344,777,468. A portion of the securities pledged as collateral were loaned pursuant to the Credit Facility Agreement. The value of securities on loan amounted to $158,399,236. |
(C) | Variable rate obligation. The coupon rate shown represents the rate at period end. |
(D) | All or a portion of this security is on loan as of 1-31-24, and is a component of the fund’s leverage under the Credit Facility Agreement. |
(E) | Non-income producing security. |
(F) | Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date. |
(G) | These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $37,269,240 or 11.0% of the fund’s net assets as of 1-31-24. |
(H) | Includes hybrid securities with characteristics of both equity and debt that trade with, and pay, interest income. |
(I) | Investment is an affiliate of the fund, the advisor and/or subadvisor. |
(J) | The rate shown is the annualized seven-day yield as of 1-31-24. |
12 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Interest rate swaps | ||||||||||
Counterparty (OTC)/ Centrally cleared | Notional amount | Currency | Payments made | Payments received | Fixed payment frequency | Floating payment frequency | Maturity date | Unamortized upfront payment paid (received) | Unrealized appreciation (depreciation) | Value |
Centrally cleared | 104,000,000 | USD | Fixed 3.662% | USD SOFR Compounded OIS(a) | Semi-Annual | Quarterly | May 2026 | — | $1,159,497 | $1,159,497 |
Centrally cleared | 51,500,000 | USD | Fixed 3.473% | USD SOFR Compounded OIS(a) | Semi-Annual | Quarterly | May 2026 | — | 794,302 | 794,302 |
Centrally cleared | 25,250,000 | USD | Fixed 3.817% | USD SOFR Compounded OIS(a) | Semi-Annual | Quarterly | Dec 2026 | — | 46,515 | 46,515 |
— | $2,000,314 | $2,000,314 |
(a) | At 1-31-24, the overnight SOFR was 5.320%. |
Derivatives Currency Abbreviations | |
USD | U.S. Dollar |
Derivatives Abbreviations | |
OIS | Overnight Index Swap |
OTC | Over-the-counter |
SOFR | Secured Overnight Financing Rate |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 13 |
Assets | |
Unaffiliated investments, at value (Cost $572,935,424) | $531,447,166 |
Affiliated investments, at value (Cost $8,205,537) | 8,204,979 |
Total investments, at value (Cost $581,140,961) | 539,652,145 |
Receivable for centrally cleared swaps | 2,289,984 |
Cash | 250,413 |
Dividends and interest receivable | 3,636,650 |
Receivable for investments sold | 583,342 |
Other assets | 34,700 |
Total assets | 546,447,234 |
Liabilities | |
Credit facility agreement payable | 206,700,000 |
Payable for investments purchased | 262,078 |
Interest payable | 1,079,606 |
Payable to affiliates | |
Accounting and legal services fees | 16,907 |
Trustees’ fees | 331 |
Other liabilities and accrued expenses | 94,154 |
Total liabilities | 208,153,076 |
Net assets | $338,294,158 |
Net assets consist of | |
Paid-in capital | $435,182,484 |
Total distributable earnings (loss) | (96,888,326) |
Net assets | $338,294,158 |
Net asset value per share | |
Based on 21,529,212 shares of beneficial interest outstanding - unlimited number of shares authorized with no par value | $15.71 |
14 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Investment income | |
Dividends | $11,680,031 |
Interest | 7,773,601 |
Dividends from affiliated investments | 206,910 |
Less foreign taxes withheld | (67,051) |
Total investment income | 19,593,491 |
Expenses | |
Investment management fees | 1,972,083 |
Interest expense | 6,411,145 |
Accounting and legal services fees | 32,322 |
Transfer agent fees | 11,736 |
Trustees’ fees | 22,727 |
Custodian fees | 24,224 |
Printing and postage | 27,656 |
Professional fees | 62,859 |
Stock exchange listing fees | 12,036 |
Other | 9,004 |
Total expenses | 8,585,792 |
Less expense reductions | (20,498) |
Net expenses | 8,565,294 |
Net investment income | 11,028,197 |
Realized and unrealized gain (loss) | |
Net realized gain (loss) on | |
Unaffiliated investments | (9,503,002) |
Affiliated investments | 1,989 |
Swap contracts | 1,351,466 |
(8,149,547) | |
Change in net unrealized appreciation (depreciation) of | |
Unaffiliated investments | 26,613,102 |
Affiliated investments | 212 |
Swap contracts | (2,006,661) |
24,606,653 | |
Net realized and unrealized gain | 16,457,106 |
Increase in net assets from operations | $27,485,303 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 15 |
Six months ended 1-31-24 (unaudited) | Year ended 7-31-23 | |
Increase (decrease) in net assets | ||
From operations | ||
Net investment income | $11,028,197 | $23,291,969 |
Net realized loss | (8,149,547) | (26,914,713) |
Change in net unrealized appreciation (depreciation) | 24,606,653 | (21,339,076) |
Increase (decrease) in net assets resulting from operations | 27,485,303 | (24,961,820) |
Distributions to shareholders | ||
From earnings | (15,939,550)1 | (26,085,599) |
From tax return of capital | — | (5,728,710) |
Total distributions | (15,939,550) | (31,814,309) |
Fund share transactions | ||
Issued pursuant to Dividend Reinvestment Plan | 474,669 | 944,963 |
Total increase (decrease) | 12,020,422 | (55,831,166) |
Net assets | ||
Beginning of period | 326,273,736 | 382,104,902 |
End of period | $338,294,158 | $326,273,736 |
Share activity | ||
Shares outstanding | ||
Beginning of period | 21,497,600 | 21,437,953 |
Issued pursuant to Dividend Reinvestment Plan | 31,612 | 59,647 |
End of period | 21,529,212 | 21,497,600 |
1 | A portion of the distributions may be deemed a tax return of capital at the fiscal year end. |
16 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Cash flows from operating activities | |
Net increase in net assets from operations | $27,485,303 |
Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities: | |
Long-term investments purchased | (77,883,324) |
Long-term investments sold | 85,078,556 |
Net purchases and sales of short-term investments | (3,477,707) |
Net amortization of premium (discount) | 280,089 |
(Increase) Decrease in assets: | |
Receivable for centrally cleared swaps | 456,295 |
Dividends and interest receivable | 218,234 |
Receivable for investments sold | 2,076,755 |
Other assets | 687,211 |
Increase (Decrease) in liabilities: | |
Payable for investments purchased | 262,078 |
Interest payable | 36,632 |
Payable to affiliates | (6,725) |
Other liabilities and accrued expenses | (27,124) |
Net change in unrealized (appreciation) depreciation on: | |
Investments | (26,613,314) |
Net realized (gain) loss on: | |
Investments | 9,710,424 |
Net cash provided by operating activities | $18,283,383 |
Cash flows provided by (used in) financing activities | |
Distributions to shareholders | $(15,464,881) |
Decrease in due to custodian | (2,568,089) |
Net cash used in financing activities | $(18,032,970) |
Net increase in cash | $250,413 |
Cash at beginning of period | — |
Cash at end of period | $250,413 |
Supplemental disclosure of cash flow information: | |
Cash paid for interest | $(6,374,513) |
Noncash financing activities not included herein consists of reinvestment of distributions | $474,669 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 17 |
Period ended | 1-31-241 | 7-31-23 | 7-31-22 | 7-31-21 | 7-31-20 | 7-31-19 |
Per share operating performance | ||||||
Net asset value, beginning of period | $15.18 | $17.82 | $20.55 | $18.12 | $21.09 | $21.13 |
Net investment income2 | 0.51 | 1.09 | 1.35 | 1.39 | 1.40 | 1.34 |
Net realized and unrealized gain (loss) on investments | 0.76 | (2.25) | (2.60) | 2.52 | (2.85) | 0.30 |
Total from investment operations | 1.27 | (1.16) | (1.25) | 3.91 | (1.45) | 1.64 |
Less distributions | ||||||
From net investment income | (0.74)3 | (1.21) | (1.35) | (1.35) | (1.41) | (1.40) |
From tax return of capital | — | (0.27) | (0.13) | (0.13) | (0.11) | (0.28) |
Total distributions | (0.74) | (1.48) | (1.48) | (1.48) | (1.52) | (1.68) |
Net asset value, end of period | $15.71 | $15.18 | $17.82 | $20.55 | $18.12 | $21.09 |
Per share market value, end of period | $16.26 | $15.85 | $18.80 | $22.00 | $18.46 | $23.67 |
Total return at net asset value (%)4,5 | 9.016 | (6.66) | (6.31) | 22.52 | (7.07) | 8.26 |
Total return at market value (%)4 | 7.856 | (7.39) | (7.72) | 28.74 | (15.65) | 20.70 |
Ratios and supplemental data | ||||||
Net assets, end of period (in millions) | $338 | $326 | $382 | $440 | $387 | $450 |
Ratios (as a percentage of average net assets): | ||||||
Expenses before reductions | 5.407 | 4.39 | 1.84 | 1.63 | 2.36 | 2.98 |
Expenses including reductions8 | 5.397 | 4.38 | 1.82 | 1.62 | 2.35 | 2.97 |
Net investment income | 6.937 | 6.89 | 7.05 | 7.18 | 7.20 | 6.60 |
Portfolio turnover (%) | 15 | 30 | 22 | 30 | 34 | 35 |
Senior securities | ||||||
Total debt outstanding end of period (in millions) | $207 | $207 | $207 | $204 | $193 | $238 |
Asset coverage per $1,000 of debt9 | $2,637 | $2,578 | $2,849 | $3,155 | $3,006 | $2,890 |
1 | Six months ended 1-31-24. Unaudited. |
2 | Based on average daily shares outstanding. |
3 | A portion of the distributions may be deemed a tax return of capital at the fiscal year end. |
4 | Total return based on net asset value reflects changes in the fund’s net asset value during each period. Total return based on market value reflects changes in market value. Each figure assumes that distributions from income, capital gains and tax return of capital, if any, were reinvested. |
5 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
6 | Not annualized. |
7 | Annualized. |
8 | Expenses including reductions excluding interest expense were 1.35% (annualized), 1.32%, 1.20%, 1.22%, 1.25% and 1.26% for the periods ended 1-31-24, 7-31-23, 7-31-22, 7-31-21, 7-31-20 and 7-31-19, respectively. |
9 | Asset coverage equals the total net assets plus borrowings divided by the borrowings of the fund outstanding at period end (Note 7). As debt outstanding changes, the level of invested assets may change accordingly. Asset coverage ratio provides a measure of leverage. |
18 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
SEMIANNUAL REPORT | JOHN HANCOCK Preferred Income Fund II | 19 |
Total value at 1-31-24 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | |
Investments in securities: | ||||
Assets | ||||
Preferred securities | ||||
Communication services | $19,314,475 | $19,314,475 | — | — |
Consumer discretionary | 3,208,410 | 3,208,410 | — | — |
Energy | 3,879,000 | 3,879,000 | — | — |
Financials | 181,027,150 | 177,238,400 | $3,788,750 | — |
Industrials | 3,687,045 | 3,687,045 | — | — |
Real estate | 7,145,474 | 7,145,474 | — | — |
Utilities | 72,251,214 | 68,816,872 | 3,434,342 | — |
Common stocks | 8,771,685 | 8,771,685 | — | — |
Corporate bonds | 222,950,534 | — | 222,950,534 | — |
Capital preferred securities | 9,212,179 | — | 9,212,179 | — |
Short-term investments | 8,204,979 | 8,204,979 | — | — |
Total investments in securities | $539,652,145 | $300,266,340 | $239,385,805 | — |
Derivatives: | ||||
Assets | ||||
Swap contracts | $2,000,314 | — | $2,000,314 | — |
20 | JOHN HANCOCK Preferred Income Fund II | SEMIANNUAL REPORT |
SEMIANNUAL REPORT | JOHN HANCOCK Preferred Income Fund II | 21 |
22 | JOHN HANCOCK Preferred Income Fund II | SEMIANNUAL REPORT |
Risk | Statement of assets and liabilities location | Financial instruments location | Assets derivatives fair value | Liabilities derivatives fair value |
Interest rate | Swap contracts, at value1 | Interest rate swaps | $2,000,314 | — |
1 | Reflects cumulative value of swap contracts. Receivable/payable for centrally cleared swaps, which includes value and margin, are shown separately on the Statement of assets and liabilities. |
Statement of operations location - Net realized gain (loss) on: | |
Risk | Swap contracts |
Interest rate | $1,351,466 |
Statement of operations location - Change in net unrealized appreciation (depreciation) of: | |
Risk | Swap contracts |
Interest rate | $(2,006,661) |
SEMIANNUAL REPORT | JOHN HANCOCK Preferred Income Fund II | 23 |
• | the likelihood of greater volatility of NAV and market price of shares; |
• | fluctuations in the interest rate paid for the use of the CFA; |
• | increased operating costs, which may reduce the fund’s total return; |
• | the potential for a decline in the value of an investment acquired through leverage, while the fund’s obligations under such leverage remains fixed; and |
• | the fund is more likely to have to sell securities in a volatile market in order to meet asset coverage or other debt compliance requirements. |
24 | JOHN HANCOCK Preferred Income Fund II | SEMIANNUAL REPORT |
SEMIANNUAL REPORT | JOHN HANCOCK Preferred Income Fund II | 25 |
Dividends and distributions | |||||||||
Affiliate | Ending share amount | Beginning value | Cost of purchases | Proceeds from shares sold | Realized gain (loss) | Change in unrealized appreciation (depreciation) | Income distributions received | Capital gain distributions received | Ending value |
John Hancock Collateral Trust | 820,375 | $4,725,071 | $80,216,341 | $(76,738,634) | $1,989 | $212 | $206,910 | — | $8,204,979 |
26 | JOHN HANCOCK Preferred Income Fund II | SEMIANNUAL REPORT |
SEMIANNUAL REPORT | JOHN HANCOCK Preferred Income Fund II | 27 |
• | by anticipating the broader, more gradual changes in the business cycle, and then investing in those industries and sectors that are expected to benefit from the changes |
• | by looking within those industries and sectors for issuers and companies that are undervalued and mispriced relative to the market |
28 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT |
SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 29 |
30 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT |
SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 31 |
Payment Date | Income Distributions1 |
August 31, 2023 | $0.1235 |
September 29, 2023 | 0.1235 |
October 31, 2023 | 0.1235 |
November 30, 2023 | 0.1235 |
December 29, 2023 | 0.1235 |
January 31, 2024 | 0.1235 |
Total | $0.7410 |
1A portion of the distributions may be deemed a tax return of capital at the fiscal year end. |
Computershare
P.O. Box 43006
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150 Royall Street, Suite 101
Canton, MA 02021
32 | JOHN HANCOCK PREFERRED INCOME FUND II | SEMIANNUAL REPORT |
You can also contact us: | ||
800-852-0218 | Regular mail: | Express mail: |
jhinvestments.com | Computershare P.O. Box 43006 Providence, RI 02940-3078 | Computershare 150 Royall St., Suite 101 Canton, MA 02021 |
SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND II | 33 |
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