Semi-Annual Report by Investment Company (Form N-CSRS)
SECURITIES AND EXCHANGE COMMISSION
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21131
JOHN HANCOCK PREFERRED INCOME FUND
(Exact name of registrant as specified in charter)
200
TREASURER
200
(
Registrant's telephone number, including area code: (617) 543-9634
Date of fiscal year end:
Date of reporting period:
ITEM 1. REPORT TO STOCKHOLDERS.
Semiannual report
Closed-end fixed income
Ticker: HPI
Table of contents
| 1 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT |
Your fund at a glance
INVESTMENT OBJECTIVE
The fund seeks to provide a high level of current income consistent with preservation of capital. The fund's secondary investment objective is to provide growth of capital to the extent consistent with its primary objective.
AVERAGE ANNUAL TOTAL RETURNS AS OF 1/31/2025 (%)
The Intercontinental Exchange (ICE) Bank of America (BofA ) U.S. All Capital Securities Index tracks all fixed-to floating-rate, perpetual callable and capital securities of the ICE BofA U.S. Corporate Index.
It is not possible to invest directly in an index. Index figures do not reflect expenses, which would result in lower returns.
The performance data contained within this material represents past performance, which does not guarantee future results.
Investment returns and principal value will fluctuate and a shareholder may sustain losses. Further, the fund's performance at net asset value (NAV) is different from the fund's performance at closing market price because the closing market price is subject to the dynamics of secondary market trading. Market risk may increase when shares are purchased at a premium to NAV or sold at a discount to NAV. Current month-end performance may be higher or lower than the performance cited. The fund's most recent performance can be found at jhinvestments.com or by calling 800-852-0218.
| SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 2 |
Portfolio summary
PORTFOLIO COMPOSITION AS OF 1/31/2025 (% of total investments)
QUALITY COMPOSITION AS OF 1/31/2025 (% of total investments)
Ratings are from Moody's Investors Service, Inc. If not available, we have used S&P Global Ratings . In the absence of ratings from these agencies, we have used Fitch Ratings, Inc. "Not rated" securities are those with no ratings available from these agencies. All ratings are as of 1-31-25 and do not reflect subsequent downgrades or upgrades, if any.
| 3 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT |
SECTOR COMPOSITION AS OF 1/31/2025 (% of total investments)
| TOP 10 ISSUERS AS OF |
|
| Citigroup, Inc. | 3.6 |
| 3.6 | |
| 3.0 | |
| Bank of America Corp. | 3.1 |
| Morgan Stanley | 3.0 |
| 2.6 | |
| 2.6 | |
| The Goldman Sachs Group, Inc. | 2.5 |
| 2.3 | |
| 2.2 | |
| TOTAL | 28.5 |
| Cash and short-term investments are not included. | |
| SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 4 |
Fund's investments
AS OF 1-31-25 (unaudited)
| Shares | Value | ||||
| Preferred securities (A) 86.3% (54.7% of Total investments) | |||||
| (Cost |
|||||
| Communication services 5.6% | 24,505,485 | ||||
| Wireless telecommunication services 5.6% | |||||
| 385,925 | 7,486,945 | ||||
| 259,750 | 5,800,218 | ||||
| 68,050 | 1,507,308 | ||||
| 120,650 | 2,684,463 | ||||
| 293,875 | 7,026,551 | ||||
| Consumer discretionary 1.0% | 4,386,494 | ||||
| Broadline retail 1.0% | |||||
| 92,200 | 3,390,194 | ||||
| 81,000 | 996,300 | ||||
| Financials 58.5% | 254,550,354 | ||||
| Banks 22.1% | |||||
| Bank of America Corp., 5.000% (B) | 38,200 | 824,356 | |||
| Bank of America Corp., 6.450% (B)(C) | 118,075 | 3,052,239 | |||
| Bank of America Corp., 7.250% (B) | 8,500 | 10,404,000 | |||
| 116,850 | 2,999,540 | ||||
| 384,725 | 11,864,913 | ||||
| 245,875 | 6,545,193 | ||||
| 223,693 | 5,556,534 | ||||
| 104,346 | 2,335,263 | ||||
| 140,075 | 2,717,455 | ||||
| 180,875 | 4,594,225 | ||||
| 194,650 | 4,223,905 | ||||
| 32,500 | 806,000 | ||||
| 70,550 | 1,723,537 | ||||
| 200,000 | 5,384,000 | ||||
| 105,600 | 2,636,832 | ||||
| 172,900 | 3,103,555 | ||||
| 169,325 | 4,317,788 | ||||
| 34,275 | 865,101 | ||||
| 168,850 | 4,361,396 | ||||
| 92,200 | 1,894,710 | ||||
| 73,975 | 1,751,728 | ||||
| 5 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
| Shares | Value | ||||
| Financials (continued) | |||||
| Banks (continued) | |||||
| 9,500 | |||||
| 114,000 | 2,861,400 | ||||
| Capital markets 8.7% | |||||
| 261,450 | 6,504,876 | ||||
| 197,675 | 3,338,731 | ||||
| 37,226 | 687,192 | ||||
| Morgan Stanley, 6.375% (B) | 165,000 | 4,144,800 | |||
| Morgan Stanley, 6.500% (B) | 186,200 | 4,787,202 | |||
| Morgan Stanley, 6.625% (B) | 100,525 | 2,613,650 | |||
| Morgan Stanley, 6.875% (B) | 117,225 | 2,973,998 | |||
| Morgan Stanley, 7.125% (B) | 253,999 | 6,484,594 | |||
| 251,725 | 6,345,987 | ||||
| Consumer finance 2.4% | |||||
| 239,227 | 4,530,959 | ||||
| 228,225 | 5,936,132 | ||||
| Financial services 5.5% | |||||
| 307,650 | 8,278,862 | ||||
| 195,450 | 4,815,888 | ||||
| 80,000 | 893,600 | ||||
| 45,000 | 1,204,200 | ||||
| 312,800 | 5,955,712 | ||||
| 108,750 | 2,548,013 | ||||
| Insurance 19.8% | |||||
| 324,625 | 6,687,275 | ||||
| 153,425 | 3,079,240 | ||||
| 185,375 | 4,677,011 | ||||
| 225,350 | 5,870,368 | ||||
| 190,550 | 4,830,443 | ||||
| 330,000 | 8,114,700 | ||||
| 365,400 | 9,525,978 | ||||
| 328,590 | 6,959,536 | ||||
| 36,475 | 737,889 | ||||
| SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 6 |
| Shares | Value | ||||
| Financials (continued) | |||||
| Insurance (continued) | |||||
| 168,250 | |||||
| 208,725 | 5,495,729 | ||||
| 249,075 | 6,774,840 | ||||
| 350,150 | 9,282,477 | ||||
| 210,000 | 3,488,100 | ||||
| 104,075 | 2,766,314 | ||||
| 162,500 | 3,900,000 | ||||
| Industrials 1.4% | 5,881,916 | ||||
| Aerospace and defense 0.4% | |||||
| 26,500 | 1,589,735 | ||||
| Trading companies and distributors 1.0% | |||||
| 167,141 | 4,292,181 | ||||
| Information technology 1.3% | 5,717,178 | ||||
| Software 0.6% | |||||
| 32,800 | 2,624,000 | ||||
| Technology hardware, storage and peripherals 0.7% | |||||
| 50,600 | 3,093,178 | ||||
| Real estate 2.2% | 9,372,017 | ||||
| Hotel and resort REITs 0.9% | |||||
| 199,050 | 3,984,981 | ||||
| Office REITs 0.6% | |||||
| 148,600 | 2,642,108 | ||||
| Specialized REITs 0.7% | |||||
| 141,200 | 2,744,928 | ||||
| Utilities 16.3% | 71,100,682 | ||||
| Electric utilities 7.5% | |||||
| 283,350 | 7,058,249 | ||||
| 92,050 | 4,110,953 | ||||
| 35,150 | 1,713,914 | ||||
| 15,143 | 1,211,932 | ||||
| 60,400 | 2,550,692 | ||||
| 187,175 | 3,226,897 | ||||
| SCE Trust VII, 7.500% | 239,125 | 5,578,786 | |||
| SCE Trust VIII, 6.950% (B) | 151,250 | 3,389,513 | |||
| The SoutheCompany, 4.950% (B) | 92,925 | 1,929,123 | |||
| The SoutheCompany, 6.500% (B) | 68,700 | 1,812,993 | |||
| 7 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
| Shares | Value | ||||
| Utilities (continued) | |||||
| Gas utilities 0.3% | |||||
| 63,275 | |||||
| Multi-utilities 8.5% | |||||
| 294,605 | 7,453,507 | ||||
| 225,000 | 5,161,500 | ||||
| 129,425 | 3,037,605 | ||||
| 335,050 | 7,987,592 | ||||
| 240,000 | 5,407,200 | ||||
| Sempra, 5.750% (B) | 338,000 | 7,929,480 | |||
| Common stocks 0.9% (0.6% of Total investments) | |||||
| (Cost |
|||||
| Utilities 0.9% | 4,062,116 | ||||
| Multi-utilities 0.9% | |||||
| 914,891 | 4,062,116 | ||||
| Rate (%) | Maturity date | Par value^ | Value | ||
| Corporate bonds 67.0% (42.4% of Total investments) | |||||
| (Cost |
|||||
| Consumer discretionary 2.1% | 9,009,652 | ||||
| Automobiles 1.3% | |||||
| 6.500 | 5,825,000 | 5,753,615 | |||
| Broadline retail 0.8% | |||||
| 8.125 | 3,300,000 | 3,256,037 | |||
| Consumer staples 0.2% | 777,919 | ||||
| Food products 0.2% | |||||
| 8.000 | 835,000 | 777,919 | |||
| Energy 8.9% | 38,747,905 | ||||
| Oil, gas and consumable fuels 8.9% | |||||
| 7.200 | 2,500,000 | 2,559,703 | |||
| 7.375 | 2,163,000 | 2,205,832 | |||
| 8.500 | 5,849,000 | 6,476,882 | |||
| SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 8 |
| Rate (%) | Maturity date | Par value^ | Value | ||
| Energy (continued) | |||||
| Oil, gas and consumable fuels (continued) | |||||
| 6.625 | 6,601,000 | ||||
| 7.125 | 9,149,000 | 9,278,468 | |||
| 7.500 | 3,050,000 | 3,142,076 | |||
| 9.000 | 8,248,000 | 8,595,018 | |||
| Financials 36.1% | 157,086,418 | ||||
| Banks 23.4% | |||||
| 9.625 | 4,000,000 | 4,602,452 | |||
| Bank of America Corp. (5.875% to 3-15-28, then 3 month CME Term SOFR + 3.193%) (B)( |
5.875 | 4,254,000 | 4,266,047 | ||
| Bank of America Corp. (6.125% to 4-27-27, then 5 Year CMT + 3.231%) (B)( |
6.125 | 2,800,000 | 2,831,156 | ||
| Barclays PLC (9.625% to 6-15-30, then 5 Year SOFR ICE Swap Rate + 5.775%) (F) | 9.625 | 4,000,000 | 4,453,228 | ||
| Citigroup, Inc. (7.375% to 5-15-28, then 5 Year CMT + 3.209%) (F) | 7.375 | 5,750,000 | 5,967,649 | ||
| Citigroup, Inc. (7.625% to 11-15-28, then 5 Year CMT + 3.211%) (F) | 7.625 | 6,570,000 | 6,882,423 | ||
| 7.715 | 7,500,000 | 7,444,236 | |||
| 4.250 | 4,300,000 | 4,113,328 | |||
| 6.450 | 5,250,000 | 5,272,727 | |||
| 7.250 | 4,700,000 | 4,796,519 | |||
| 5.625 | 3,275,000 | 3,263,993 | |||
| 6.875 | 4,575,000 | 4,775,696 | |||
| 5.000 | 3,795,000 | 3,704,352 | |||
| 3.500 | 4,850,000 | 4,570,851 | |||
| 10.000 | 3,400,000 | 3,703,086 | |||
| 8.625 | 6,345,000 | 6,690,364 | |||
| 6.000 | 7,415,000 | 7,420,925 | |||
| 9 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
| Rate (%) | Maturity date | Par value^ | Value | ||
| Financials (continued) | |||||
| Banks (continued) | |||||
| 6.200 | 6,706,000 | ||||
| 6.850 | 3,750,000 | 3,850,665 | |||
| 7.625 | 6,174,000 | 6,567,562 | |||
| Capital markets 5.7% | |||||
| 6.700 | 4,445,000 | 4,532,113 | |||
| 4.000 | 3,500,000 | 3,106,342 | |||
| The Goldman Sachs Group, Inc. (6.125% to 11-10-34, then 10 Year CMT + 2.400%) (F) | 6.125 | 4,020,000 | 3,926,578 | ||
| The Goldman Sachs Group, Inc. (7.500% to 2-10-29, then 5 Year CMT + 3.156%) (B)( |
7.500 | 7,495,000 | 7,907,008 | ||
| The Goldman Sachs Group, Inc. (7.500% to 5-10-29, then 5 Year CMT + 2.809%) (F) | 7.500 | 5,169,000 | 5,412,336 | ||
| Consumer finance 0.7% | |||||
| 6.125 | 3,050,000 | 3,050,363 | |||
| Financial services 0.7% | |||||
| 7.758 | 2,865,000 | 3,029,437 | |||
| Insurance 5.6% | |||||
| 7.950 | 4,000,000 | 4,183,512 | |||
| 5.875 | 4,789,000 | 4,775,800 | |||
| 6.500 | 7,350,000 | 6,813,743 | |||
| 7.000 | 8,536,000 | 8,407,960 | |||
| Health care 0.7% | 3,328,156 | ||||
| Health care providers and services 0.7% | |||||
| 7.000 | 3,295,000 | 3,328,156 | |||
| Industrials 1.0% | 4,281,002 | ||||
| Trading companies and distributors 1.0% | |||||
| 6.000 | 4,375,000 | 4,281,002 | |||
| SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 10 |
| Rate (%) | Maturity date | Par value^ | Value | ||
| Utilities 18.0% | |||||
| Electric utilities 8.1% | |||||
| Brookfield Infrastructure Finance ULC (6.750% to 3-15-30, then 5 Year CMT + 2.453%) | 6.750 | 3,365,000 | 3,386,018 | ||
| 5.000 | 2,772,000 | 2,486,529 | |||
| 5.375 | 10,500,000 | 9,670,066 | |||
| 7.125 | 3,750,000 | 3,823,106 | |||
| 7.625 | 3,000,000 | 3,128,138 | |||
| 10.250 | 6,760,000 | 7,496,421 | |||
| 7.375 | 5,322,000 | 5,170,853 | |||
| Gas utilities 1.1% | |||||
| 7.200 | 4,670,000 | 4,692,430 | |||
| Independent power and renewable electricity producers5.7% | |||||
| 7.600 | 6,864,000 | 6,987,971 | |||
| 8.000 | 8,750,000 | 8,971,078 | |||
| 8.875 | 8,533,000 | 9,142,879 | |||
| Multi-utilities 3.1% | |||||
| 6.850 | 4,025,000 | 4,082,364 | |||
| 6.375 | 1,500,000 | 1,488,288 | |||
| 6.950 | 3,600,000 | 3,671,222 | |||
| Sempra (6.400% to 10-1-34, then 5 Year CMT + 2.632%) (B)(C) | 6.400 | 2,500,000 | 2,408,077 | ||
| Sempra (6.875% to 10-1-29, then 5 Year CMT + 2.789%) (B)(C) | 6.875 | 2,000,000 | 1,995,819 | ||
| Convertible bonds 1.6% (1.0% of Total investments) | |||||
| (Cost |
|||||
| Utilities 1.6% | 6,681,884 | ||||
| Electric utilities 1.6% | |||||
| 5.750 | 5,850,000 | 6,681,884 | |||
| 11 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
| Rate (%) | Maturity date | Par value^ | Value | ||
| Capital preferred securities (H) 1.2% (0.8% of Total investments) | |||||
| (Cost |
|||||
| Financials 1.2% | 5,396,376 | ||||
| Insurance 1.2% | |||||
| 7.875 | 4,940,000 | 5,396,376 | |||
| Yield (%) | Shares | Value | |||
| Short-term investments 0.8% (0.5% of Total investments) | |||||
| (Cost |
|||||
| Short-term funds 0.8% | 3,641,334 | ||||
| 4.2301(J) | 364,010 | 3,641,334 | |||
| Total investments (Cost |
|||||
| Other assets and liabilities, net (57.8%) | (251,676,253) | ||||
| Total net assets 100.0% | |||||
| 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 |
|
| Security Abbreviations and Legend | |
| CME | CME Group Published Rates |
| CMT | Constant Maturity Treasury |
| ICE | |
| 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 |
| (C) | All or a portion of this security is on loan as of 1-31-25, and is a component of the fund's leverage under the Credit Facility Agreement. The value of securities on loan amounted to |
| (D) | Variable rate obligation. The coupon rate shown represents the rate at period end. |
| (E) | Non-income producing security. |
| (F) | Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date. |
| (G) | This security is 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 |
| (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 1-31-25. |
| SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 12 |
DERIVATIVES
SWAPS
| 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 | 129,000,000 | USD | Fixed 3.662% | USD SOFR Compounded OIS(a) | Semi-Annual | Quarterly | - | |||
| Centrally cleared | 64,000,000 | USD | Fixed 3.473% | USD SOFR Compounded OIS(a) | Semi-Annual | Quarterly | - | 673,680 | 673,680 | |
| Centrally cleared | 32,000,000 | USD | Fixed 3.817% | USD SOFR Compounded OIS(a) | Semi-Annual | Quarterly | - | 167,956 | 167,956 | |
| - | ||||||||||
| (a) | At 1-31-25, the overnight SOFR was 4.380%. |
| Derivatives Currency Abbreviations | |
| USD | |
| Derivatives Abbreviations | |
| OIS | Overnight Index Swap |
| OTC | Over-the-counter |
| SOFR | Secured Overnight Financing Rate |
At 1-31-25, the aggregate cost of investments for federal income tax purposes was $704,983,473 . Net unrealized depreciation aggregated to $16,012,892 , of which $20,488,215 related to gross unrealized appreciation and $36,501,107 related to gross unrealized depreciation.
See Notes to financial statements regarding investment transactions and other derivatives information.
| 13 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 1-31-25 (unaudited)
| Assets | |
| Unaffiliated investments, at value (Cost |
|
| Affiliated investments, at value (Cost |
3,641,334 |
| Total investments, at value (Cost |
687,128,147 |
| Receivable for centrally cleared swaps | 2,373,371 |
| Dividends and interest receivable | 4,951,509 |
| Receivable for fund shares sold | 207,136 |
| Receivable for investments sold | 1,718,754 |
| Other assets | 19,515 |
| Total assets | 696,398,432 |
| Liabilities | |
| Credit facility agreement payable | 257,100,000 |
| Payable for investments purchased | 2,624,000 |
| Interest payable | 1,124,670 |
| Payable to affiliates | |
| Accounting and legal services fees | 21,057 |
| Trustees' fees | 501 |
| Other liabilities and accrued expenses | 76,310 |
| Total liabilities | 260,946,538 |
| Net assets | |
| Net assets consist of | |
| Paid-in capital | |
| Total distributable earnings (loss) | (98,485,654) |
| Net assets | |
| Net asset value per share | |
| Based on 26,735,403 shares of beneficial interest outstanding - unlimited number of shares authorized with no par value | |
| SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 14 |
STATEMENT OF OPERATIONS For the six months ended 1-31-25 (unaudited)
| Investment income | |
| Dividends | |
| Interest | 10,651,630 |
| Dividends from affiliated investments | 140,490 |
| Less foreign taxes withheld | (17,840) |
| Total investment income | 23,837,484 |
| Expenses | |
| Investment management fees | 2,646,712 |
| Interest expense | 7,275,501 |
| Accounting and legal services fees | 42,641 |
| Transfer agent fees | 11,344 |
| Trustees' fees | 26,298 |
| Custodian fees | 30,699 |
| Printing and postage | 32,364 |
| Professional fees | 53,739 |
| Stock exchange listing fees | 13,308 |
| Other | 10,774 |
| Total expenses | 10,143,380 |
| Less expense reductions | (31,590) |
| Net expenses | 10,111,790 |
| Net investment income | 13,725,694 |
| Realized and unrealized gain (loss) | |
| Net realized gain (loss) on | |
| Unaffiliated investments | (3,084,558) |
| Affiliated investments | 3,988 |
| Swap contracts | 1,906,173 |
| (1,174,397) | |
| Change in net unrealized appreciation (depreciation) of | |
| Unaffiliated investments | 12,478,980 |
| Affiliated investments | 20 |
| Swap contracts | (1,072,162) |
| 11,406,838 | |
| Net realized and unrealized gain | 10,232,441 |
| Increase in net assets from operations |
| 15 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
STATEMENTS OF CHANGES IN NET ASSETS
| Six months ended (unaudited) |
Year ended |
|
| Increase (decrease) in net assets | ||
| From operations | ||
| Net investment income | ||
| Net realized loss | (1,174,397) | (19,087,011) |
| Change in net unrealized appreciation (depreciation) | 11,406,838 | 53,386,690 |
| Increase in net assets resulting from operations | 23,958,135 | 61,215,436 |
| Distributions to shareholders | ||
| From earnings | (19,778,999)1 | (31,673,098) |
| From tax retuof capital | - | (7,717,096) |
| Total distributions | (19,778,999) | (39,390,194) |
| Fund share transactions | ||
| Issued pursuant to Dividend Reinvestment Plan | 1,227,010 | 2,437,269 |
| Total increase | 5,406,146 | 24,262,511 |
| Net assets | ||
| Beginning of period | 430,045,748 | 405,783,237 |
| End of period | ||
| Share activity | ||
| Shares outstanding | ||
| Beginning of period | 26,662,744 | 26,506,898 |
| Issued pursuant to Dividend Reinvestment Plan | 72,659 | 155,846 |
| End of period | 26,735,403 | 26,662,744 |
| 1 | A portion of the distributions may be deemed a tax retuof capital at the fiscal year end. |
| SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 16 |
STATEMENT OF CASH FLOWS For the six months ended 1-31-25 (unaudited)
| Cash flows from operating activities | |
| Net increase in net assets from operations | |
| Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities: | |
| Long-term investments purchased | (120,105,063) |
| Long-term investments sold | 120,743,213 |
| Net purchases and sales of short-term investments | (1,003,404) |
| Net amortization of premium (discount) | 292,152 |
| (Increase) Decrease in assets: | |
| Receivable for centrally cleared swaps | 29,074 |
| Dividends and interest receivable | (355,676) |
| Receivable for investments sold | 2,443,692 |
| Other assets | 11,373 |
| Increase (Decrease) in liabilities: | |
| Payable for investments purchased | 2,023,917 |
| Interest payable | (219,178) |
| Payable to affiliates | 8,610 |
| Other liabilities and accrued expenses | (59,212) |
| Net change in unrealized (appreciation) depreciation on: | |
| Investments | (12,479,000) |
| Net realized (gain) loss on: | |
| Investments | 3,080,570 |
| Net cash provided by operating activities | |
| Cash flows provided by (used in) financing activities | |
| Distributions to shareholders | |
| (Increase) in receivable for fund shares sold pursuant to dividend reinvestment plan | (207,136) |
| Net cash used in financing activities | |
| Net decrease in cash | |
| Cash at beginning of period | |
| Cash at end of period | - |
| Supplemental disclosure of cash flow information: | |
| Cash paid for interest | |
| Noncash financing activities not included herein consists of reinvestment of distributions |
| 17 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Financial highlights
| Period ended | ||||||
| Per share operating performance | ||||||
| Net asset value, beginning of period | ||||||
| Net investment income2 | 0.51 | 1.01 | 1.08 | 1.35 | 1.39 | 1.41 |
| Net realized and unrealized gain (loss) on investments | 0.39 | 1.29 | (2.28) | (2.69) | 2.47 | (2.87) |
| Total from investment operations | 0.90 | 2.30 | (1.20) | (1.34) | 3.86 | (1.46) |
| Less distributions | ||||||
| From net investment income | (0.74)3 | (1.19) | (1.22) | (1.35) | (1.34) | (1.44) |
| From tax retuof capital | - | (0.29) | (0.26) | (0.13) | (0.14) | (0.08) |
| Total distributions | (0.74) | (1.48) | (1.48) | (1.48) | (1.48) | (1.52) |
| Net asset value, end of period | ||||||
| Per share market value, end of period | ||||||
| Total retuat net asset value (%)4,5 | 5.506 | 16.13 | (6.79) | (6.62) | 21.77 | (7.14) |
| Total retuat market value (%)4 | 3.576 | 21.84 | (7.13) | (6.72) | 12.09 | (7.67) |
| Ratios and supplemental data | ||||||
| Net assets, end of period (in millions) | ||||||
| Ratios (as a percentage of average net assets): | ||||||
| Expenses before reductions | 4.547 | 5.18 | 4.39 | 1.82 | 1.61 | 2.32 |
| Expenses including reductions8 | 4.537 | 5.17 | 4.37 | 1.81 | 1.60 | 2.31 |
| Net investment income | 6.157 | 6.56 | 6.81 | 6.97 | 7.06 | 7.12 |
| Portfolio turnover (%) | 17 | 33 | 29 | 21 | 30 | 35 |
| Senior securities | ||||||
| Total debt outstanding end of period (in millions) | ||||||
| Asset coverage per |
| 1 | Six months ended 1-31-25. Unaudited. |
| 2 | Based on average daily shares outstanding. |
| 3 | A portion of the distributions may be deemed a tax retuof capital at the fiscal year end. |
| 4 | Total retubased on net asset value reflects changes in the fund's net asset value during each period. Total retubased on market value reflects changes in market value. Each figure assumes that distributions from income, capital gains and tax retuof 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 1.27% (annualized), 1.31%, 1.31%, 1.19%, 1.20% and 1.24% for the periods ended 1-31-25, 7-31-24, 7-31-23, 7-31-22, |
| 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. |
| SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK Preferred Income Fund | 18 |
Notes to financial statements (unaudited)
Note 1-Organization
Note 2-Significant accounting policies
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. The fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.
Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:
Security valuation. Investments are stated at value as of the scheduled close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M. , EasteTime. In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing at a time other than the regularly scheduled close, the net asset value (NAV) may be determined as of the regularly scheduled close of the NYSE pursuant to the Valuation Policies and Procedures of the Advisor, John Hancock Investment Management LLC , the fund's valuation designee.
In order to value the securities, the fund uses the following valuation techniques: Equity securities, including exchange-traded or closed-end funds, are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the fund in open-end mutual funds, including John Hancock Collateral Trust (JHCT), are valued at their respective NAVs each business day. Debt obligations are typically valued based on evaluated prices provided by an independent pricing vendor. Independent pricing vendors utilize matrix pricing, which takes into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, as well as broker supplied prices. Swaps are generally valued using evaluated prices obtained from an independent pricing vendor.
In certain instances, the Pricing Committee of the Advisor may determine to value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled, or if trading closed earlier than scheduled, and trading occurred as normal on another exchange or market.
Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the Pricing Committee following procedures established by the Advisor and adopted by the Board of Trustees . The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed.
The fund uses a three tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities, including registered investment companies. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the Advisor's assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology
| 19 | JOHN HANCOCK Preferred Income Fund | SEMIANNUAL REPORT |
used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input classification of the fund's investments as of January 31, 2025 , by major security category or type:
| Total value at |
Level 1 quoted price |
Level 2 significant observable inputs |
Level 3 significant unobservable inputs |
|
| Investments in securities: | ||||
| Assets | ||||
| Preferred securities | ||||
| Communication services | - | - | ||
| Consumer discretionary | 4,386,494 | 4,386,494 | - | - |
| Financials | 254,550,354 | 254,550,354 | - | - |
| Industrials | 5,881,916 | 5,881,916 | - | - |
| Information technology | 5,717,178 | 5,717,178 | - | - |
| Real estate | 9,372,017 | 9,372,017 | - | - |
| Utilities | 71,100,682 | 69,888,750 | - | |
| Common stocks | 4,062,116 | 4,062,116 | - | - |
| Corporate bonds | 291,832,311 | - | 291,832,311 | - |
| Convertible bonds | 6,681,884 | - | 6,681,884 | - |
| Capital preferred securities | 5,396,376 | - | 5,396,376 | - |
| Short-term investments | 3,641,334 | 3,641,334 | - | - |
| Total investments in securities | - | |||
| Derivatives: | ||||
| Assets | ||||
| Swap contracts | - | - |
The fund holds liabilities for which the fair value approximates the carrying amount for financial statement purposes. As of January 31, 2025 , the liability for the fund's credit facility agreement on the Statement of assets and liabilities is categorized as Level 2 within the disclosure hierarchy.
Real estate investment trusts. The fund may invest in real estate investment trusts (REITs). Distributions from REITs may be recorded as income and subsequently characterized by the REIT at the end of their fiscal year as a reduction of cost of investments and/or as a realized gain. As a result, the fund will estimate the components of distributions from these securities. Such estimates are revised when the actual components of the distributions are known.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Debt obligations may be placed in a non-accrual status and related interest income may be reduced by stopping current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful. Dividend income is recorded on ex-date, except for dividends of certain foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Non-cash dividends, if any, are recorded at the fair market value of the securities received.
| SEMIANNUAL REPORT | JOHN HANCOCK Preferred Income Fund | 20 |
Distributions received on securities that represent a tax retuof capital and/or capital gain, if any, are recorded as a reduction of cost of investments and/or as a realized gain, if amounts are estimable. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Foreign taxes. The fund may be subject to withholding tax on income, capital gains or repatriations imposed by certain countries, a portion of which may be recoverable. Foreign taxes are accrued based upon the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Taxes are accrued based on gains realized by the fund as a result of certain foreign security sales. In certain circumstances, estimated taxes are accrued based on unrealized appreciation of such securities. Investment income is recorded net of foreign withholding taxes.
Overdrafts. Pursuant to the custodian agreement, the fund's custodian may, in its discretion, advance funds to the fund to make properly authorized payments. When such payments result in an overdraft, the fund is obligated to repay the custodian for any overdraft, including any costs or expenses associated with the overdraft. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Statement of cash flows. A Statement of cash flows is presented when a fund has a significant amount of borrowing during the period, based on the average total borrowing in relation to total assets, or when a certain percentage of the fund's investments is classified as Level 3 in the fair value hierarchy. Information on financial transactions that have been settled through the receipt and disbursement of cash is presented in the Statement of cash flows. The cash amount shown in the Statement of cash flows is the amount included in the fund's Statement of assets and liabilities and represents the cash on hand at the fund's custodian and does not include any short-term investments or collateral on derivative contracts, if any.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of July 31, 2024 , the fund has a short-term capital loss carryforward of $8,192,550 and a long-term capital loss carryforward of $65,982,145 available to offset future net realized capital gains. These carryforwards do not expire.
As of July 31, 2024 , the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends monthly. Capital gain distributions, if any, are typically distributed annually.
Such distributions, on a tax basis, if any, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a retuof capital. The final determination of tax characteristics of the fund's distribution will occur at the end of the year and will subsequently be reported to shareholders.
| 21 | JOHN HANCOCK Preferred Income Fund | SEMIANNUAL REPORT |
Capital accounts within the financial statements are adjusted for permanent book-tax differences at fiscal year end. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to amortization and accretion on debt securities and derivative transactions.
Note 3-Derivative instruments
The fund may invest in derivatives in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the over-the-counter (OTC) market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the position. Some derivatives involve risks that are potentially greater than the risks associated with investing directly in the referenced securities or other referenced underlying instrument. Specifically, the fund is exposed to the risk that the counterparty to an OTC derivatives contract will be unable or unwilling to make timely settlement payments or otherwise honor its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction.
Certain derivatives are traded or cleared on an exchange or central clearinghouse. Exchange-traded or centrally-cleared transactions generally present less counterparty risk to a fund than OTC transactions. The exchange or clearinghouse stands between the fund and the broker to the contract and therefore, credit risk is generally limited to the failure of the exchange or clearinghouse and the clearing member.
Centrally-cleared swap contracts are subject to clearinghouse rules, including initial and variation margin requirements, daily settlement of obligations and the clearinghouse guarantee of payments to the broker. There is, however, still counterparty risk due to the potential insolvency of the broker with respect to any margin held in the brokers' customer accounts. While clearing members are required to segregate customer assets from their own assets, in the event of insolvency, there may be a shortfall in the amount of margin held by the broker for its clients. Collateral or margin requirements for centrally-cleared derivatives are set by the broker or applicable clearinghouse. Margin for centrally-cleared transactions is included in Receivable/Payable for centrally-cleared swaps in the Statement of assets and liabilities. Securities pledged by the fund for centrally-cleared transactions, if any, are identified in the Fund's investments.
Swaps. Swap agreements are agreements between the fund and a counterparty to exchange cash flows, assets, foreign currencies or market-linked returns at specified intervals. Swap agreements are privately negotiated in the OTC market (OTC swaps) or may be executed on a registered commodities exchange (centrally cleared swaps). Swaps are marked-to-market daily and the change in value is recorded as a component of unrealized appreciation/depreciation of swap contracts. The value of the swap will typically impose collateral posting obligations on the party that is considered out-of-the-money on the swap.
Upfront payments made/received by the fund, if any, are amortized/accreted for financial reporting purposes, with the unamortized/unaccreted portion included in the Statement of assets and liabilities. A termination payment by the counterparty or the fund is recorded as realized gain or loss, as well as the net periodic payments received or paid by the fund.
Entering into swap agreements involves, to varying degrees, elements of credit, market and documentation risk that may provide outcomes that produce losses in excess of the amounts recognized on the Statement of assets and liabilities. Such risks involve the possibility that there will be no liquid market for the swap, or that a counterparty may default on its obligation or delay payment under the swap terms. The counterparty may disagree or contest the terms of the swap. In addition to interest rate risk, market risks may also impact the swap. The fund may also suffer losses if it is unable to terminate or assign outstanding swaps or reduce its exposure through offsetting transactions.
| SEMIANNUAL REPORT | JOHN HANCOCK Preferred Income Fund | 22 |
Interest rate swaps. Interest rate swaps represent an agreement between the fund and a counterparty to exchange cash flows based on the difference between two interest rates applied to a notional amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other. The fund settles accrued net interest receivable or payable under the swap contracts at specified, future intervals.
During the six months ended January 31, 2025 , the fund used interest rate swap contracts to manage against changes in the credit facility agreement interest rates. The notional values at the period end are representative of the fund's exposure throughout the period. No new interest rate swap positions were entered into or closed during the six months ended January 31, 2025 .
Fair value of derivative instruments by risk category
The table below summarizes the fair value of derivatives held by the fund at January 31, 2025 by risk category:
| 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 | - |
| 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. |
Effect of derivative instruments on the Statement of operations
The table below summarizes the net realized gain (loss) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the six months ended January 31, 2025 :
| Statement of operations location - Net realized gain (loss) on: | |
| Risk | Swap contracts |
| Interest rate |
The table below summarizes the net change in unrealized appreciation (depreciation) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the six months ended January 31, 2025 :
| Statement of operations location - Change in net unrealized appreciation (depreciation) of: | |
| Risk | Swap contracts |
| Interest rate |
Note 4-Guarantees and indemnifications
Under the fund's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 5-Fees and transactions with affiliates
| 23 | JOHN HANCOCK Preferred Income Fund | SEMIANNUAL REPORT |
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor, equivalent on an annual basis, to 0.75% of the fund's average daily managed assets (net assets plus borrowing under the credit facility agreement) (see Note 7). The Advisor has a subadvisory agreement with Manulife Investment Management (US) LLC , an indirectly owned subsidiary of MFC and an affiliate of the Advisor. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate managed assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the six months ended January 31, 2025 , this waiver amounted to 0.01% of the fund's average daily net assets, on an annualized basis. This agreement expires on July 31, 2026 , unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time.
The expense reductions described above amounted to $31,590 for the six months ended January 31, 2025 .
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the six months ended January 31, 2025 , were equivalent to a net annual effective rate of 0.74% of the fund's average daily managed assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, compliance, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These accounting and legal services fees incurred, for the six months ended January 31, 2025 , amounted to an annual rate of 0.01% of the fund's average daily managed assets.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. These Trustees receive from the fund and the other John Hancock closed-end funds an annual retainer. In addition, Trustee out-of-pocket expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 6-Leverage risk
The fund utilizes a Credit Facility Agreement (CFA) to increase its assets available for investment. When the fund leverages its assets, shareholders bear the expenses associated with the CFA and have potential to benefit or be disadvantaged from the use of leverage. The Advisor's fee is also increased in dollar terms from the use of leverage. Consequently, the fund and the Advisor may have differing interests in determining whether to leverage the fund's assets. Leverage creates risks that may adversely affect the retufor the holders of shares, including:
| • | 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. |
To the extent the income or capital appreciation derived from securities purchased with funds received from leverage exceeds the cost of leverage, the fund's retuwill be greater than if leverage had not been used; conversely, returns would be lower if the cost of the leverage exceeds the income or capital appreciation derived.
In addition to the risks created by the fund's use of leverage, the fund is subject to the risk that it would be unable
| SEMIANNUAL REPORT | JOHN HANCOCK Preferred Income Fund | 24 |
to timely, or at all, obtain replacement financing if the CFA is terminated. Were this to happen, the fund would be required to de-leverage, selling securities at a potentially inopportune time and incurring tax consequences. Further, the fund's ability to generate income from the use of leverage would be adversely affected.
Note 7-Credit Facility Agreement
The fund has entered into a Credit Facility Agreement (CFA) with a subsidiary of BNP Paribas (BNP) that allows it to borrow up to $292.5 million (maximum facility amount) and to invest the borrowings in accordance with its investment practices.
The fund pledges a portion of its assets as collateral to secure borrowings under the CFA. Such pledged assets are held in a special custody account with the fund's custodian. The amount of assets required to be pledged by the fund is determined in accordance with the CFA. The fund retains the benefits of ownership of assets pledged to secure borrowings under the CFA. Interest charged is at the rate of OBFR (overnight bank funding rate) plus 0.75% and is payable monthly. As of January 31, 2025 , the fund had borrowings of $257,100,000 at an interest rate of 5.08%, which are reflected in the Credit facility agreement payable on the Statement of assets and liabilities. During the six months ended January 31, 2025 , the average borrowings under the CFA and the effective average interest rate were $257,100,000 and 5.61%, respectively.
The fund is required to pay a commitment fee equal to 0.60% on any unused portion of the maximum facility amount, only for days on which the aggregate outstanding amount of the loans under the CFA is less than 80% of the maximum facility amount. For the six months ended January 31, 2025 , there were no commitment fees incurred by the fund.
The fund may terminate the CFA with 30 days' notice. If certain asset coverage and collateral requirements, minimum net assets or other covenants are not met, the CFA could be deemed in default and result in termination. Absent a default or facility termination event, BNP generally is required to provide the fund with 360 days' notice prior to terminating or amending the CFA.
The fund has an agreement with BNP that allows BNP to use the fund's pledged securities for its own financing purposes in an amount not to exceed the lesser of: (i) outstanding borrowings owed by the fund to BNP or (ii) 33 1/3% of the fund's total assets. The fund can designate any security within the pledged collateral as ineligible to be borrowed and can recall any of the securities. The fund also has the right to apply and set-off an amount equal to 100% of the then-current fair market value of such securities against the current borrowings under the CFA in the event that BNP fails to timely retuthe securities and in certain other circumstances. In such circumstances, however, the fund may not be able to obtain replacement financing required to purchase replacement securities and, consequently, the fund's income generating potential may decrease. Even if the fund is able to obtain replacement financing, it might not be able to purchase replacement securities at favorable prices. Income earned from BNP under this agreement amounted to $0 for the six months ended January 31, 2025 is recorded as a component of interest income on the Statement of operations.
Note 8-Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $120,105,063 and $120,743,213 , respectively, for the six months ended January 31, 2025 .
Note 9-Industry or sector risk
The fund may invest a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's NAV more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
| 25 | JOHN HANCOCK Preferred Income Fund | SEMIANNUAL REPORT |
Commercial banks, savings and loan associations, and holding companies of the foregoing are especially subject to adverse effects of volatile interest rates, concentrations of loans in particular industries, and significant competition. Banks and financial services companies could suffer losses if interest rates rise or economic conditions deteriorate.
Note 10-Investment in affiliated underlying funds
The fund may invest in affiliated underlying funds that are managed by the Advisor and its affiliates. Information regarding the fund's fiscal year to date purchases and sales of the affiliated underlying funds as well as income and capital gains earned by the fund, if any, is as follows:
| 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 |
| 364,010 | - | ||||||||
Note 11-New accounting pronouncement
In this reporting period, the fund adopted Financial Accounting Standards Board Accounting Standards Update 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (ASU 2023-07). Adoption of the new standard impacted financial statement disclosures only and did not affect the fund's financial position or the results of its operations. The management committee of the Advisor acts as the fund's chief operating decision maker (the CODM), assessing performance and making decisions about resource allocation. The fund represents a single operating segment, as the CODM monitors and assesses the operating results of the fund as a whole, and the fund's long-term strategic asset allocation is managed in accordance with the terms of its prospectus, based on a defined investment strategy which is executed by the portfolio management team of the fund's subadvisor. Segment assets are reflected in the Statement of assets and liabilities as "Total assets", which consists primarily of total investments at value. The financial information, including the measurement of profit and loss and significant expenses, provided to and reviewed by the CODM is consistent with that presented within the Statement of operations, which includes "Increase (decrease) in net assets from operations", Statements of changes in net assets, which includes "Increase (decrease) in net assets from fund share transactions", and Financial highlights, which includes total retuand income and expense ratios.
| SEMIANNUAL REPORT | JOHN HANCOCK Preferred Income Fund | 26 |
Investment objective, principal investment strategies, and principal risks
Unaudited
Investment Objective
The fund's primary investment objective is to provide a high level of current income, consistent with preservation of capital. The fund's secondary investment objective is to provide growth of capital to the extent consistent with its primary investment objective. The fund seeks to achieve its objectives by investing in securities that, in the opinion of the Advisor, may be undervalued relative to similar securities in the marketplace.
Principal Investment Strategies
Under normal market conditions, the fund invests at least 80% of its assets (net assets plus borrowings for investment purposes) in preferred stocks and other preferred securities, including convertible preferred securities. This is a non-fundamental policy and may be changed by the Board of Trustees of the fund provided that shareholders are provided with at least 60 days prior written notice of any change as required by the rules under the 1940 Act. Preferred stocks and other preferred securities include, but are not limited to, convertible preferred securities, corporate hybrid securities, Trust Preferred Securities (defined below), cumulative and non-cumulative preferred stock, and depositary shares of preferred stock. Preferred securities generally pay fixed or adjustable-rate distributions to investors and have preference over common stock in the payment of distributions and the liquidation of a company's assets, but are generally junior to all forms of the company's debt, including both senior and subordinated debt. The fund intends to invest primarily in fully taxable preferred securities. The fund's portfolio of preferred securities may include both fixed rate and adjustable rate securities. In addition, certain preferred securities held by the fund may be issued by trusts or other special purpose entities created by companies, such as bank holding companies, specifically for the purpose of issuing such securities (Trust Preferred Securities). The allocation of the fund's assets in various types of preferred, debt and equity securities may vary from time to time depending upon the Advisor's assessment of market conditions.
The fund will invest at least 50% of its total assets in preferred securities and other fixed-income securities that are rated investment grade (i.e., at least Baa by a nationally recognized statistical rating organization such as Moody's Investors Service, Inc. ("Moody's") or BBB by S&P Global Ratings ("S&P")), or in unrated securities determined by the Advisor to be of comparable credit quality. The fund may invest up to 50% of its total assets in preferred securities and other fixed income securities rated below investment grade (rated below Baa by Moody's or below BBB by S&P), or in comparable unrated securities. Below investment grade securities must be rated B or higher by either S&P or Moody's or determined to be of comparable quality. These investment policies are based on credit quality ratings at the time of acquisition.
The Advisor seeks to produce superior results by focusing on the business cycle and individual security fundamentals and less so on interest rate and duration. In structuring the portfolio, the Advisor seeks to add investment value in two ways:
| • | 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 |
The fund may invest in corporate bonds, common stock, securities issued by the U.S. government or its related agencies, real estate investment trusts ("REITs") and money market instruments. The fund may invest up to 20% of its total assets in securities of corporate and governmental issuers located outside the United States that are traded or denominated in U.S. dollars. The fund may invest up to 20% of its assets in illiquid securities including, but not limited to, restricted securities, securities that may be resold pursuant to Rule 144A under the Securities Act of 1933, as amended, but that are deemed to be illiquid, and repurchase agreements with maturities in excess of seven days. The fund concentrates its investments in securities of issuers in the industries composing the utilities
| 27 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT |
sector, which includes telecommunication companies, meaning that the fund will invest 25% or more of its total assets in the industries composing the utilities sector. The fund may also invest in derivatives such as credit default swaps, futures, options, swaps, reverse repurchase agreements and options on futures.
The fund may issue preferred shares or debt obligations to establish leverage, to the extent permitted by the 1940 Act. The fund generally will not issue preferred shares or borrow unless the Advisor expects that the fund will achieve a greater retuon such borrowed funds than the additional costs the fund incurs as a result of such borrowing. The fund may also engage in reverse repurchase agreements and invest in derivatives to establish investment leverage or for temporary purposes.
The manager considers environmental, social, and/or governance (ESG) factors, alongside other relevant factors, as part of its investment process. ESG factors may include, but are not limited to, matters regarding board diversity, climate change policies, and supply chain and human rights policies. The ESG characteristics utilized in the fund's investment process may change over time and one or more characteristics may not be relevant with respect to all issuers that are eligible fund investment.
Principal Risks
As is the case with all exchange-listed closed-end funds, shares of this fund may trade at a discount or a premium to the fund's net asset value (NAV). An investment in the fund is subject to investment and market risks, including the possible loss of the entire principal invested.
The fund's main risks are listed below in alphabetical order, not in order of importance.
Changing distribution level & retuof capital risk. There is no guarantee prior distribution levels will be maintained, and distributions may include a substantial tax retuof capital. A retuof capital is the retuof all or a portion of a shareholder's investment in the fund. For the fiscal year ended July 31, 2024 , the fund's aggregate distributions included a retuof capital of $0.29 per share, or 19.59% of aggregate distributions, which could impact the tax treatment of a subsequent sale of fund shares.
Concentration risk. Because the fund may focus on one or more industries or sectors of the economy, its performance depends in large part on the performance of those industries or sectors. As a result, the value of an investment may fluctuate more widely since it is more susceptible to market, economic, political, regulatory, and other conditions and risks affecting those industries or sectors than a fund that invests more broadly across industries and sectors.
Credit and counterparty risk. The issuer or guarantor of a fixed-income security, the counterparty to an over-the-counter derivatives contract, or a borrower of fund securities may not make timely payments or otherwise honor its obligations. U.S. government securities are subject to varying degrees of credit risk depending upon the nature of their support. A downgrade or default affecting any of the fund's securities could affect the fund's performance.
Cybersecurity and operational risk. Cybersecurity breaches may allow an unauthorized party to gain access to fund assets, customer data, or proprietary information, or cause a fund or its service providers to suffer data corruption or lose operational functionality. Similar incidents affecting issuers of a fund's securities may negatively impact performance. Operational risk may arise from human error, error by third parties, communication errors, or technology failures, among other causes.
Economic and market events risk. Events in the U.S. and global financial markets, including actions taken by the U.S. Federal Reserve or foreign central banks to stimulate or stabilize economic growth, may at times result in unusually high market volatility, which could negatively impact performance. Reduced liquidity in credit and fixed-income markets could adversely affect issuers worldwide. Banks and financial services companies could suffer losses if interest rates rise or economic conditions deteriorate.
| SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 28 |
Equity securities risk. The price of equity securities may decline due to changes in a company's financial condition or overall market conditions. Securities the manager believes are undervalued may never realize their full potential value, and in certain markets value stocks may underperform the market as a whole.
Environmental, social, and governance (ESG) integration risk. The manager considers ESG factors that it deems relevant or additive, along with other material factors and analysis, when managing the fund. The manager may consider these ESG factors on all or a meaningful portion of the fund's investments. In certain situations, the extent to which these ESG factors may be applied according to the manager's integrated investment process may not include U.S. Treasuries, government securities, or other asset classes. ESG factors may include, but are not limited to, matters regarding board diversity, climate change policies, and supply chain and human rights policies. Incorporating ESG criteria and making investment decisions based on certain ESG characteristics, as determined by the manager, carries the risk that the fund may perform differently, including underperforming, funds that do not utilize ESG criteria, or funds that utilize different ESG criteria. Integration of ESG factors into the fund's investment process may result in a manager making different investments for the fund than for a fund with a similar investment universe and/or investment style that does not incorporate such considerations in its investment strategy or processes, and the fund's investment performance may be affected. Because ESG factors are one of many considerations for the fund, the manager may nonetheless include companies with low ESG characteristics or exclude companies with high ESG characteristics in the fund's investments.
Fixed-income securities risk. A rise in interest rates typically causes bond prices to fall. The longer the average maturity or duration of the bonds held by a fund, the more sensitive it will likely be to interest-rate fluctuations. An issuer may not make all interest payment or repay all or any of the principal borrowed. Changes in a security's credit qualify may adversely affect fund performance. Additionally, the value of inflation-indexed securities is subject to the effects of changes in market interest rates caused by factors other than inflation ("real interest rates"). Generally, when real interest rates rise, the value of inflation-indexed securities will fall and the fund's value may decline as a result of this exposure to these securities.
Foreign securities risk. Less information may be publicly available regarding foreign issuers, including foreign government issuers. Foreign securities may be subject to foreign taxes and may be more volatile than U.S. securities. Currency fluctuations and political and economic developments may adversely impact the value of foreign securities.
Hedging, derivatives, and other strategic transactions risk. Hedging, derivatives, and other strategic transactions may increase a fund's volatility and could produce disproportionate losses, potentially more than the fund's principal investment. Risks of these transactions are different from and possibly greater than risks of investing directly in securities and other traditional instruments. Under certain market conditions, derivatives could become harder to value or sell and may become subject to liquidity risk (i.e., the inability to enter into closing transactions). Derivatives and other strategic transactions that the fund intends to utilize include: credit default swaps, futures contracts, options, and swaps, reverse repurchase agreements and options on futures. Futures contracts, options, and swaps generally are subject to counterparty risk. In addition, swaps may be subject to interest-rate and settlement risk, and the risk of default of the underlying reference obligation. An event of default or insolvency of the counterparty to a reverse repurchase agreement could result in delays or restrictions with respect to the fund's ability to dispose of the underlying securities. In addition, a reverse repurchase agreement may be considered a form of leverage and may, therefore, increase fluctuations in the fund's NAV.
Illiquid and restricted securities risk. Illiquid and restricted securities may be difficult to value and may involve greater risks than liquid securities. Illiquidity may have an adverse impact on a particular security's market price and the fund's ability to sell the security.
Leveraging risk. Issuing preferred shares or using derivatives may result in a leveraged portfolio. Leveraging long exposures increases a fund's losses when the value of its investments declines. Some derivatives have the potential for unlimited loss, regardless of the size of the initial investment. The fund also utilizes a Credit Facility Agreement to increase its assets available for investment. See "Note 6 -Leverage risk" above.
| 29 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT |
Liquidity risk. The extent (if at all) to which a security may be sold or a derivative position closed without negatively impacting its market value may be impaired by reduced market activity or participation, legal restrictions, or other economic and market impediments. Widespread selling of fixed-income securities during periods of reduced demand may adversely impact the price or salability of such securities.
Lower-rated and high-yield fixed-income securities risk. Lower-rated and high-yield fixed-income securities (junk bonds) are subject to greater credit quality risk, risk of default, and price volatility than higher-rated fixed-income securities, may be considered speculative, and can be difficult to resell.
Preferred and convertible securities risk. Preferred stock dividends are payable only if declared by the issuer's board. Preferred stock may be subject to redemption provisions. The market values of convertible securities tend to fall as interest rates rise and rise as interest rates fall. Convertible preferred stock's value can depend heavily upon the underlying common stock's value.
Real estate investment trust risk. REITs, pooled investment vehicles that typically invest in real estate directly or in loans collateralized by real estate, carry risks associated with owning real estate, including the potential for a decline in value due to economic or market conditions.
Real estate securities risk. Securities of companies in the real estate industry carry risks associated with owning real estate, including the potential for a decline in value due to economic or market conditions.
| SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 30 |
ADDITIONAL INFORMATION
Unaudited
The fund is a closed-end, diversified management investment company, common shares of which were initially offered to the public on August 27, 2002 and are publicly traded on the New York Stock Exchange (the NYSE).
Dividends and distributions
During the six months ended January 31, 2025 , distributions from net investment income totaling $0.7410 per share were paid to shareholders. The dates of payments and the amounts per share were as follows:
| Payment Date | Income Distributions1 |
| 0.1235 | |
| 0.1235 | |
| 0.1235 | |
| 0.1235 | |
| 0.1235 | |
| Total |
| 1A portion of the distributions may be deemed a tax retuof capital at the fiscal year end. |
Shareholder communication and assistance
If you have any questions concerning the fund, we will be pleased to assist you. If you hold shares in your own name and not with a brokerage firm, please address all notices, correspondence, questions or other communications regarding the fund to the transfer agent at:
Regular Mail:
Computershare
P.O. Box 43006
Providence, RI 02940-3078
P.O. Box 43006
Registered or Overnight Mail:
Computershare
150 Royall Street , Suite 101
Canton, MA 02021
If your shares are held with a brokerage firm, you should contact that firm, bank or other nominee for assistance.
| 31 | JOHN HANCOCK PREFERRED INCOME FUND | SEMIANNUAL REPORT |
More information
Trustees
Officers
Chief Financial Officer
Investment advisor
Subadvisor
Portfolio Managers
Custodian
Transfer agent
Legal counsel
Stock symbol
* Member of the Audit Committee
# Appointed to serve as Trustee effective August 1, 2024 .
π Member of the Audit Committee as of September 24, 2024 .
† Non-Independent Trustee
‡ Effective July 1, 2024 .
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30 , are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
All of the fund's holdings as of the end of the third month of every fiscal quarter are filed with the SEC on Form N-PORT within 60 days of the end of the fiscal quarter. The fund's Form N-PORT filings are available on our website and the SEC's website, sec.gov.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com or by calling 800-852-0218.
The report is certified under the Sarbanes-Oxley Act, which requires closed-end funds and other public companies to affirm that, to the best of their knowledge, the information in their financial reports is fairly and accurately stated in all material respects.
| You can also contact us: | ||
| 800-852-0218 | Regular mail: | Express mail: |
| jhinvestments.com | P.O. Box 43006 |
| SEMIANNUAL REPORT | JOHN HANCOCK PREFERRED INCOME FUND | 32 |
| MF4240233 | P8SA 1/25 |
3/25
ITEM 2. CODE OF ETHICS.
Item is not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Item is not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Item is not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Item is not applicable at this time.
ITEM 6. SCHEDULE OF INVESTMENTS.
(a)Refer to information included in Item 1.
(b)Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES. Not applicable.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
Not applicable.
ITEM 10. REMUNERATION PAID TO DIRECTORS, OFFICERS, AND OTHERS OF OPEN-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 11. STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY CONTRACT. Information included in Item 1, if applicable.
ITEM 12. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Item is not applicable at this time.
ITEM 13. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a)Item is not applicable at this time.
(b)Item is not applicable at this time.
ITEM 14. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 15. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No material changes.
ITEM 16. CONTROLS AND PROCEDURES.
(a)Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the registrant's principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the
(b)There were no changes in the registrant's internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 17. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
The Fund did not participate directly in securities lending activities. See Note 7 to financial statements in Item 1.
ITEM 18. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.
Not applicable.
ITEM 19. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Not applicable.
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.
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President, |
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Principal Executive Officer |
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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.
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President, |
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Principal Executive Officer |
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Chief Financial Officer, |
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Attachments
Disclaimer
AM Best Revises Under Review Status to Negative for Credit Ratings of NASW Insurance Company
Semi-Annual Report by Investment Company (Form N-CSRS)
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