SEC Company Response from JOHN HANCOCK MUNICIPAL SECURITIES TRUST (CIK 0000857769) — Jun 2, 2022
JOHN HANCOCK MUNICIPAL SECURITIES TRUST (CIK 0000857769)
Date: June 2, 2022 · CIK: 0000857769 · Accession: 0001133228-22-003785
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File numbers found in text: 811-05968
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CORRESP
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June 2, 2022
VIA EDGAR
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 02549
Attention: Sonny Oh
Re:
John
Hancock Municipal Securities Trust (the “Trust”) — File No. 033-32246; 811-05968
Registration
Statement on Form N-1A
Dear Mr. Oh:
On behalf of the Trust, we submit this letter in response
to comments received by telephone on May 11, 2022, from the staff (“Staff”) of the Securities and Exchange Commission
(the “SEC”) with respect to Post-effective Amendment No. 62 under the Securities Act of 1933, as amended, and Amendment
No. 66 under the Investment Company Act of 1940, as amended (the “1940 Act”), to the Trust’s Registration Statement
on Form N-1A, filed with the SEC on March 24, 2022, accession no. 0001133228-22-001575 (the “Amendment”). The Amendment
relates to John Hancock Short Duration Municipal Opportunities Fund, a new series of the Trust (the “Fund”).
For convenience, we have set forth each comment below,
followed by the Trust’s response. Unless otherwise stated, capitalized terms have the same meaning as given in the Amendment.
Prospectus Comments
Comment 1 — Please include the ticker
symbol for each class of shares of the Fund on the front covers of the prospectus and the Statement of Additional Information (the “SAI”).
Response to Comment 1 — The ticker
symbol of each class of shares of the Fund will be included on the front cover of the prospectus and the SAI when such class of shares
is offered to the general public.
Comment 2 — Under “Fund Summary
— Fees and expenses,” the Staff highlighted the sentence discussing the fact that the shareholder may pay other fees, which
are not reflected in the tables and examples, should be bolded. Please bold the applicable sentence, as it is bolded in Form N-1A.
K&L
Gates LLP
State
Street Financial Center One Lincoln Street Boston MA 02111
T
+1 617 261 3231 F +1 617 261 3175 klgates.com
Response to Comment 2 — The Trust
has made the requested change and bolded the applicable sentence.
Comment 3 — Under “Fund Summary
— Fees and expenses,” in the “Shareholder fees” table, please move the parenthetical disclosure regarding the
Class A maximum deferred sales charge to a footnote.
Response to Comment 3 — The Trust
believes that the placement of this disclosure is appropriate. Accordingly, the Trust respectfully declines to make any changes in response
to this comment.
Comment 4 —The SEC Staff notes that there
are certain bracketed or omitted items in the Amendment. Please finalize and complete any omitted information in the Fund’s final
filing. Please also provide for the Staff’s review completed fee tables under “Fund summary — Fees and expenses”
as part of this letter.
Response to Comment 4 — The Trust
confirms it will make the requested changes and will finalize and include any omitted information in the final filing. Additionally, the
fee tables for the Fund and the share classes described in the Amendment are included in Appendix A to this letter.
Comment 5 — Under “Fund Summary
— Fees and expenses” in the “Annual Fund Operating Expenses” table, the Staff notes that the “Other Expenses”
for Class A, Class C, and Class I differ from those of Class R6 by 3 basis points. Please explain supplementally how there is an expense
component unique to the given share class.
Response to Comment 5 — The Trust
supplementally notes that transfer agency expenses are described in the Statement of Additional Information and are calculated monthly.
The Trust also notes that the associated expenses for transfer agent services are allocated among four different expense categories associated
with providing such services. Within each expense category, the transfer agent expense is allocated across all of the John Hancock affiliated
funds and/or classes for which transfer agent services are provided, on the basis of relative average net assets.
Comment 6 — Under “Fund Summary
— Fees and Expenses” in the “Annual Fund Operating Expenses” table, with respect to footnote 2, if applicable,
please disclose whether the investment adviser has the ability to recoup amounts waived or reimbursed under the contractual expense limitation
arrangement. If so, please disclose the conditions under which recoupment may take place.
Response to Comment 6 — Supplementally,
the Trust notes that waived or reimbursed expenses are not subject to recoupment by the adviser. Accordingly, the Trust respectfully declines
to make any changes in response to this comment.
Comment 7 — Regarding the disclosure under
“Fund summary — Expense example,” please disclose in the narrative introduction that the contractual waivers, if any,
are reflected for only one year or the duration of the waiver.
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Response to Comment 7 — The
Trust confirms that the expense examples reflect the effect of any contractual fee waivers only for the periods described in the fee table,
as permitted by Instruction 4(a) to Item 3 of Form N-1A. However, as Form N-1A does not require disclosure related to this approach,
the Trust respectfully declines to make any changes in response to this comment.
Comment 8 —The Trust states under “Fund
summary — Principal investment strategies” that “the fund may also invest up to 35% of its net assets in non-investment
grade bonds rated by S&P Global Ratings (S&P), Fitch Ratings, Inc. (Fitch) or Moody’s Investors Service, Inc. (Moody’s)
or comparable rating by any nationally recognized statistical ratings organization (NRSRO) or their unrated equivalents.” Please
disclose the ratings for each of those ratings agencies that would denote a non-investment grade bond.
Response to Comment 8 — In response
to the Staff’s comment, the Trust has revised the disclosure as-follows:
The fund primarily invests in bonds
that are investment grade when purchased, but Most of these securities are investment-grade, although the fund may
also invest up to 35% of its net assets in below-investment-grade debt securities (junk bonds) rated as
low as CC non-investment grade bonds rated by S&P Global Ratings (S&P), and
Fitch Ratings, Inc. (Fitch) and Ca by or Moody’s Investors Service, Inc. (Moody’s),
or comparable rating by any nationally recognized statistical ratings organization (NRSRO), or their unrated equivalents.
Non-investment grade securities may also be referred to as below investment grade securities, commonly known as “junk bonds”.
Comment 9 — Under “Fund summary
— Principal investment strategies,” please clarify that non-investment grade debt securities are also known as “junk
bonds”.
Response to Comment 9 — The Registrant
directs the Staff to the revised disclosure set forth in Response 8 above.
Comment 10 — Under “Fund summary
— Principal investment strategies,” the Trust states that “[t]he fund may invest in fixed income securities which include
bonds, debt securities and other similar instruments.” Please specify or provide examples of “other similar instruments.”
Additionally, please provide any corresponding risk disclosure that relates to those instruments.
Response to Comment 10 — The
Trust believes that the Fund’s disclosure appropriately sets forth the types of fixed income securities which the portfolio managers
may select for the Fund. The Trust, therefore, respectfully declines to make any changes in response to this comment.
Comment 11 — Under “Fund summary
– Principal investment strategies,” the Trust states, “The fund will have an average effective duration of 4.5 years
or less.” Please revise this sentence or provide an example to explain the significance of the number of years associated with an
effective duration.
Response to Comment 11 — The
Trust notes that the SAI contains the following disclosure regarding duration:
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The longer a fixed-income security’s
duration, the more sensitive it will be to changes in interest rates. Similarly, a fund with a longer average portfolio duration will
be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration. Duration is a measure used to determine
the sensitivity of a security’s price to changes in interest rates that incorporates a security’s yield, coupon, final maturity,
and call features, among other characteristics. All other things remaining equal, for each one percentage point increase in interest rates,
the value of a portfolio of fixed-income investments would generally be expected to decline by one percent for every year of the portfolio’s
average duration above zero. For example, the price of a bond fund with an average duration of eight years would be expected to fall approximately
8% if interest rates rose by one percentage point. The maturity of a security, another commonly used measure of price sensitivity, measures
only the time until final payment is due, whereas duration takes into account the pattern of all payments of interest and principal on
a security over time, including how these payments are affected by prepayments and by changes in interest rates, as well as the time until
an interest rate is reset (in the case of variable-rate securities).
Therefore, the Trust respectfully declines
to make any changes in response to the comment.
Comment 12 — Under “Fund summary
– Principal investment strategies,” the third sentence of the second paragraph states, “The fund may invest heavily
in bonds from any given state or region and may have substantial investments in obligations of certain states and their agencies, instrumentalities,
and/or political subdivisions.” Please provide additional disclosure regarding the states or regions in which the fund may have
substantial investments either in the “Fund Summary” or in the “Fund Details” section of the prospectus. Additionally,
please include any corresponding risk disclosure as a result of any updates.
Response to Comment 12 — The
Trust respectfully believes that the disclosure adequately addresses the Fund’s “state or region” investment strategy
and any corresponding risk. Accordingly, the Trust respectfully declines to make any changes in response to this comment.
Comment 13 — Under “Fund summary
– Principal investment strategies,” with respect to investing in derivatives, please review the Fund’s principal investment
strategies and principal risk disclosure to ensure the disclosure is not generic and fully describes how the Fund will use derivatives
and the risks associated with this use. See the letter from Barry Miller of the Division of Investment Management of the SEC to the Investment
Company Institute dated July 30, 2010 (the “Derivatives Disclosure Letter”). Please also disclose whether investments
in derivatives are counted toward the Fund’s 80% test.
Response to Comment 13 —The Trust
confirms that it has reviewed the derivatives disclosure included in the Fund’s prospectus and has determined that it is consistent
with the views set forth in the Derivatives Disclosure Letter. Additionally, the Trust confirms that investments in derivatives
which are on a municipal bond or municipal index count toward the Fund’s 80% test. Whereas, a derivative on any security type other
than a municipal security would not count toward the Fund’s 80% test. The Trust also notes that the Fund contains detailed disclosure
with respect to its use of derivative instruments and includes disclosure relating to the Fund’s 80% policy with respect to the
definition of fixed income instruments. Although the Fund may utilize derivatives investments and
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may include certain derivatives in its 80% policy, the Trust respectfully
declines to revise its disclosure, as it believes its disclosure is sufficient. The Trust also notes that it has taken this approach with
respect to a number of funds in its complex and that this approach is therefore consistent on a complex-wide basis.
Comment 14 — Please briefly describe general
obligation bonds and government bonds in more detail and provide the difference between the two. Alternatively, please include such description
in the Item 9 strategy disclosure.
Response to Comment 14 — The
Trust respectfully believes that the disclosure is appropriate. The Trust also respectfully notes that the SAI contains the additional
disclosure regarding general obligation bonds and government bonds. Accordingly, the Trust respectfully declines to make any changes in
response to this comment.
Comment 15 — Under “Fund Summary
— Principal risks,” the Staff notes that the principal risks appear in alphabetical order. Please reorder the risks to prioritize
the risks that are most likely to adversely affect the Fund’s net asset value, yield and total return. Please note that after listing
the most significant risks to the Fund, the remaining risks may be alphabetized. See Dalia Blass, Keynote Address - ICI Securities
Law Developments Conference, October 25, 2018, available at: https://www.sec.gov/news/speech/speech-blass-102518# and ADI-2019-08
- Improving Principal Risks Disclosure.
Response to Comment 15 — The
Trust respectfully submits that the current order of the principal risks is in compliance with the requirements of Form N-1A, which does
not require listing the principal risks of investing in a fund in any particular order. The Trust further notes that the alphabetical
ordering convention of its “Principal risks” is consistent across the John Hancock fund complex. Further, in order to clarify
for shareholders that they should not make any assumptions regarding the significance of the risk factors based on their current order,
the Trust includes the following disclosure in the introductory paragraph “The fund’s main risks are listed below in alphabetical
order, not in order of importance.” For these reasons, and in order to maintain consistency of disclosure complex-wide, the Trust
respectfully declines to make any changes in response to this comment.
Comment 16 — The Staff notes that the
disclosure under “Fund summary — Principal risks,” includes “Sector risk.” Accordingly, please add disclosure
relating to sector focus to the Fund’s principal investment strategies.
Response to Comment 16 —The Trust
respectfully believes that the disclosure adequately addresses the investment strategy. Accordingly, the Trust respectfully declines to
make any changes in response to this comment.
Comment 17 — To the extent that the Fund
is focused or concentrated in a specific geographic region or country, please consider disclosing those particular states or regions in
the State/region risk” under “Fund summary – Principal risks.”
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Response to Comment 17 — The
Trust confirms that the Fund has no current intention to concentrate or focus in a specific geographic region or state. Accordingly, the
Trust respectfully declines to make any changes in response to this comment.
Comment 18 — In “Fund summary —
Portfolio management,” please state the month and year that each portfolio manager began managing the Fund.
Response to Comment 18 — Generally,
the date that a newly established John Hancock fund (such as the Fund) commences operations is not known at the time that the fund’s
shares are registered with the SEC. Thus, if a portfolio manager is expected to manage the fund when it commences operations, the John
Hancock funds’ usual practice is to disclose that the portfolio manager has managed the fund since inception or the year in which
the fund is expected to commence operations, in order to preserve flexibility in disclosure for new funds. The month and year in which
each portfolio manager commenced management of the Fund will be disclosed in the Fund’s first annual update. Accordingly, the Trust
respectfully declines to make any changes in response to this comment.
Comment 19 — Please disclose that the
Fund’s 80% policy requiring shareholder approval to change is a fundamental investment policy in the SAI. Please include this within
the list of fundamental