High Income Securities Fund : Semi-Annual Report 2022

High Income Securities Fund (PCF)

Semi-Annual Report

For the six months ended

February 28, 2022

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April 29, 2022

Dear Fellow Stockholders:

The Fund pays monthly distributions to common stockholders at an annualized rate of 10% (or 0.8333% per month) based on its net asset value (NAV) as of the last business day of the previous calendar year. In 2021, the monthly distributions were $0.078 and in 2022 they have been $0.073. Thus, the total amount of distributions in the first half of fiscal year 2022 (from September 1, 2021 to February 28, 2022) were $0.458 per share. In some years, the Fund's managed distribution policy may require it to distribute capital, as was the case in 2020 and 2021.

On October 22, 2021, the Fund completed a rights offering in which 8,042,590 additional shares of common stock were issued at a price of $8.36 resulting in NAV dilution of approximately $0.42 per share or 4.5%. Several trustees purchased shares in the rights offering and I personally purchased more than 200,000 shares.

In the first half of fiscal year 2022, the Fund's NAV fell from $9.31 per share on August 31, 2021 to $8.60 on February 28, 2022. After accounting for distributions of $0.458 cents per share, the NAV declined by 2.71% for the period inclusive of the aforementioned 4.5% dilution from the rights offering, which created a non-recurring drag on performance. On February 28, 2022, the Fund's shares closed at a discount of 5.36% from NAV. The Board closely monitors the discount and will consider measures to address it if it exceeds 10% for an extended period of time.

Since April 2019, a committee of the Board of Trustees, comprised of Andrew Dakos, Rajeev Das and me, has been responsible for investing the Fund's assets within the parameters of the Fund's existing investment policies and restrictions. A primary focus of the Fund's investment strategy has been to acquire discounted shares of closed-end investment companies ("CEFs") and business development companies ("BDCs") that make regular distributions, as well as the senior securities, e.g., notes or preferred shares of CEFs and BDCs (which we think have a negligible risk of defaulting) and certain operating companies when they are attractively priced. In addition, units or common shares issued by special purpose acquisition companies (a/k/a blank check companies or SPACs) may comprise up to 20% of the Fund's portfolio.

After the Fund liquidated its entire portfolio to conduct a large tender, it adopted the ICE BofA Merrill Lynch 6 Month U.S. Treasury Bill Index (which was down 0.04% for the first half of fiscal year 2022) as a "place marker" benchmark. However, we do not think that benchmark is a good fit for the Fund because the Fund seeks higher returns and assumes greater risk than that Index. As discussed below, we would like to expand the Fund's investment parameters and if and when that occurs, the Board will determine whether there is a more suitable benchmark.

One feature of CEFs and BDCs that we find attractive is that their stock prices can vary for reasons that have nothing to do with the investment merits of their underlying portfolios. For example, we have recently been buying shares of CION Investment Corporation, a BDC with a portfolio of mostly first lien variable rate loans, after its trading discount widened rather dramatically for no apparent reason. CION started its life in 2012 as a non-traded BDC and until October 2021, when CION's shares began trading on the New York Stock Exchange, investors had limited liquidity. To address the possibility of significant selling pressure after listing, CION imposed limits on the transfer of shares by its original stockholders. One lockup period recently ended and the stock price fell more than 20% over the next few weeks as supply overwhelmed demand. We saw this as an opportunity to exploit a trading imbalance that was unrelated to CION's portfolio. CION's current distribution rate as a percentage of its stock price is about 11% and we estimate the discount to NAV at about 30%. Moreover, prior to listing its shares, CION's board, anticipating the possibility of a large discount developing from the post-listing overhang, approved a share repurchase program for up to $50 million of stock. We expect the selling pressure to eventually abate and the discount to narrow. In the meantime, we should collect an attractive stream of distributions.

As discussed previously, we sometimes have to forego investments whose risk-reward profiles are attractive, but don't fit within the Fund's restrictive investment parameters. In addition, we would like the flexibility to increase the Fund's exposure to SPACs, which can provide a significantly higher return than a money market fund with a minimal risk of incurring a realized loss of principal provided that the common stock is sold or redeemed before a transaction with an operating company is completed. (Shares of SPACs held after a transaction is completed can be very volatile.) Thus, we think the Fund should have greater flexibility in selecting investments as well as the ability to use leverage to enhance its returns. Now that the rights offering has been completed and the Fund's size has reached an acceptable level, the Board intends to consider asking stockholders to vote on proposals to broaden the Fund's investment parameters, authorize the use of leverage, and engage an investment advisor that has demonstrated success in using activist measures to enhance the value of its clients' investments.

Lastly, we remind you that from time to time the Fund seeks instructions from stockholders for voting its proxies for certain closed-end funds whose shares the Fund owns. The instruction forms are available athttp://highincomesecuritiesfund.com. If you would like to receive an email notification when the Fund seeks proxy voting instructions for a closed-end fund whose shares it owns, please email us [e-mail].

Sincerely yours,

Phillip Goldstein Chairman

$25,000

$5,000

8/31/20 8/31/21

This chart assumes an initial gross investment of $10,000 made on 2/29/2012.

Past Performance at a glance (unaudited)

Average annual total returns for the periods ended 2/28/2022

6 month

Net assets value returns High Income Securities Fund

(not annualized)

-2.87%

1 year 4.52%

5 years 5.77%

10 years 6.51%

Market price returns High Income Securities Fund

-13.70%

7.87%

6.43%

6.39%

Index returns

ICE BofA Merrill Lynch 6 Month Treasury Bill Index

-0.04%

0.00%

1.27%

0.79%

Share Price as of 2/28/2022

Net asset value $8.60

Market price $8.13

The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares.

Effective after the close of business on July 23, 2018, the Fund became internally managed and did not pay any management fees for the six months ended February 28, 2022. Generally, the Fund invests in securities of discounted shares of income-oriented closed-end investment companies, business development companies and Special Purpose Acquisition Vehicles.