UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-22795
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First Trust Intermediate Duration Preferred & Income
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Fund (Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
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Date of fiscal year end: October 31
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Date of reporting period: April 30, 2017
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
FIRST TRUST
INTERMEDIATE DURATION
PREFERRED & INCOME FUND (FPF)
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SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED
APRIL 30, 2017
STONEBRIDGE
Advisors LLC
FIRST TRUST
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TABLE OF CONTENTS
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FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
SEMI-ANNUAL REPORT
APRIL 30, 2017 (UNAUDITED)
Shareholder Letter.......................................................... 1
At a Glance................................................................. 2
Portfolio Commentary........................................................ 4
Portfolio of Investments.................................................... 6
Statement of Assets and Liabilities......................................... 13
Statement of Operations..................................................... 14
Statements of Changes in Net Assets......................................... 15
Statement of Cash Flows..................................................... 16
Financial Highlights........................................................ 17
Notes to Financial Statements............................................... 18
Additional Information...................................................... 24
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and/or Stonebridge Advisors LLC ("Stonebridge" or the
"Sub-Advisor") and their respective representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
First Trust Intermediate Duration Preferred & Income Fund (the "Fund") to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. When evaluating the
information included in this report, you are cautioned not to place undue
reliance on these forward-looking statements, which reflect the judgment of the
Advisor and/or Sub-Advisor and their representatives only as of the date hereof.
We undertake no obligation to publicly revise or update these forward-looking
statements to reflect events and circumstances that arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that the Fund will achieve its investment objectives. The
Fund is subject to market risk, which is the possibility that the market values
of securities owned by the Fund will decline and that the value of the Fund's
shares may therefore be less than what you paid for them. Accordingly, you can
lose money by investing in the Fund. See "Risk Considerations" in the Additional
Information section of this report for a discussion of certain other risks of
investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on the Fund's webpage at http://www.ftportfolios.com.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment in
the Fund. It includes details about the Fund and presents data and analysis that
provide insight into the Fund's performance and investment approach.
By reading the portfolio commentary by the portfolio management team of the
Fund, you may obtain an understanding of how the market environment affected the
Fund's performance. The statistical information that follows may help you
understand the Fund's performance compared to that of relevant market
benchmarks.
It is important to keep in mind that the opinions expressed by personnel of the
Sub-Advisor are just that: informed opinions. They should not be considered to
be promises or advice. The opinions, like the statistics, cover the period
through the date on the cover of this report. The material risks of investing in
the Fund are spelled out in the prospectus, the statement of additional
information, this report and other Fund regulatory filings.
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SHAREHOLDER LETTER
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FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
APRIL 30, 2017 (UNAUDITED)
Dear Shareholders:
Thank you for your investment in the First Trust Intermediate Duration Preferred
& Income Fund (the "Fund").
The year 2016 was a historic year all over the world. Many will remember some of
the events that occurred during the year: from the Brexit vote in the UK to
leave the European Union, to the results of the U.S. Presidential Election which
seemed unlikely at the beginning of 2016, to the first World Series Championship
for the Chicago Cubs in 108 years!
First Trust Advisors L.P. ("First Trust") is pleased to provide you with this
semi-annual report which contains detailed information about your investment.
Additionally, First Trust has compiled the Fund's financial statements for you
to review. We encourage you to read this report and discuss it with your
financial advisor.
On November 8, 2016, Donald J. Trump was elected to become the 45th president in
our country's history. As I write this, he has just hit his 100th day in office,
always a historic marker for pundits, politicians, and voters. While no one has
a crystal ball and the ability to predict how the Trump administration will
shape the United States (and the world), there is no doubt that his populist
message resonated for many Americans. His message of improving lives for the
"average" American, while reducing the size and scope of the federal government,
also won him millions of votes. Many of his supporters believe that with his
background in business, Trump will make policy changes that will continue to
grow the economy and spur stock markets even higher. Many analysts predicted the
Dow Jones Industrial Average would hit a new benchmark, 20,000, in the first
days of the New Year. It took until January 25, 2017, but the Dow finally traded
over 20,000 on that day. On March 1, 2017, the Dow went past 21,000, a new
record. As with all change and a new administration, only time will tell where
our economy and the markets will go.
As of December 31, 2016, the S&P 500(R) Index (the "Index") was up 11.96% for
the year, on a total return basis, as measured by Bloomberg. As of April 30,
2017, the Index was up 7.16% (calendar year-to-date). The current bull market
(measuring from March 9, 2009 through April 28, 2017) is the second longest in
history, but lags the longest bull market by 4.17 years, according to Bespoke
Investment Group. We remain bullish on the economy, but continue to have a
long-term perspective. We believe investors should think long-term as well,
since no one can predict volatility and the inevitable ups and downs that occur
in the market.
Thank you for giving First Trust the opportunity to be a part of your investment
plan. We value our relationship with you and will continue our relentless focus
on bringing the types of investments that we believe could help you reach your
financial goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 1
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
"AT A GLANCE"
APRIL 30, 2017 (UNAUDITED)
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FUND STATISTICS
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Symbol on New York Stock Exchange FPF
Common Share Price $23.61
Common Share Net Asset Value ("NAV") $24.44
Premium (Discount) to NAV (3.40)%
Net Assets Applicable to Common Shares $1,484,889,363
Current Monthly Distribution per Common Share (1) $0.1525
Current Annualized Distribution per Common Share $1.8300
Current Distribution Rate on Closing Common Share Price (2) 7.75%
Current Distribution Rate on NAV (2) 7.49%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
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Common Share Price NAV
4/16 23.02 22.95
22.80 22.81
22.99 22.90
22.89 23.06
5/16 23.10 23.20
23.03 23.09
23.05 23.08
23.26 23.03
6/16 23.03 22.94
23.45 23.01
23.51 23.05
23.48 23.32
23.67 23.53
7/16 23.61 23.71
23.51 23.66
23.51 23.79
23.51 23.90
8/16 23.35 24.02
23.42 23.95
23.14 23.96
22.93 23.75
23.27 23.97
9/16 23.34 23.89
22.92 23.84
22.53 23.76
22.96 23.98
10/16 22.76 24.01
22.20 23.73
21.23 23.42
21.30 23.21
11/16 21.54 23.24
21.65 23.01
21.71 23.11
21.80 23.18
22.34 23.32
12/16 22.69 23.15
22.84 23.39
23.25 23.57
22.96 23.57
1/17 23.10 23.75
23.27 23.74
23.38 23.82
23.41 23.94
2/17 23.64 24.05
23.39 24.03
22.63 23.84
23.16 23.96
23.23 24.06
3/17 23.24 24.14
23.57 24.08
23.65 24.09
23.57 24.21
4/17 23.61 24.44
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PERFORMANCE
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Average Annual Total Returns
6 Months Ended 1 Year Ended Inception (5/23/13)
4/30/17 4/30/17 to 4/30/17
FUND PERFORMANCE (3)
NAV 6.18% 15.92% 9.50%
Market Value 8.73% 11.64% 7.28%
INDEX PERFORMANCE
BofA Merrill Lynch Fixed Rate Preferred Securities Index 2.99% 6.50% 5.86%
BofA Merrill Lynch U.S. Capital Securities Index 1.97% 7.57% 5.07%
Blended Index(4) 2.48% 7.04% 5.48%
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(1) Most recent distribution paid or declared through 4/30/2017. Subject to
change in the future.
(2) Distribution rates are calculated by annualizing the most recent
distribution paid or declared through the report date and then dividing by
Common Share price or NAV, as applicable, as of 4/30/2017. Subject to
change in the future.
(3) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distributions, if any, at prices obtained by
the Dividend Reinvestment Plan and changes in NAV per share for NAV
returns and changes in Common Share price for market value returns. Total
returns do not reflect sales load and are not annualized for periods less
than one year. Past performance is not indicative of future results.
(4) The Blended Index consists of the following: BofA Merrill Lynch Fixed Rate
Preferred Securities Index (50%) and BofA Merrill Lynch U.S. Capital
Securities Index (50%). The Blended Index was added to reflect the diverse
allocation of institutional preferred and hybrid securities in the Fund's
Portfolio. The indexes do not charge management fees or brokerage
expenses, and no such fees or expenses were deducted from the performance
shown. Indexes are unmanaged and an investor cannot invest directly in an
index.
Page 2
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
"AT A GLANCE" (CONTINUED)
APRIL 30, 2017 (UNAUDITED)
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% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
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Banks 41.2%
Insurance 26.4
Electric Utilities 6.1
Food Products 5.4
Capital Markets 3.7
Diversified Telecommunication Services 3.6
Energy Equipment & Services 2.3
Oil, Gas & Consumable Fuels 2.3
Diversified Financial Services 1.5
Multi-Utilities 1.4
Thrifts & Mortgage Finance 1.2
Independent Power Producers and Renewable
Electricity Producers 1.1
Equity Real Estate Investment Trusts 0.8
Metals & Mining 0.8
Industrial Conglomerates 0.5
Transportation Infrastructure 0.5
Consumer Finance 0.5
Internet Software & Services 0.4
Wireless Telecommunication Services 0.3
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Total 100.0%
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
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Cooperatieve Rabobank UA 2.1%
Aquarius & Investments PLC for Swiss
Reinsurance Co., Ltd. 2.1
Enel S.p.A. 1.9
Emera, Inc., Series 16-A 1.9
Credit Agricole S.A. 1.7
Catlin Insurance Co., Ltd. 1.7
Banco Bilbao Vizcaya Argentaria S.A. 1.7
Farm Credit Bank Of Texas, Series 1 1.5
American International Group, Inc. 1.5
Koninklijke KPN N.V. 1.4
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Total 17.5%
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% OF TOTAL
CREDIT QUALITY (5) INVESTMENTS
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A 0.6%
A- 4.0
BBB+ 13.1
BBB 19.9
BBB- 20.6
BB+ 21.9
BB 8.6
BB- 1.9
B+ 1.1
B 0.8
B- 0.2
NR 7.3
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Total 100.0%
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(5) The credit quality and ratings information presented above reflect the
ratings assigned by one or more nationally recognized statistical rating
organizations (NRSROs), including Standard & Poor's Ratings Group, a
division of the McGraw Hill Companies, Inc., Moody's Investors Service,
Inc., Fitch Ratings or a comparably rated NRSRO. For situations in which a
security is rated by more than one NRSRO and the ratings are not
equivalent, the highest ratings are used. Sub-investment grade ratings are
those rated BB+/Ba1 or lower. Investment grade ratings are those rated
BBB-/Baa3 or higher. The credit ratings shown relate to the credit
worthiness of the issuers of the underlying securities in the Fund, and
not to the Fund or its shares. Credit ratings are subject to change.
NR Not Rated.
Page 3
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PORTFOLIO COMMENTARY
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FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
SEMI-ANNUAL REPORT
APRIL 30, 2017 (UNAUDITED)
ADVISOR
First Trust Advisors L.P. ("First Trust") was established in 1991 and is located
in Wheaton, Illinois. First Trust is a registered investment advisor which
offers customized portfolio management using its structured, quantitative
approach to security selection. As of April 30, 2017, First Trust managed or
supervised $105.533 billion in assets.
SUB-ADVISOR
Stonebridge Advisors LLC ("Stonebridge" or the "Sub-Advisor") is the sub-advisor
to First Trust Intermediate Duration Preferred & Income Fund (the "Fund" or
"FPF") and is a registered investment advisor based in Wilton, Connecticut.
Stonebridge specializes in the management of preferred securities and North
American equity income securities.
STONEBRIDGE ADVISORS LLC PORTFOLIO MANAGEMENT TEAM
SCOTT T. FLEMING - PRESIDENT AND CHIEF INVESTMENT OFFICER
ROBERT WOLF - SENIOR VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER
DANIELLE SALTERS, CFA - VICE PRESIDENT, PORTFOLIO MANAGER AND CREDIT ANALYST
COMMENTARY
MARKET RECAP
The six-month period ended April 30, 2017 was a time of solid returns for the
preferred and hybrid securities markets. After some initial volatility, the
market recovered and performed well throughout the last half of the period due
to the continued low rate environment. Positive performance in the preferred and
hybrid securities markets was also driven by continued investor demand for high
income-producing securities coupled with a positive market technical factor
resulting from limited new issuance supply. The retail preferred securities
market was pushed higher by inflows into the passive preferred exchange-traded
funds ("ETFs"), while institutional hybrid securities lagged retail until the
last quarter of the period. For the six-month period, the retail market earned
2.99%, while the institutional market earned 1.97% according to the BofA Merrill
Lynch Fixed Rate Preferred Securities Index ("P0P1") and the BofA Merrill Lynch
U.S. Capital Securities Index ("C0CS"), respectively.
PERFORMANCE ANALYSIS
The First Trust Intermediate Duration Preferred & Income Fund (the "Fund")
produced a total return of 8.73% based on market price and 6.18% based on net
asset value ("NAV") for the six-month period ended April 30, 2017, outperforming
the benchmark's (a 50/50 blend P0P1 and C0CS) return of 2.48%. This was achieved
despite the Fund maintaining a conservative interest rate stance relative to the
benchmark. Throughout the year, the effective duration of the Fund excluding
leverage was lower than the benchmark while still keeping income comparable to
peer funds.
The primary factors that contributed to the outperformance of the Fund relative
to the benchmark were leverage and overall security selection. The Fund achieved
superior security selection within most categories, including fixed-to-floating
rate and fixed-for-life structured securities, institutional securities and
securities issued by domestic companies. The Fund's strategy to maintain a
shorter duration and overweight fixed-to-floating rate securities compared to
the benchmark, which is its principal method for managing duration, was a drag
on relative performance from an allocation standpoint. However, the superior
security selection within the shorter duration buckets and fixed-to-floating
rate securities more than offset this detractor. Also, the Fund's relative
performance suffered from its overweight in European securities, but security
selection once again helped to offset this detractor. Although the
aforementioned contributors were all meaningful, the largest factor that added
to the relative outperformance was leverage.
The Fund also employed a hedging strategy throughout the year in order to
further manage its interest rate risk. This strategy consisted of an interest
rate swap. Going forward, Stonebridge continues to believe it is prudent to
maintain a conservative interest rate stance relative to the benchmark,
particularly if it is able to do so while continuing to pay the high
distribution rate to shareholders.
Page 4
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PORTFOLIO COMMENTARY (CONTINUED)
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FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
SEMI-ANNUAL REPORT
APRIL 30, 2017 (UNAUDITED)
MARKET AND FUND OUTLOOK
While the results of the U.S. election in November increased market expectations
for the economy, rising uncertainty in terms of U.S. government policy and more
mixed economic data has tempered market enthusiasm in the first quarter of 2017.
The relatively sharp upward move in U.S. interest rates, a stronger U.S. dollar,
and a stronger equity market that occurred in the fourth quarter of 2016
moderated in the first four months of 2017. Despite the positive shift in
sentiment, economic weakness still persists in the rest of the world. Market
interest rates have remained quite low in Europe and Japan, complicating
monetary policy outside the U.S. and effectively limiting the speed and
magnitude of any U.S. tightening.
The Federal Reserve ("Fed") increased short term rates in December 2016 and
March 2017, signaling further rate hikes in 2017, in our view. While the
direction of rates upward is not a surprise, we continue to believe that any
changes are likely to be measured and gradual, with the curve likely flattening
somewhat as short-term rates increase faster than long-term rates. We have long
anticipated, and positioned for, a rising rate environment, and we continue to
hold the view that this process will be gradual. U.S. fiscal policy and
potential tax and regulatory changes have the potential to boost economic growth
but we also believe this impact is likely to be muted and slow given political
uncertainty and our belief that any changes will likely be phased in over time.
In this overall low-rate environment, despite some tightening in the first
quarter, credit spreads remain fairly wide by historical standards, supported by
the stable to positive credit fundamentals we see in most issuers. We believe
that the historically wide yield spreads of preferred and hybrid securities
relative to both U.S. Treasuries and other credit spread products should help
drive positive performance in the asset class.
We believe the recent increase in interest rates is a credit positive for both
bank and insurance companies due to potentially higher net interest margins and
investment portfolio returns. We believe any potential modification of the Dodd
Frank financial regulation in the U.S. would also probably be a small credit
positive for U.S. banks. In general, we expect banks to be allowed more latitude
to make loans and trade securities but we expect currently high regulatory
capital requirements to remain in place. In European financials, the volatility
we saw in early 2016 led to modifications in European bank regulatory capital
rules. This reduced the risk of hybrid coupon interruptions and helped support
performance of European hybrid securities in the latter part of the year and in
the first part of 2017. Several weaker banking names in Europe, notably Deutsche
Bank and Unicredit, both successfully raised common equity to strengthen their
balance sheets. In Europe, we also expect that the legal costs of settling large
legacy mortgage and financial conduct cases are abating. Many of the major banks
have settled or are expected to settle with regulators for penalty amounts that
were less than expected and easily manageable given solid capital ratios and
improving earnings.
Given the outlook for gradually rising interest rates in 2017, we have
maintained our conservative stance on interest rate risk by remaining overweight
less interest rate sensitive securities than our benchmark. With the potential
for further rate volatility, we believe it is prudent to maintain durations
shorter than the benchmark, particularly if we can do so while paying
distributions comparable to or better than the benchmark yield. We believe the
quality and stability of our duration is better than the benchmark given our
lower exposure to negatively convex securities (such as securities trading at
negative yield to calls and low coupon fixed rate for life structures). As a
result, we believe our portfolios should continue to show more resilience in a
market downturn and potentially outperform in a rising rate environment.
Page 5
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS
APRIL 30, 2017 (UNAUDITED)
STATED STATED
SHARES DESCRIPTION RATE MATURITY VALUE
---------------- --------------------------------------------------- ----------- ---------- --------------
$25 PAR PREFERRED SECURITIES - 26.3%
Banks - 6.0%
85,593 Banc Of California, Inc., Series E................. 7.00% (a) $ 2,256,231
56,910 Bank of America Corp., Series Y.................... 6.50% (a) 1,530,879
342,451 Citigroup Capital XIII (b) (c)..................... 7.54% 10/30/40 8,985,914
151,390 Citigroup, Inc., Series J (d)...................... 7.13% (a) 4,437,241
300,000 Citigroup, Inc., Series S (c)...................... 6.30% (a) 8,022,000
99,752 Fifth Third Bancorp, Series I (d).................. 6.63% (a) 2,850,912
149,642 FNB Corp. (c) (d).................................. 7.25% (a) 4,421,921
758,373 GMAC Capital Trust I, Series 2 (b) (c)............. 6.82% 02/15/40 19,308,177
46,510 ING Groep N.V...................................... 6.20% (a) 1,191,121
249,165 JPMorgan Chase & Co., Series AA.................... 6.10% (a) 6,690,080
244,803 JPMorgan Chase & Co., Series BB.................... 6.15% (a) 6,585,201
198,230 MB Financial, Inc., Series A (c) (e)............... 8.00% (a) 5,193,626
300,000 People's United Financial, Inc., Series A (c) (d).. 5.63% (a) 8,268,000
38,987 PNC Financial Services Group, Inc., Series P (d)... 6.13% (a) 1,141,150
79,000 Valley National Bancorp, Series A (d).............. 6.25% (a) 2,253,080
6,452 Wells Fargo & Co. (d).............................. 5.85% (a) 174,849
100,000 Wells Fargo & Co., Series W........................ 5.70% (a) 2,544,000
115,455 Wintrust Financial Corp., Series D (c) (d)......... 6.50% (a) 3,111,512
--------------
88,965,894
--------------
Capital Markets - 2.9%
145,201 Apollo Investment Corp. (c)........................ 6.88% 07/15/43 3,776,678
24,485 Goldman Sachs Group, Inc., Series K (d)............ 6.38% (a) 699,781
376,213 Morgan Stanley, Series E (c) (d)................... 7.13% (a) 11,041,852
633,698 Morgan Stanley, Series F (c) (d)................... 6.88% (a) 18,377,242
76,000 Morgan Stanley, Series K (d)....................... 5.85% (a) 2,004,880
160,000 State Street Corp., Series G (d)................... 5.35% (a) 4,275,200
127,663 Stifel Financial Corp., Series A................... 6.25% (a) 3,370,303
--------------
43,545,936
--------------
Consumer Finance - 0.5%
282,289 Capital One Financial Corp., Series D (c).......... 6.70% (a) 7,762,948
--------------
Diversified Financial Services - 0.7%
396,387 KKR Financial Holdings LLC, Series A (c)........... 7.38% (a) 10,246,604
--------------
Diversified Telecommunication Services - 1.8%
300,000 Qwest Corp. (c).................................... 6.88% 10/01/54 7,650,000
243,977 Qwest Corp......................................... 6.63% 09/15/55 6,160,419
141,191 Qwest Corp......................................... 7.00% 02/01/56 3,723,207
350,000 Qwest Corp. (c).................................... 6.50% 09/01/56 8,715,000
--------------
26,248,626
--------------
Electric Utilities - 0.5%
258,726 Southern (The) Co.................................. 6.25% 10/15/75 6,853,652
9,254 Southern (The) Co.................................. 5.25% 10/01/76 226,908
--------------
7,080,560
--------------
Equity Real Estate Investment Trusts - 1.1%
250,000 Corporate Office Properties Trust, Series L (c).... 7.38% (a) 6,367,200
82,300 EPR Properties, Series F........................... 6.63% (a) 2,127,455
1,932 Equity Commonwealth................................ 5.75% 08/01/42 48,203
87,997 Kilroy Realty Corp., Series H...................... 6.38% (a) 2,229,404
250,000 VEREIT, Inc., Series F (c)......................... 6.70% (a) 6,432,500
--------------
17,204,762
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Page 6 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 2017 (UNAUDITED)
STATED STATED
SHARES DESCRIPTION RATE MATURITY VALUE
---------------- --------------------------------------------------- ----------- ---------- --------------
$25 PAR PREFERRED SECURITIES (Continued)
Food Products - 2.9%
874,388 CHS, Inc., Series 2 (c) (d)........................ 7.10% (a) $ 24,596,535
571,059 CHS, Inc., Series 3 (c) (d)........................ 6.75% (a) 15,498,541
114,692 CHS, Inc., Series 4 (c)............................ 7.50% (a) 3,314,599
--------------
43,409,675
--------------
Insurance - 4.8%
100,436 Allstate Corp., Series C........................... 6.75% (a) 2,741,903
95,314 Allstate Corp., Series E........................... 6.63% (a) 2,624,948
182,995 Amtrust Financial Services, Inc. (c)............... 7.25% 06/15/55 4,593,174
204,030 Amtrust Financial Services, Inc. (c)............... 7.50% 09/15/55 5,235,410
100,000 Amtrust Financial Services, Inc., Series F......... 6.95% (a) 2,211,000
86,841 Arch Capital Group, Ltd., Series E................. 5.25% (a) 2,006,027
75,500 Aspen Insurance Holdings, Ltd...................... 5.63% (a) 1,842,200
184,270 Berkley (WR) Corp. (c)............................. 5.75% 06/01/56 4,650,975
160,203 Delphi Financial Group, Inc. (d) (e)............... 7.38% 05/15/37 3,619,594
158,193 Global Indemnity Ltd. (c).......................... 7.75% 08/15/45 3,986,464
190,380 Global Indemnity Ltd............................... 7.88% 04/15/47 4,778,538
17,485 National General Holdings Corp..................... 7.63% 09/15/55 440,972
133,133 National General Holdings Corp., Series C.......... 7.50% (a) 3,377,584
107,835 PartnerRe, Ltd., Series G (c)...................... 6.50% (a) 2,930,955
7,456 PartnerRe, Ltd., Series H.......................... 7.25% (a) 215,702
225,000 Phoenix Companies, Inc............................. 7.45% 01/15/32 4,120,312
795,327 Reinsurance Group of America, Inc. (c) (d)......... 5.75% 06/15/56 22,149,857
--------------
71,525,615
--------------
Internet Software & Services - 0.5%
268,155 eBay, Inc.......................................... 6.00% 02/01/56 7,108,789
--------------
Multi-Utilities - 2.0%
732,571 Integrys Holding, Inc. (c) (d)..................... 6.00% 08/01/73 19,971,717
350,000 Just Energy Group, Inc., Series A (c) (d).......... 8.50% (a) 9,516,500
--------------
29,488,217
--------------
Oil, Gas & Consumable Fuels - 0.4%
200,000 NuStar Energy L.P., Series A (d)................... 8.50% (a) 5,356,000
--------------
Thrifts & Mortgage Finance - 1.7%
945,000 New York Community Bancorp, Inc., Series A (c) (d). 6.38% (a) 25,893,000
--------------
Wireless Telecommunication Services - 0.5%
262,545 United States Cellular Corp. (c)................... 7.25% 12/01/64 7,041,457
--------------
TOTAL $25 PAR PREFERRED SECURITIES............................................ 390,878,083
(Cost $373,916,818) --------------
$50 PAR PREFERRED SECURITIES - 0.1%
Consumer Finance - 0.1%
38,765 SLM Corp., Series A (c)............................ 6.97% (a) 1,940,188
(Cost $1,903,672) --------------
See Notes to Financial Statements Page 7
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 2017 (UNAUDITED)
STATED STATED
SHARES DESCRIPTION RATE MATURITY VALUE
---------------- --------------------------------------------------- ----------- ---------- --------------
$100 PAR PREFERRED SECURITIES - 3.5%
Banks - 3.5%
80,000 Agribank FCB (d) (e)............................... 6.88% (a) $ 8,895,000
179,000 CoBank ACB, Series F (c) (d)....................... 6.25% (a) 18,560,063
82,220 CoBank ACB, Series G (c)........................... 6.13% (a) 8,168,047
54,250 Cobank ACB, Series H (c) (d)....................... 6.20% (a) 5,606,401
100,000 Farm Credit Bank Of Texas (c) (d) (e).............. 6.75% (a) 10,868,750
--------------
TOTAL $100 PAR PREFERRED SECURITIES .......................................... 52,098,261
(Cost $50,687,346) --------------
$1,000 PAR PREFERRED SECURITIES - 7.0%
Banks - 4.3%
12,000 AgStar Financial Services ACA (c) (d) (e) (f)...... 6.75% (a) 12,850,500
25,859 Farm Credit Bank Of Texas, Series 1 (c) (e)........ 10.00% (a) 31,806,570
15,364 Sovereign Real Estate Investment Trust (e) (f)..... 12.00% (a) 19,166,590
--------------
63,823,660
--------------
Diversified Financial Services - 0.3%
5,000 Kinder Morgan, GP, Inc. (b) (e) (f)................ 4.95% 08/18/57 4,550,313
--------------
Diversified Telecommunication Services - 1.3%
16,000 Centaur Funding Corp. (e) (f)...................... 9.08% 04/21/20 18,655,000
--------------
Insurance - 1.1%
18,708 XLIT Ltd., Series D (b)............................ 4.28% (a) 16,235,036
--------------
TOTAL $1,000 PAR PREFERRED SECURITIES......................................... 103,264,009
(Cost $105,044,820) --------------
$1,000,000 PAR PREFERRED SECURITIES - 1.0%
Banks - 1.0%
12 FT Real Estate Securities Co., Inc. (e) (f) (g).... 9.50% (a) 15,184,764
(Cost $15,990,000) --------------
STATED STATED
PAR AMOUNT DESCRIPTION RATE MATURITY VALUE
---------------- --------------------------------------------------- ----------- ---------- --------------
CAPITAL PREFERRED SECURITIES - 103.1%
Banks - 43.3%
$ 16,000,000 Australia & New Zealand Banking Group
Ltd. (c) (d) (h) (i)............................ 6.75% (a) 17,776,624
33,200,000 Banco Bilbao Vizcaya Argentaria S.A. (c) (d) (i)... 9.00% (a) 35,076,530
15,000,000 Banco do Brasil S.A. (d) (h) (i)................... 9.00% (a) 15,885,000
18,000,000 Bank of America Corp., Series DD (c) (d)........... 6.30% (a) 19,867,500
23,867,000 Bank of America Corp., Series Z (c) (d)............ 6.50% (a) 26,552,037
40,000 Barclays Bank PLC (h).............................. 10.18% 06/12/21 50,426
20,000,000 Barclays PLC (c) (d) (i)........................... 8.25% (a) 21,327,300
22,000,000 BNP Paribas S.A. (c) (d) (h) (i)................... 7.63% (a) 23,953,600
9,500,000 BPCE S.A. (c) (d) (h).............................. 12.50% (a) 11,471,250
800,000 Citigroup, Inc., Series E (d) (e).................. 8.40% (a) 853,000
25,000,000 Citigroup, Inc., Series R (c) (d).................. 6.13% (a) 26,670,000
9,000,000 Citigroup, Inc., Series T (c) (d).................. 6.25% (a) 9,810,000
25,000,000 CoBank ACB, Series I (c) (d)....................... 6.25% (a) 27,376,450
4,000,000 Commerzbank AG (c)................................. 8.13% 09/19/23 4,733,920
Page 8 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 2017 (UNAUDITED)
STATED STATED
PAR AMOUNT DESCRIPTION RATE MATURITY VALUE
---------------- --------------------------------------------------- ----------- ---------- --------------
CAPITAL PREFERRED SECURITIES (Continued)
Banks (Continued)
$ 37,104,000 Cooperatieve Rabobank UA (c) (d) (h)............... 11.00% (a) $ 43,458,060
32,500,000 Credit Agricole S.A. (c) (d) (h) (i)............... 8.13% (a) 35,951,012
10,000,000 Credit Agricole S.A. (c) (d) (h)................... 8.38% (a) 11,193,800
5,975,000 Credit Agricole S.A. (c) (d)....................... 8.38% (a) 6,688,296
13,000,000 Dresdner Funding Trust I (c) (h)................... 8.15% 06/30/31 15,470,000
10,000,000 ING Groep N.V. (d) (i)............................. 6.88% (a) 10,638,400
18,000,000 Intesa Sanpaolo S.p.A. (c) (d) (h) (i)............. 7.70% (a) 17,842,500
5,000,000 JPMorgan Chase & Co., Series 1 (d)................. 7.90% (a) 5,231,250
20,000,000 JPMorgan Chase & Co., Series S (c) (d)............. 6.75% (a) 22,585,000
14,000,000 Lloyds Bank PLC (c) (d) (h)........................ 12.00% (a) 19,085,500
14,150,000 Lloyds Bank PLC (c) (d)............................ 12.00% (a) 19,289,987
7,248,000 Macquarie Bank Ltd. (c) (d) (i).................... 10.25% 06/20/57 7,382,653
23,264,000 Natixis S.A. (c) (d) (h)........................... 10.00% (a) 24,950,640
5,575,000 Natixis S.A. (d)................................... 10.00% (a) 5,979,188
11,290,000 NIBC Bank N.V. (c)................................. 7.63% (a) 11,760,477
9,000,000 Royal Bank Of Scotland Group PLC (c) (d)........... 7.65% (a) 10,710,000
10,000,000 Royal Bank Of Scotland Group PLC (c) (d) (i)....... 8.00% (a) 10,400,000
27,000,000 Royal Bank Of Scotland Group PLC (c) (d) (i)....... 8.63% (a) 29,214,000
24,600,000 Societe Generale S.A. (c) (d) (h) (i).............. 7.38% (a) 26,076,000
12,750,000 Societe Generale S.A. (c) (d) (i).................. 8.25% (a) 13,554,551
12,400,000 Standard Chartered PLC (c) (d) (h) (i)............. 7.50% (a) 13,258,700
5,000,000 Sun Trust Banks, Inc. (d).......................... 5.05% (a) 5,035,100
21,500,000 Wells Fargo & Co., Series K (c) (d)................ 7.98% (a) 22,521,250
12,670,000 Zions Bancorporation, Series J (c) (d)............. 7.20% (a) 13,715,275
--------------
643,395,276
--------------
Capital Markets - 2.3%
5,000,000 Aberdeen Asset Management PLC (c).................. 7.00% (a) 5,197,355
4,150,000 Charles Schwab Corp. (c) (d)....................... 7.00% (a) 4,756,315
4,500,000 Credit Suisse Group AG (d) (h) (i)................. 7.50% (a) 5,001,277
2,500,000 Goldman Sachs Group, Inc., Series L (c) (d)........ 5.70% (a) 2,584,375
15,000,000 UBS Group AG (c) (d) (i)........................... 7.13% (a) 15,952,395
--------------
33,491,717
--------------
Diversified Financial Services - 1.1%
18,418,000 Glen Meadow Pass-Through Trust (b) (c) (h)......... 3.16% 02/12/47 16,184,818
--------------
Diversified Telecommunication Services - 2.1%
27,150,000 Koninklijke KPN N.V. (c) (d) (h)................... 7.00% 03/28/73 29,681,738
1,000,000 Koninklijke KPN N.V. (c) (d)....................... 7.00% 03/28/73 1,093,250
--------------
30,774,988
--------------
Electric Utilities - 8.2%
36,500,000 Emera, Inc., Series 16-A (c) (d)................... 6.75% 06/15/76 40,378,125
34,750,000 Enel S.p.A. (c) (d) (h)............................ 8.75% 09/24/73 40,744,375
4,000,000 Nextera Energy Capital Holdings, Inc.,
Series D (c) (d)................................ 7.30% 09/01/67 4,029,760
25,400,000 PPL Capital Funding, Inc., Series A (b) (c)........ 3.82% 03/30/67 24,574,500
4,179,000 Southern California Edison Co., Series E (c) (d)... 6.25% (a) 4,654,361
6,500,000 Southern (The) Co., Series B (d)................... 5.50% 03/15/57 6,741,657
--------------
121,122,778
--------------
See Notes to Financial Statements Page 9
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 2017 (UNAUDITED)
STATED STATED
PAR AMOUNT DESCRIPTION RATE MATURITY VALUE
---------------- --------------------------------------------------- ----------- ---------- --------------
CAPITAL PREFERRED SECURITIES (Continued)
Energy Equipment & Services - 3.2%
$ 20,900,000 Transcanada Trust (d) (c).......................... 5.30% 03/15/77 $ 21,122,062
24,800,000 Transcanada Trust, Series 16-A (c) (d)............. 5.88% 08/15/76 26,722,000
--------------
47,844,062
--------------
Food Products - 4.7%
9,000,000 Dairy Farmers of America (c) (e) (f)............... 7.13% (a) 9,933,750
13,211,000 Land O'Lakes Capital Trust I (c) (e) (f)........... 7.45% 03/15/28 14,796,320
10,000,000 Land O'Lakes, Inc. (h)............................. 7.25% (a) 10,150,000
23,000,000 Land O'Lakes, Inc. (c) (h)......................... 8.00% (a) 24,725,000
10,000,000 Land O'Lakes, Inc. (c) (h)......................... 8.00% (a) 10,750,000
--------------
70,355,070
--------------
Independent Power and Renewable Electricity
Producers - 1.6%
12,150,000 AES Gener S.A. (d)................................. 8.38% 12/18/73 13,091,625
9,850,000 AES Gener S.A. (d) (h)............................. 8.38% 12/18/73 10,613,375
--------------
23,705,000
--------------
Industrial Conglomerates - 0.7%
10,000,000 General Electric Co., Series D (c) (d)............. 5.00% (a) 10,560,000
--------------
Insurance - 31.3%
2,000,000 Aegon N.V. (b)..................................... 2.33% (a) 1,661,000
9,600,000 AG Insurance S.A./N.V. (c) (d)..................... 6.75% (a) 10,220,448
23,820,000 American International Group, Inc. (c) (d)......... 8.18% 05/15/58 30,787,350
40,000,000 Aquarius & Investments PLC for Swiss Reinsurance
Co., Ltd. (d)................................... 8.25% (a) 42,966,840
30,000,000 Assured Guaranty Municipal Holdings,
Inc. (d) (h).................................... 6.40% 12/15/66 27,075,000
11,000,000 Aviva PLC (c)...................................... 8.25% (a) 11,398,750
38,700,000 Catlin Insurance Co., Ltd. (b) (c) (h)............. 4.13% (a) 35,700,750
2,050,000 Cloverie PLC for Zurich Insurance Co., Ltd. (d).... 8.25% (a) 2,157,625
10,600,000 CNP Assurances (c) (d)............................. 6.88% (a) 11,419,295
10,600,000 CNP Assurances (c) (d)............................. 7.50% (a) 11,337,813
12,500,000 Dai-Ichi Life Insurance Co., Ltd.
(The) (c) (d) (h)............................... 7.25% (a) 14,367,187
27,375,000 Friends Life Holdings PLC (c) (d).................. 7.88% (a) 29,413,945
25,616,000 La Mondiale SAM (c) (d)............................ 7.63% (a) 27,760,905
12,500,000 Liberty Mutual Group, Inc. (b) (c) (h)............. 4.04% 03/15/37 11,981,250
16,210,000 Liberty Mutual Group, Inc. (c) (h)................. 7.80% 03/15/37 18,803,600
2,000,000 Liberty Mutual Group, Inc. (c) (d)................. 10.75% 06/15/58 3,095,000
12,000,000 MetLife, Inc. (c) (h).............................. 9.25% 04/08/38 17,295,000
17,180,000 Metlife, Inc. (c).................................. 10.75% 08/01/39 27,530,950
20,000,000 Mitsui Sumitomo Insurance Co., Ltd. (c) (d) (h).... 7.00% 03/15/72 23,125,000
3,000,000 Nationwide Financial Services Capital
Trust (c) (e)................................... 7.90% 03/01/37 3,299,559
19,700,000 Nationwide Financial Services, Inc. (c)............ 6.75% 05/15/37 20,882,000
24,300,000 QBE Insurance Group, Ltd. (c) (d) (h).............. 7.50% 11/24/43 27,793,125
20,250,000 QBE Insurance Group, Ltd. (d)...................... 6.75% 12/02/44 22,345,065
25,000,000 Sirius International Group Ltd. (d) (e) (f)........ 7.51% (a) 25,562,500
6,800,000 Stancorp Financial Group, Inc. (c) (d)............. 6.90% 06/01/67 6,154,000
--------------
464,133,957
--------------
Page 10 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 2017 (UNAUDITED)
STATED STATED
PAR AMOUNT DESCRIPTION RATE MATURITY VALUE
---------------- --------------------------------------------------- ----------- ---------- --------------
CAPITAL PREFERRED SECURITIES (Continued)
Metals & Mining - 1.1%
$ 15,000,000 BHP Billiton Finance USA Ltd. (c) (d) (h).......... 6.75% 10/19/75 $ 17,025,000
--------------
Oil, Gas & Consumable Fuels - 2.8%
21,526,000 Enbridge Energy Partners L.P. (c) (d).............. 8.05% 10/01/37 21,364,555
4,635,000 Enterprise Products Operating LLC, Series A (b).... 4.88% 08/01/66 4,640,794
15,000,000 Enterprise Products Operating LLC,
Series B (c) (d)................................ 7.03% 01/15/68 15,562,500
--------------
41,567,849
--------------
Transportation Infrastructure - 0.7%
10,000,000 AerCap Global Aviation Trust (c) (d) (h)........... 6.50% 06/15/45 10,550,000
--------------
TOTAL CAPITAL PREFERRED SECURITIES............................................ 1,530,710,515
(Cost $1,499,728,321) --------------
TOTAL INVESTMENTS - 141.0%.................................................... 2,094,075,820
(Cost $2,047,270,977) (j)
OUTSTANDING LOAN - (43.4%) ................................................... (645,000,000)
NET OTHER ASSETS AND LIABILITIES - 2.4%....................................... 35,813,543
--------------
NET ASSETS - 100.0%........................................................... $1,484,889,363
==============
-----------------------------
(a) Perpetual maturity.
(b) Floating rate security. The interest rate shown reflects the rate in
effect at April 30, 2017.
(c) All or a portion of this security serves as collateral on the outstanding
loan.
(d) Fixed-to-floating or fixed-to-variable rate security. The interest rate
shown reflects the fixed rate in effect at April 30, 2017. At a
predetermined date, the fixed rate will change to a floating rate or a
variable rate.
(e) Pursuant to procedures adopted by the Fund's Board of Trustees, this
security has been determined to be illiquid by Stonebridge Advisors, LLC
(the "Sub-Advisor").
(f) This security, sold within the terms of a private placement memorandum, is
exempt from registration upon resale under Rule 144A under the Securities
Act of 1933, as amended (the "1933 Act"), and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers (see Note 2C - Restricted Securities in the Notes to Financial
Statements).
(g) This security is fair valued by the Advisor's Pricing Committee in
accordance with procedures adopted by the Fund's Board of Trustees, and in
accordance with the provisions of the Investment Company Act of 1940, as
amended. At April 30, 2017, securities noted as such are valued at
$15,184,764 or 1.0% of net assets.
(h) This security, sold within the terms of a private placement memorandum, is
exempt from registration upon resale under Rule 144A under the 1933 Act,
and may be resold in transactions exempt from registration, normally to
qualified institutional buyers. Pursuant to procedures adopted by the
Fund's Board of Trustees, this security has been determined to be liquid
by the Sub-Advisor. Although market instability can result in periods of
increased overall market illiquidity, liquidity for each security is
determined based on security specific factors and assumptions, which
require subjective judgment. At April 30, 2017, securities noted as such
amounted to $627,989,607 or 42.3% of net assets.
(i) This security is a contingent convertible capital security, which may be
subject to conversion into common stock of the issuer under certain
circumstances. At April 30, 2017, securities noted as such amounted to
$299,290,542 or 14.1% of managed assets. Of these securities, 5.3%
originated in emerging markets and 94.7% originated in foreign markets.
(j) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of April 30, 2017, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $72,236,610 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $25,431,767.
-----------------------------
INTEREST RATE SWAP AGREEMENTS:
COUNTERPARTY FLOATING RATE(1) EXPIRATION DATE NOTIONAL AMOUNT FIXED RATE(1) VALUE
--------------------------------------------------------------------------------------------------------------
Bank of Nova Scotia 1 month LIBOR 1/23/25 $ 165,000,000 1.786% $ 2,760,326
------------- ------------
(1) The Fund pays the fixed rate and receives the floating rate. The floating
rate on April 30, 2017 was 0.988%.
See Notes to Financial Statements Page 11
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 2017 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of April 30,
2017 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
4/30/2017 PRICES INPUTS INPUTS
--------------- --------------- --------------- ---------------
$25 Par Preferred Securities:
Insurance ..................................... $ 71,525,615 $ 63,785,709 $ 7,739,906 $ --
Multi-Utilities ............................... 29,488,217 9,516,500 19,971,717 --
Other industry categories*..................... 289,864,251 289,864,251 -- --
$50 Par Preferred Securities*..................... 1,940,188 1,940,188 -- --
$100 Par Preferred Securities*.................... 52,098,261 -- 52,098,261 --
$1,000 Par Preferred Securities*.................. 103,264,009 -- 103,264,009 --
$1,000,000 Par Preferred Securities*.............. 15,184,764 -- -- 15,184,764
Capital Preferred Securities*..................... 1,530,710,515 -- 1,530,710,515 --
--------------- --------------- --------------- ---------------
Total Investments................................. 2,094,075,820 365,106,648 1,713,784,408 15,184,764
Interest Rate Swaps**............................. 2,760,326 -- 2,760,326 --
--------------- --------------- --------------- ---------------
Total............................................. $ 2,096,836,146 $ 365,106,648 $ 1,716,544,734 $ 15,184,764
=============== =============== =============== ===============
* See Portfolio of Investments for industry breakout.
** See Interest Rate Swap Agreements for contract detail.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between Levels at April 30, 2017.
Level 3 Par preferred securities are valued using broker quotes. These values
are based on unobservable and non-quantitative inputs. The Fund's Board of
Trustees has adopted valuation procedures that are utilized by the Advisor's
Pricing Committee to oversee the day-to-day valuation of the Fund's investments.
The Advisor's Pricing Committee, through the Fund's fund accounting agent,
monitors daily pricing via tolerance checks and stale and unchanged price
reviews. The Advisor's Pricing Committee also reviews monthly back testing of
third-party pricing service prices by comparing sales prices of the Fund's
investments to prior day third-party pricing service prices. Additionally, the
Advisor's Pricing Committee reviews periodic information from the Fund's
third-party pricing service that compares secondary market trade prices to their
daily valuations.
The following table presents the activity of the Fund's investments measured at
fair value on a recurring basis using significant unobservable inputs (Level 3)
for the period presented.
BEGINNING BALANCE AT OCTOBER 31, 2016
$1,000,000 Par Preferred Securities $ 15,800,486
Net Realized Gain (Loss) --
Net Change in Unrealized Appreciation/Depreciation (615,722)
Purchases --
Sales --
Transfers In --
Transfers Out --
Ending Balance at April 30, 2017
$1,000,000 Par Preferred Securities 15,184,764
---------------
Total Level 3 holdings $ 15,184,764
===============
There was a net change of $(615,722) in unrealized appreciation (depreciation)
from Level 3 investments held as of April 30, 2017.
Page 12 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2017 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $2,047,270,977)........................................................................ $ 2,094,075,820
Cash............................................................................................ 13,691,109
Cash segregated as collateral for open swap contracts........................................... 3,202,812
Swap contracts, at value........................................................................ 2,760,326
Prepaid expenses................................................................................ 43,204
Receivables:
Interest..................................................................................... 25,650,326
Investment securities sold................................................................... 1,427,312
Dividends.................................................................................... 843,137
Tax reclaims................................................................................. 131,698
----------------
Total Assets................................................................................. 2,141,825,744
----------------
LIABILITIES:
Outstanding loan................................................................................ 645,000,000
Payables:
Investment securities purchased.............................................................. 9,239,233
Investment advisory fees..................................................................... 1,475,846
Interest and fees due on loan................................................................ 997,441
Administrative fees.......................................................................... 133,927
Printing fees................................................................................ 27,779
Audit and tax fees........................................................................... 21,311
Transfer agent fees.......................................................................... 4,398
Legal fees................................................................................... 15,471
Custodian fees............................................................................... 17,417
Trustees' fees and expenses.................................................................. 1,753
Financial reporting fees..................................................................... 732
Other liabilities............................................................................... 1,073
----------------
Total Liabilities............................................................................ 656,936,381
----------------
NET ASSETS...................................................................................... $ 1,484,889,363
================
NET ASSETS CONSIST OF:
Paid-in capital................................................................................. $ 1,448,052,970
Par value....................................................................................... 607,660
Accumulated net investment income (loss)........................................................ 5,672,178
Accumulated net realized gain (loss) on investments, futures and swap contracts................. (19,008,614)
Net unrealized appreciation (depreciation) on investments and swap contracts.................... 49,565,169
----------------
NET ASSETS...................................................................................... $ 1,484,889,363
================
NET ASSET VALUE, per share...................................................................... $ 24.44
================
Number of Common Shares outstanding (unlimited number of Common Shares
has been authorized)......................................................................... 60,765,997
================
See Notes to Financial Statements Page 13
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED)
INVESTMENT INCOME:
Interest........................................................................................ $ 51,564,703
Dividends....................................................................................... 19,379,906
----------------
Total investment income...................................................................... 70,944,609
----------------
EXPENSES:
Investment advisory fees........................................................................ 8,782,926
Interest and fees on loan....................................................................... 4,985,506
Administrative fees............................................................................. 338,876
Printing fees................................................................................... 104,766
Custodian fees.................................................................................. 81,599
Listing expense................................................................................. 26,526
Transfer agent fees............................................................................. 10,404
Audit and tax fees.............................................................................. 17,036
Trustees' fees and expenses..................................................................... 9,915
Financial reporting fees........................................................................ 4,586
Other........................................................................................... 1,914
----------------
Total expenses............................................................................... 14,364,054
----------------
NET INVESTMENT INCOME (LOSS).................................................................... 56,580,555
================
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.................................................................................. 2,339,496
Swap contracts............................................................................... (889,259)
----------------
1,450,237
----------------
Net change in unrealized appreciation (depreciation) on:
Investments.................................................................................. 18,501,279
Swap contracts............................................................................... 7,675,412
----------------
Net change in unrealized appreciation (depreciation)......................................... 26,176,691
----------------
NET REALIZED AND UNREALIZED GAIN (LOSS)......................................................... 27,626,928
----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $ 84,207,483
================
Page 14 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
4/30/2017 ENDED
(UNAUDITED) 10/31/2016
-------------- --------------
OPERATIONS:
Net investment income (loss)...................................................... $ 56,580,555 $ 117,529,162
Net realized gain (loss).......................................................... 1,450,237 5,712,431
Net change in unrealized appreciation (depreciation).............................. 26,176,691 15,313,345
-------------- --------------
Net increase (decrease) in net assets resulting from operations................... 84,207,483 138,554,938
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................................................. (59,246,847) (118,413,319)
-------------- --------------
Total distributions to shareholders............................................... (59,246,847) (118,413,319)
-------------- --------------
SHAREHOLDER TRANSACTIONS:
Proceeds from Common Shares reinvested............................................ -- 1,426,562
-------------- --------------
Total increase (decrease) in net assets........................................... 24,960,636 21,568,181
NET ASSETS:
Beginning of period............................................................... 1,459,928,727 1,438,360,546
-------------- --------------
End of period..................................................................... $1,484,889,363 $1,459,928,727
============== ==============
Accumulated net investment income (loss) at end of period......................... $ 5,672,178 $ 8,338,470
============== ==============
CHANGES IN SHARES OUTSTANDING:
Common Shares outstanding, beginning of period.................................... 60,765,997 60,704,189
Common Shares issued as reinvestment under the Dividend Reinvestment Plan......... -- 61,808
-------------- --------------
Common Shares outstanding, end of period.......................................... 60,765,997 60,765,997
============== ==============
See Notes to Financial Statements Page 15
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 2017 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations................... $ 84,207,483
Adjustments to reconcile net increase (decrease) in net assets resulting from
operations to net cash used by operating activities:
Purchases of investments..................................................... (326,383,881)
Sales, maturities and pay downs of investments............................... 326,640,136
Net amortization/accretion of premium/discount on investments................ 363,248
Net realized gain/loss on investments........................................ (2,339,496)
Net change in unrealized appreciation/depreciation on investments............ (18,501,279)
Net change in unrealized appreciation/depreciation on swap contracts......... (7,675,412)
Decrease in cash segregated as collateral for open swap contracts............ 8,188,834
CHANGES IN ASSETS AND LIABILITIES:
Increase in interest receivable.............................................. (1,710,476)
Decrease in dividends receivable............................................. 313,427
Decrease in tax reclaim...................................................... 191,408
Increase in prepaid expenses................................................. (43,204)
Decrease in other assets..................................................... 33,758
Increase in interest and fees on loan payable................................ 263,748
Decrease in investment advisory fees payable................................. (32,509)
Decrease in audit and tax fees payable....................................... (11,889)
Decrease in legal fees payable............................................... (32,208)
Decrease in printing fees payable............................................ (38,473)
Increase in administrative fees payable...................................... 54,290
Decrease in custodian fees payable........................................... (19,638)
Increase in transfer agent fees payable...................................... 2,891
Increase in Trustees' fees and expenses payable.............................. 278
Decrease in financial reporting fees payable................................. (39)
Increase in other liabilities payable........................................ 1,048
--------------
CASH PROVIDED BY OPERATING ACTIVITIES............................................. $ 63,472,045
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Common Shareholders from net investment income.............. (59,246,847)
--------------
CASH USED BY FINANCING ACTIVITIES................................................. (59,246,847)
--------------
Increase in cash.................................................................. 4,225,198
Cash at beginning of period....................................................... 9,465,911
--------------
Cash at end of period............................................................. $ 13,691,109
==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees................................. $ 4,721,788
==============
Page 16 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS FOR THE PERIOD
ENDED YEAR ENDED OCTOBER 31, 5/23/2013 (a)
4/30/2017 -------------------------------------------- THROUGH
(UNAUDITED) 2016 2015 2014 10/31/2013
------------ ------------ ------------ ------------ --------------
Net asset value, beginning of period............ $ 24.03 $ 23.69 $ 24.42 $ 23.51 $ 23.88 (b)
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................... 0.93 1.94 1.96 1.85 0.70
Net realized and unrealized gain (loss)......... 0.46 0.35 (0.58) 0.97 (0.64)
---------- ---------- ---------- ---------- ----------
Total from investment operations................ 1.39 2.29 1.38 2.82 0.06
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income........................... (0.98) (1.95) (2.11) (1.91) (0.46)
---------- ---------- ---------- ---------- ----------
Common Shares offering costs charged to
paid-in capital.............................. -- -- 0.00 (c) -- (0.03)
---------- ---------- ---------- ---------- ----------
Capital reduction resulting from issuance of
common shares................................ -- -- -- -- 0.06
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.................. $ 24.44 $ 24.03 $ 23.69 $ 24.42 $ 23.51
========== ========== ========== ========== ==========
Market value, end of period..................... $ 23.61 $ 22.66 $ 21.95 $ 21.94 $ 21.01
========== ========== ========== ========== ==========
TOTAL RETURN BASED ON NET ASSET VALUE (d)....... 6.18% 10.68% 6.68% 13.37% 0.60%
========== ========== ========== ========== ==========
TOTAL RETURN BASED ON MARKET VALUE (d).......... 8.73% 12.65% 10.02% 13.98% (14.13)%
========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)............ $1,484,889 $1,459,929 $1,438,361 $1,482,490 $1,427,164
Ratio of total expenses to average net
assets....................................... 2.01% (e) 1.88% 1.76% 1.69% 1.53% (e)
Ratio of net expenses to average net assets
excluding interest expense................... 1.31% (e) 1.34% 1.34% 1.33% 1.24% (e)
Ratio of net investment income (loss) to
average net assets........................... 7.93% (e) 8.34% 8.15% 7.66% 7.01% (e)
Portfolio turnover rate......................... 15% 50% 48% 62% 11%
INDEBTEDNESS:
Total loan outstanding (in 000's)............... $ 645,000 $ 645,000 $ 645,000 $ 665,000 $ 584,000
Asset coverage per $1,000 of indebtedness (f)... $ 3,302 $ 3,263 $ 3,230 $ 3,229 $ 3,444
-----------------------------
(a) The Fund was seeded on April 16, 2013 and commenced operations on May 23,
2013.
(b) Beginning net asset value is net of sales load of $1.125 per share from
the initial offering.
(c) Amount represents less than $0.01 per share.
(d) Total return is based on the combination of reinvested dividend, capital
gain and return of capital distribution if any, at prices obtained by the
Dividend Reinvestment Plan, and changes in net asset value per share for
net asset value returns and changes in Common Shares price for market
value returns. Total returns do not reflect sales load and are not
annualized for periods of less than one year. Past performance is not
indicative of future results.
(e) Annualized.
(f) Calculated by taking the Fund's total assets less the Fund's total
liabilities (not including the loan outstanding) and dividing by the loan
balance in 000's.
See Notes to Financial Statements Page 17
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
APRIL 30, 2017 (UNAUDITED)
1. ORGANIZATION
First Trust Intermediate Duration Preferred & Income Fund (the "Fund") is a
non-diversified closed-end management investment company organized as a
Massachusetts business trust on February 4, 2013, and is registered with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended (the "1940 Act"). The Fund trades under the ticker symbol "FPF"
on the New York Stock Exchange ("NYSE").
The primary investment objective is to seek a high level of current income. The
Fund has a secondary objective of capital appreciation. The Fund seeks to
achieve its objectives by investing, under normal market conditions, at least
80% of its managed assets in preferred securities and other income producing
securities issued by U.S. and non-U.S. companies, including traditional
preferred securities, hybrid preferred securities that have investment and
economic characteristics of both preferred securities and debt securities,
floating rate and fixed-to-floating rate preferred securities, debt securities,
convertible securities and contingent convertible securities. There can be no
assurance that the Fund will achieve its investment objectives. The Fund seeks
to maintain, under normal market conditions, a duration of between three and
eight years. The Fund may not be appropriate for all investors.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund is considered an investment company and follows accounting and
reporting guidance under Financial Accounting Standards Board ("FASB")
Accounting Standards Codification Topic 946, "Financial Services - Investment
Companies." Accounting Standards Codification ("ASC") Topic 946, "Financial
Services-Investment Companies." The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of the
financial statements. The preparation of the financial statements in accordance
with accounting principles generally accepted in the United States of America
("U.S. GAAP") requires management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
A. PORTFOLIO VALUATION
The Fund's net asset value ("NAV") is determined daily as of the close of
regular trading on the NYSE, normally 4:00 p.m. Eastern time, on each day the
NYSE is open for trading. If the NYSE closes early on a valuation day, the NAV
is determined as of that time. Domestic debt securities and foreign securities
are priced using data reflecting the earlier closing of the principal markets
for those securities. The Fund's NAV is calculated by dividing the value of all
assets of the Fund (including accrued interest and dividends), less all
liabilities (including accrued expenses and dividends declared but unpaid, and
any borrowings of the Fund), by the total number of shares outstanding.
The Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value. Market
value prices represent last sale or official closing prices from a national or
foreign exchange (i.e., a regulated market) and are obtained from a third-party
pricing service or are determined by the Pricing Committee of the Fund's
investment advisor, First Trust Advisors L.P. ("First Trust" or the "Advisor"),
in accordance with valuation procedures adopted by the Fund's Board of Trustees,
and in accordance with provisions of the 1940 Act. Investments valued by the
Advisor's Pricing Committee are footnoted as such in the footnotes to the
Portfolio of Investments. The Fund's investments are valued as follows:
Preferred stocks and other equity securities listed on any national or
foreign exchange (excluding The Nasdaq National Market LLC ("Nasdaq") and
the London Stock Exchange Alternative Investment Market ("AIM")), are
valued at the last sale price on the exchange on which they are
principally traded or, for Nasdaq and AIM securities, the official closing
price. Securities traded on one or more than one securities exchange are
valued at the last sale price or official closing price, as applicable, at
the close of the securities exchange representing the principal market for
such securities.
Corporate bonds, notes and other debt securities are valued on the basis
of valuations provided by dealers who make markets in such securities or
by an independent pricing service approved by the Fund's Board of
Trustees, which may use the following valuation inputs when available:
1) benchmark yields;
2) reported trades;
3) broker/dealer quotes;
4) issuer spreads;
5) benchmark securities;
6) bids and offers; and
7) reference data including market research publications.
Securities traded in an over-the-counter market are fair valued at the
mean of their most recent bid and asked price, if available, and otherwise
at their closing bid price.
Page 18
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
APRIL 30, 2017 (UNAUDITED)
Swaps are fair valued utilizing quotations provided by a third-party
pricing service or, if the third-party pricing service does not provide a
value, by quotes provided by the selling dealer or financial institution.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Board of Trustees or its delegate,
the Advisor's Pricing Committee, at fair value. These securities generally
include, but are not limited to, restricted securities (securities which may not
be publicly sold without registration under the Securities Act of 1933, as
amended (the "1933 Act")) for which a third-party pricing service is unable to
provide a market price; securities whose trading has been formally suspended; a
security whose market price is not available from a pre-established pricing
source; a security with respect to which an event has occurred that is likely to
materially affect the value of the security after the market has closed but
before the calculation of the Fund's NAV or make it difficult or impossible to
obtain a reliable market quotation; and a security whose price, as provided by
the third-party pricing service, does not reflect the security's fair value. As
a general principle, the current fair value of a security would appear to be the
amount which the owner might reasonably expect to receive for the security upon
its current sale. When fair value prices are used, generally they will differ
from market quotations or official closing prices on the applicable exchanges. A
variety of factors may be considered in determining the fair value of such
securities, including, but not limited to, the following:
1) the type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or third-party pricing services;
6) relationships among various securities;
7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
8) an analysis of the issuer's financial statements; and
9) the existence of merger proposals or tender offers that might affect
the value of the security.
If the securities in question are foreign securities, the following additional
information may be considered:
1) the value of similar foreign securities traded on other foreign
markets;
2) ADR trading of similar securities;
3) closed-end fund trading of similar securities;
4) foreign currency exchange activity;
5) the trading prices of financial products that are tied to baskets of
foreign securities;
6) factors relating to the event that precipitated the pricing problem;
7) whether the event is likely to recur; and
8) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions.
The Fund is subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodologies used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value the Fund's investments as of April 30, 2017, is
included with the Fund's Portfolio of Investments.
Page 19
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
APRIL 30, 2017 (UNAUDITED)
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income, is
recorded on the accrual basis. Amortization of premiums and the accretion of
discounts are recorded using the effective interest method.
The Fund may hold the securities of real estate investments trusts ("REITs").
Distributions from such investments may include income, capital gains and return
of capital. The actual character of amounts received during the year is not
known until after the REITs' fiscal year end. The Fund records the character of
distributions received from the REITs during the year based on estimates
available. The characterization of distributions received by the Fund may be
subsequently revised based on information received from the REITs after their
tax reporting periods conclude.
C. RESTRICTED SECURITIES
The Fund invests in restricted securities, which are securities that may not be
offered for public sale without first being registered under the 1933 Act. Prior
to registration, restricted securities may only be resold in transactions exempt
from registration under Rule 144A under the 1933 Act, normally to qualified
institutional buyers. As of April 30, 2017, the Fund held restricted securities
as shown in the following table that Stonebridge Advisors LLC ("Stonebridge" or
the "Sub-Advisor") has deemed illiquid pursuant to procedures adopted by the
Fund's Board of Trustees. Although market instability can result in periods of
increased overall market illiquidity, liquidity for each security is determined
based on security-specific factors and assumptions, which require subjective
judgment. The Fund does not have the right to demand that such securities be
registered. These securities are valued according to the valuation procedures as
stated in the Portfolio Valuation note (Note 2A) and are not expressed as a
discount to the carrying value of a comparable unrestricted security. There are
no unrestricted securities with the same maturity dates and yields for these
issuers.
PAR % OF
ACQUISITION AMOUNT/ CURRENT CARRYING NET
SECURITY DATE SHARES PRICE COST VALUE ASSETS
---------------------------------- --------------- ----------- ------------ ------------ ------------ ------
AgStar Financial Services ACA,
6.75% 5/29/13-7/31/15 12,000 $ 1,070.88 $ 12,105,000 $ 12,850,500 0.87%
Centaur Funding Corp., 9.08%,
04/21/20 5/29/13-5/31/13 16,000 1,165.94 20,528,750 18,655,000 1.26
FT Real Estate Securities Co.,
Inc., 9.50% 6/15/16 12 1,265,397.00 15,990,000 15,184,764 1.02
Kinder Morgan GP, Inc., 4.95% 3/21/17 5,000 910.06 4,562,500 4,550,313 0.31
Sovereign Real Estate Investment
Trust, 12.00% 6/11/13-3/22/16 15,364 1,247.50 20,231,885 19,166,590 1.29
Dairy Farmers of America, 7.13% 9/15/16 $ 9,000,000 110.38 9,000,000 9,933,750 0.67
Land O'Lakes, Capital Trust I,
7.45% 6/6/14-6/10/15 $13,211,000 112.00 13,635,728 14,796,320 1.00
Sirius International Group Ltd.,
7.51% 8/06/14-4/24/15 $25,000,000 102.25 26,480,164 25,562,500 1.72
----------------------------------
$122,534,027 $120,699,737 8.14%
==================================
D. SWAP AGREEMENTS
The Fund may enter into interest rate swap agreements. A swap is a financial
instrument that typically involves the exchange of cash flows between two
parties ("Counterparties") on specified dates (settlement dates) where the cash
flows are based on agreed upon prices, rates, etc. Payments received or made by
the Fund for interest rate swaps are recorded in the Statement of Operations as
"Net realized gain (loss) on swap contracts". When an interest rate swap is
terminated, the Fund will record a realized gain or loss equal to the difference
between the proceeds from (or cost of) the closing transaction and the Fund's
basis in the contract, if any. Generally, the basis of the contracts, if any, is
the premium received or paid. Swap agreements are individually negotiated and
involve the risk of the potential inability of the Counterparties to meet the
terms of the agreement. In connection with these agreements, cash and securities
may be identified as collateral in accordance with the terms of the respective
swap agreements to provide assets of value and recourse in the event of default
under the swap agreement or bankruptcy/insolvency of a party to the swap
agreement. In the event of a default by the Counterparty, the Fund will seek
withdrawal of this collateral and may incur certain costs exercising its right
with respect to the collateral. If a Counterparty becomes bankrupt or otherwise
fails to perform its obligations due to financial difficulties, the Fund may
experience significant delays in obtaining any recovery in a bankruptcy or other
reorganization proceeding. The Fund may obtain only limited recovery or may
obtain no recovery in such circumstances.
Swap agreements may increase or decrease the overall volatility of the
investments of the Fund. The performance of swap agreements may be affected by a
change in the specific interest rate, security, currency, or other factors that
determine the amounts of payments due to and from the Fund. The Fund's maximum
equity price risk to meet its future payments under swap agreements outstanding
Page 20
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
APRIL 30, 2017 (UNAUDITED)
at April 30, 2017, is equal to the total notional amount as shown on the
Portfolio of Investments. The notional amount represents the U.S. dollar value
of the contract as of the day of the opening transaction or contract reset. When
the Fund enters into a swap agreement, any premium paid is included in "Swap
contracts, at value" on the Statement of Assets and Liabilities.
The Fund held interest rate swap agreements at April 30, 2017. An interest rate
swap agreement involves the Fund's agreement to exchange a stream of interest
payments for another party's stream of cash flows. Interest rate swaps do not
involve the delivery of securities or other underlying assets or principal.
Accordingly, the risk of loss with respect to interest rate swaps is limited to
the net amount of interest payments that the Fund is contractually obligated to
make.
Cash segregated as collateral for open swap contracts in the amount of
$3,202,812 is shown on the Statement of Assets and Liabilities.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, are declared and paid monthly, or
as the Board of Trustees may determine from time to time. Distributions of net
realized capital gains earned by the Fund, if any, will be distributed at least
annually.
Distributions from income and capital gains are determined in accordance with
federal income tax regulations, which may differ from U.S. GAAP. Certain capital
accounts in the financial statements are periodically adjusted for permanent
differences in order to reflect their tax character. These permanent differences
are primarily due to the varying treatment of income and gain/loss on portfolio
securities held by the Fund and have no impact on net assets or NAV per share.
Temporary differences, which arise from recognizing certain items of income,
expense and gain/loss in different periods for financial statement and tax
purposes, will reverse at some time in the future.
The tax character of distributions paid during the fiscal period ended October
31, 2016, was as follows:
Distributions paid from:
Ordinary income.................................... $ 118,413,319
As of October 31, 2016, the components of distributable earnings on a tax basis
were as follows:
Undistributed ordinary income...................... $ 4,048,023
Undistributed capital gains........................ --
---------------
Total undistributed earnings....................... 4,048,023
Accumulated capital and other losses............... (18,255,523)
Net unrealized appreciation (depreciation)......... 25,475,597
---------------
Total accumulated earnings (losses)................ 11,268,097
Other.............................................. --
Paid-in capital.................................... 1,448,660,630
---------------
Net Assets......................................... $ 1,459,928,727
===============
F. INCOME TAXES
The Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal and state income taxes. However, due to the
timing and amount of distributions, the Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of the Fund's taxable income exceeds
the distributions from such taxable income for the calendar year.
The Fund intends to utilize provisions of the federal income tax laws, which
allow it to carry a realized capital loss forward indefinitely following the
year of the loss and offset such loss against any future realized capital gains.
The Fund is subject to certain limitations under U.S. tax rules on the use of
capital loss carryforwards and net unrealized built-in-losses. These limitations
apply when there has been a 50% change in ownership. At October 31, 2016, the
Fund had capital loss carryforward for federal income tax purposes of
$18,255,523.
The Fund is subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. The taxable years ended 2013,
2014, 2015 and 2016 remain open to federal and state audit. As of April 30,
2017, management has evaluated the application of these standards to the Fund,
and has determined that no provision for income tax is required in the Fund's
financial statements for uncertain tax positions.
G. EXPENSES
The Fund will pay all expenses directly related to its operations.
Page 21
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
APRIL 30, 2017 (UNAUDITED)
H. NEW AND AMENDED FINANCIAL REPORTING RULES AND FORMS
On October 13, 2016, the SEC adopted new rules and forms, and amended existing
rules and forms. The new and amended rules and forms are intended to modernize
the reporting of information provided by funds and to improve the quality and
type of information that funds provide to the SEC and investors. The new and
amended rules and forms are effective for the First Trust funds, including this
Fund, for reporting periods beginning on and after June 1, 2018. Management is
evaluating the new and amended rules and forms to determine the impact to the
Fund.
I. NEW ACCOUNTING PRONOUNCEMENT
In December 2016, FASB released accounting standards update ("ASU") 2016-19 that
makes technical changes to various sections of the ASC, including Topic 820,
Fair Value Measurement. The changes to Topic 820 are intended to clarify the
difference between a valuation approach and a valuation technique. The changes
to ASC 820-10-50-2 require a reporting entity to disclose, for Level 2 and Level
3 fair value measurements, a change in either or both a valuation approach and a
valuation technique and the reason(s) for the change. The changes to Topic 820
are effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2016. At this time, management is evaluating the
implications of the ASU and has not yet determined its impact on the financial
statements and disclosures.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Fund, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust is responsible for the ongoing monitoring of the Fund's investment
portfolio, managing the Fund's business affairs and providing certain
administrative services necessary for the management of the Fund. For these
investment management services, First Trust is entitled to a monthly fee
calculated at an annual rate of 0.85% of the Fund's average daily net assets.
First Trust also provides fund reporting services to the Fund for a flat annual
fee in the amount of $9,250.
Stonebridge, a majority-owned affiliate of First Trust, serves as the Fund's
sub-advisor and manages the Fund's portfolio subject to First Trust's
supervision. The Sub-Advisor receives a monthly portfolio management fee
calculated at an annual rate of 0.425% of average daily net assets that is paid
by First Trust out of its investment advisory fee.
Brown Brothers Harriman & Co. ("BBH") serves as the Fund's administrator, fund
accountant and custodian in accordance with certain fee arrangements. As
administrator and fund accountant, BBH is responsible for providing certain
administrative and accounting services to the Fund, including maintaining the
Fund's books of account, records of the Fund's securities transactions, and
certain other books and records. As custodian, BBH is responsible for custody of
the Fund's assets.
Computershare, Inc. serves as the Fund's transfer agent in accordance with
certain fee arrangements. As transfer agent, Computershare, Inc. is responsible
for maintaining shareholder records for the Fund.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee are paid
additional annual fees to serve in such capacities, with such compensation
allocated pro rata among each fund in the First Trust Fund Complex based on net
assets. Independent Trustees are reimbursed for travel and out-of-pocket
expenses in connection with all meetings. The Lead Independent Trustee and
Committee Chairmen rotate every three years. The officers and "Interested"
Trustee receive no compensation from the Fund for acting in such capacities.
4. PURCHASES AND SALES OF SECURITIES
For the period ended April 30, 2017, the cost of purchases and proceeds from
sales of investment securities, excluding short-term investments, for the Fund
was $321,922,075 and $310,310,555, respectively.
Page 22
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
APRIL 30, 2017 (UNAUDITED)
5. DERIVATIVE TRANSACTIONS
The following table presents the types of derivatives held by the Fund at April
30, 2017, the primary underlying risk exposure and the location of these
instruments as presented on the Statement of Assets and Liabilities.
ASSET DERIVATIVES LIABILITY DERIVATIVES
----------------------------------------- --------------------------------------
DERIVATIVE RISK STATEMENT OF ASSETS AND STATEMENT OF ASSETS AND
INSTRUMENTS EXPOSURE LIABILITIES LOCATION VALUE LIABILITIES LOCATION VALUE
------------------ ------------------ --------------------------- ----------- ------------------------ -----------
Interest Rate Swap
Agreement Interest Rate Risk Swap Contracts, at Value $ 2,760,326 Swap Contracts, at Value $ --
The following table presents the amount of net realized gain (loss) and change
in net unrealized appreciation (depreciation) recognized for the six months
ended April 30, 2017, on derivative instruments as well as the primary
underlying risk exposure associated with each instrument.
STATEMENT OF OPERATIONS LOCATION
------------------------------------------------------------------------------------------
INTEREST RATE RISK
Net realized gain (loss) on swap contracts.................................. $ (889,259)
Net change in unrealized appreciation (depreciation) on swap contracts....... 7,675,412
The average volume of interest rate swaps was $165,000,000 for the six months
ended April 30, 2017.
The Fund does not have the right to offset financial assets and financial
liabilities related to swap contracts on the Statement of Assets and
Liabilities.
6. BORROWINGS
The Fund entered into a credit agreement with The Bank of Nova Scotia that has a
maximum commitment amount of $725,000,000. The borrowing rate under the facility
is equal to the 1-month LIBOR plus 75 basis points. In addition, under the
facility, the Fund pays a commitment fee of 0.15% on the undrawn amount of such
facility on any date that the loan balance is less than 50% of the total
commitment amount. The average amount outstanding between November 1, 2016 and
April 30, 2017 was $645,000,000 with a weighted average interest rate of 1.54%.
As of April 30, 2017, the Fund had outstanding borrowings of $645,000,000 under
this committed facility agreement. The high and low annual interest rates for
the six months ended April 30, 2017, were 1.75% and 1.28%, respectively. The
interest rate at April 30, 2017, was 1.75%.
7. INDEMNIFICATION
The Fund has a variety of indemnification obligations under contracts with its
service providers. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
8. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the Fund through
the date the financial statements were issued, and has determined that there was
the following subsequent event:
On May 22, 2017, the Fund declared a dividend of $0.1525 per share to Common
Shareholders of record on June 5, 2017, payable June 15, 2017.
Page 23
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
APRIL 30, 2017 (UNAUDITED)
DIVIDEND REINVESTMENT PLAN
If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by
Computershare Trust Company, N.A. (the "Plan Agent"), in additional Common
Shares under the Plan. If you elect to receive cash distributions, you will
receive all distributions in cash paid by check mailed directly to you by the
Plan Agent, as the dividend paying agent.
If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:
(1) If Common Shares are trading at or above net asset value ("NAV") at
the time of valuation, the Fund will issue new shares at a price
equal to the greater of (i) NAV per Common Share on that date or
(ii) 95% of the market price on that date.
(2) If Common Shares are trading below NAV at the time of valuation, the
Plan Agent will receive the dividend or distribution in cash and
will purchase Common Shares in the open market, on the NYSE or
elsewhere, for the participants' accounts. It is possible that the
market price for the Common Shares may increase before the Plan
Agent has completed its purchases. Therefore, the average purchase
price per share paid by the Plan Agent may exceed the market price
at the time of valuation, resulting in the purchase of fewer shares
than if the dividend or distribution had been paid in Common Shares
issued by the Fund. The Plan Agent will use all dividends and
distributions received in cash to purchase Common Shares in the open
market within 30 days of the valuation date except where temporary
curtailment or suspension of purchases is necessary to comply with
federal securities laws. Interest will not be paid on any uninvested
cash payments.
You may elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (866) 340-1104, in
accordance with such reasonable requirements as the Plan Agent and the Fund may
agree upon. If you withdraw or the Plan is terminated, you will receive a
certificate for each whole share in your account under the Plan, and you will
receive a cash payment for any fraction of a share in your account. If you wish,
the Plan Agent will sell your shares and send you the proceeds, minus brokerage
commissions.
The Plan Agent maintains all Common Shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.
Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized although cash is not received by you.
Consult your financial advisor for more information.
If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.
The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing Computershare, Inc., P.O.
Box 505000, Louisville, KY 40233-5000.
--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on how the Fund voted proxies relating to
portfolio investments during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Fund's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's ("SEC") website located at
http://www.sec.gov.
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available (1) by calling (800) 988-5891; (2) on the Fund's website located
at http://www.ftportfolios.com; (3) on the SEC's website at http://www.sec.gov;
and (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling (800) SEC-0330.
Page 24
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
APRIL 30, 2017 (UNAUDITED)
SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Fund held its Annual Meeting of Shareholders ("Annual Meeting") on April 24,
2017. At the Annual Meeting, Robert F. Keith was elected by the Common
Shareholders of the First Trust Intermediate Duration Preferred & Income Fund as
the Class I Trustee for a three-year term expiring at the Fund's annual meeting
of shareholders in 2020. The number of votes cast in favor of Mr. Keith was
50,473,755, the number of votes withheld was 803,652 and the number of broker
non-votes was 9,488,590. James A. Bowen, Niel B. Nielson, Richard E. Erickson
and Thomas R. Kadlec are the other current and continuing Trustees.
RISK CONSIDERATIONS
Risks are inherent in all investing. The following summarizes some, but not all,
of the risks that should be considered for the Fund. For additional information
about the risks associated with investing in the Fund, please see the Fund's
prospectus and statement of additional information, as well as other Fund
regulatory filings.
INVESTMENT AND MARKET RISK: An investment in the Fund's common shares ("Common
Shares") is subject to investment risk, including the possible loss of the
entire principal invested. Common Shares at any point in time may be worth less
than the original investment, even after taking into account the reinvestment of
Fund dividends and distributions. The Fund utilizes leverage, which magnifies
investment risk.
PREFERRED/HYBRID PREFERRED AND DEBT SECURITIES RISK: Preferred/hybrid preferred
and debt securities in which the Fund invests are subject to various risks,
including credit risk, interest rate risk, call/prepayment risk and reinvestment
risk, as described below. In addition, preferred and hybrid preferred securities
are subject to certain other risks, including deferral and omission risk,
subordination risk, limited voting rights risk and special redemption rights
risk.
CREDIT AND BELOW INVESTMENT GRADE SECURITIES RISK: The Fund is subject to credit
risk, which is the risk that an issuer of a security may be unable or unwilling
to make dividend, interest and principal payments when due and the related risk
that the value of a security may decline because of concerns about the issuer's
ability or willingness to make such payments. Credit risk may be heightened for
the Fund because it invests in below investment grade securities, which involve
greater risks than investment grade securities, including the possibility of
dividend or interest deferral, default or bankruptcy.
LEVERAGE RISK: The use of leverage by the Fund can magnify the effect of any
losses. If the income and gains from the securities and investments purchased
with leverage proceeds do not cover the cost of leverage, the return to the
Common Shares will be less than if leverage had not been used. Moreover,
leverage involves risks and special considerations for holders of Common Shares
including the likelihood of greater volatility of net asset value and market
price of the Common Shares than a comparable portfolio without leverage, and the
risk that fluctuations in interest rates on reverse repurchase agreements,
borrowings and short-term debt or in the dividend rates on any preferred shares
of the Fund that the Fund may pay will reduce the return to the holders of
Common Shares or will result in fluctuations in the dividends paid on the Common
Shares. There is no assurance that a leveraging strategy will be successful.
Although the Fund seeks to maintain a duration under normal market
circumstances, excluding the effects of leverage, of between three and eight
years, if the effect of the Fund's use of leverage was included in calculating
duration, it could result in a longer duration for the Fund.
CALL/PREPAYMENT AND REINVESTMENT RISK: If an issuer of a security exercises an
option to redeem its issue at par or prepay principal earlier than scheduled,
the Fund may be forced to reinvest in lower yielding securities. A decline in
income could affect the Common Shares' market price or the overall return of the
Fund.
DURATION RISK: The Fund seeks to maintain, under normal market conditions, a
duration, excluding the effects of leverage, of between three and eight years.
Various techniques may be used to shorten or lengthen the Fund's duration.
Securities with longer durations tend to be more sensitive to interest rate (or
yield) changes than securities with shorter durations. The duration of a
security will be expected to change over time with changes in market factors and
time to maturity.
RISKS OF CONCENTRATION IN THE FINANCIALS SECTOR: Because the Fund invests 25% or
more of its managed assets in the financial sector, it will be more susceptible
to adverse economic or regulatory occurrences affecting this sector, such as
changes in interest rates, loan concentration and competition.
INTEREST RATE RISK: The Fund is subject to interest rate risk, which is the risk
that the preferred and debt securities in which the Fund invests will decline in
value because of rising market interest rates.
FLOATING RATE AND FIXED-TO-FLOATING RATE SECURITIES RISK: The market value of
floating rate and fixed-to-floating rate securities may fall in a declining
interest rate environment and may also fall in a rising interest rate
environment if there is a lag between the rise in interest rates and the
interest rate reset. A secondary risk associated with declining interest rates
is the risk that income earned by the Fund on floating rate and
fixed-to-floating rate securities may decline due to lower coupon payments on
floating-rate securities.
Page 25
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
APRIL 30, 2017 (UNAUDITED)
CONVERTIBLE SECURITIES/CONTINGENT CONVERTIBLE SECURITIES RISK: The market value
of convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because of
the conversion feature, the market value of convertible securities tends to vary
with fluctuations in the market value of the underlying common stock. Contingent
convertible securities provide for mandatory conversion into common stock of the
issuer under certain circumstances. Since the common stock of the issuer may not
pay a dividend, investors in these instruments could experience a reduced income
rate, potentially to zero; and conversion would deepen the subordination of the
investor, hence worsening standing in a bankruptcy. In addition, some such
instruments have a set stock conversion rate that would cause a reduction in
value of the security if the price of the stock is below the conversion price on
the conversion date.
FOREIGN (NON-U.S.) SECURITIES RISK: Investing in securities of non-U.S. issuers
may involve certain risks not typically associated with investing in securities
of U.S. issuers. These risks include: (i) there may be less publicly available
information about non-U.S. issuers or markets due to less rigorous disclosure or
accounting standards or regulatory practices; (ii) non-U.S. markets may be
smaller, less liquid and more volatile than the U.S. market; (iii) potential
adverse effects of fluctuations in currency exchange rates or controls on the
value of the Fund's investments; (iv) the economies of non U.S. countries may
grow at slower rates than expected or may experience a downturn or recession;
(v) the impact of economic, political, social or diplomatic events; (vi) certain
non-U.S. countries may impose restrictions on the ability of non U.S. issuers to
make payments of principal and interest to investors located in the United
States due to blockage of non-U.S. currency exchanges or otherwise; and (vii)
withholding and other non-U.S. taxes may decrease the Fund's return.
ILLIQUID AND RESTRICTED SECURITIES RISK: The Fund may invest up to 25% of its
Managed Assets in illiquid securities and may also invest, without limit, in
unregistered or otherwise restricted securities. Investment of the Fund's assets
in illiquid and restricted securities may restrict the Fund's ability to take
advantage of market opportunities. Illiquid and restricted securities may be
difficult to dispose of at a fair price at the times when the Fund believes it
is desirable to do so. The market price of illiquid and restricted securities
generally is more volatile than that of more liquid securities, which may
adversely affect the price that the Fund pays for or recovers upon the sale of
such securities. Illiquid and restricted securities are also more difficult to
value, especially in challenging markets. The risks associated with illiquid and
restricted securities may be particularly acute in situations in which the
Fund's operations require cash and could result in the Fund borrowing to meet
its short-term needs or incurring losses on the sale of illiquid or restricted
securities.
Page 26
This Page Left Blank Intentionally.
This Page Left Blank Intentionally.
FIRST TRUST
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
INVESTMENT SUB-ADVISOR
Stonebridge Advisors LLC
10 Westport Road
Suite C101
Wilton, CT 06897
ADMINISTRATOR,
FUND ACCOUNTANT &
CUSTODIAN
Brown Brothers Harriman & Co.
50 Post Office Square
Boston, MA 02110
TRANSFER AGENT
Computershare, Inc.
P.O. Box 505000
Louisville, KY 40233-5000
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
There has been no change, as of the date of this filing, in any of the
portfolios managers identified in response to paragraph (a)(1) of this Item in
the Registrant's most recently filed annual report on Form N-CSR.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers, or
persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the filing
date of the report that includes the disclosure required by this
paragraph, based on their evaluation of these controls and procedures
required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as
amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's second fiscal quarter
of the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not Applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section
906 of the Sarbanes- Oxley Act of 2002 are attached hereto.
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.
(registrant) First Trust Intermediate Duration Preferred & Income Fund
-----------------------------------------------------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, President and
Chief Executive Officer
(principal executive officer)
Date: June 20, 2017
-------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, President and
Chief Executive Officer
(principal executive officer)
Date: June 20, 2017
-------------------
By (Signature and Title)* /s/ Donald P. Swade
----------------------------------------
Donald P. Swade, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: June 20, 2017
-------------------
* Print the name and title of each signing officer under his or her signature.