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 Fund
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(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: October 31, 2013
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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)
ANNUAL REPORT
FOR THE PERIOD MAY 23, 2013
(COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 2013
FIRST TRUST
STONEBRIDGE
Advisors LLC
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TABLE OF CONTENTS
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FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
ANNUAL REPORT
OCTOBER 31, 2013
Shareholder Letter........................................................... 1
At A Glance.................................................................. 2
Portfolio Commentary ........................................................ 3
Portfolio of Investments .................................................... 5
Statement of Assets and Liabilities ......................................... 13
Statement of Operations ..................................................... 14
Statement of Changes in Net Assets........................................... 15
Statement of Cash Flows...................................................... 16
Financial Highlights......................................................... 17
Notes to Financial Statements................................................ 18
Report of Independent Registered Public Accounting Firm...................... 23
Additional Information....................................................... 24
Board of Trustees and Officers............................................... 28
Privacy Policy............................................................... 30
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
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.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment. 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
Stonebridge 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 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)
ANNUAL LETTER FROM THE CHAIRMAN AND CEO
OCTOBER 31, 2013
Dear Shareholders:
I am pleased to present you with the first annual report for your investment in
First Trust Intermediate Duration Preferred & Income Fund (the "Fund").
As a shareholder, twice a year you will receive a detailed report about your
investment, including portfolio commentary from the Fund's management team, a
performance analysis, and a market and Fund outlook. Additionally, First Trust
Advisors L.P. ("First Trust") compiles the Fund's financial statements for you
to review. These reports are intended to keep you up-to-date on your investment,
and I encourage you to read this document and discuss it with your financial
advisor.
As you are probably aware, the last twelve months saw both challenging economic
and political issues in the U.S. However, the period was still positive for the
markets. In fact, the S&P 500 Index, as measured on a total return basis, rose
27.18% during the twelve months ended October 31, 2013. Of course, past
performance can never be an indicator of future performance, but First Trust
believes that staying invested in quality products through up and down markets
and having a long-term horizon can help investors as they work toward their
financial goals.
First Trust continues to offer a variety of products that we believe could fit
many financial plans for investors seeking long-term investment success. Your
financial advisor can tell you about the other investments First Trust offers
that might fit your financial goals. We encourage you to discuss those goals
with your financial advisor regularly so that he or she can help keep you on
track and help you choose investments that match your goals.
First Trust will continue to make available up-to-date information about your
investments so you and your financial advisor are current on any First Trust
investments you own. We value our relationship with you, and thank you for the
opportunity to assist you in achieving 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"
October 31, 2013 (Unaudited)
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Fund Statistics
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Symbol on New York Stock Exchange FPF
Common Share Price $21.01
Common Share Net Asset Value ("NAV") $23.51
Premium (Discount) to NAV (10.63)%
Net Assets Applicable to Common Shares $1,427,164,432
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) 8.71%
Current Distribution Rate on NAV (2) 7.78%
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COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
NAV Common Share Price
5/13 23.85 25.00
23.79 25.05
23.51 25.00
23.25 25.07
22.84 24.89
6/13 23.00 25.00
23.01 24.45
23.18 24.05
23.42 23.05
7/13 23.42 23.15
23.26 22.20
23.24 21.70
23.03 21.11
22.93 20.94
8/13 22.97 21.39
22.74 20.81
22.76 21.38
23.02 20.70
9/13 23.01 20.91
22.92 21.39
22.99 21.10
23.25 20.94
23.41 21.01
10/13 23.51 21.01
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PERFORMANCE
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Cumulative Total Return
Inception (5/23/2013)
to 10/31/2013
FUND PERFORMANCE (3)
NAV 0.60%
Market Value -14.13%
INDEX PERFORMANCE
BofA Merrill Lynch Fixed Rate Preferred Securities Index -6.24%
BofA Merrill Lynch U.S. Capital Securities Index -0.03%
Blended Benchmark(4) -3.14%
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% OF TOTAL
INDUSTRY CLASSIFICATION INVESTMENTS
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Commercial Banks 33.9%
Insurance 31.2
Diversified Financial Services 17.5
Capital Markets 5.1
Real Estate Investment Trusts (REITs) 2.7
Electric Utilities 2.7
Oil, Gas & Consumable Fuels 2.1
Diversified Telecommunication Services 1.8
Multi-Utilities 1.2
Metals & Mining 0.8
Consumer Finance 0.6
Energy Equipment & Services 0.3
Wireless Telecommunication Services 0.1
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Total 100.0%
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% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
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General Electric Capital Corp., 7.125% 2.7%
Wells Fargo & Co., 7.980% 2.7
JPMorgan Chase & Co., 7.900% 2.3
XL Group PLC, 6.500% 2.0
QBE Capital Funding III Ltd., 7.250% 2.0
Cooperatieve Centrale Raiffeisen-
Boerenleenbank BA, 8.400% 1.7
Deutsche Bank Capital Funding Trust
VII, 5.628% 1.5
Aviva PLC, 8.250% 1.5
American International Group, Inc., 8.175% 1.5
Bank of America Corp., 8.000% 1.4
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Total 19.3%
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(1) Most recent distribution paid or declared through 10/31/2013. 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 10/31/2013. 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 loads and are not annualized for periods less
than one year. Past performance is not indicative of future results.
(4) The blended benchmark consists of the following: BofA Merrill Lynch Fixed
Rate Preferred Securities Index (50%) and BofA Merrill Lynch U.S. Capital
Securities Index (50%).
Page 2
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PORTFOLIO COMMENTARY
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FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013
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.
PORTFOLIO MANAGEMENT TEAM
SCOTT T. FLEMING - PRESIDENT AND CIO OF STONEBRIDGE ADVISORS LLC
ALLEN SHEPARD, PH.D. - VICE PRESIDENT, SENIOR RISK ANALYST AND PORTFOLIO
ANALYTICS
ROBERT WOLF - VICE PRESIDENT, PORTFOLIO MANAGER AND SENIOR CREDIT ANALYST
DANIELLE SALTERS, CFA - CREDIT ANALYST
PAUL KRESS - JR. TRADER AND ANALYST
ERIC WEAVER - TRADER AND ANALYST
The Fund's statement of additional information includes additional information
about the Portfolio Managment Team and is available, without charge, upon
request, by calling (800) 988-5891.
COMMENTARY
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND
The Fund commenced operations on May 23, 2013. The Fund's primary investment
objective is to seek a high level of current income. As a secondary objective,
the Fund seeks capital appreciation. The Fund pursues its objectives by
investing in preferred and other income-producing securities. The Fund seeks to
maintain, under normal market conditions, a duration excluding the effects of
leverage, of between three and eight years. There can be no assurance that the
Fund's investment objectives will be achieved.
MARKET RECAP
After more than 4 years of positive results in the preferred and hybrid
securities market, in May 2013, near the inception of the Fund, the global
financial markets entered into a period of increased volatility.
In late May, statements from the Federal Open Markets Committee related to
initiating the tapering of Quantitative Easing ("QE") caused Treasuries to sell
off, and by the beginning of June, preferred and hybrid securities followed
Treasuries lower. The market volatility continued as the sell-off that began
throughout fixed-income markets in early May did not break until late September.
Yields across fixed-income increased gradually as markets attempted to price in
expectations for a "taper" or reduction in the pace of the Federal Reserve's
monthly asset purchase program, heavily expected to begin in September. During
this period, price declines were further compounded by significant redemptions
in fixed-income fund products. The "no taper" decision at the September 18
Federal Reserve meeting surprised the markets, causing an abrupt rally of the
10-year Treasury and providing support to most of the fixed-income market over
the final two weeks of the month. The preferred market underperformed most other
fixed-income asset classes as it did not fully participate in the sharp rebound
seen by other segments in the market during the final two weeks of September. As
investors looked to reduce duration, the preferred market saw spreads over
Treasuries rising, particularly for longer duration securities, compounding
price declines. Volatility ensued once again through mid-October, this time in
reaction to the extended U.S. government shutdown. Once the U.S. government was
reopened on October 17, preferred securities stabilized through the fiscal year
end of October 31, 2013, along with most other fixed-income securities, as
investors took advantage of higher yields and wider spreads in the preferred and
hybrid market.
PERFORMANCE SUMMARY
For the period beginning May 23, 2013 (inception date of Fund) and ending on the
fiscal year-end of October 31, 2013, the Fund produced a total return on its
Market Price (MP) of -14.13% and a total return on Net Asset Value (NAV) of
0.60%. This compares to the Fund's blended benchmark index total return of
-3.14%. The blended benchmark used for the Fund consists of equal 50% weightings
in both the BofA Merrill Lynch Fixed Rate Preferred Securities Index (P0P1) and
the BofA Merrill Lynch U.S. Capital Securities Index (C0CS).
As of October 31st, the Fund traded at a 10.63% discount to NAV. The
underperformance of the MP relative to NAV and the blended benchmark was likely
a result of selling pressure in fixed-income fund products over the past few
months. The primary factors that contributed to the outperformance of the Fund's
NAV relative to the blended benchmark were a higher weighting in institutional
securities with a concentration in fixed-to-floating rate securities, shorter
duration, timing of
Page 3
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PORTFOLIO COMMENTARY (CONTINUED)
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investments and security selection. With a concentration in preferreds and
hybrids with a fixed-to-floating rate coupon structure, the overall portfolio
duration was shortened considerably lower than the benchmark, as these
securities tend to have shorter durations than fixed-rate securities. Given the
timing of the inception of the Fund and subsequent invest-up period, the Fund
was able to take advantage of declining prices in the market, selecting the best
securities on a relative value basis and positioning the Fund to perform well in
the rising rate environment. The Fund utilized close to 30% leverage once it got
fully invested. Given the market weakness from May to August, the invest-up
period for the Fund was extended, which aided performance as the Fund was buying
securities and adding leverage at lower prices than at the time of its launch.
The use of leverage had a positive effect to the Fund's NAV total return during
the period.
MARKET AND FUND OUTLOOK
Stonebridge is cautiously optimistic about the performance of the preferred
market for the remainder of 2013 and into early 2014. While volatility in the
Treasury market is likely to continue to impact the preferred market, we
continue to believe that preferred and hybrid securities are an attractive
source of income relative to other asset classes, and that current pricing in
the preferred market is supported by fundamental valuations, as witnessed by the
wide spreads relative to Treasuries and other fixed-income alternatives.
From a macro perspective, the Fed appears to be on hold with tapering economic
stimulus until the first quarter of 2014, at the earliest, while economic
conditions improve more slowly than initially anticipated. Outside of the U.S.,
the global economy appears to be improving, but remains weak. As a result, we
believe interest rates are likely to stabilize over the near term, with the long
end of the treasury yield curve range-bound through year end and no rise in the
front end of the curve for at least one year.
The spread to Treasuries remains wide to historical averages and preferred
securities continue to offer investors relatively high income on a current-yield
basis. As of October 31, 2013, the current yield on $25 par preferred
securities, based on P0P1, was 6.67%, resulting in a spread of 417 basis points
over the 10-year Treasury, 71 basis points wider than the 15-year historical
average of 346 basis points. The current yield on $1000 par preferred
securities, based on C0CS, was 6.07%, resulting in a spread of 357 basis points
over the 10-year Treasury, 21 basis points wider than the 15-year historical
average of 336 basis points. (Source: Bank of America Merrill Lynch Research,
Stonebridge Advisors LLC). Historically wide spreads coupled with improved
profitability and credit fundamentals in the major sectors represented in the
preferred securities universe provide the potential for further spread
tightening in preferred securities (a cushion against rising rates).
Stonebridge will continue to actively manage the Fund to seek to protect against
the downside risks in the market while aiming to outperform in all market
environments. We intend to maintain a shorter duration in the Fund than the
index to seek to protect investors in a rising interest rate environment. As of
October 31, 2013, the effective duration of the portfolio was less than 5.5
years, while the blended benchmark had an effective duration upward of 7 years.
The goal over the next few months is to continue the strategy of optimizing the
Fund's investment portfolio to generate high current income while reducing
interest rate sensitivity and credit risk. We currently see the best value, in
terms of structure, in certain fixed-to-floating rate securities, high
coupon/low duration securities and regulatory call candidates. Fixed-to-floating
rate securities currently provide attractive income for investors while
providing protection against rising interest rates in the future.
Regulatory-call candidates are those that will lose tier-1 qualifying credit due
to regulatory changes and, thus, will likely be redeemed or tendered in the
short- to intermediate-term, providing support for securities that are
attractively priced to a potential early call. Stonebridge continues to believe
that interest rate risk in the preferred and hybrid market is manageable through
security selection and that, particularly in the current market environment,
active management is paramount with respect to security selection, assessing
relative value and managing interest rate risk.
Page 4
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 2013
STATED STATED
SHARES DESCRIPTION RATE MATURITY VALUE
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$20 PAR PREFERRED SECURITIES - 0.4%
REAL ESTATE INVESTMENT TRUSTS - 0.4%
312,157 CommonWealth REIT (a) ............................................. 7.50% 11/15/19 $ 6,477,258
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TOTAL $20 PAR PREFERRED SECURITIES ........................................................ 6,477,258
(Cost $6,565,806) --------------
$25 PAR PREFERRED SECURITIES - 22.9%
CAPITAL MARKETS - 2.3%
21,808 Affiliated Managers Group, Inc..................................... 6.38% 08/15/42 508,781
100,000 Apollo Investment Corp............................................. 6.88% 07/15/43 2,146,000
189,424 Ares Capital Corp.................................................. 7.00% 02/15/22 4,953,437
44,567 Ares Capital Corp.................................................. 7.75% 10/15/40 1,153,394
334,403 Goldman Sachs Group, Inc. (a) ..................................... 6.13% 11/01/60 8,246,378
221,140 Morgan Stanley Capital Trust VI (a) ............................... 6.60% 02/01/46 5,455,524
214,051 Morgan Stanley Capital Trust VII (a) .............................. 6.60% 10/15/66 5,267,795
208,643 Raymond James Financial, Inc. (a) ................................. 6.90% 03/15/42 5,347,520
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33,078,829
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COMMERCIAL BANKS - 4.5%
2,115 Deutsche Bank Capital Funding Trust X ............................. 7.35% (b) 53,552
323,084 HSBC Holdings PLC, Series 2 (a) ................................... 8.00% (b) 8,836,347
220,000 PNC Financial Services Group, Inc., Series P (c) .................. 6.13% (b) 5,583,600
246,368 Regions Financial Corp., Series A (a) ............................. 6.38% (b) 5,641,827
523,170 Santander Finance Preferred SAU, Series 10 ........................ 10.50% (b) 14,047,115
190,000 SunTrust Banks, Inc., Series E (a) ................................ 5.88% (b) 4,094,500
200,000 Taylor Capital Group Inc., Series A (a) ........................... 8.00% (b) 5,348,000
165,000 Texas Capital Bancshares Inc., Series A (a) ....................... 6.50% (b) 3,672,900
411,951 Wells Fargo & Co. (a) (c) ......................................... 5.85% (b) 10,018,648
175,000 Wells Fargo & Co., Series J (a) ................................... 8.00% (b) 4,977,000
66,300 Zions Bancorporation, Series G (c) ................................ 6.30% (b) 1,574,625
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63,848,114
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CONSUMER FINANCE - 0.6%
333,306 Discover Financial Services, Series B (a) ......................... 6.50% (b) 7,972,680
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DIVERSIFIED FINANCIAL SERVICES - 5.4%
817,473 Citigroup Capital XIII (a) (c) .................................... 7.88% 10/30/40 22,480,508
87,674 Citigroup, Inc., Series J (c) ..................................... 7.13% (b) 2,271,633
200,000 Citigroup, Inc., Series K (c) ..................................... 6.88% (b) 4,990,000
95,000 Countrywide Capital IV ............................................ 6.75% 04/01/33 2,395,900
535,567 Countrywide Capital V (a) ......................................... 7.00% 11/01/36 13,415,953
196,292 ING Groep N.V. (a) ................................................ 6.20% (b) 4,565,752
279,112 ING Groep N.V. (a) ................................................ 6.38% (b) 6,587,043
60,085 ING Groep N.V...................................................... 7.05% (b) 1,500,923
47,426 ING Groep N.V...................................................... 7.20% (b) 1,193,238
276,254 ING Groep N.V...................................................... 7.38% (b) 6,972,651
14,077 KKR Financial Holdings LLC ........................................ 8.38% 11/15/41 390,637
243,087 KKR Financial Holdings LLC, Series A (a) .......................... 7.38% (b) 6,023,696
See Notes to Financial Statements Page 5
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2013
STATED STATED
SHARES DESCRIPTION RATE MATURITY VALUE
------------- ------------------------------------------------------------------- --------- ----------- --------------
$25 PAR PREFERRED SECURITIES (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
172,752 RBS Capital Funding Trust VII, Series G ........................... 6.08% (b) $ 3,783,269
--------------
76,571,203
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.1%
83,750 Qwest Corp......................................................... 7.38% 06/01/51 2,097,937
148,899 Qwest Corp. (a) ................................................... 7.50% 09/15/51 3,755,233
120,211 Qwest Corp. (a) ................................................... 7.00% 04/01/52 2,970,414
315,508 Qwest Corp. (a) ................................................... 6.13% 06/01/53 6,657,219
--------------
15,480,803
--------------
ELECTRIC UTILITIES - 0.7%
189,962 Entergy Arkansas Inc............................................... 4.75% 06/01/63 3,690,962
59,454 Entergy Texas, Inc................................................. 7.88% 06/01/39 1,576,125
69,149 NextEra Energy Capital Holdings, Inc., Series F ................... 8.75% 03/01/69 1,789,576
2,639 NextEra Energy Capital Holdings, Inc., Series G ................... 5.70% 03/01/72 57,029
14,226 NextEra Energy Capital Holdings, Inc., Series H ................... 5.63% 06/15/72 301,591
101,653 PPL Capital Funding, Inc., Series B ............................... 5.90% 04/30/73 2,187,573
--------------
9,602,856
--------------
INSURANCE - 5.0%
67,806 Arch Capital Group Ltd., Series C ................................. 6.75% (b) 1,642,939
200,000 Aspen Insurance Holdings Ltd. (a) (c) ............................. 5.95% (b) 4,792,000
361,470 Aspen Insurance Holdings Ltd. (c) ................................. 7.40% (b) 9,401,835
54,269 Aviva PLC ......................................................... 8.25% 12/01/41 1,476,659
150,515 Axis Capital Holdings Ltd., Series C (a) .......................... 6.88% (b) 3,680,092
264,683 Endurance Specialty Holdings Ltd., Series B (a) ................... 7.50% (b) 6,699,127
359,023 Hartford Financial Services Group, Inc. (a) (c) ................... 7.88% 04/15/42 10,361,404
215,000 Maiden Holdings North America Ltd.................................. 8.25% 06/15/41 5,557,750
630,041 MetLife, Inc., Series B (a) ....................................... 6.50% (b) 15,662,819
175,000 Montpelier Re Holdings Ltd. (a) ................................... 8.88% (b) 4,746,000
118,028 PartnerRe Ltd., Series E .......................................... 7.25% (b) 3,025,058
189,077 Reinsurance Group of America, Inc. (a) (c) ........................ 6.20% 09/15/42 4,709,908
7,000 WR Berkley Corp.................................................... 5.63% 04/30/53 145,600
--------------
71,901,191
--------------
MULTI-UTILITIES - 0.6%
354,500 Integrys Energy Group, Inc. (c) ................................... 6.00% 08/01/73 8,582,445
--------------
REAL ESTATE INVESTMENT TRUSTS - 2.5%
245,007 CommonWealth REIT (a) ............................................. 5.75% 08/01/42 4,787,437
178,774 CommonWealth REIT, Series E (a) ................................... 7.25% (b) 4,102,863
90,000 Digital Realty Trust, Inc., Series E (a) .......................... 7.00% (b) 2,079,000
110,285 DuPont Fabros Technology Inc., Series A (a) ....................... 7.88% (b) 2,729,554
62,848 EPR Properties, Series F .......................................... 6.63% (b) 1,375,743
61,206 Hospitality Properties Trust, Series D ............................ 7.13% (b) 1,508,116
30,980 Kilroy Realty Corp., Series G ..................................... 6.38% (b) 666,380
150,541 Kilroy Realty Corp., Series H (a) ................................. 6.88% (b) 3,456,421
22,444 Kimco Realty Corp., Series H ...................................... 6.90% (b) 554,816
Page 6 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2013
STATED STATED
SHARES DESCRIPTION RATE MATURITY VALUE
------------- ------------------------------------------------------------------- --------- ----------- --------------
$25 PAR PREFERRED SECURITIES (CONTINUED)
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
313,699 National Retail Properties, Inc., Series D (a) .................... 6.63% (b) $ 7,164,885
25,911 PS Business Parks, Inc., Series S ................................. 6.45% (b) 588,957
5,740 Public Storage, Series Q .......................................... 6.50% (b) 141,720
33,338 Regency Centers Corp., Series 6 ................................... 6.63% (b) 759,773
99,794 Taubman Centers, Inc., Series J ................................... 6.50% (b) 2,227,402
70,879 Taubman Centers, Inc., Series K ................................... 6.25% (b) 1,529,569
26,348 Vornado Realty Trust, Series I .................................... 6.63% (b) 632,352
88,499 Vornado Realty Trust, Series J .................................... 6.88% (b) 2,194,775
--------------
36,499,763
--------------
WIRELESS TELECOMMUNICATION SERVICES - 0.2%
29,358 Telephone & Data Systems, Inc...................................... 6.63% 03/31/45 715,454
57,253 Telephone & Data Systems, Inc...................................... 6.88% 11/15/59 1,403,271
25,790 United States Cellular Corp........................................ 6.95% 05/15/60 634,950
--------------
2,753,675
--------------
TOTAL $25 PAR PREFERRED SECURITIES ........................................................ 326,291,559
(Cost $340,534,192) --------------
$50 PAR PREFERRED SECURITIES - 0.2%
CONSUMER FINANCE - 0.2%
54,367 SLM Corp., Series A ............................................... 6.97% (b) 2,556,880
--------------
TOTAL $50 PAR PREFERRED SECURITIES ........................................................ 2,556,880
(Cost $2,677,798) --------------
$100 PAR PREFERRED SECURITIES - 2.8%
COMMERCIAL BANKS - 2.8%
80,000 AgriBank FCB (c) .................................................. 6.88% (b) 8,036,800
175,000 CoBank ACB, Series F (a) (c) (d) (f) .............................. 6.25% (b) 17,423,438
50,000 CoBank ACB, Series G (a) (f) ...................................... 6.13% (b) 4,431,250
100,000 Farm Credit Bank of Texas (c) (d) (f) ............................. 6.75% (b) 10,021,880
--------------
TOTAL $100 PAR PREFERRED SECURITIES ....................................................... 39,913,368
(Cost $41,913,750) --------------
$1,000 PAR PREFERRED SECURITIES - 4.6%
COMMERCIAL BANKS - 1.4%
10,000 AgStar Financial Services ACA (c) (d) (f) ......................... 6.75% (b) 9,990,000
9,959 Santander Finance Preferred SAU, Series 11 (a) (c) ................ 10.50% (b) 10,263,994
--------------
20,253,994
--------------
DIVERSIFIED FINANCIAL SERVICES - 1.1%
15,000 Pitney Bowes International Holdings Inc.,
Series F (a) (d) (f) ........................................... 6.13% (b) 15,633,750
--------------
See Notes to Financial Statements Page 7
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2013
STATED STATED
SHARES DESCRIPTION RATE MATURITY VALUE
------------- ------------------------------------------------------------------- --------- ----------- --------------
$1,000 PAR PREFERRED SECURITIES (CONTINUED)
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.4%
16,000 Centaur Funding Corp. (a) (d) (f) ................................. 9.08% 04/21/20 $ 19,715,000
--------------
REAL ESTATE INVESTMENT TRUSTS - 0.7%
8,000 Sovereign Real Estate Investment Trust (d) (f) .................... 12.00% (b) 10,158,192
--------------
TOTAL $1,000 PAR PREFERRED SECURITIES ..................................................... 65,760,936
Cost ($66,324,484) --------------
STATED STATED
PAR AMOUNT DESCRIPTION RATE MATURITY VALUE
------------- ------------------------------------------------------------------- --------- ----------- --------------
CAPITAL PREFERRED SECURITIES - 97.6%
CAPITAL MARKETS - 3.9%
$ 28,850,000 Deutsche Bank Capital Funding Trust VII (a) (c) (d) ............... 5.63% (b) 29,859,750
26,288,000 Goldman Sachs Capital I (a) ....................................... 6.35% 02/15/34 26,385,529
--------------
56,245,279
--------------
COMMERCIAL BANKS - 33.3%
18,600,000 Banco Bilbao Vizcaya Argentaria S.A. (c) .......................... 9.00% (b) 19,358,880
9,940,000 Barclays Bank PLC (d) ............................................. 10.18% 06/12/21 13,214,286
10,000,000 Barclays Bank PLC (a) ............................................. 7.63% 11/21/22 10,340,000
21,000,000 Barclays Bank PLC (a) (c) ......................................... 7.75% 04/10/23 22,233,750
6,000,000 Barclays Bank PLC (a) (c) (d) ..................................... 7.43% (b) 6,645,000
16,750,000 BBVA International Preferred SAU (a) (c) .......................... 5.92% (b) 15,828,750
17,000,000 BNP Paribas S.A. (a) (c) (d) ...................................... 7.20% (b) 17,786,250
7,500,000 BPCE S.A. (a) (c) (d) ............................................. 12.50% (b) 9,665,625
3,000,000 BPCE S.A........................................................... 13.00% (b) 3,457,020
20,000,000 Cooperatieve Centrale Raiffeisen-Boerenleenbank
BA (c) ......................................................... 8.40% (b) 22,080,000
24,604,000 Cooperatieve Centrale Raiffeisen-Boerenleenbank
BA (a) (c) (d) ................................................. 11.00% (b) 32,568,389
6,000,000 Credit Agricole S.A. (a) (c) (d) .................................. 8.38% (b) 6,787,500
5,000,000 Dresdner Funding Trust I (d) ...................................... 8.15% 06/30/31 5,087,500
8,700,000 Fifth Third Capital Trust IV (a) (c) .............................. 6.50% 04/15/37 8,591,250
4,000,000 HSBC USA Capital Trust II (a) (d) ................................. 8.38% 05/15/27 4,066,248
9,000,000 LBG Capital No.1 PLC (c) (d) ...................................... 8.00% (b) 9,594,000
13,500,000 Lloyds Bank PLC (a) (c) (d) ....................................... 12.00% (b) 18,326,250
22,755,000 Lloyds Banking Group PLC (a) (c) (d) .............................. 5.92% (b) 21,219,037
23,500,000 Lloyds Banking Group PLC (a) (c) (d) .............................. 6.27% (b) 22,060,625
23,020,000 M&T Bank Corp. (a) (d) ............................................ 6.88% (b) 23,465,759
10,000,000 Macquarie PMI LLC ................................................. 8.38% (b) 10,577,000
9,964,000 Mizuho Capital Investment USD 2, Ltd. (a) (c) (d) ................. 14.95% (b) 10,860,959
2,000,000 Natixis (a) (c) ................................................... 10.00% (b) 2,318,696
10,754,000 Natixis (a) (c) (d) ............................................... 10.00% (b) 12,467,628
4,200,000 NIBC Bank N.V...................................................... 7.63% (b) 3,664,500
24,600,000 Royal Bank of Scotland Group PLC, Series U (a) (c) ................ 7.64% (b) 23,800,500
20,000,000 Royal Bank of Scotland PLC (The) (c) .............................. 9.50% 03/16/22 23,355,520
13,980,000 SMFG Preferred Capital USD 3 Ltd. (a) (c) (d) ..................... 9.50% (b) 17,557,482
15,184,000 Standard Chartered Bank (c) ....................................... 9.50% (b) 16,512,600
4,500,000 Standard Chartered PLC (a) (c) (d) ................................ 6.41% (b) 4,778,438
46,000,000 Wells Fargo & Co., Series K (a) (c) ............................... 7.98% (b) 52,095,000
Page 8 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2013
STATED STATED
PAR AMOUNT DESCRIPTION RATE MATURITY VALUE
------------- ------------------------------------------------------------------- --------- ----------- --------------
CAPITAL PREFERRED SECURITIES (CONTINUED)
COMMERCIAL BANKS (CONTINUED)
$ 6,800,000 Zions Bancorporation (a) (c) ...................................... 5.80% (b) $ 6,109,800
9,000,000 Zions Bancorporation, Series J (c) ................................ 7.20% (b) 9,022,500
--------------
485,496,742
--------------
DIVERSIFIED FINANCIAL SERVICES - 15.8%
25,500,000 Bank of America Corp., Series K (a) (c) ........................... 8.00% (b) 28,373,442
20,000,000 Bank of America Corp., Series M (a) (c) ........................... 8.13% (b) 22,452,860
17,250,000 Citigroup, Inc. (a) (c) ........................................... 5.95% (b) 16,452,187
800,000 Citigroup, Inc., Series E (c) ..................................... 8.40% (b) 888,836
47,500,000 General Electric Capital Corp., Series A (a) (c) .................. 7.13% (b) 53,049,045
20,520,000 Glen Meadow Pass Through Trust (a) (c) (d) ........................ 6.51% 02/12/67 19,801,800
14,530,000 ING US, Inc. (a) (c) .............................................. 5.65% 05/15/53 13,883,691
40,009,000 JPMorgan Chase & Co., Series 1 (a) (c) ............................ 7.90% (b) 44,151,812
15,000,000 JPMorgan Chase & Co., Series R (a) (c) ............................ 6.00% (b) 14,587,500
11,585,000 ZFS Finance USA Trust II (a) (c) (d) .............................. 6.45% 12/15/65 12,482,838
--------------
226,124,011
--------------
ELECTRIC UTILITIES - 3.1%
5,000,000 Enel SpA (c) (d) .................................................. 8.75% 09/24/73 5,435,250
14,975,000 NextEra Energy Capital Holdings, Inc.,
Series D (a) (c) ............................................... 7.30% 09/01/67 16,036,608
17,500,000 PPL Capital Funding Inc., Series A (a) (c) ........................ 6.70% 03/30/67 17,688,282
4,179,000 Southern California Edison Co., Series E (a) (c) .................. 6.25% (b) 4,367,055
--------------
43,527,195
--------------
ENERGY EQUIPMENT & SERVICES - 0.5%
7,000,000 DCP Midstream LLC (a) (c) (d) ..................................... 5.85% 05/21/43 6,580,000
--------------
INSURANCE - 35.2%
2,500,000 Aegon NV (e) ...................................................... 2.96% (b) 1,974,500
23,000,000 American International Group, Inc. (a) (c) ........................ 8.18% 05/15/58 28,462,500
5,000,000 Assured Guaranty Municipal Holdings,
Inc. (a) (c) (d) ............................................... 6.40% 12/15/66 3,925,000
26,000,000 Aviva PLC (a) ..................................................... 8.25% (b) 28,730,260
9,500,000 AXA S.A. (a) (c) (d) .............................................. 6.38% (b) 9,393,125
25,055,000 AXA S.A. (a) (c) (d) .............................................. 6.46% (b) 25,587,419
6,050,000 Catlin Insurance Co Ltd. (a) (c) (d) .............................. 7.25% (b) 6,322,250
8,500,000 CHUBB Corp. (a) (c) ............................................... 6.38% 03/29/67 9,307,500
13,050,000 Cloverie PLC for Zurich Insurance Co., Ltd. (c) ................... 8.25% (b) 15,170,625
7,000,000 CNP Assurances (c) ................................................ 6.88% (b) 7,472,500
10,000,000 CNP Assurances (c) ................................................ 7.50% (b) 11,002,000
12,500,000 Dai-ichi Life Insurance Co Ltd. (The) (a) (c) (d) ................. 7.25% (b) 14,271,463
10,000,000 Friends Life Group PLC (c) ........................................ 7.88% (b) 10,762,500
22,200,000 Genworth Holdings, Inc. (a) (c) ................................... 6.15% 11/15/66 20,184,684
23,782,000 Hartford Financial Services Group Inc. (a) (c) .................... 8.13% 06/15/38 27,955,741
8,100,000 Liberty Mutual Group, Inc. (a) (c) (d) ............................ 7.00% 03/15/37 8,464,500
23,000,000 Lincoln National Corp. (a) (c) .................................... 7.00% 05/17/66 23,862,500
18,000,000 Lincoln National Corp. (a) (c) .................................... 6.05% 04/20/67 17,955,000
6,000,000 Maiden Capital Financing Trust (d) ................................ 14.00% 01/15/39 6,126,000
6,000,000 MetLife Capital Trust IV (a) (d) .................................. 7.88% 12/15/37 6,945,000
See Notes to Financial Statements Page 9
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2013
STATED STATED
PAR AMOUNT DESCRIPTION RATE MATURITY VALUE
------------- ------------------------------------------------------------------- --------- ----------- --------------
CAPITAL PREFERRED SECURITIES (CONTINUED)
INSURANCE (CONTINUED)
$ 7,500,000 MetLife Capital Trust X (a) (d) ................................... 9.25% 04/08/38 $ 9,731,250
16,265,000 MetLife Inc. (a) .................................................. 10.75% 08/01/39 24,356,837
15,000,000 Mitsui Sumitomo Insurance Co., Ltd. (c) (d) ....................... 7.00% 03/15/72 16,875,000
3,000,000 Nationwide Financial Services Capital Trust (a) ................... 7.90% 03/01/37 3,292,224
13,000,000 Nationwide Financial Services Inc. (a) ............................ 6.75% 05/15/37 12,870,000
5,000,000 Provident Financing Trust I (a) ................................... 7.41% 03/15/38 5,510,390
23,265,000 Prudential Financial Inc. (a) (c) ................................. 8.88% 06/15/38 28,325,137
19,389,000 Prudential PLC (c) ................................................ 11.75% (b) 21,536,332
36,520,000 QBE Capital Funding III Ltd. (a) (c) (d) .......................... 7.25% 05/24/41 38,437,300
5,500,000 StanCorp Financial Group Inc. (a) (c) ............................. 6.90% 06/01/67 5,513,750
3,000,000 Sumitomo Life Insurance Co. (c) (d) ............................... 6.50% 09/20/73 3,201,081
8,000,000 Swiss Re Capital I LP (a) (c) (d) ................................. 6.85% (b) 8,560,000
40,611,000 XL Group PLC, Series E (a) (c) .................................... 6.50% (b) 40,042,446
--------------
502,126,814
--------------
METALS & MINING - 1.1%
14,872,000 ArcelorMittal (c) ................................................. 8.75% (b) 15,994,836
--------------
MULTI-UTILITIES - 1.1%
9,000,000 Dominion Resources, Inc. (a) (c) .................................. 7.50% 06/30/66 9,624,537
5,000,000 RWE AG (c) ........................................................ 7.00% 10/12/72 5,479,800
--------------
15,104,337
--------------
OIL, GAS & CONSUMABLE FUELS - 2.9%
5,000,000 BG Energy Capital PLC (c) ......................................... 6.50% 11/30/72 5,450,000
21,720,000 Enbridge Energy Partners L.P. (a) (c) ............................. 8.05% 10/01/37 24,508,891
10,000,000 Enterprise Products Operating LLC, Series B (a) (c) ............... 7.03% 01/15/68 11,060,110
--------------
41,019,001
--------------
TOTAL CAPITAL PREFERRED SECURITIES ........................................................ 1,392,218,215
(Cost $1,442,450,268) --------------
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
------------- ------------------------------------------------------------------- --------- ----------- --------------
CORPORATE BONDS AND NOTES - 8.9%
CAPITAL MARKETS - 0.8%
10,000,000 Goldman Sachs Group, Inc. (The) (a) ............................... 6.75% 10/01/37 10,956,870
--------------
COMMERCIAL BANKS - 4.7%
2,560,000 Barclays Bank PLC (a) ............................................. 10.18% 06/12/21 3,403,277
1,010,000 BBVA Global Finance Ltd............................................ 7.00% 12/01/25 1,050,159
5,000,000 Credit Agricole SA (c) (d) ........................................ 8.13% 09/19/33 5,317,500
26,000,000 KBC Bank NV (c) ................................................... 8.00% 01/25/23 28,063,100
8,500,000 UBS AG (a) (c) .................................................... 7.25% 02/22/22 9,320,522
10,000,000 Wells Fargo & Co................................................... 5.38% 11/02/43 10,155,290
--------------
57,309,848
--------------
Page 10 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2013
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
------------- ------------------------------------------------------------------- --------- ----------- --------------
CORPORATE BONDS AND NOTES (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES - 1.6%
10,000,000 Credit Suisse Group Guernsey I Ltd. (c) ........................... 7.88% 02/24/41 $ 10,985,500
10,000,000 UBS AG ............................................................ 7.63% 08/17/22 11,419,710
--------------
22,405,210
--------------
INSURANCE - 2.5%
25,500,000 Aquarius + Investments PLC for Swiss Reinsurance
Co. Ltd. (c) ................................................... 8.25% (b) 27,986,250
6,800,000 AXA S.A............................................................ 8.60% 12/15/30 8,294,232
--------------
36,280,482
--------------
TOTAL CORPORATE BONDS AND NOTES ........................................................... 126,952,410
(Cost $88,569,425) --------------
TOTAL INVESTMENTS - 137.4% ................................................................ 1,960,170,626
(Cost $1,989,035,723) (g)
NET OTHER ASSETS AND LIABILITIES - (37.4%) ................................................ (533,006,194)
--------------
NET ASSETS - 100.0% ....................................................................... $1,427,164,432
==============
(a) All or a portion of this security serves as collateral on the outstanding
loan.
(b) Perpetual maturity.
(c) Fixed-to-floating or fixed-to-variable rate security. The interest rate
shown reflects the fixed rate in effect at October 31, 2013. At a
predetermined date, the fixed rate will change to a floating rate or a
variable rate.
(d) 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, 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 Stonebridge Advisors LLC, the Fund's
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 October 31, 2013, securities noted as such
amounted to $556,409,762 or 38.99% of net assets.
(e) Floating rate security. The interest rate shown reflects the rate in
effect at October 31, 2013.
(f) This security is fair valued in accordance with procedures adopted by the
Fund's Board of Trustees and in accordance with provisions of the
Investment Company Act of 1940, as amended.
(g) Aggregate cost for financial reporting purposes is $1,988,746,028, which
approximates the aggregate cost for federal income tax purposes. As of
October 31, 2013, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$20,788,106 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$49,363,508.
See Notes to Financial Statements Page 11
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 2013
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of October 31,
2013 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
10/31/2013 PRICES INPUTS INPUTS
-------------- -------------- -------------- --------------
$20 Par Preferred Securities*................. $ 6,477,258 $ 6,477,258 $ -- $ --
$25 Par Preferred Securities*................. 326,291,559 326,291,559 -- --
$50 Par Preferred Securities*................. 2,556,880 2,556,880 -- --
$100 Par Preferred Securities
Commercial Banks......................... 39,913,368 8,036,800 31,876,568 --
$1,000 Par Preferred Securities
Commercial Banks......................... 20,253,994 10,263,994 9,990,000 --
Diversified Financial Services........... 15,633,750 -- 15,633,750 --
Diversified Telecommunication Services... 19,715,000 -- 19,715,000 --
Real Estate Investment Trusts............ 10,158,192 -- 10,158,192 --
Capital Preferred Securities*................. 1,392,218,215 -- 1,392,218,215 --
Corporate Bonds and Notes*.................... 126,952,410 -- 126,952,410 --
-------------- -------------- -------------- --------------
Total Investments............................. $1,960,170,626 $ 353,626,491 $1,606,544,135 $ --
============== ============== ============== ==============
*See Portfolio of Investments for industry breakout.
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 October 31, 2013.
Page 12 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2013
ASSETS:
Investments, at value
(Cost $1,989,035,723)....................................................................... $1,960,170,626
Cash........................................................................................... 35,141,279
Prepaid expenses............................................................................... 50,665
Receivables:
Interest.................................................................................... 27,382,645
Investment securities sold.................................................................. 1,696,841
Dividends................................................................................... 1,205,968
Tax reclaims................................................................................ 204,042
Other assets................................................................................ 1,466
--------------
Total Assets................................................................................ 2,025,853,532
--------------
LIABILITIES:
Outstanding loan............................................................................... 584,000,000
Payables:
Investment securities purchased............................................................. 12,451,583
Investment advisory fees.................................................................... 1,429,979
Custodian fees.............................................................................. 276,955
Administrative fees......................................................................... 232,152
Printing fees............................................................................... 111,272
Offering costs.............................................................................. 109,603
Audit and tax fees.......................................................................... 33,200
Interest and fees due on loan............................................................... 28,162
Legal fees.................................................................................. 7,640
Transfer agent fees......................................................................... 4,500
Financial reporting fees.................................................................... 4,054
--------------
Total Liabilities........................................................................... 598,689,100
--------------
NET ASSETS..................................................................................... $1,427,164,432
==============
NET ASSETS CONSIST OF:
Paid-in capital................................................................................ $1,447,001,470
Par value...................................................................................... 607,042
Accumulated net investment income (loss)....................................................... 15,554,873
Accumulated net realized gain (loss) on investments............................................ (7,133,856)
Net unrealized appreciation (depreciation) on investments...................................... (28,865,097)
--------------
NET ASSETS..................................................................................... $1,427,164,432
==============
NET ASSET VALUE, per common share (par value $0.01 per common share)........................... $ 23.51
==============
Number of common shares outstanding (unlimited number of common shares has been authorized).... 60,704,189
==============
See Notes to Financial Statements Page 13
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED OCTOBER 31, 2013 (a)
INVESTMENT INCOME:
Interest (net of foreign withholding tax of $303,073).......................................... $ 40,099,640
Dividends...................................................................................... 11,557,464
--------------
Total investment income..................................................................... 51,657,104
--------------
EXPENSES:
Investment advisory fees....................................................................... 6,664,101
Interest and fees on loan...................................................................... 1,721,669
Custodian fees................................................................................. 293,378
Administrative fees............................................................................ 279,688
Printing fees.................................................................................. 113,973
Legal fees..................................................................................... 61,426
Audit and tax fees............................................................................. 33,200
Trustees' fees and expenses.................................................................... 27,477
Listing expense................................................................................ 23,743
Transfer agent fees............................................................................ 12,500
Financial reporting fees....................................................................... 4,054
Other.......................................................................................... 3,175
--------------
Total expenses.............................................................................. 9,238,384
--------------
NET INVESTMENT INCOME (LOSS)................................................................... 42,418,720
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments..................................................... (6,225,537)
Net change in unrealized appreciation (depreciation) on investments......................... (28,865,097)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS)........................................................ (35,090,634)
--------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................ $ 7,328,086
==============
-----------------------------
(a) The Fund was seeded on April 16, 2013 and commenced operations on May 23,
2013.
Page 14 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
STATEMENT OF CHANGES IN NET ASSETS
PERIOD
ENDED
10/31/2013 (a)
--------------
OPERATIONS:
Net investment income (loss)..................................................... $ 42,418,720
Net realized gain (loss)......................................................... (6,225,537)
Net change in unrealized appreciation (depreciation)............................. (28,865,097)
--------------
Net increase (decrease) in net assets resulting from operations.................. 7,328,086
--------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................................................ (27,772,166)
--------------
CAPITAL TRANSACTIONS:
Proceeds from common shares sold................................................. 1,449,312,512
Offering costs................................................................... (1,704,000)
--------------
Net increase (decrease) in net assets resulting from shareholder transactions.... 1,447,608,512
--------------
Total increase (decrease) in net assets.......................................... 1,427,164,432
NET ASSETS:
Beginning of period.............................................................. --
--------------
End of period.................................................................... $1,427,164,432
==============
Accumulated net investment income (loss) at end of period........................ $ 15,554,873
==============
CAPITAL TRANSACTIONS WERE AS FOLLOWS:
Common shares at beginning of period............................................. --
Common shares sold............................................................... 60,704,189
--------------
Common shares at end of period................................................... 60,704,189
==============
-----------------------------
(a) The Fund was seeded on April 16, 2013 and commenced operations on May 23,
2013.
See Notes to Financial Statements Page 15
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED OCTOBER 31, 2013 (a)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations............... $ 7,328,086
Adjustments to reconcile net increase (decrease) in net assets resulting from
operations to net cash used by operating activities:
Purchases of investments................................................. (2,124,605,466)
Sales, maturities and paydowns of investments............................ 140,098,948
Net realized gain/loss on investments.................................... 6,225,537
Net change in unrealized appreciation/depreciation on investments........ 28,865,097
CHANGES IN ASSETS AND LIABILITIES:
Increase in interest receivable.......................................... (27,382,645)
Increase in dividends receivable......................................... (1,205,968)
Increase in tax reclaims receivable...................................... (204,042)
Increase in prepaid expenses............................................. (50,665)
Increase in other assets................................................. (1,466)
Increase in interest and fees on loan payable............................ 28,162
Increase in investment advisory fees payable............................. 1,429,979
Increase in audit and tax fees payable................................... 33,200
Increase in legal fees payable........................................... 7,640
Increase in printing fees payable........................................ 111,272
Increase in administrative fees payable.................................. 232,152
Increase in custodian fees payable....................................... 276,955
Increase in transfer agent fees payable.................................. 4,500
Increase in financial reporting fees payable............................. 4,054
----------------
CASH USED IN OPERATING ACTIVITIES............................................. $ (1,968,804,670)
----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of common shares sold, net of offering costs.................... 1,449,312,512
Offering costs........................................................... (1,594,397)
Issuance of loan......................................................... 584,000,000
Distributions to common shareholders from net investment income.......... (27,772,166)
----------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES.............................. 2,003,945,949
----------------
Increase in cash......................................................... 35,141,279
----------------
Cash at end of period.................................................... $ 35,141,279
================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees........................ $ 1,693,507
================
-----------------------------
(a) The Fund was seeded on April 16, 2013 and commenced operations on May 23,
2013.
Page 16 See Notes to Financial Statements
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD
FOR THE PERIOD
5/23/2013 (a)
THROUGH
10/31/2013
-----------------
Net asset value, beginning of period .............. $ 23.88 (b)
-----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ...................... 0.70
Net realized and unrealized gain (loss) ........... (0.64)
-----------
Total from investment operations .................. 0.06
-----------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income ............................. (0.46)
-----------
Common Shares offering costs charged to
paid-in capital ................................ (0.03)
-----------
Premiums from shares sold in at the market
offerings ...................................... 0.06
-----------
Net asset value, end of period .................... $ 23.51
===========
Market value, end of period ....................... $ 21.01
===========
TOTAL RETURN BASED ON NET ASSET VALUE (c) ......... 0.60%
===========
TOTAL RETURN BASED ON MARKET VALUE (c) ............ (14.13)%
===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .............. $ 1,427,164
Ratio of total expenses to average net assets ..... 1.53% (d)
Ratio of total expenses to average net assets .....
excluding interest expense ..................... 1.24% (d)
Ratio of net investment income (loss) to
average net assets ............................. 7.01% (d)
Portfolio turnover rate ........................... 11%
INDEBTEDNESS: .....................................
Total loan outstanding (in 000's) ................. $ 584,000
Asset coverage per $1,000 of indebtedness (e)...... $ 3,444
(a) The Fund was seeded on April 16, 2013 and commenced operations on May 23,
2013.
(b) Beginning NAV is net of sales load of $1.125 per share from the initial
offering.
(c) 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 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 less than one year. Past performance is not
indicative of future results.
(d) Annualized.
(e) 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)
OCTOBER 31, 2013
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 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 NAV is determined daily as of the close of regular trading on the New
York Stock Exchange ("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 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 in
accordance with valuation procedures adopted by the Fund's Board of Trustees,
and in accordance with provisions of the 1940 Act. Market quotations and prices
used to value the Fund's investments are primarily obtained from third party
pricing services. The Fund's securities will be valued as follows:
Preferred stocks and other equity securities listed on any national or
foreign exchange (excluding the NASDAQ(R) 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 sales 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 valued at the midpoint
between the bid and the asked price, if available, and otherwise at their
closing bid price.
Debt securities having a maturity of sixty days or less when purchased are
valued at cost adjusted for amortization of premiums and accretion of
discounts.
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
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) for which a pricing
service is unable to provide a market
Page 18
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013
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 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. The use of
fair value prices by the Fund generally results in prices used by the Fund that
may differ from current market quotations or official closing prices on the
applicable exchange. 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 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 methodology 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 October 31, 2013, is
included with the Fund's Portfolio of Investments.
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, if any, is
recorded on the accrual basis, including the amortization of premiums and
accretion of discounts.
Page 19
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013
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. 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
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 has 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. Permanent differences
incurred during the period ended October 31, 2013, resulting in book and tax
accounting differences, have been reclassified at year end to reflect an
increase in accumulated net investment income (loss) of $908,319, and a decrease
in accumulated net realized gain (loss) on investments of $908,319. Net assets
were not affected by these reclassifications.
The tax character of distributions paid during the fiscal period ended October
31, 2013 was as follows:
Distributions paid from:
Ordinary income.................................. $ 27,772,166
Capital gain..................................... --
Return of capital................................ --
As of October 31, 2013, the distributable earnings and net assets on a tax basis
were as follows:
Undistributed ordinary income.................... $ 15,265,178
Undistributed capital gains...................... --
--------------
Total undistributed earnings..................... 15,265,178
Accumulated capital and other losses............. (7,133,856)
Net unrealized appreciation (depreciation)....... (28,575,402)
--------------
Total accumulated earnings (losses).............. (20,444,080)
Other............................................ --
Paid in Capital.................................. 1,447,608,512
--------------
Net Assets....................................... $1,427,164,432
==============
D. INCOME TAXES
The Fund intends 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 or 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, 2013, the
Fund had capital loss carryforwards of $7,133,856 for federal income tax
purposes.
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. As of October 31, 2013,
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. Tax year ended 2013 remains open for
audit.
E. EXPENSES
The Fund will pay all expenses directly related to its operations.
Page 20
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013
F. ORGANIZATION AND OFFERING COSTS
Organization costs consisted of costs incurred to establish the Fund and enable
it to legally conduct business. These costs included filing fees, listing fees,
legal services pertaining to the organization of the business and audit fees
relating to the initial registration and auditing the initial statement of
assets and liabilities, among other fees. Offering costs consisted of legal fees
pertaining to the Fund's shares offered for sale, registration fees,
underwriting fees, and printing of the initial prospectus, among other fees.
First Trust paid all organization expenses. The Fund's Common Share offering
costs of $1,704,000 were recorded as a reduction of the proceeds from sales from
the sale of Common Shares during the period ended October 31, 2013.
G. ACCOUNTING PRONOUNCEMENT
In December 2011, the Financial Accounting Standards Board ("FASB") issued an
Accounting Standards Update No. 2011-11: "Disclosures about Offsetting Assets
and Liabilities" ("ASU 2011-11"). This disclosure requirement is intended to
help investors and other financial statement users better assess the effect or
potential effect of offsetting arrangements on a fund's financial position. ASU
2011-11 requires entities to disclose both gross and net information about both
instruments and transactions eligible for offset on the Statements of Assets and
Liabilities, and disclose instruments and transactions subject to master netting
or similar agreements. In addition, in January 2013, FASB issued Accounting
Standards Update No. 2013-1 "Clarifying the Scope of Offsetting Assets and
Liabilities" ("ASU 2013-1"), specifying which transactions are subject to
offsetting disclosures. The scope of the disclosure requirements is limited to
derivative instruments, repurchase agreements, and reverse repurchase
agreements, and securities borrowing and securities lending transactions. ASU
2011-11 and ASU 2013-1 are effective for financial statements with fiscal years
beginning on or after January 1, 2013, and interim periods within those fiscal
years. There was no material impact on the current financial statements as a
result of these new standards.
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 selection and ongoing monitoring of the securities
in the Fund's portfolio, managing the Fund's business affairs and providing
certain administrative services necessary for the management of the Fund. For
these 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 Advisors LLC ("Stonebridge" or the "Sub-Advisor"), 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 serves as the Fund's transfer agent in accordance with certain fee
arrangements. As transfer agent, Computershare 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 of $125,000 per year and an annual per fund fee of $4,000 for each
closed-end fund or other actively managed fund and $1,000 for each index fund in
the First Trust Fund Complex. The fixed annual retainer is allocated pro rata
among each fund in the First Trust Fund Complex based on net assets.
Additionally, the Lead Independent Trustee is paid $15,000 annually, the
Chairman of the Audit Committee is paid $10,000 annually, and each of the
Chairmen of the Nominating and Governance Committee and the Valuation Committee
is paid $5,000 annually to serve in such capacities, with such compensation
allocated pro rata among each fund in the First Trust Fund Complex based on net
assets. Trustees are reimbursed for travel and out-of-pocket expenses in
connection with all meetings. The Lead Independent Trustee and each Committee
Chairman will serve two-year terms until December 31, 2013, before rotating to
serve as Chairman of another Committee or as Lead Independent Trustee. After
December 31, 2013, the Lead Independent Trustee and Committee Chairmen will
rotate every three years. The officers and the "Interested" Trustee receive no
compensation from the Fund for acting in such capacities.
4. PURCHASES AND SALES OF SECURITIES
For the period ended October 31, 2013, the cost of purchases and proceeds from
sales of investment securities, excluding short-term investments, for the Fund
was $2,137,057,049 and $141,795,789, respectively.
Page 21
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013
5. BORROWINGS
On June 4, 2013, the Fund entered into a committed facility agreement with Bank
of America Merrill Lynch that has a maximum commitment amount of $725,000,000.
The borrowing rate under the facility is equal to the 1-month LIBOR plus 70
basis points. In addition, under the facility, the Fund pays a commitment fee of
0.25% on the undrawn amount of such facility on any day that the loan balance is
less than 20% of the total commitment amount. The average amount outstanding
between June 4, 2013 and October 31, 2013, was $444,426,667 with a weighted
average interest rate of 0.84%. As of October 31, 2013, the Fund had outstanding
borrowings of $584,000,000 under this committed facility agreement. The high and
low annual interest rates for the period ended October 31, 2013, were 0.90% and
0.87%, respectively. The interest rate at October 31, 2013, was 0.87%.
6. 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.
7. 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
were the following subsequent events:
On November 20, 2013, the Fund declared a dividend of $0.1525 per share to
Common Shareholders of record on December 4, 2013, payable December 10, 2013.
On December 17, 2013, the Fund declared a dividend of $0.1525 per share with an
additional special distribution of $0.0763 per share to Common Shareholders of
record on December 31, 2013, payable on January 15, 2014.
Page 22
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FIRST TRUST INTERMEDIATE DURATION
PREFERRED & INCOME FUND:
We have audited the accompanying statement of assets and liabilities of First
Trust Intermediate Duration Preferred & Income Fund (the "Fund"), including the
portfolio of investments, as of October 31, 2013, and the related statements of
operations, cash flows, and changes in net assets, and the financial highlights
for the period presented. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of October 31, 2013 by correspondence with the Fund's
custodian and brokers; where replies were not received, we performed other
auditing procedures. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
First Trust Intermediate Duration Preferred & Income Fund as of October 31,
2013, and the results of its operations, its cash flows, changes in its net
assets, and the financial highlights for the period presented, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
Chicago, Illinois
December 20, 2013
Page 23
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013 (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
Computershare Inc., 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 30170, College Station, TX 77842-3170.
--------------------------------------------------------------------------------
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.
Page 24
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013 (UNAUDITED)
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.
FEDERAL TAX INFORMATION
For the taxable year ended October 31, 2013, the following percentages of income
dividends paid by the Fund qualify for the dividends received deduction
available to corporations:
Dividends Received Deduction
------------------------------
63.45%
For the taxable year ended October 31, 2013, the following percentage of income
dividends paid by the Fund is hereby designated as qualified divided income:
Qualified Dividend Income
-----------------------------
65.15%
BOARD CONSIDERATIONS REGARDING APPROVAL OF
INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
The Board of Trustees of First Trust Intermediate Duration & Preferred Income
Fund (the "Fund"), including the Independent Trustees, unanimously approved the
Investment Management Agreement (the "Advisory Agreement") between the Fund and
First Trust Advisors L.P. (the "Advisor") and the Investment Sub-Advisory
Agreement (the "Sub-Advisory Agreement" and together with the Advisory
Agreement, the "Agreements") among the Fund, the Advisor and Stonebridge
Advisors LLC (the "Sub-Advisor"), at a meeting held on March 10-11, 2013. The
Board of Trustees determined that the Agreements are in the best interests of
the Fund in light of the extent and quality of the services expected to be
provided and such other matters as the Board considered to be relevant in the
exercise of its reasonable business judgment.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. To assist the Board in its evaluation of the Agreements, the
Independent Trustees received a separate report from each of the Advisor and the
Sub-Advisor in advance of the Board meeting that, among other things, outlined
the services to be provided by the Advisor and the Sub-Advisor (including the
relevant personnel responsible for these services and their experience); the
proposed advisory fee and sub-advisory fee for the Fund as compared to fees
charged by investment advisors and sub-advisors to comparable funds and as
compared to fees charged to other clients of the Advisor and the Sub-Advisor;
estimated expenses of the Fund as compared to expense ratios of comparable
funds; the nature of expenses to be incurred in providing services to the Fund
and the potential for economies of scale, if any; financial data on the Advisor
and the Sub-Advisor; any fall-out benefits to the Advisor and the Sub-Advisor;
and information on the Advisor's and the Sub-Advisor's compliance programs. The
Independent Trustees also met separately with their independent legal counsel to
discuss the information provided by the Advisor and the Sub-Advisor. The Board
applied its business judgment to determine whether the arrangements between the
Fund and the Advisor and among the Fund, the Advisor and the Sub-Advisor are
reasonable business arrangements from the Fund's perspective as well as from the
perspective of shareholders.
In reviewing the Agreements, the Board considered the nature, extent and quality
of services to be provided by the Advisor and the Sub-Advisor under the
Agreements, and noted that employees of the Advisor provide management services
to other investment companies in the First Trust fund complex with diligence and
care. With respect to the Advisory Agreement, the Board considered that the
Advisor will be responsible for the overall management and administration of the
Fund and reviewed the services to be provided by the Advisor to the Fund,
including the oversight of the Sub-Advisor. The Board noted the compliance
program that had been developed by the Advisor and considered that it includes a
robust program for monitoring the Sub-Advisor's compliance with the 1940 Act and
the Fund's investment objectives and policies. The Board noted the efforts
expended by the Advisor in organizing the Fund and making arrangements for
entities to provide services to the Fund. With respect to the Sub-Advisory
Agreement, the Board noted the background and experience of the Sub-Advisor's
portfolio management team and the Sub-Advisor's investment style. The Board
considered its familiarity with the Sub-Advisor, which sub-advises the First
Trust Preferred Securities and Income Fund (the "Open-End Fund"), an open-end
fund, and the First Trust Preferred Securities and Income ETF (the "ETF"), an
actively managed exchange-traded fund, for both of which the Advisor serves as
investment manager. At the meeting, the Trustees received a presentation from
one of the portfolio managers, and were able to ask
Page 25
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013 (UNAUDITED)
questions about the Sub-Advisor's proposed investment strategies for the Fund.
In light of the information presented and the considerations made, the Board
concluded that the nature, extent and quality of services to be provided to the
Fund by the Advisor and the Sub-Advisor under the Agreements are expected to be
satisfactory.
The Board considered the advisory and sub-advisory fees to be paid under the
Agreements. The Board reviewed data prepared by Lipper Inc. ("Lipper"), an
independent source, showing the proposed advisory fee and the estimated expense
ratio assuming an asset level for the Fund as compared to the advisory fees and
expense ratios of a peer group of other leveraged closed-end funds selected by
Lipper. The Board noted that the Fund's proposed contractual advisory fee was
higher than the median of the Lipper peer group. The Board also reviewed data
prepared by the Advisor showing the Fund's proposed advisory fee as compared to
an additional group of peer funds provided by the Advisor. The Board considered
the proposed sub-advisory fee rate and how it would relate to the overall
management fee structure of the Fund, noting that the fees to be paid to the
Sub-Advisor would be paid by the Advisor from its advisory fee. The Board
considered the Advisor's statement that it does not provide investment advisory
services to other clients that have similar investment objectives and policies
as the Fund, except for the Open-End Fund and the ETF. The Board noted that the
Open-End Fund pays a slightly lower advisory fee and the ETF pays a unitary fee.
The Board also considered information provided by the Sub-Advisor as to the fees
it charges to other similar clients, noting that the Sub-Advisor's sub-advisory
fee for the Fund was equal to or slightly higher than the fees the Sub-Advisor
charges to other similar clients, including the Open-End Fund and the ETF. Since
the Fund is newly organized, the Board could not consider investment performance
of the Fund. The Board did review performance information for the Sub-Advisor's
Standard Taxable Preferreds Composite, which the Sub-Advisor stated was managed
similarly to the proposed strategy for the Fund. On the basis of all the
information provided on the fees and estimated expenses of the Fund, the Board
concluded that the advisory and sub-advisory fees were reasonable and
appropriate in light of the nature, extent and quality of services expected to
be provided by the Advisor and the Sub-Advisor under the Agreements.
The Board considered the Advisor's representation that the proposed advisory fee
was not structured to pass the benefits of any economies of scale on to
shareholders. The Board noted that the Advisor has continued to invest in
personnel and infrastructure for the First Trust fund complex and indicated
that, because the Fund is a closed-end fund, the Advisor believed that any
discussion of economies of scale was not material to a discussion of the
advisory fee structure. The Board took the costs to be borne by the Advisor in
connection with its services to be performed under the Advisory Agreement into
consideration and noted that the Advisor was unable to estimate the
profitability of the Advisory Agreement to the Advisor. The Board noted that the
Sub-Advisor commented on its estimated profitability under the Sub-Advisory
Agreement in its written response to the Board and noted the Sub-Advisor's
statement that because it will need to borrow to cover its portion of the
structuring fee payable to the Fund's underwriters, the Sub-Advisor did not
expect to earn a profit under the Sub-Advisory Agreement for up to two years.
The Board noted that the Sub-Advisor is an affiliate of the Advisor and that it
was expected that the Advisor would finance the Sub-Advisor's payment of its
portion of the underwriters' structuring fee. The Board considered fall-out
benefits described by the Advisor that may be realized from its relationship
with the Fund, including the Advisor's compensation for fund reporting services
to be provided pursuant to a separate Fund Reporting Services Agreement. The
Board considered the fall-out benefits described by the Sub-Advisor that may be
realized from its relationship with the Fund. The Board noted that neither the
Advisor nor the Sub-Advisor maintained any soft-dollar arrangements.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, unanimously determined that the terms
of the Agreements are fair and reasonable and that the approval of the
Agreements is in the best interests of the Fund. No single factor was
determinative in the Board's analysis.
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.
PAGE 26
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ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013 (UNAUDITED)
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, 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 financials 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.
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: 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 27
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BOARD OF TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013 (UNAUDITED)
The Fund's statement of additional information includes additional information
about the Trustees and is available, without charge, upon request, by calling
(800) 988-5891.
NUMBER OF OTHER
PORTFOLIOS IN TRUSTEESHIPS OR
THE FIRST TRUST DIRECTORSHIPS
NAME, ADDRESS, TERM OF OFFICE FUND COMPLEX HELD BY TRUSTEE
DATE OF BIRTH AND AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY DURING PAST
POSITION WITH THE FUND SERVICE(2) DURING PAST 5 YEARS TRUSTEE 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson, Trustee o Three Year Term Physician; President, Wheaton Orthopedics; 105 None
c/o First Trust Advisors L.P. Limited Partner, Gundersen Real
120 East Liberty Drive, o Since Fund Estate Limited Partnership; Member,
Suite 400 Inception Sportsmed LLC
Wheaton, IL 60187
D.O.B.: 04/51
Thomas R. Kadlec, Trustee o Three Year Term President (March 2010 to Present), Senior 105 Director of ADM
c/o First Trust Advisors L.P. Vice President and Chief Financial Officer Investor Services,
120 East Liberty Drive, o Since Fund (May 2007 to March 2010), Inc. and ADM
Suite 400 Inception ADM Investor Services, Inc. Investor Services
Wheaton, IL 60187 (Futures Commission Merchant) International
D.O.B.: 11/57
Robert F. Keith, Trustee o Three Year Term President (2003 to Present), Hibs 105 Director of
c/o First Trust Advisors L.P. Enterprises (Financial and Management Trust Company
120 East Liberty Drive, o Since Fund Consulting) of Illinois
Suite 400 Inception
Wheaton, IL 60187
D.O.B.: 11/56
Niel B. Nielson, Trustee o Three Year Term President and Chief Executive Officer (June 105 Director of
c/o First Trust Advisors L.P. 2013 to Present), Dew Learning LLC Covenant
120 East Liberty Drive, o Since Fund (Educational Products and Services), President Transport Inc.
Suite 400 Inception (June 2002 to June 2013), Covenant College
Wheaton, IL 60187
D.O.B.: 03/54
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
James A. Bowen(1), Trustee and o Three Year Term Chief Executive Officer (December 2010 105 None
Chairman of the Board to Present), President (until December
120 East Liberty Drive, o Since Fund 2010), First Trust Advisors L.P. and First
Suite 400 Inception Trust Portfolios L.P.; Chairman of the
Wheaton, IL 60187 Board of Directors, BondWave LLC
D.O.B.: 09/55 (Software Development Company/
Investment Advisor) and Stonebridge
Advisors LLC (Investment Advisor)
-----------------------------
(1) Mr. Bowen is deemed an "interested person" of the Fund due to his position
as CEO of First Trust Advisors L.P., investment advisor of the Fund.
(2) Currently, Robert F. Keith, as a Class I Trustee, is serving as a trustee
until the Fund's 2014 annual meeting of shareholders. Richard E. Erickson
and Thomas R. Kadlec, as Class II Trustees, are serving as trustees until
the Fund's 2015 annual meeting of shareholders. James A. Bowen and Niel B.
Nielson, as Class III Trustees, are serving as trustees until the Fund's
2016 annual meeting of shareholders.
Page 28
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BOARD OF TRUSTEES AND OFFICERS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013 (UNAUDITED)
NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS(3)
------------------------------------------------------------------------------------------------------------------------------------
Mark R. Bradley President and Chief o Indefinite Term Chief Operating Officer (December 2010 to Present)
120 East Liberty Drive, Executive Officer and Chief Financial Officer, First Trust Advisors
Suite 400 o Since Fund Inception L.P. and First Trust Portfolios L.P.; Chief Financial
Wheaton, IL 60187 Officer, BondWave LLC (Software Development
D.O.B.: 11/57 Company/Investment Advisor) and Stonebridge
Advisors LLC (Investment Advisor)
James M. Dykas Treasurer, Chief Financial o Indefinite Term Controller (January 2011 to Present),
120 East Liberty Drive, Officer and Chief Senior Vice President (April 2007 to
Suite 400 Accounting Officer o Since Fund Inception January 2011), First Trust Advisors L.P.
Wheaton, IL 60187 and First Trust Portfolios L.P.
D.O.B.: 01/66
W. Scott Jardine Secretary and Chief o Indefinite Term General Counsel, First Trust Advisors L.P., First
120 East Liberty Drive, Legal Officer Trust Portfolios L.P. and BondWave LLC
Suite 400 o Since Fund Inception (Software Development Company/Investment
Wheaton, IL 60187 Advisor); Secretary of Stonebridge Advisors LLC
D.O.B.: 05/60 (Investment Advisor)
Daniel J. Lindquist Vice President o Indefinite Term Managing Director (July 2012 to Present), Senior
120 East Liberty Drive, Vice President (September 2005 to July 2012),
Suite 400 o Since Fund Inception First Trust Advisors L.P. and First Trust Portfolios
Wheaton, IL 60187 L.P.
D.O.B.: 02/70
Kristi A. Maher Chief Compliance Officer o Indefinite Term Deputy General Counsel,
120 East Liberty Drive, and Assistant Secretary First Trust Advisors L.P. and
Suite 400 o Since Fund Inception First Trust Portfolios L.P.
Wheaton, IL 60187
D.O.B.: 12/66
-----------------------------
(3) Officers of the Fund have an indefinite term. The term "officer" means the
president, vice president, secretary, treasurer, controller or any other
officer who performs a policy making function.
Page 29
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PRIVACY POLICY
--------------------------------------------------------------------------------
FIRST TRUST INTERMEDIATE DURATION PREFERRED & INCOME FUND (FPF)
OCTOBER 31, 2013
PRIVACY POLICY
First Trust values our relationship with you and considers your privacy an
important priority in maintaining that relationship. We are committed to
protecting the security and confidentiality of your personal information.
SOURCES OF INFORMATION
We collect nonpublic personal information about you from the following sources:
o Information we receive from you and your broker-dealer, investment
advisor or financial representative through interviews,
applications, agreements or other forms;
o Information about your transactions with us, our affiliates or
others;
o Information we receive from your inquiries by mail, e-mail or
telephone; and
o Information we collect on our website through the use of "cookies".
For example, we may identify the pages on our website that your
browser requests or visits.
INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. In addition to using
this information to verify your identity (as required under law), the permitted
uses may also include the disclosure of such information to unaffiliated
companies for the following reasons:
o In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your
personal information as described above to unaffiliated financial
service providers and other companies that perform administrative or
other services on our behalf, such as transfer agents, custodians
and trustees, or that assist us in the distribution of investor
materials such as trustees, banks, financial representatives, proxy
services, solicitors and printers.
o We may release information we have about you if you direct us to do
so, if we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).
In addition, in order to alert you to our other financial products and services,
we may share your personal information within First Trust.
PRIVACY ONLINE
We allow third-party companies, including AddThis (a social media sharing
service), to collect certain anonymous information when you visit our website.
These companies may use non-personally identifiable information during your
visits to this and other websites in order to provide advertisements about goods
and services likely to be of greater interest to you. These companies typically
use a cookie, third party web beacon or pixel tags, to collect this information.
To learn more about this behavioral advertising practice, you can visit
www.networkadvertising.org.
CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, First Trust restricts access to
your nonpublic personal information to those First Trust employees who need to
know that information to provide products or services to you. We maintain
physical, electronic and procedural safeguards to protect your nonpublic
personal information.
POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time, however, if we do change
it, we will tell you promptly. For questions about our policy, or for additional
copies of this notice, please go to www.ftportfolios.com, or contact us at
1-800-621-1675 (First Trust Portfolios) or 1-800-222-6822 (First Trust
Advisors).
PAGE 30
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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
187 Danbury Road
Wilton, CT 06897
ADMINISTRATOR,
FUND ACCOUNTANT &
CUSTODIAN
Brown Brothers Harriman & Co.
50 Milk Street
Boston, MA 02109
TRANSFER AGENT
Computershare Inc.
P.O. Box 30170
College Station, TX 77842-3170
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.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by
the registrant or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, and
that relates to any element of the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, that
relates to one or more of the items set forth in paragraph (b) of
this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the Registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each of them is "independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees (Registrant) -- The aggregate fees billed for the last
fiscal year for professional services rendered by the principal
accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements
for those fiscal years were $47,250 for the fiscal year ended
beginning from Registrant's inception on May 23, 2013 through
October 31, 2013.
(b) Audit-Related Fees (Registrant) -- The aggregate fees billed in the
last fiscal year for assurance and related services by the principal
accountant that are reasonably related to the performance of the
audit of the registrant's financial statements and are not reported
under paragraph (a) of this Item were $0 for the fiscal year ended
beginning from Registrant's inception on May 23, 2013 through
October 31, 2013.
Audit-Related Fees (Investment Advisor) -- The aggregate fees billed in
the last fiscal year for assurance and related services by the principal
accountant that are reasonably related to the performance of the audit of
the registrant's financial statements and are not reported under paragraph
(a) of this Item were $7,000 for the fiscal year ended beginning from
Registrant's inception on May 23, 2013 through October 31, 2013.
(c) Tax Fees (Registrant) -- The aggregate fees billed in the last
fiscal year for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning were $0
for the fiscal year ended beginning from Registrant's inception on
May 23, 2013 through October 31, 2013.
Tax Fees (Investment Advisor) -- The aggregate fees billed in the last
fiscal year for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning were $0 for the fiscal
year ended beginning from Registrant's inception on May 23, 2013 through
October 31, 2013.
(d) All Other Fees (Registrant) -- The aggregate fees billed in the last
fiscal year for products and services provided by the principal
accountant to the Registrant, other than the services reported in
paragraphs (a) through (c) of this Item were $0 for the fiscal year
ended beginning from Registrant's inception on May 23, 2013 through
October 31, 2013.
All Other Fees (Investment Adviser) The aggregate fees billed in the last
fiscal year for products and services provided by the principal accountant
to the Registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for the fiscal year ended beginning from
Registrant's inception on May 23, 2013 through October 31, 2013.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval
Policy, the Audit Committee (the "Committee") is responsible for the
pre-approval of all audit services and permitted non-audit services (including
the fees and terms thereof) to be performed for the registrant by its
independent auditors. The Chairman of the Committee is authorized to give such
pre-approvals on behalf of the Committee up to $25,000 and report any such
pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent
auditor's engagements for non-audit services with the registrant's adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted or overseen by another investment adviser) and any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the registrant, if the engagement relates
directly to the operations and financial reporting of the registrant, subject to
the de minimis exceptions for non-audit services described in Rule 2-01 of
Regulation S-X. If the independent auditor has provided non-audit services to
the registrant's adviser (other than any sub-adviser whose role is primarily
portfolio management and is sub-contracted with or overseen by another
investment adviser) and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to its policies, the Committee
will consider whether the provision of such non-audit services is compatible
with the auditor's independence.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) for the Registrant and the Registrant's investment
adviser of this Item that were approved by the audit committee
pursuant to the pre-approval exceptions included in paragraph
(c)(7)(i)(c) or paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X
are as follows:
(b) 0%
(c) 0%
(d) 0%
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the
most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent
employees was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the
registrant's investment adviser (not including any sub-adviser whose
role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling,
controlled by, or under common control with the adviser that
provides ongoing services to the registrant for the Registrant's
fiscal year beginning from Registrant's inception on May 23, 2013
through October 31, 2013, were $0 for the Registrant and $0 for the
Registrant's investment adviser.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and
any entity controlling, controlled by, or under common control with
the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The Registrant has a separately designated audit committee
consisting of all the independent directors of the Registrant. The
members of the audit committee are: Thomas R. Kadlec, Niel B.
Nielson, Richard E. Erickson and Robert F. Keith.
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.
The Proxy Voting Policies are attached herewith.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a)(1) IDENTIFICATION OF PORTFOLIO MANAGERS OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGERS OR MANAGEMENT TEAM MEMBERS
Information provided as of January 5, 2014.
Stonebridge Advisors LLC is a registered investment advisor based in Wilton,
Connecticut. Stonebridge specializes in the management of preferred securities
and North American equity income securities.
Scott T. Fleming, President and CIO of Stonebridge Advisors LLC
Prior to founding Stonebridge, Mr. Fleming co-founded Spectrum Asset Management,
Inc., an investment advisor that specializes in preferred securities asset
management for institutional clients and mutual funds. During his 13-year tenure
there, he served as Chairman of the Board of Directors, Chief Financial Officer
and Chief Investment Officer. Under his leadership, Spectrum grew to be the
largest preferred securities manager in the country.
As Chief Investment Officer at Spectrum, Mr. Fleming established and implemented
custom investment strategies for the firm's clients. In this capacity he was
instrumental in growing assets under management to over $2 billion by
consistently outperforming stated benchmarks by solid margins. Mr. Fleming
previously served as Vice President, Portfolio Manager for DBL Preferred
Management, Inc. in New York City. There he managed over $300 million of
institutional assets with a strategy specializing in preferred securities. Mr.
Fleming received a BS in Accounting from Bentley College in Waltham, MA and his
MBA in Finance from Babson College in Wellesley, MA.
Robert Wolf, Vice President, Portfolio Manager and Senior Credit Analyst
Mr. Wolf brings 14 years of fixed-income experience to Stonebridge in both
portfolio management and credit research. Prior to joining Stonebridge in 2006,
Mr. Wolf was a high-yield fixed-income research analyst at Lehman Brothers. In
this role, his responsibilities included detailed credit analysis across
multiple sectors, relative value analysis, and developing trade recommendations
for Lehman's High-Yield proprietary trading effort. Mr. Wolf previously worked
for Lehman Brothers Commercial Mortgage-Backed Securities (CMBS) trading desk as
a credit analyst where he provided in-depth analysis of CMBS transactions and
the underlying Commercial Real Estate.
Mr. Wolf received his B.S. degree in Chemistry from Villanova University in 1999
and his MBA in Finance from the New York University Stern School of Business in
2004.
Danielle Salters, CFA, Credit Analyst
Ms. Salters has six years of investment management experience of which five
years have been focused on fixed-income. Previous functions have included
fundamental credit research, relative value analysis and trading. Prior to
beginning at Stonebridge, Ms. Salters was Portfolio Analyst at a boutique asset
manager where she focused on high-yield credit analysis and portfolio analytics
for a hedge fund and institutional client.
Previously, Ms. Salters was employed by UBS Financial Services, Inc., where she
worked in Taxable Fixed-Income Sales and, later, served as the Fixed-Income
Specialist to a Portfolio Manager. Ms. Salters received her A.B. in economics
from Duke University in 2007.
(a)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGERS OR MANAGEMENT TEAM MEMBER
AND POTENTIAL CONFLICTS OF INTEREST
Information provided as of October 31, 2013.
# of Accounts Total Assets
Total Managed for which for which
Advisory Fee is Advisory Fee
Name of Portfolio Manager or # of Accounts Based on is Based on
Team Member Type of Accounts* Managed Total Assets Performance Performance
----------------------------- ---------------------------------- ------------- ------------ ----------------- --------------
1. Scott T. Fleming Registered Investment Companies 2 $272.68M 0 0
Other Pooled Investment Vehicles 1509 $336.87M 0 0
Other Accounts 1832 $990.97M 0 0
2. Danielle Salters, CFA Registered Investment Companies 2 $272.68M 0 0
Other Pooled Investment Vehicles 1509 $336.87M 0 0
Other Accounts 1832 $990.97M 0 0
3. Robert Wolf Registered Investment Companies 2 $272.68M 0 0
Other Pooled Investment Vehicles 1509 $336.87M 0 0
Other Accounts 1832 $990.97M 0 0
PORTFOLIO MANAGER POTENTIAL CONFLICTS OF INTERESTS
Potential conflicts of interest may arise when a fund's portfolio manager has
day-to-day management responsibilities with respect to one or more other funds
or other accounts, as is the case for the portfolio managers of the Fund. These
potential conflicts may include:
Stonebridge Advisors LLC's ("Stonebridge") Preferred Securities investment style
is consistent across all of its managed accounts. Stonebridge is not aware of
any material conflicts of interest between its separately managed accounts and
the Fund. In the case where Stonebridge does block trades that involve the Fund
and other accounts, Stonebridge follows its trade allocation policy and handles
the trade in a fair and equitable manner.
(a)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGERS OR MANAGEMENT TEAM MEMBERS
PORTFOLIO MANAGER COMPENSATION
Information provided as of October 31, 2013.
Annual salary plus mid-year and year-end discretionary bonus based on
performance of individual, firm as a
whole, company profitability, and asset growth.
(a)(4) DISCLOSURE OF SECURITIES OWNERSHIP
Information provided as of October 31, 2012.
Dollar Range of Fund Shares
Name Beneficially Owned
Scott T. Fleming $0
Danielle Salters, CFA $0
Robert Wolf $0
(b) Not applicable.
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.
At the registrant's organizational meeting the registrant's Board of Trustees
adopted a Nominating and Governance Committee Charter which includes procedures
by which shareholders may recommend nominees to the registrant's board of
trustees as described below:
When a vacancy on the Board of Trustees of a First Trust Fund occurs and
nominations are sought to fill such vacancy, the Nominating and Governance
Committee may seek nominations from those sources it deems appropriate in
its discretion, including shareholders of the Fund. A shareholder may
recommend a person for nomination as a candidate at any time. If a
recommendation is received with satisfactorily completed information (as
set forth below) regarding a candidate during a time when a vacancy exists
on the Board or during such other time as the Committee is accepting
recommendations, the recommendation will be forwarded to the Chair of the
Committee and the outside counsel to the independent trustees.
Recommendations received at any other time will be kept on file until such
time as the Committee is accepting recommendations, at which point they
may be considered for nomination.
To submit a recommendation for nomination as a candidate for a position on
the Board of Trustees, shareholders of the Fund shall mail such
recommendation to W. Scott Jardine, Secretary, at the Fund's address, 120
East Liberty Drive, Suite 400, Wheaton, Illinois 60187. Such
recommendation shall include the following information: (i) a statement in
writing setting forth (A) the name, age, date of birth, business address,
residence address and nationality of the person or persons to be
nominated; (B) the class or series and number of all shares of the
Registrant owned of record or beneficially by each such person or persons,
as reported to such shareholder by such nominee(s); (C) any other
information regarding each such person required by paragraphs (a), (d),
(e) and (f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of
Rule 14a-101 (Schedule 14A) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (or any successor provision thereto); (D) any
other information regarding the person or persons to be nominated that
would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitation of proxies for
election of trustees or directors pursuant to Section 14 of the Exchange
Act and the rules and regulations promulgated thereunder; and (E) whether
such shareholder believes any nominee is or will be an "interested person"
of the Registrant (as defined in the Investment Company Act of 1940) and,
if not an "interested person," information regarding each nominee that
will be sufficient for the Registrant to make such determination; and (ii)
the written and signed consent of any person to be nominated to be named
as a nominee and to serve as a trustee if elected. In addition, the
trustees may require any proposed nominee to furnish such other
information as they may reasonably require or deem necessary to determine
the eligibility of such proposed nominee to serve as a trustee. The
Committee will not consider new trustee candidates who are 72 years of age
or older.
A copy of the Nominating and Governance Committee Charter is available on the
Registrant's website at www.ftportfolios.com.
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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(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/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date: December 20, 2013
---------------------
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/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date: December 20, 2013
---------------------
By (Signature and Title)* /s/ Mark R. Bradley
----------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: December 20, 2013
---------------------
* Print the name and title of each signing officer under his or her signature.