First Trust Intermediate Duration Preferred & Income Fund

08/07/2024 | Press release | Distributed by Public on 08/07/2024 14:49

Semi Annual Report by Investment Company Form N CSRS

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 number811-22795

First Trust Intermediate Duration Preferred & Income Fund
(Exact name of registrant as specified in charter)

120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(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
(Name and address of agent for service)

Registrant's telephone number, including area code: 630-765-8000

Date of fiscal year end: October 31

Date of reporting period: April 30, 2024

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. § 3507.

Item 1. Reports to Stockholders.

(a) The Report to Shareholders is attached herewith.
First Trust
Intermediate Duration Preferred & Income Fund (FPF)
Semi-Annual Report
For the Six Months Ended
April 30, 2024
Table of Contents
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Semi-Annual Report
April 30, 2024
Shareholder Letter
1
At a Glance
2
Portfolio Commentary
4
Portfolio of Investments
7
Statement of Assets and Liabilities
15
Statement of Operations
16
Statements of Changes in Net Assets
17
Statement of Cash Flows
18
Financial Highlights
19
Notes to Financial Statements
20
Additional Information
26
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 respective representatives only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events and circumstances that arise after the date hereof.
Performance and Risk Disclosure
There is no assurance that the Fund will achieve its investment objectives. The Fund is subject to market risk, which is the possibility that the market values of securities owned by the Fund will decline and that the value of the Fund's shares may therefore be less than what you paid for them. Accordingly, you can lose money by investing in the Fund. See "Principal Risks" 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 www.ftportfolios.comor speak with your financial advisor. Investment returns, net asset value and common share price will fluctuate and Fund shares, when sold, may be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund performance on the Fund's web page at www.ftportfolios.com.
How to Read This Report
This report contains information that may help you evaluate your investment in the Fund. It includes details about the Fund and presents data and analysis that provide insight into the Fund's performance and investment approach.
By reading the portfolio commentary by the portfolio management team of the Fund, you may obtain an understanding of how the market environment affected the Fund's performance. The statistical information that follows may help you understand the Fund's performance compared to that of relevant market benchmarks.
It is important to keep in mind that the opinions expressed by personnel of First Trust and 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 material risks of investing in the Fund are spelled out in the prospectus, the statement of additional information, this report and other Fund regulatory filings.
Shareholder Letter
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Semi-Annual Letter from the Chairman and CEO
April 30, 2024
Dear Shareholders,
First Trust is pleased to provide you with the semi-annual report for the First Trust Intermediate Duration Preferred & Income Fund (the "Fund"), which contains detailed information about the Fund for the six months ended April 30, 2024.
On March 16, 2022, the Federal Reserve (the "Fed") initiated the first of what have been eleven increases to the Federal Funds target rate thus far in the current cycle. Given its potential impact, financial pundits have been debating the direction and timing of the Fed's interest rate policy ever since. In December 2023, the Fed gave some guidance, announcing that it expected to implement up to three interest rate cuts totaling 75 basis points ("bps") in 2024. Investors responded to the news with exuberance. In the U.S., the S&P 500® Index surged by 10.56% on a total return basis in the first quarter of 2024, adding to its already stunning 26.29% total return in 2023. For comparison, the yield on the 10-Year Treasury Note ("T-Note") stood at 3.80% on December 27, 2023, down a stunning 119 bps from its most recent high of 4.99% set just months prior on October 19, 2023. Bond yields generally move in the opposite direction of prices. Given this relationship, the decline in the 10-Year T-Note's yield is indicative of investor's desire to lock in higher income payments prior to the Fed reducing its policy rate.
At this point, it makes sense to step back and highlight several ways the Fed's interest rate policy has impacted the U.S. economy. We'll start with the good news. On April 30, 2024, inflation, as measured by the trailing 12-month rate on the Consumer Price Index, stood at 3.4%, down significantly from its most recent peak of 9.1% set in June 2022. Additionally, the higher Federal Funds target rate has been a boon for those investors with assets in fixed income, money market, and other interest-bearing accounts. The total value of assets held in U.S. money market accounts stood at $6.0 trillion on May 1, 2024, nearly double where it stood just five years ago. Notably, the weekly yield on the benchmark U.S. Treasury 3-Month Money Market Index more than doubled from 2.40% to 5.32% between the end of April 2019 and April 2024.
Now for the not-so-good news. Higher interest rates often restrict the ability of consumers and businesses to spend and finance growth, respectively. While the consumer has remained relatively unscathed thus far, evidence that they are stretching their budgets is mounting. The Federal Reserve Bank of New York reported that the total balance of U.S. credit card debt stood at a record $1.13 trillion at the end of 2023, while the average annual percentage rate for all cards rose to a record 21.59% in the first quarter of 2024. Perhaps unsurprisingly, delinquency rates have been surging. Data from the Federal Reserve Bank of St. Louis revealed that the delinquency rate on credit card loans for all U.S. commercial banks rose to 3.10% in the fourth quarter of 2023, up from 2.62% in the fourth quarter of 2019 (pre-COVID-19). In April 2024, 43% of small and mid-sized U.S. businesses were unable to pay their rent on time and in full. In addition, higher interest rates are impacting economic growth. In the U.S., real gross domestic product growth was a tepid 1.6% in the first quarter of 2024, far below consensus expectations of 2.5%. Not even the U.S. government is immune to the impacts of higher interest rates. At the end of the first quarter of 2024, the interest payments paid by the Federal government stood at a record $1.06 trillion, nearly double their total of $0.56 trillion at the end of the fourth quarter of 2019.
Thank you for giving First Trust the opportunity to play a role in your financial future. We value our relationship with you and will report on the Fund again in six months.
Sincerely,
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"
As of April 30, 2024 (Unaudited)
Fund Statistics
Symbol on New York Stock Exchange
FPF
Common Share Price
$17.06
Common Share Net Asset Value ("NAV")
$18.69
Premium (Discount) to NAV
(8.72
)%
Net Assets Applicable to Common Shares
$1,137,391,705
Current Distribution per Common Share(1)
$0.1375
Current Annualized Distribution per Common Share
$1.6500
Current Distribution Rate on Common Share Price(2)
9.67
%
Current Distribution Rate on NAV(2)
8.83
%
Common Share Price & NAV (weekly closing price)
Performance
Average Annual Total Returns
6 Months Ended
4/30/24
1 Year Ended
4/30/24
5 Years Ended
4/30/24
10 Years Ended
4/30/24
Inception
(5/23/13)
to 4/30/24
Fund Performance(3)
NAV
16.84
%
18.26
%
3.06
%
5.43
%
5.83
%
Market Value
25.69
%
19.03
%
2.16
%
5.26
%
4.51
%
Index Performance
ICE BofA US Investment Grade Institutional
Capital Securities Index
10.31
%
9.61
%
3.98
%
5.01
%
4.52
%
Blended Index(4)
11.78
%
10.06
%
2.58
%
N/A
N/A
(1)
Most recent distribution paid through April 30, 2024. Subject to change in the future.
(2)
Distribution rates are calculated by annualizing the most recent distribution paid through the report date and then dividing by Common Share Price or NAV, as applicable, as of April 30, 2024. Subject to change in the future.
(3)
Total return is based on the combination of reinvested dividend, capital gain, and return of capital distributions, if any, at prices obtained by the Dividend Reinvestment Plan and changes in NAV per share for NAV returns and changes in Common Share Price for market value returns. Total returns do not reflect sales load and are not annualized for periods of less than one year. Past performance is not indicative of future results.
(4)
The Blended Index consists of a 30/30/30/10 blend of the ICE BofA Core Plus Fixed Rate Preferred Securities Index, the ICE BofA US Investment Grade Institutional Capital Securities Index, the ICE USD Contingent Capital Index and the ICE BofA US High Yield Institutional Capital Securities Index. The Blended Index is intended to reflect the proportional market cap of each segment of the preferred and hybrid securities market. The Blended Index returns are calculated by using the monthly returns of the indices listed above during each period shown. At the beginning of each month the indices are rebalanced to a 30/30/30/10 ratio to account for divergence from that ratio that occurred during the course of each month. The monthly returns are then compounded for each period shown above, giving the performance for the Blended Index for each period shown above. Since the ICE USD Contingent Capital Index had an inception date of December 31, 2013, the performance of the Blended Index is not available for all of the periods disclosed.
Page 2
First Trust Intermediate Duration Preferred & Income Fund (FPF)
"AT A GLANCE" (Continued)
As of April 30, 2024 (Unaudited)
Industry Classification
% of Total
Investments
Banks
46.8%
Insurance
19.0
Capital Markets
8.2
Oil, Gas & Consumable Fuels
7.6
Multi-Utilities
3.9
Financial Services
3.6
Food Products
3.0
Electric Utilities
2.7
Wireless Telecommunication Services
0.9
Mortgage Real Estate Investment Trusts
0.8
Trading Companies & Distributors
0.6
Real Estate Management & Development
0.6
Construction Materials Manufacturing
0.5
Retail REITs
0.4
Independent Power & Renewable Electricity Producers
0.4
Diversified Telecommunication Services
0.3
Gas Utilities
0.2
Automobiles
0.2
Diversified REITs
0.2
Consumer Finance
0.1
Specialized REITs
0.0*
Total
100.0%
*
Amount is less than 0.1%.
Top Ten Holdings
% of Total
Investments
Barclays PLC
2.0%
JPMorgan Chase & Co., Series NN
1.8
Wells Fargo & Co., Series L
1.8
Highlands Holdings Bond Issuer Ltd./Highlands Holdings
Bond Co-Issuer, Inc.
1.8
Bank of America Corp., Series TT
1.7
Land O'Lakes, Inc.
1.7
Algonquin Power & Utilities Corp.
1.7
Intesa Sanpaolo S.p.A.
1.7
Banco Santander S.A.
1.7
Enbridge, Inc.
1.5
Total
17.4%
Country Allocation
% of Total
Investments
United States
52.6%
Canada
13.1
United Kingdom
8.4
France
5.9
Spain
4.5
Mexico
2.8
Bermuda
2.7
Italy
1.9
Netherlands
1.8
Multinational
1.8
Germany
1.3
Australia
1.1
Chile
0.7
Sweden
0.6
Switzerland
0.5
Japan
0.3
Total
100.0%
Credit Quality(5)
% of Total
Fixed-Income
Investments
A-
0.1%
BBB+
12.3
BBB
23.3
BBB-
36.0
BB+
13.5
BB
8.7
BB-
1.9
B
0.6
Not Rated
3.6
Total
100.0%
Fund Allocation
% of Net Assets
Capital Preferred Securities
120.4%
$25 Par Preferred Securities
21.8
$1,000 Par Preferred Securities
3.5
Foreign Corporate Bonds and Notes
2.6
$1,000,000 Par Preferred Securities
1.1
Reverse Repurchase Agreement
(8.8)
Outstanding Loan
(42.4)
Net Other Assets and Liabilities
1.8
Total
100.0%
(5)
The credit quality and ratings information presented above reflect the ratings assigned by one or more nationally recognized statistical rating organizations (NRSROs), including S&P Global Ratings, Moody's Investors Service, Inc., Fitch Ratings or a comparably rated NRSRO. For situations in which a security is rated by more than one NRSRO and the ratings are not equivalent, the highest rating is used. Sub-investment grade ratings are those rated BB+/Ba1 or lower. Investment grade ratings are those rated BBB-/Baa3 or higher. The credit ratings shown relate to the creditworthiness of the issuers of the underlying securities in the Fund, and not to the Fund or its shares. Credit ratings are subject to change.
Page 3
Portfolio Commentary
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Semi-Annual Report
April 30, 2024 (Unaudited)
Advisor
First Trust Advisors L.P. ("First Trust" or the "Advisor") serves as the investment advisor to the First Trust Intermediate Duration Preferred & Income Fund (the "Fund"). First Trust is responsible for the ongoing monitoring of the Fund's investment portfolio, managing the Fund's business affairs and providing certain administrative services necessary for the management of the Fund.
Sub-Advisor
Stonebridge Advisors LLC ("Stonebridge" or the "Sub-Advisor") is the sub-advisor to the Fund and is a registered investment advisor based in Wilton, Connecticut. Stonebridge specializes in the management of preferred and hybrid securities.
Stonebridge Advisors LLC Portfolio Management Team*
Robert Wolf - Chief Investment Officer and Executive Vice President
Eric Weaver - Chief Strategist and Executive Vice President
Angelo Graci, CFA - Head of Credit Research and Executive Vice President
Commentary
Market Recap
The preferred and hybrid securities market rallied significantly during the first half of fiscal year 2024 after a series of supportive data prints on inflation and the economy in the fourth quarter of 2023 helped turn market sentiment and the Federal Reserve's (the "Fed") expectations following a very weak October 2023. The rally continued into 2024, as a combination of high income and price appreciation led by spread tightening drove returns during the six-month period ended April 30, 2024. This occurred despite rates moving higher across the curve to start 2024, as resilient economic data and earnings contributed to tighter spread levels that had remained stubbornly wide since early 2023. The preferred and hybrid asset class was also supported by investor demand, including positive exchange-traded fund flows, large order books on new issuance and increased interest from investment grade investors.
This backdrop helped drive very strong performance for non-investment grade $1,000 par securities, as represented by the ICE BofA US High Yield Institutional Capital Securities Index ("HIPS") which returned 14.60% during the six-month period ended April 30, 2024. The second highest performing segment of the preferred and hybrid securities market during the period was the $25 par exchange-traded retail securities, as represented by the ICE BofA Core Plus Fixed Rate Preferred Securities Index ("P0P4") which returned 13.68%, followed by investment grade $1,000 pars, as represented by the ICE BofA US Investment Grade Institutional Capital Securities Index ("CIPS") which returned 10.31%. Contingent convertible capital securities ("CoCos"), as represented by the ICE USD Contingent Capital Index ("CDLR"), were the laggard during the period, despite returning 10.29% and outperforming most other parts of the fixed income universe.
*On March 1, 2024, Scott Fleming left his Portfolio Manager role for the Fund.
Page 4
Portfolio Commentary (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Semi-Annual Report
April 30, 2024 (Unaudited)
Performance Analysis
Performance
Average Annual Total Returns
6 Months Ended
4/30/24
1 Year Ended
4/30/24
5 Years Ended
4/30/24
10 Years Ended
4/30/24
Inception
(5/23/13)
to 4/30/24
Fund Performance(1)
NAV
16.84
%
18.26
%
3.06
%
5.43
%
5.83
%
Market Value
25.69
%
19.03
%
2.16
%
5.26
%
4.51
%
Index Performance
ICE BofA US Investment Grade Institutional
Capital Securities Index
10.31
%
9.61
%
3.98
%
5.01
%
4.52
%
Blended Index (2)
11.78
%
10.06
%
2.58
%
N/A
N/A
Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund's past performance does not predict future performance.
For the six-month period ended April 30, 2024, the Fund produced a total return of 25.69% based on market price and 16.84% based on net asset value ("NAV"). This compares to a total return of 11.78% for the benchmark (the "Benchmark"), which is a 30/30/30/10 blend of CIPS, CDLR, P0P4, and HIPS, respectively.
The Fund significantly outperformed the Benchmark during the period primarily due to leverage, as well as its security selection within variable rate securities, life insurance, utilities, European banks and emerging market banks. Leverage contributed approximately 4.95% to performance during the period.
The main catalyst for the Fund's outperformance within its variable rate exposure was spread tightening during the period, causing many deeply discounted securities to pull to par. This was most pronounced in lower coupon (˂6%) and lower reset spread securities (˂400 basis points resets). The majority of the Fund's variable rate outperformance occurred within investment grade $1,000 pars and within CoCos.
(1)
Total return is based on the combination of reinvested dividend, capital gain, and return of capital distributions, if any, at prices obtained by the Dividend Reinvestment Plan and changes in NAV per share for NAV returns and changes in Common Share Price for market value returns. Total returns do not reflect sales load and are not annualized for periods of less than one year.
(2)
The Blended Index consists of a 30/30/30/10 blend of the ICE BofA Core Plus Fixed Rate Preferred Securities Index, the ICE BofA US Investment Grade Institutional Capital Securities Index, the ICE USD Contingent Capital Index and the ICE BofA US High Yield Institutional Capital Securities Index. The Blended Index is intended to reflect the proportional market cap of each segment of the preferred and hybrid securities market. The Blended Index returns are calculated by using the monthly returns of the indices listed above during each period shown. At the beginning of each month the indices are rebalanced to a 30/30/30/10 and 50-50 ratio respectively to account for divergence from that ratio that occurred during the course of each month. The monthly returns are then compounded for each period shown above, giving the performance for the Blended Index for each period shown above. Since the ICE USD Contingent Capital Index had an inception date of December 31, 2013, the performance of the Blended Index is not available for all of the periods disclosed.
Page 5
Portfolio Commentary (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Semi-Annual Report
April 30, 2024 (Unaudited)
Offsetting some of the Fund's performance versus the Benchmark was its underweight to longer duration $25 par fixed for life securities, which was one of the top performing segments during the period. The Fund also underperformed within non-investment grade $1,000 pars, driven by its overweight exposure to Land O' Lakes Inc., which lagged during the period. The Fund also gave back some performance due to its underweight to consumer finance and super regional banks.
Finally, the Fund increased its dividend distribution in the fourth quarter of 2023 from $0.1075 per share to $0.1375 per share. The Fund's discount to NAV shrunk significantly during the period, moving from approximately 15.15% to close at approximately 8.72%.
The Fund has a practice of seeking to maintain a relatively stable monthly distribution, which may be changed at any time. The practice has no impact on the Fund's investment strategy and may reduce the Fund's NAV. However, the Advisor believes the practice helps maintain the Fund's competitiveness and may benefit the Fund's market price and premium/discount to the Fund's NAV. The monthly distribution rate began at $0.1075 and ended the period at $0.1375 per share. At the $0.1375 per share monthly distribution rate, the annualized distribution rate at April 30, 2024 was 8.83% at NAV and 9.67% at market price. The final determination of the source and tax status of all 2024 distributions will be made after the end of 2024 and will be provided on Form 1099-DIV. The foregoing is not to be construed as tax advice. Please consult your tax advisor for further information regarding tax matters.
Market and Fund Outlook
Absent any interest rate cuts over the near term, our base case for the preferred and hybrid securities market is for a carry driven environment. Preferred market metrics remain attractive compared to other fixed income asset classes. However, we believe interest rate cuts in the U.S. will likely be the next catalyst for future price appreciation. Longer term, we believe the preferred and hybrid securities market provides a compelling entry point given the discounted prices and historically attractive yield-to-worst in the market. We believe active management may provide additional upside for investors through duration management and security selection based on relative value and credit analysis.
Page 6
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments
April 30, 2024 (Unaudited)
Shares
Description
Stated
Rate
Stated
Maturity
Value
$25 PAR PREFERRED SECURITIES - 21.8%
Automobiles - 0.3%
6,850
Ford Motor Co.
6.00
%
12/01/59
$164,400
134,551
Ford Motor Co. (a)
6.50
%
08/15/62
3,296,500
3,460,900
Banks - 1.7%
224,127
Bank of America Corp., Series KK (b)
5.38
%
(c)
5,101,131
123,343
KeyCorp (b) (d)
6.20
%
(c)
2,762,883
228,424
Pinnacle Financial Partners, Inc., Series B (b)
6.75
%
(c)
5,269,742
89,691
US Bancorp, Series K (b)
5.50
%
(c)
2,090,697
155,912
Wintrust Financial Corp., Series E (b) (d)
6.88
%
(c)
3,916,509
19,140,962
Capital Markets - 3.1%
29,434
Affiliated Managers Group, Inc.
4.75
%
09/30/60
544,823
173,946
Affiliated Managers Group, Inc.
4.20
%
09/30/61
2,880,546
321,634
Affiliated Managers Group, Inc. (b)
6.75
%
03/30/64
8,233,830
82,679
Brookfield Oaktree Holdings, LLC, Series A (b)
6.63
%
(c)
1,802,402
15,487
Brookfield Oaktree Holdings, LLC, Series B
6.55
%
(c)
332,971
472,118
Carlyle Finance LLC
4.63
%
05/15/61
8,550,057
187,198
KKR Group Finance Co., IX LLC
4.63
%
04/01/61
3,539,914
380,000
TPG Operating Group II, L.P. (b)
6.95
%
03/15/64
9,800,200
35,684,743
Consumer Finance - 0.1%
5,099
Capital One Financial Corp., Series I
5.00
%
(c)
98,513
90,291
Capital One Financial Corp., Series J (b)
4.80
%
(c)
1,657,743
1,756,256
Diversified REITs - 0.3%
168,343
Global Net Lease, Inc., Series A (a)
7.25
%
(c)
3,368,543
Diversified Telecommunication Services - 0.4%
249,085
AT&T, Inc., Series C (b)
4.75
%
(c)
4,892,029
Electric Utilities - 1.3%
80,866
SCE Trust IV, Series J (b) (d)
5.38
%
(c)
1,907,629
65,915
SCE Trust V, Series K (b) (d)
5.45
%
(c)
1,618,872
38,168
SCE Trust VI
5.00
%
(c)
756,490
383,132
SCE Trust VII, Series M (b)
7.50
%
(c)
9,999,745
14,282,736
Financial Services - 1.1%
458,137
Equitable Holdings, Inc., Series A (b)
5.25
%
(c)
9,987,387
10,807
Jackson Financial, Inc. (d)
8.00
%
(c)
282,927
105,383
Voya Financial, Inc., Series B (b) (d)
5.35
%
(c)
2,533,407
12,803,721
Food Products - 0.1%
45,964
CHS, Inc., Series 3 (b) (d)
6.75
%
(c)
1,163,349
Gas Utilities - 0.3%
281,492
South Jersey Industries, Inc.
5.63
%
09/16/79
3,910,690
Independent Power & Renewable Electricity Producers - 0.6%
245,850
Brookfield BRP Holdings Canada, Inc.
4.63
%
(c)
3,822,968
See Notes to Financial Statements
Page 7
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
April 30, 2024 (Unaudited)
Shares
Description
Stated
Rate
Stated
Maturity
Value
$25 PAR PREFERRED SECURITIES (Continued)
Independent Power & Renewable Electricity
Producers (Continued)
161,321
Brookfield Renewable Partners, L.P., Series 17 (b)
5.25
%
(c)
$2,742,457
6,565,425
Insurance - 9.3%
441,475
AEGON Funding Co., LLC (b)
5.10
%
12/15/49
9,284,219
548,929
American Equity Investment Life Holding Co., Series A (b) (d)
5.95
%
(c)
13,234,678
259,357
American Equity Investment Life Holding Co., Series B (b) (d)
6.63
%
(c)
6,372,402
193,648
AmTrust Financial Services, Inc.
7.25
%
06/15/55
3,040,274
210,480
AmTrust Financial Services, Inc.
7.50
%
09/15/55
3,430,156
192,000
Arch Capital Group Ltd., Series G (b)
4.55
%
(c)
3,705,600
14,128
Argo Group International Holdings, Inc. (d)
7.00
%
(c)
343,311
66,549
Aspen Insurance Holdings Ltd. (b)
5.63
%
(c)
1,307,688
346,650
Aspen Insurance Holdings Ltd. (b)
5.63
%
(c)
6,676,479
286,000
Athene Holding Ltd. (b) (d)
7.25
%
03/30/64
7,124,260
85,647
Athene Holding Ltd., Series A (b) (d)
6.35
%
(c)
2,013,561
52,936
Athene Holding Ltd., Series D
4.88
%
(c)
936,967
566,049
Athene Holding Ltd., Series E (b) (d)
7.75
%
(c)
15,062,564
116,238
CNO Financial Group, Inc.
5.13
%
11/25/60
2,341,033
584,250
Delphi Financial Group, Inc., 3 Mo. CME Term SOFR + CSA +
3.45% (a) (b) (e)
8.76
%
05/15/37
14,153,456
415,053
F&G Annuities & Life, Inc. (b)
7.95
%
12/15/53
10,791,378
193,528
Phoenix Cos. (The), Inc.
7.45
%
01/15/32
3,476,247
114,134
RenaissanceRe Holdings Ltd., Series G
4.20
%
(c)
1,991,638
105,285,911
Mortgage Real Estate Investment Trusts - 0.1%
32,675
AGNC Investment Corp., Series F (d)
6.13
%
(c)
763,288
Multi-Utilities - 0.7%
112,073
Algonquin Power & Utilities Corp., Series 19-A (a) (b) (d)
6.20
%
07/01/79
2,796,221
195,763
Brookfield Infrastructure Finance ULC
5.00
%
05/24/81
3,335,801
84,780
Brookfield Infrastructure Partners, L.P., Series 13
5.13
%
(c)
1,462,455
5,032
Sempra
5.75
%
07/01/79
121,171
7,715,648
Oil, Gas & Consumable Fuels - 0.2%
105,029
NuStar Energy, L.P., Series A, 3 Mo. CME Term SOFR + CSA +
7.03% (e)
12.36
%
(c)
2,685,592
Real Estate Management & Development - 0.9%
299,946
Brookfield Property Partners, L.P., Series A
5.75
%
(c)
3,752,324
353,120
Brookfield Property Partners, L.P., Series A2
6.38
%
(c)
4,777,714
76,129
Brookfield Property Preferred, L.P.
6.25
%
07/26/81
1,104,632
23,528
DigitalBridge Group, Inc., Series I (b)
7.15
%
(c)
526,086
1,939
DigitalBridge Group, Inc., Series J
7.13
%
(c)
44,015
10,204,771
Specialized REITs - 0.0%
17,466
National Storage Affiliates Trust, Series A (b)
6.00
%
(c)
379,886
Wireless Telecommunication Services - 1.3%
175,650
United States Cellular Corp.
6.25
%
09/01/69
3,383,019
246,990
United States Cellular Corp.
5.50
%
03/01/70
4,389,012
See Notes to Financial Statements
Page 8
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
April 30, 2024 (Unaudited)
Shares
Description
Stated
Rate
Stated
Maturity
Value
$25 PAR PREFERRED SECURITIES (Continued)
Wireless Telecommunication Services (Continued)
383,361
United States Cellular Corp.
5.50
%
06/01/70
$6,766,322
14,538,353
Total $25 Par Preferred Securities
248,602,803
(Cost $277,685,986)
$1,000 PAR PREFERRED SECURITIES - 3.5%
Banks - 3.5%
7,627
Bank of America Corp., Series L
7.25
%
(c)
8,771,050
26,803
Wells Fargo & Co., Series L
7.50
%
(c)
30,701,228
Total $1,000 Par Preferred Securities
39,472,278
(Cost $45,974,536)
$1,000,000 PAR PREFERRED SECURITIES - 1.1%
Mortgage Real Estate Investment Trusts - 1.1%
12
FT Real Estate Securities Co., Inc. (f) (g) (h)
9.50
%
(c)
12,360,000
(Cost $15,990,000)
Par
Amount
Description
Stated
Rate
Stated
Maturity
Value
CAPITAL PREFERRED SECURITIES - 120.4%
Banks - 64.8%
$7,900,000
Banco Bilbao Vizcaya Argentaria S.A. (d) (i)
9.38
%
(c)
8,316,448
18,100,000
Banco Bilbao Vizcaya Argentaria S.A., Series 9 (b) (d) (i)
6.50
%
(c)
17,896,864
3,300,000
Banco de Credito e Inversiones S.A. (d) (i) (j)
8.75
%
(c)
3,384,233
2,000,000
Banco de Credito e Inversiones S.A. (d) (i) (k)
8.75
%
(c)
2,051,050
6,100,000
Banco del Estado de Chile (d) (j)
7.95
%
(c)
6,149,562
5,700,000
Banco Mercantil del Norte S.A. (d) (i) (j)
7.50
%
(c)
5,496,686
8,000,000
Banco Mercantil del Norte S.A. (d) (i) (j)
7.63
%
(c)
7,806,171
7,400,000
Banco Mercantil del Norte S.A. (d) (i) (j)
8.38
%
(c)
7,372,284
10,800,000
Banco Santander S.A. (d) (i)
4.75
%
(c)
9,265,330
26,800,000
Banco Santander S.A. (b) (d) (i)
9.63
%
(c)
28,156,509
11,400,000
Banco Santander S.A. (b) (d) (i)
9.63
%
(c)
12,199,026
29,385,000
Bank of America Corp., Series TT (b) (d)
6.13
%
(c)
29,110,918
1,360,000
Bank of America Corp., Series X (b) (d)
6.25
%
(c)
1,358,976
13,000,000
Bank of Montreal (d)
7.70
%
05/26/84
13,009,626
16,920,000
Bank of Nova Scotia (The) (d)
8.63
%
10/27/82
17,462,117
19,466,000
Bank of Nova Scotia (The) (d)
8.00
%
01/27/84
19,618,010
1,300,000
Barclays PLC (d) (i)
4.38
%
(c)
1,061,826
34,670,000
Barclays PLC (b) (d) (i)
8.00
%
(c)
34,179,562
8,700,000
Barclays PLC (d) (i)
9.63
%
(c)
9,114,372
8,550,000
BBVA Bancomer S.A. (a) (d) (i) (j)
5.88
%
09/13/34
7,894,374
9,900,000
BBVA Bancomer S.A. (d) (i) (j)
8.45
%
06/29/38
10,227,551
12,800,000
BNP Paribas S.A. (d) (i) (j)
4.63
%
(c)
10,302,511
17,710,000
BNP Paribas S.A. (b) (d) (i) (j)
7.75
%
(c)
17,903,269
5,100,000
BNP Paribas S.A. (d) (i) (j)
8.00
%
(c)
5,080,755
23,200,000
BNP Paribas S.A. (b) (d) (i) (j)
8.50
%
(c)
24,043,691
4,000,000
BNP Paribas S.A. (b) (d) (i) (j)
9.25
%
(c)
4,247,536
1,200,000
Citigroup, Inc., Series AA (b) (d)
7.63
%
(c)
1,241,393
6,000,000
Citigroup, Inc., Series BB (b) (d)
7.20
%
(c)
6,065,442
1,051,000
Citigroup, Inc., Series M (b) (d)
6.30
%
(c)
1,054,464
8,600,000
Citigroup, Inc., Series P (b) (d)
5.95
%
(c)
8,567,990
2,314,000
Citigroup, Inc., Series X (b) (d)
3.88
%
(c)
2,177,900
21,800,000
Citigroup, Inc., Series Z (b) (d)
7.38
%
(c)
22,408,067
6,500,000
Citizens Financial Group, Inc., Series F (b) (d)
5.65
%
(c)
6,368,260
See Notes to Financial Statements
Page 9
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
April 30, 2024 (Unaudited)
Par
Amount
Description
Stated
Rate
Stated
Maturity
Value
CAPITAL PREFERRED SECURITIES (Continued)
Banks (Continued)
$607,000
Citizens Financial Group, Inc., Series G (d)
4.00
%
(c)
$521,718
4,000,000
CoBank ACB (d)
7.25
%
(c)
3,991,050
25,000,000
CoBank ACB, Series I (b) (d)
6.25
%
(c)
24,592,497
9,695,000
CoBank ACB, Series K (b) (d)
6.45
%
(c)
9,597,057
2,800,000
Commerzbank AG (d) (i) (k)
7.00
%
(c)
2,759,666
3,450,000
Farm Credit Bank of Texas, Series 3 (a) (d) (j)
6.20
%
(c)
3,172,242
400,000
Farm Credit Bank of Texas, Series 4 (b) (d) (j)
5.70
%
(c)
393,959
4,706,000
Fifth Third Bancorp, Series L (b) (d)
4.50
%
(c)
4,498,055
25,100,000
HSBC Holdings PLC (b) (d) (i)
8.00
%
(c)
25,969,138
10,920,000
ING Groep N.V. (b) (d) (i)
6.50
%
(c)
10,781,026
12,900,000
ING Groep N.V. (b) (d) (i) (k)
7.50
%
(c)
12,674,250
4,000,000
ING Groep N.V. (d) (i) (k)
8.00
%
(c)
3,995,600
28,550,000
Intesa Sanpaolo S.p.A. (b) (d) (i) (j)
7.70
%
(c)
28,370,683
30,600,000
JPMorgan Chase & Co., Series NN (b) (d)
6.88
%
(c)
31,432,695
4,000,000
Lloyds Banking Group PLC (b) (d) (i)
6.75
%
(c)
3,936,719
17,912,000
Lloyds Banking Group PLC (b) (d) (i)
7.50
%
(c)
17,775,842
26,067,000
Lloyds Banking Group PLC (b) (d) (i)
8.00
%
(c)
25,807,839
10,150,000
NatWest Group PLC (b) (d) (i)
8.00
%
(c)
10,174,035
9,934,000
PNC Financial Services Group (The), Inc., Series U (b) (d)
6.00
%
(c)
9,580,311
8,636,000
PNC Financial Services Group (The), Inc., Series V (b) (d)
6.20
%
(c)
8,487,499
14,390,000
PNC Financial Services Group (The), Inc., Series W (b) (d)
6.25
%
(c)
13,564,043
16,000,000
Royal Bank of Canada (d)
7.50
%
05/02/84
16,058,174
6,370,000
Societe Generale S.A. (d) (i) (j)
5.38
%
(c)
5,168,303
20,300,000
Societe Generale S.A. (b) (d) (i) (j)
9.38
%
(c)
20,712,374
8,000,000
Societe Generale S.A. (b) (d) (i) (j)
10.00
%
(c)
8,401,744
18,565,000
Standard Chartered PLC (b) (d) (i) (j)
4.30
%
(c)
14,884,218
65,000
Standard Chartered PLC (d) (k)
7.01
%
(c)
65,907
5,660,000
Sumitomo Mitsui Financial Group, Inc. (d) (i)
6.60
%
(c)
5,457,072
2,200,000
Svenska Handelsbanken AB (d) (i) (k)
4.75
%
(c)
1,836,195
1,000,000
Swedbank AB (d) (i) (k)
7.63
%
(c)
982,222
7,400,000
Swedbank AB (d) (i) (k)
7.75
%
(c)
7,270,863
2,779,000
Texas Capital Bancshares, Inc. (b) (d)
4.00
%
05/06/31
2,479,520
22,000,000
Toronto-Dominion Bank (The) (a) (b) (d)
8.13
%
10/31/82
22,677,666
5,000,000
UniCredit S.p.A. (a) (d) (j)
5.46
%
06/30/35
4,602,008
13,000,000
Wells Fargo & Co. (b) (d)
7.63
%
(c)
13,625,716
736,890,679
Capital Markets - 9.0%
12,296,000
Apollo Management Holdings, L.P. (a) (b) (d) (j)
4.95
%
01/14/50
11,815,288
9,300,000
Ares Finance Co. III LLC (a) (b) (d) (j)
4.13
%
06/30/51
8,592,802
15,772,000
Charles Schwab (The) Corp., Series G (b) (d)
5.38
%
(c)
15,635,990
1,500,000
Charles Schwab (The) Corp., Series H (d)
4.00
%
(c)
1,222,685
660,000
Charles Schwab (The) Corp., Series I (d)
4.00
%
(c)
608,928
2,200,000
Charles Schwab (The) Corp., Series K (b) (d)
5.00
%
(c)
2,061,391
28,250,000
Credit Suisse Group AG, Claim (l) (m)
3,248,750
6,400,000
Credit Suisse Group AG, Claim (l) (m)
736,000
15,730,000
Credit Suisse Group AG, Claim (l) (m)
1,808,950
19,220,000
Credit Suisse Group AG, Claim (l) (m)
2,210,300
20,500,000
Deutsche Bank AG, Series 2020 (b) (d) (i)
6.00
%
(c)
19,123,351
7,900,000
Goldman Sachs Group (The), Inc., Series W (b) (d)
7.50
%
(c)
8,195,255
17,496,000
Goldman Sachs Group (The), Inc., Series X (d)
7.50
%
(c)
17,730,143
2,000,000
Macquarie Bank Ltd. (d) (i) (j)
6.13
%
(c)
1,939,107
8,064,000
State Street Corp., Series I (b) (d)
6.70
%
(c)
8,090,944
103,019,884
See Notes to Financial Statements
Page 10
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
April 30, 2024 (Unaudited)
Par
Amount
Description
Stated
Rate
Stated
Maturity
Value
CAPITAL PREFERRED SECURITIES (Continued)
Construction Materials Manufacturing - 0.7%
$7,800,000
Cemex SAB de CV (d) (j)
9.13
%
(c)
$8,375,344
Electric Utilities - 2.8%
7,950,000
American Electric Power Co., Inc. (a) (b) (d)
3.88
%
02/15/62
7,138,748
1,377,000
Edison International, Series A (b) (d)
5.38
%
(c)
1,322,602
6,976,000
Emera, Inc., Series 16-A (a) (d)
6.75
%
06/15/76
6,922,620
11,400,000
NextEra Energy Capital Holdings, Inc. (b) (d)
6.70
%
09/01/54
11,298,557
5,110,000
Southern California Edison Co., Series E 3 Mo. CME Term SOFR
+ CSA + 4.46% (b) (e)
9.79
%
(c)
5,133,868
31,816,395
Financial Services - 4.3%
15,000,000
American AgCredit Corp. (b) (d) (j)
5.25
%
(c)
14,100,000
9,350,000
Capital Farm Credit ACA, Series 1 (b) (d) (j)
5.00
%
(c)
8,976,000
3,800,000
Compeer Financial ACA (b) (d) (j)
4.88
%
(c)
3,610,000
22,150,000
Corebridge Financial, Inc. (a) (b) (d)
6.88
%
12/15/52
21,934,785
48,620,785
Food Products - 4.4%
6,000,000
Dairy Farmers of America, Inc. (b) (f)
7.13
%
(c)
5,617,500
7,329,000
Land O'Lakes Capital Trust I (a) (b) (f)
7.45
%
03/15/28
7,212,689
10,000,000
Land O'Lakes, Inc. (a) (b) (j)
7.25
%
(c)
8,050,000
33,000,000
Land O'Lakes, Inc. (b) (j)
8.00
%
(c)
28,875,000
49,755,189
Insurance - 16.6%
3,000,000
Aegon N.V. (a) (d)
5.50
%
04/11/48
2,885,312
17,585,000
Assurant, Inc. (a) (b) (d)
7.00
%
03/27/48
17,518,381
5,150,000
Assured Guaranty Municipal Holdings, Inc. (a) (d) (j)
6.40
%
12/15/66
4,557,872
11,232,000
AXIS Specialty Finance LLC (a) (b) (d)
4.90
%
01/15/40
10,081,234
4,000,000
CNP Assurances SACA (d) (k)
4.88
%
(c)
3,283,620
8,704,000
Enstar Finance LLC (a) (b) (d)
5.75
%
09/01/40
8,507,243
17,149,000
Enstar Finance LLC (a) (b) (d)
5.50
%
01/15/42
16,273,118
15,300,000
Fortegra Financial Corp. (a) (b) (d) (f)
8.50
%
10/15/57
15,030,789
26,121,000
Global Atlantic Fin Co. (a) (b) (d) (j)
4.70
%
10/15/51
23,092,381
29,237,000
Hartford Financial Services Group (The), Inc., 3 Mo. CME Term
SOFR + CSA + 2.39% (a) (b) (e) (j)
7.69
%
02/12/47
25,986,976
8,183,000
Kuvare US Holdings, Inc. (b) (d) (j)
7.00
%
02/17/51
8,285,288
2,000,000
La Mondiale SAM (b) (d) (k)
5.88
%
01/26/47
1,947,740
9,500,000
Lancashire Holdings Ltd. (b) (d) (k)
5.63
%
09/18/41
8,469,763
11,204,000
Liberty Mutual Group, Inc. (a) (b) (d) (j)
4.13
%
12/15/51
10,224,829
2,465,000
Liberty Mutual Group, Inc. (j)
4.30
%
02/01/61
1,517,887
5,125,000
Lincoln National Corp., Series C (b) (d)
9.25
%
(c)
5,473,731
2,442,000
Nationwide Financial Services Capital Trust (a) (m)
7.90
%
03/01/37
2,442,557
2,910,000
Nationwide Financial Services, Inc. (a) (b)
6.75
%
05/15/37
2,891,060
11,273,000
Prudential Financial, Inc. (a) (d)
6.00
%
09/01/52
10,918,703
7,160,000
QBE Insurance Group Ltd. (b) (d) (j)
5.88
%
(c)
7,092,700
2,000,000
QBE Insurance Group Ltd. (b) (d) (k)
5.88
%
06/17/46
1,963,046
188,444,230
Multi-Utilities - 5.1%
32,782,000
Algonquin Power & Utilities Corp. (a) (b) (d)
4.75
%
01/18/82
28,464,279
24,890,000
Sempra (b) (d)
4.13
%
04/01/52
22,631,689
7,000,000
Sempra (b) (d)
6.88
%
10/01/54
6,929,404
58,025,372
See Notes to Financial Statements
Page 11
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
April 30, 2024 (Unaudited)
Par
Amount
Description
Stated
Rate
Stated
Maturity
Value
CAPITAL PREFERRED SECURITIES (Continued)
Oil, Gas & Consumable Fuels - 11.2%
$27,810,000
Enbridge, Inc. (a) (b) (d)
6.25
%
03/01/78
$25,999,041
8,800,000
Enbridge, Inc. (b) (d)
8.50
%
01/15/84
9,306,422
15,490,000
Enbridge, Inc., Series 16-A (a) (b) (d)
6.00
%
01/15/77
14,680,231
15,150,000
Enbridge, Inc., Series 20-A (b) (d)
5.75
%
07/15/80
13,898,165
2,055,000
Energy Transfer, L.P. (d)
8.00
%
05/15/54
2,117,971
2,543,000
Energy Transfer, L.P., Series B (b) (d)
6.63
%
(c)
2,345,466
8,799,000
Energy Transfer, L.P., Series F (b) (d)
6.75
%
(c)
8,620,631
18,200,000
Energy Transfer, L.P., Series G (b) (d)
7.13
%
(c)
17,519,586
7,145,000
Energy Transfer, L.P., Series H (b) (d)
6.50
%
(c)
6,950,998
494,000
Enterprise Products Operating LLC (d)
5.38
%
02/15/78
458,731
21,650,000
Transcanada Trust (a) (b) (d)
5.50
%
09/15/79
19,607,597
6,450,000
Transcanada Trust (a) (b) (d)
5.60
%
03/07/82
5,649,375
127,154,214
Retail REITs - 0.6%
1,200,000
Scentre Group Trust 2 (a) (d) (j)
4.75
%
09/24/80
1,145,760
6,450,000
Scentre Group Trust 2 (a) (b) (d) (j)
5.13
%
09/24/80
5,889,844
7,035,604
Trading Companies & Distributors - 0.9%
3,110,000
AerCap Holdings N.V. (b) (d)
5.88
%
10/10/79
3,076,493
7,554,000
Aircastle Ltd. (b) (d) (j)
5.25
%
(c)
7,175,010
10,251,503
Total Capital Preferred Securities
1,369,389,199
(Cost $1,442,125,709)
Principal
Value
Description
Stated
Coupon
Stated
Maturity
Value
FOREIGN CORPORATE BONDS AND NOTES - 2.6%
Insurance - 2.6%
29,795,925
Highlands Holdings Bond Issuer Ltd./Highlands Holdings Bond
Co-Issuer, Inc. (a) (b) (j) (n)
7.63
%
10/15/25
29,800,710
(Cost $29,985,359)
Total Investments - 149.4%
1,699,624,990
(Cost $1,811,761,590)
Shares
Description
Value
REVERSE REPURCHASE AGREEMENT - (8.8)%
(100,000,000
)
Scotia Bank, due 7/27/24, 1 month CME Term SOFR + CSA + 65bps
(100,000,000
)
Outstanding Loan - (42.4)%
(481,700,000
)
Net Other Assets and Liabilities - 1.8%
19,466,715
Net Assets - 100.0%
$1,137,391,705
(a)
This security or a portion of this security is segregated as collateral for reverse repurchase agreements. All of these securities are
corporate bonds. The remaining contractual maturity of the agreement is between 30-90 days. At April 30, 2024, securities noted
as such are valued at $206,530,457.
(b)
All or a portion of this security serves as collateral on the outstanding loan. At April 30, 2024, the segregated value of these
securities amounts to $870,499,993.
(c)
Perpetual maturity.
(d)
Fixed-to-floating or fixed-to-variable rate security. The interest rate shown reflects the fixed rate in effect at April 30, 2024. At a
predetermined date, the fixed rate will change to a floating rate or a variable rate.
(e)
Floating or variable rate security.
See Notes to Financial Statements
Page 12
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
April 30, 2024 (Unaudited)
(f)
This security, sold within the terms of a private placement memorandum, is exempt from registration upon resale under
Rule 144A of the Securities Act of 1933, as amended (the "1933 Act"), and may be resold in transactions exempt from
registration, normally to qualified institutional buyers (see Note 2D - Restricted Securities in the Notes to Financial Statements).
(g)
This security is fair valued by the Advisor's Pricing Committee in accordance with procedures approved by the Fund's Board of
Trustees, and in accordance with the provisions of the Investment Company Act of 1940 and rules thereunder, as amended. At
April 30, 2024, securities noted as such are valued at $12,360,000 or 1.1% of net assets.
(h)
This security's value was determined using significant unobservable inputs (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements).
(i)
This security is a contingent convertible capital security which may be subject to conversion into common stock of the issuer
under certain circumstances. At April 30, 2024, securities noted as such amounted to $454,020,295 or 26.4% of managed assets.
Of these securities, 8.5% originated in emerging markets, and 91.5% originated in foreign markets.
(j)
This security, sold within the terms of a private placement memorandum, is exempt from registration upon resale under
Rule 144A of the 1933 Act, and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
Pursuant to procedures adopted by the Fund's Board of Trustees, this security has been determined to be liquid by Stonebridge
Advisors LLC (the "Sub-Advisor"). Although market instability can result in periods of increased overall market illiquidity,
liquidity for each security is determined based on security specific factors and assumptions, which require subjective judgment.
At April 30, 2024, securities noted as such amounted to $414,716,952 or 36.5% of net assets.
(k)
This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act.
(l)
Claim pending with the administrative court of Switzerland.
(m)
Pursuant to procedures adopted by the Fund's Board of Trustees, this security has been determined to be illiquid by the
Sub-Advisor.
(n)
These notes are Senior Payment-in-kind ("PIK") Toggle Notes whereby the issuer may, at its option, elect to pay interest on the
notes (1) entirely in cash or (2) entirely in PIK interest. Interest paid in cash will accrue on the notes at a rate of 7.63% per annum
("Cash Interest Rate") and PIK interest will accrue on the notes at a rate per annum equal to the Cash Interest Rate plus 75 basis
points. For the six months ended April 30, 2024, this security paid all of its interest in cash.
Abbreviations throughout the Portfolio of Investments:
CME
- Chicago Mercantile Exchange
CSA
- Credit Spread Adjustment
REITs
- Real Estate Investment Trusts
SOFR
- Secured Overnight Financing Rate
See Notes to Financial Statements
Page 13
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
April 30, 2024 (Unaudited)
Valuation Inputs
A summary of the inputs used to value the Fund's investments as of April 30, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
ASSETS TABLE
Total
Value at
4/30/2024
Level 1
Quoted
Prices
Level 2
Significant
Observable
Inputs
Level 3
Significant
Unobservable
Inputs
$25 Par Preferred Securities:
Gas Utilities
$3,910,690
$-
$3,910,690
$-
Insurance
105,285,911
81,185,778
24,100,133
-
Other Industry Categories*
139,406,202
139,406,202
-
-
$1,000 Par Preferred Securities*
39,472,278
39,472,278
-
-
$1,000,000 Par Preferred Securities*
12,360,000
-
-
12,360,000
Capital Preferred Securities*
1,369,389,199
-
1,369,389,199
-
Foreign Corporate Bonds and Notes*
29,800,710
-
29,800,710
-
Total Investments
$1,699,624,990
$260,064,258
$1,427,200,732
$12,360,000
LIABILITIES TABLE
Total
Value at
4/30/2024
Level 1
Quoted
Prices
Level 2
Significant
Observable
Inputs
Level 3
Significant
Unobservable
Inputs
Reverse Repurchase Agreement
$(100,000,000
)
$-
$(100,000,000
)
$-
*
See Portfolio of Investments for industry breakout.
Level 3 Investments are fair valued by the Advisor's Pricing Committee and are footnoted in the Portfolio of Investments. All Level 3 values are based on unobservable and non-quantitative inputs.
The following table presents the activity of the Fund's investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period presented.
Beginning Balance at October 31, 2023
$1,000,000 Par Preferred Securities
$12,480,000
Net Realized Gain (Loss)
-
Net Change in Unrealized Appreciation/Depreciation
(120,000
)
Purchases
-
Sales
-
Transfers In
-
Transfers Out
-
Ending Balance at April 30, 2024
$1,000,000 Par Preferred Securities
12,360,000
Total Level 3 holdings
$12,360,000
There was a net change of $(120,000) in unrealized appreciation (depreciation) from Level 3 investments held as of April 30, 2024.
See Notes to Financial Statements
Page 14
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Statement of Assets and Liabilities
April 30, 2024 (Unaudited)
ASSETS:
Investments, at value
$1,699,624,990
Cash
12,073,668
Foreign currency
17,899
Receivables:
Interest
17,301,181
Investment securities sold
1,016,580
Dividends
265,080
Prepaid expenses
523
Total Assets
1,730,299,921
LIABILITIES:
Outstanding loan
481,700,000
Reverse repurchase agreement
100,000,000
Payables:
Investment securities purchased
6,250,381
Interest and fees on loan and repurchase agreement
3,180,882
Investment advisory fees
1,200,212
Administrative fees
481,750
Shareholder reporting fees
29,548
Custodian fees
27,857
Audit and tax fees
22,624
Financial reporting fees
771
Transfer agent fees
743
Other liabilities
13,448
Total Liabilities
592,908,216
NET ASSETS
$1,137,391,705
NET ASSETS consist of:
Paid-in capital
$1,412,699,698
Par value
608,478
Accumulated distributable earnings (loss)
(275,916,471
)
NET ASSETS
$1,137,391,705
NET ASSET VALUE,per Common Share (par value $0.01 per Common Share)
$18.69
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized)
60,847,827
Investments, at cost
$1,811,761,590
Foreign currency, at cost (proceeds)
$17,865
See Notes to Financial Statements
Page 15
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Statement of Operations
For the Six Months Ended April 30, 2024 (Unaudited)
INVESTMENT INCOME:
Interest
$48,274,175
Dividends
10,277,553
Foreign withholding tax
(960,725
)
Other
282
Total investment income
57,591,285
EXPENSES:
Interest and fees on loan and repurchase agreement
17,621,815
Investment advisory fees
7,158,724
Legal fees
394,026
Administrative fees
306,028
Shareholder reporting fees
133,491
Custodian fees
92,280
Listing expense
30,349
Audit and tax fees
22,065
Trustees' fees and expenses
18,972
Transfer agent fees
10,254
Financial reporting fees
4,625
Other
49,691
Total expenses
25,842,320
NET INVESTMENT INCOME (LOSS)
31,748,965
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments
(2,386,656
)
Net change in unrealized appreciation (depreciation) on:
Investments
135,738,119
Foreign currency translation
34
Net change in unrealized appreciation (depreciation)
135,738,153
NET REALIZED AND UNREALIZED GAIN (LOSS)
133,351,497
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
$165,100,462
See Notes to Financial Statements
Page 16
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Statements of Changes in Net Assets
Six Months
Ended
4/30/2024
(Unaudited)
Year
Ended
10/31/2023
OPERATIONS:
Net investment income (loss)
$31,748,965
$69,447,941
Net realized gain (loss)
(2,386,656
)
(91,749,105
)
Net change in unrealized appreciation (depreciation)
135,738,153
(1,209,669
)
Net increase (decrease) in net assets resulting from operations
165,100,462
(23,510,833
)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment operations
(48,374,023
)
(66,905,271
)
Return of capital
-
(12,805,383
)
Total distributions to shareholders
(48,374,023
)
(79,710,654
)
Total increase (decrease) in net assets
116,726,439
(103,221,487
)
NET ASSETS:
Beginning of period
1,020,665,266
1,123,886,753
End of period
$1,137,391,705
$1,020,665,266
COMMON SHARES:
Common Shares at end of period
60,847,827
60,847,827
See Notes to Financial Statements
Page 17
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Statement of Cash Flows
For the Six Months Ended April 30, 2024 (Unaudited)
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations
$165,100,462
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash
provided by operating activities:
Purchases of investments
(330,392,217
)
Sales, maturities and paydown of investments
322,275,408
Net amortization/accretion of premiums/discounts on investments
8,041
Net realized gain/loss on investments
2,386,656
Net change in unrealized appreciation/depreciation on investments
(135,738,119
)
Changes in assets and liabilities:
Decrease in interest receivable
1,962,156
Decrease in reclaims receivable
111,234
Decrease in dividends receivable
274,824
Increase in prepaid expenses
(523
)
Increase in interest and fees payable on loan and reverse repurchase agreement
96,492
Increase in investment advisory fees payable
56,142
Decrease in audit and tax fees payable
(16,013
)
Decrease in legal fees payable
(2,249
)
Decrease in shareholder reporting fees payable
(28,716
)
Increase in administrative fees payable
47,273
Decrease in custodian fees payable
(91
)
Decrease in transfer agent fees payable
(884
)
Increase in other liabilities payable
3,227
Cash provided by operating activities
$26,143,103
Cash flows from financing activities:
Distributions to Common Shareholders from investment operations
(48,374,023
)
Repayment of borrowing
(19,000,000
)
Proceeds from borrowing
47,500,000
Cash used in financing activities
(19,874,023
)
Increase in cash and foreign currency
6,269,080
Cash and foreign currency at beginning of period
5,822,487
Cash and foreign currency at end of period
$12,091,567
Supplemental disclosure of cash flow information:
Cash paid during the period for interest and fees
$17,525,323
See Notes to Financial Statements
Page 18
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Financial Highlights
For a Common Share outstanding throughout each period
Six Months
Ended
4/30/2024
(Unaudited)
Year Ended October 31,
2023
2022
2021
2020
2019
Net asset value, beginning of
period
$16.77
$18.47
$24.93
$22.66
$24.40
$22.84
Income from investment
operations:
Net investment income (loss)
0.52
(a)
1.14
(a)
1.43
1.58
1.56
1.65
Net realized and unrealized gain
(loss)
2.20
(1.53
)
(6.39
)
2.22
(1.71
)
1.61
Total from investment operations
2.72
(0.39
)
(4.96
)
3.80
(0.15
)
3.26
Distributions paid to
shareholders from:
Net investment income
(0.80
)
(1.10
)
(1.40
)
(1.48
)
(1.45
)
(1.64
)
Return of capital
-
(0.21
)
(0.10
)
(0.05
)
(0.14
)
(0.06
)
Total distributions paid to
Common Shareholders
(0.80
)
(1.31
)
(1.50
)
(1.53
)
(1.59
)
(1.70
)
Net asset value, end of period
$18.69
$16.77
$18.47
$24.93
$22.66
$24.40
Market value, end of period
$17.06
$14.23
$16.39
$25.48
$21.56
$24.07
Total return based on net asset
value(b)
16.84
%
(1.56
)%
(20.30
)%
17.25
%
(0.05
)%
15.44
%
Total return based on market
value(b)
25.69
%
(5.86
)%
(30.77
)%
25.89
%
(3.60
)%
27.06
%
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)
$1,137,392
$1,020,665
$1,123,887
$1,516,364
$1,376,701
$1,482,428
Ratio of total expenses to average
net assets
4.63
% (c)
4.34
%
2.22
%
1.72
%
1.98
%
2.70
%
Ratio of total expenses to average
net assets excluding interest
expense
1.47
% (c)
1.42
%
1.35
%
1.33
%
1.31
%
1.33
%
Ratio of net investment income
(loss) to average net assets
5.69
% (c)
6.32
%
6.59
%
6.44
%
6.93
%
7.14
%
Portfolio turnover rate
19
%
39
%
25
%
39
%
45
%
40
%
Indebtedness:
Total loan and reverse repurchase
agreement outstanding (in
000's)
$581,700
$553,200
$549,600
$676,000
$616,000
$646,000
Asset coverage per $1,000 of
indebtedness (d)
$2,955
$2,845
$3,045
$3,243
$3,235
$3,295
Total loan outstanding (in 000's)
$481,700
$453,200
$449,600
$576,000
$516,000
$646,000
Asset coverage per $1,000 of
indebtedness (e)
$3,361
$3,252
$3,500
$3,633
$3,668
$3,295
(a)
Based on average shares outstanding.
(b)
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 Share Price for market value returns. Total returns do not reflect sales load and are not annualized for periods of less
than one year. Past performance is not indicative of future results.
(c)
Annualized.
(d)
Calculated by subtracting the Fund's total liabilities (not including the loan and reverse repurchase agreement outstanding) from
the Fund's total assets, and dividing by the outstanding loan and reverse repurchase agreement balances in 000's.
(e)
Calculated by subtracting the Fund's total liabilities (not including the loan outstanding) from the Fund's total assets, and dividing
by the outstanding loan balance in 000's.
See Notes to Financial Statements
Page 19
Notes to Financial Statements
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
1. Organization
First Trust Intermediate Duration Preferred & Income Fund (the "Fund") is a 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 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 Fund's primary investment objective is to seek a high level of current income. The Fund has a secondary objective of capital appreciation. The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its managed assets in preferred securities and other income producing securities issued by U.S. and non-U.S. companies, including traditional preferred securities, hybrid preferred securities that have investment and economic characteristics of both preferred securities and debt securities, floating rate and fixed-to-floating rate preferred securities, debt securities, convertible securities and contingent convertible securities. There can be no assurance that the Fund will achieve its investment objectives. The Fund seeks to maintain, under normal market conditions, a duration of between three and eight years. The Fund may not be appropriate for all investors.
2. Significant Accounting Policies
The Fund is considered an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board Accounting Standards Codification Topic 946, "Financial Services-Investment Companies." The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of the financial statements. The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
A. Portfolio Valuation
The net asset value ("NAV") of the Common Shares of the Fund is determined daily as of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time, on each day the NYSE is open for trading. If the NYSE closes early on a valuation day, the NAV is determined as of that time. Domestic debt securities and foreign securities are priced using data reflecting the earlier closing of the principal markets for those securities. The Fund's NAV per Common Share is calculated by dividing the value of all assets of the Fund (including accrued interest and dividends), less all liabilities (including accrued expenses, dividends declared but unpaid and any borrowings of the Fund), by the total number of Common Shares outstanding.
The Fund's investments are valued daily at market value or, in the absence of market value with respect to any portfolio securities, at fair value. Market value prices represent readily available market quotations such as last sale or official closing prices from a national or foreign exchange (i.e., a regulated market) and are primarily obtained from third-party pricing services. Fair value prices represent any prices not considered market value prices and are either obtained from a third-party pricing service or are determined by the Pricing Committee of the Fund's investment advisor, First Trust Advisors L.P. ("First Trust" or the "Advisor"), in accordance with valuation procedures approved by the Fund's Board of Trustees, and in accordance with provisions of the 1940 Act and rules thereunder. Investments valued by the Advisor's Pricing Committee, if any, are footnoted as such in the footnotes to the Portfolio of Investments. The Fund's investments are valued as follows:
Preferred stocks and other equity securities listed on any national or foreign exchange (excluding Nasdaq, Inc. ("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 more than one securities exchange are valued at the last sale price or official closing price, as applicable, at the close of the securities exchange representing the primary exchange for such securities.
Corporate bonds, notes and other debt securities are fair valued on the basis of valuations provided by a third-party pricing service approved by the Advisor's Pricing Committee, 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.
Equity securities traded in an over-the-counter market are valued at the close price or the last trade price.
Page 20
Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Advisor's Pricing Committee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended (the "1933 Act")) for which a third-party pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market or fair value price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of the Fund's NAV or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the third-party pricing service, does not reflect the security's fair value. As a general principle, the current fair value of a security would appear to be the amount which the owner might reasonably expect to receive for the security upon its current sale. When fair value prices are used, generally they will differ from market quotations or official closing prices on the applicable exchanges. A variety of factors may be considered in determining the fair value of such securities, including, but not limited to, the following:
1)
the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price;
2)
the type of security;
3)
the size of the holding;
4)
the initial cost of the security;
5)
transactions in comparable securities;
6)
price quotes from dealers and/or third-party pricing services;
7)
relationships among various securities;
8)
information obtained by contacting the issuer, analysts, or the appropriate stock exchange;
9)
an analysis of the issuer's financial statements;
10)
the existence of merger proposals or tender offers that might affect the value of the security; and
11)
other relevant factors.
If the securities in question are foreign securities, the following additional information may be considered:
1)
the last sale price on the exchange on which they are principally traded;
2)
the value of similar foreign securities traded on other foreign markets;
3)
ADR trading of similar securities;
4)
closed-end fund or exchange-traded fund trading of similar securities;
5)
foreign currency exchange activity;
6)
the trading prices of financial products that are tied to baskets of foreign securities;
7)
factors relating to the event that precipitated the pricing problem;
8)
whether the event is likely to recur;
9)
whether the effects of the event are isolated or whether they affect entire markets, countries or regions; and
10)
other relevant factors.
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:
•
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.
•
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.
Page 21
Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
•
Level 3 - Level 3 inputs are unobservable inputs. Unobservable inputs may reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the investment.
The inputs or methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. A summary of the inputs used to value the Fund's investments as of April 30, 2024, is included with the Fund's Portfolio of Investments.
B. Reverse Repurchase Agreements
Reverse repurchase agreements were utilized as leverage for the Fund. A reverse repurchase agreement, although structured as a sale and repurchase obligation, acts as financing under which Fund assets are pledged as collateral to secure a short-term loan. Generally, the other party to the agreement makes the loan in an amount equal to a percentage of the market value of the pledged collateral. At the maturity of the reverse repurchase agreement, the loan will be repaid and the collateral will correspondingly be received back by the Fund. While used as collateral, the assets continue to pay principal and interest which are for the benefit of the Fund.
Information for the six months ended April 30, 2024:
Maximum amount outstanding during the period . . . . . . . . . . . . . . . . . . . . $100,000,000
Average amount outstanding during the period* . . . . . . . . . . . . . . . . . . . . . $100,000,000
* The average amount outstanding during the period was calculated by adding the borrowings at the end of each day and dividing the sum by the number of days in the six months ended April 30, 2024. There was $100,000,000 outstanding at April 30, 2024, which approximates fair value.
During the six months ended April 30, 2024, the interest rates ranged from 6.06% to 6.12% with a weighted average interest rate of 6.08%, on borrowings by the Fund under reverse repurchase agreements, which had interest expense that aggregated $3,072,906. The rate as of April 30, 2024 was 6.07%
C. Securities Transactions and Investment Income
Securities transactions are recorded as of the trade date. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Amortization of premiums and the accretion of discounts are recorded using the effective interest method.
The United Kingdom's Financial Conduct Authority (the "FCA"), which regulates the London Interbank Offered Rates ("LIBOR"), ceased making LIBOR available as a reference rate over a phase-out period that began December 31, 2021. The overnight and 12-month USD LIBOR settings permanently ceased as of June 30, 2023. The FCA announced that the 1-, 3- and 6-month USD LIBOR settings will continue to be published using a synthetic methodology to serve as a fallback for non-U.S. contracts until September 2024. In response to the discontinuation of LIBOR, investors have added fallback provisions to existing contracts for investments whose value is tied to LIBOR, with most fallback provisions requiring the adoption of the Secured Overnight Financing Rate ("SOFR") as a replacement rate. There is no assurance that any alternative reference rate, including SOFR, will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. At this time, it is not possible to predict the full impact of the elimination of LIBOR and the establishment of an alternative reference rate on the Fund or its investments.
The Fund may hold real estate investments trusts ("REITs"). Distributions from such investments may be comprised of return of capital, capital gains and income. 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 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.
D. Restricted Securities
The Fund invests in restricted securities, which are securities that may not be offered for public sale without first being registered under the 1933 Act. Prior to registration, restricted securities may only be resold in transactions exempt from registration under Rule 144A under the 1933 Act, normally to qualified institutional buyers. As of April 30, 2024, the Fund held restricted securities as shown in the following table that Stonebridge Advisors LLC ("Stonebridge" or the "Sub-Advisor") has deemed illiquid pursuant to procedures adopted by the Fund's Board of Trustees. Although market instability can result in periods of increased overall market illiquidity, liquidity for each security is determined based on security-specific factors and assumptions, which require subjective judgment. The Fund does not have the right to demand that such securities be registered. These securities are valued according to the
Page 22
Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
valuation procedures as stated in the Portfolio Valuation note (Note 2A) and are not expressed as a discount to the carrying value of a comparable unrestricted security. There are no unrestricted securities with the same maturity dates and yields for these issuers.
Security
Acquisition
Date
Par
Amount/Shares
Current Price
Carrying
Cost
Value
% of
Net
Assets
Dairy Farmers of America, Inc.,
7.13%
9/15/16
$6,000,000
$93.63
$6,000,000
$5,617,500
0.49
%
Fortegra Financial Corp., 8.50%,
10/15/57
10/12/17 - 3/12/18
$15,300,000
98.24
15,343,460
15,030,789
1.32
FT Real Estate Securities Co.,
Inc., 9.50%
6/15/16
12
1,030,000.00
15,990,000
12,360,000
1.09
Land O'Lakes Capital Trust I,
7.45%, 03/15/28
3/20/15 - 2/25/19
$7,329,000
98.41
7,592,132
7,212,689
0.63
$44,925,592
$40,220,978
3.53
%
E. Offsetting on the Statement of Assets and Liabilities
Offsetting assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset on the Statement of Assets and Liabilities and disclose instruments and transactions subject to master netting or similar agreements. These disclosure requirements are intended to help investors and other financial statement users better assess the effect or potential effect of offsetting arrangements on the Fund's financial position. The transactions subject to offsetting disclosures are derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions.
This disclosure, if applicable, is included within each Fund's Portfolio of Investments under the heading "Offsetting Assets and Liabilities." For financial reporting purposes, the Fund does not offset financial assets and financial liabilities that are subject to master netting arrangements ("MNAs") or similar agreements on the Statement of Assets and Liabilities. MNAs provide the right, in the event of default (including bankruptcy and insolvency), for the non-defaulting counterparty to liquidate the collateral and calculate the net exposure to the defaulting party or request additional collateral.
At April 30, 2024, reverse repurchase agreement assets and liabilities (by type) on a gross basis are as follows:
Gross Amounts not Offset
in the Statement of
Assets and Liabilities
Gross
Amounts of
Recognized
Liabilities
Gross Amounts
Offset in the
Statement of
Assets
and Liabilities
Net Amounts of
Liabilities
Presented
in the Statement
of Assets and
Liabilities
Financial
Instruments
Collateral
Amounts
Pledged
Net
Amount
Reverse Repurchase
Agreement
$(100,000,000
)
$-
$(100,000,000
)
$100,000,000
$-
$-
F. Dividends and Distributions to Shareholders
Dividends from net investment income, if any, are declared and paid monthly by the Fund, or as the Board of Trustees may determine from time to time. Distributions of net realized capital gains earned by the Fund, if any, are distributed at least annually.
Distributions from income and realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These permanent differences are primarily due to the varying treatment of income and gain/loss on portfolio securities held by the Fund and have no impact on net assets or NAV per share. Temporary differences, which arise from recognizing certain items of income, expense and gain/loss in different periods for financial statement and tax purposes, will reverse at some point in the future.
Page 23
Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
The tax character of distributions paid by the Fund during the fiscal year ended October 31, 2023, was as follows:
Distributions paid from:
Ordinary income
$66,905,271
Capital gains
-
Return of capital
12,805,383
As of October 31, 2023, the components of distributable earnings and net assets on a tax basis were as follows:
Undistributed ordinary income
$-
Undistributed capital gains
-
Total undistributed earnings
-
Accumulated capital and other losses
(151,030,217
)
Net unrealized appreciation (depreciation)
(241,612,693
)
Total accumulated earnings (losses)
(392,642,910
)
Other
-
Paid-in capital
1,413,308,176
Total net assets
$1,020,665,266
G. Income Taxes
The Fund intends to continue to qualify as a regulated investment company by complying with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, which includes distributing substantially all of its net investment income and net realized gains to shareholders. Accordingly, no provision has been made for federal and state income taxes. However, due to the timing and amount of distributions, the Fund may be subject to an excise tax of 4% of the amount by which approximately 98% of the Fund's taxable income exceeds the distributions from such taxable income for the calendar year.
The Fund intends to utilize provisions of the federal income tax laws, which allow it to carry a realized capital loss forward indefinitely following the year of the loss and offset such loss against any future realized capital gains. The Fund is subject to certain limitations under U.S. tax rules on the use of capital loss carryforwards and net unrealized built-in losses. These limitations apply when there has been a 50% change in ownership. At October 31, 2023, for federal income tax purposes, the Fund had $151,030,217 of capital loss carryforwards available, to the extent provided by regulations, to offset future capital gains.
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. Taxable years ended 2020, 2021, 2022, and 2023 remain open to federal and state audit. As of April 30, 2024, 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.
As of April 30, 2024, the aggregate cost, gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation/(depreciation) on investments (including short positions and derivatives, if any) for federal income tax purposes were as follows:
Tax Cost
Gross
Unrealized
Appreciation
Gross
Unrealized
(Depreciation)
Net Unrealized
Appreciation
(Depreciation)
$1,811,761,590
$33,502,794
$(145,639,394)
$(112,136,600)
H. Expenses
The Fund will pay all expenses directly related to its operations.
3. Investment Advisory Fee, Affiliated Transactions and Other Fee Arrangements
First Trust, the investment advisor to the Fund, is a limited partnership with one limited partner, Grace Partners of DuPage L.P., and one general partner, The Charger Corporation. The Charger Corporation is an Illinois corporation controlled by James A. Bowen, Chief Executive Officer of First Trust. First Trust is responsible for the ongoing monitoring of the Fund's investment portfolio, managing the Fund's business affairs and providing certain administrative services necessary for the management of the Fund. For
Page 24
Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
these services, First Trust is entitled to a monthly fee calculated at an annual rate of 0.85% of the Fund's Managed Assets (the average daily total asset value of the Fund minus the sum of the Fund's liabilities other than the principal amount of borrowings or reverse repurchase agreements, if any). First Trust also provides fund reporting services to the Fund for a flat annual fee in the amount of $9,250.
Stonebridge, a majority-owned affiliate of First Trust, serves as the Fund's sub-advisor and manages the Fund's portfolio subject to First Trust's supervision. The Sub-Advisor receives a monthly portfolio management fee calculated at an annual rate of 0.425% of the Fund's Managed Assets that is paid by First Trust out of its investment advisory fee.
First Trust Capital Partners, LLC, an affiliate of First Trust, owns a 51% ownership interest in Stonebridge.
Brown Brothers Harriman & Co. ("BBH") serves as the Fund's administrator, fund accountant and custodian in accordance with certain fee arrangements. As administrator and fund accountant, BBH is responsible for providing certain administrative and accounting services to the Fund, including maintaining the Fund's books of account, records of the Fund's securities transactions, and certain other books and records. As custodian, BBH is responsible for custody of the Fund's assets.
Computershare, Inc. ("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 that is allocated equally among each fund in the First Trust Fund Complex. Each Independent Trustee is also paid an annual per fund fee that varies based on whether the fund is a closed-end or other actively managed fund, a target outcome fund or an index fund.
Additionally, the Chairs of the Audit Committee, Nominating and Governance Committee and Valuation Committee, the Vice Chair of the Audit Committee, the Lead Independent Trustee and the Vice Lead Independent Trustee are paid annual fees to serve in such capacities, with such compensation allocated pro rata among each fund in the First Trust Fund Complex based on net assets. Independent Trustees are reimbursed for travel and out-of-pocket expenses in connection with all meetings. The Committee Chairs, the Audit Committee Vice Chair, the Lead Independent Trustee and the Vice Lead Independent Trustee rotate periodically in serving in such capacities. The officers and "Interested" Trustee receive no compensation from the Fund for acting in such capacities.
4. Purchases and Sales of Securities
For the six months ended April 30, 2024, the cost of purchases and proceeds from sales of investments, excluding short term investments were $334,994,015 and $322,924,050, respectively.
5. Borrowings
The Fund entered into a credit agreement with The Bank of Nova Scotia that has a maximum commitment amount of $725,000,000. The borrowing rate under the facility is equal to the 1-month Term SOFR plus 75 basis points plus the SOFR adjustment of 10 basis points. In addition, under the facility, the Fund pays a commitment fee of 0.15% on the undrawn amount of such facility on any date that the loan balance is less than 50% of the total commitment amount. The average amount outstanding between November 1, 2023 and April 30, 2024, was $471,684,615 with a weighted average interest rate of 6.18%. As of April 30, 2024, the Fund had outstanding borrowings of $481,700,000, which approximates fair value, under this committed facility agreement. The borrowings are categorized as Level 2 within the fair value hierarchy. The high and low annual interest rates for the six months ended April 30, 2024, were 6.22% and 6.16%, respectively. The interest rate at April 30, 2024, was 6.17%
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 was the following subsequent event:
Pursuant to approval by the Fund's Board of Trustees, The Bank of New York Mellon, 240 Greenwich Street, New York, New York, 10286, replaced Brown Brothers Harriman & Co. as the administrator, custodian, and fund accountant on June 3, 2024.
Page 25
Additional Information
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
Dividend Reinvestment Plan
If your Common Shares are registered directly with the Fund or if you hold your Common Shares with a brokerage firm that participates in the Fund's Dividend Reinvestment Plan (the "Plan"), unless you elect, by written notice to the Fund, to receive cash distributions, all dividends, including any capital gain distributions, on your Common Shares will be automatically reinvested by Computershare Trust Company N.A. (the "Plan Agent"), in additional Common Shares under the Plan. If you elect to receive cash distributions, you will receive all distributions in cash paid by check mailed directly to you by the Plan Agent, as the dividend paying agent.
If you decide to participate in the Plan, the number of Common Shares you will receive will be determined as follows:
(1)
If Common Shares are trading at or above net asset value ("NAV") at the time of valuation, the Fund will issue new shares at a price equal to the greater of (i) NAV per Common Share on that date or (ii) 95% of the market price on that date.
(2)
If Common Shares are trading below NAV at the time of valuation, the Plan Agent will receive the dividend or distribution in cash and will purchase Common Shares in the open market, on the NYSE or elsewhere, for the participants' accounts. It is possible that the market price for the Common Shares may increase before the Plan Agent has completed its purchases. Therefore, the average purchase price per share paid by the Plan Agent may exceed the market price at the time of valuation, resulting in the purchase of fewer shares than if the dividend or distribution had been paid in Common Shares issued by the Fund. The Plan Agent will use all dividends and distributions received in cash to purchase Common Shares in the open market within 30 days of the valuation date except where temporary curtailment or suspension of purchases is necessary to comply with federal securities laws. Interest will not be paid on any uninvested cash payments.
You may elect to opt-out of or withdraw from the Plan at any time by giving written notice to the Plan Agent, or by telephone at (866) 340-1104, in accordance with such reasonable requirements as the Plan Agent and the Fund may agree upon. If you withdraw or the Plan is terminated, you will receive a certificate for each whole share in your account under the Plan, and you will receive a cash payment for any fraction of a share in your account. If you wish, the Plan Agent will sell your shares and send you the proceeds, minus brokerage commissions.
The Plan Agent maintains all Common Shareholders' accounts in the Plan and gives written confirmation of all transactions in the accounts, including information you may need for tax records. Common Shares in your account will be held by the Plan Agent in non-certificated form. The Plan Agent will forward to each participant any proxy solicitation material and will vote any shares so held only in accordance with proxies returned to the Fund. Any proxy you receive will include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions in Common Shares. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases.
Automatically reinvesting dividends and distributions does not mean that you do not have to pay income taxes due upon receiving dividends and distributions. Capital gains and income are realized although cash is not received by you. Consult your financial advisor for more information.
If you hold your Common Shares with a brokerage firm that does not participate in the Plan, you will not be able to participate in the Plan and any dividend reinvestment may be effected on different terms than those described above.
The Fund reserves the right to amend or terminate the Plan if in the judgment of the Board of Trustees the change is warranted. There is no direct service charge to participants in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants. Additional information about the Plan may be obtained by writing Computershare, Inc., P.O. Box 43006, Providence, RI 02940-3006.
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 at www.ftportfolios.com; and (3) on the Securities and Exchange Commission's ("SEC") website at www.sec.gov.
Portfolio Holdings
The Fund files portfolio holdings information for each month in a fiscal quarter within 60 days after the end of the relevant fiscal quarter on Form N-PORT. Portfolio holdings information for the third month of each fiscal quarter will be publicly available on the
Page 26
Additional Information (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
SEC's website at www.sec.gov. The Fund's complete schedule of portfolio holdings for the second and fourth quarters of each fiscal year is included in the semi-annual and annual reports to shareholders, respectively, and is filed with the SEC on Form N-CSR. The semi-annual and annual report for the Fund is available to investors within 60 days after the period to which it relates. The Fund's Forms N-PORT and Forms N-CSR are available on the SEC's website listed above.
Submission of Matters to a Vote of Shareholders
The Fund held its Annual Meeting of Shareholders (the "Annual Meeting") on April 30, 2024. At the Annual Meeting, Thomas R. Kadlec and Richard E. Erickson were elected by the Common Shareholders of First Trust Intermediate Duration Preferred & Income Fund as Class II Trustees for a three-year term expiring at the Fund's annual meeting of shareholders in 2027. The number of votes cast in favor of Mr. Kadlec was 48,273,021 and the number of votes withheld was 1,819,591. The number of votes cast in favor of Mr. Erickson was 48,218,711 and the number of votes withheld was 1,873,901. Denise M. Keefe, Robert F. Keith, James A. Bowen, Niel B. Nielson, and Bronwyn Wright are the other current and continuing Trustees.
Principal Risks
The Fund is a closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. The Fund is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance that the Fund will achieve its investment objectives. The following discussion summarizes the principal risks associated with investing in the Fund, which includes the risk that you could lose some or all of your investment in the Fund. The Fund is subject to the informational requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 and, in accordance therewith, files reports, proxy statements and other information that is available for review.
Contingent Convertible Securities Risk.CoCos are hybrid securities most commonly issued by banking institutions that present risks similar to debt securities and convertible securities. CoCos are distinct in that they are intended to either convert into equity or have their principal written down upon the occurrence of certain "triggers." When an issuer's capital ratio falls below a specified trigger level, or in a regulator's discretion depending on the regulator's judgment about the issuer's solvency prospects, a CoCo may be written down, written off or converted into an equity security. Due to the contingent write-down, write-off and conversion feature, CoCos may have substantially greater risk than other securities in times of financial stress. If the trigger level is breached, the issuer's decision to write down, write off or convert a CoCo may be outside its control, and the Fund may suffer a complete loss on an investment in CoCos with no chance of recovery even if the issuer remains in existence. CoCos are usually issued in the form of subordinated debt instruments to provide the appropriate regulatory capital treatment. If an issuer liquidates, dissolves or winds-up before a conversion to equity has occurred, the rights and claims of the holders of the CoCos (such as the Fund) against the issuer generally rank junior to the claims of holders of unsubordinated obligations of the issuer. In addition, if the CoCos are converted into the issuer's underlying equity securities after a conversion event (i.e., a "trigger"), each holder will be further subordinated. CoCos also may have no stated maturity and have fully discretionary coupons. This means coupon payments can be canceled at the issuer's discretion or at the request of the relevant regulatory authority in order to help the bank absorb losses, without causing a default. In general, the value of CoCos is unpredictable and is influenced by many factors including, without limitation: the creditworthiness of the issuer and/or fluctuations in such issuer's applicable capital ratios; supply and demand for CoCos; general market conditions and available liquidity; and economic, financial and political events that affect the issuer, its particular market or the financial markets in general.
Credit Agency Risk. Credit ratings are determined by credit rating agencies and are only the opinions of such entities. Ratings assigned by a rating agency are not absolute standards of credit quality and do not evaluate market risk or the liquidity of securities. Any shortcomings or inefficiencies in credit rating agencies' processes for determining credit ratings may adversely affect the credit ratings of securities held by the Fund or such credit rating agency's ability to evaluate creditworthiness and, as a result, may adversely affect those securities' perceived or actual credit risk.
Credit and Below-Investment Grade Securities Risk. Credit risk is the risk that the issuer or other obligated party of a debt security in the Fund's portfolio will fail to pay, or it is perceived that it will fail to pay, dividends or interest and/or repay principal when due. Below-investment grade instruments, including instruments that are not rated but judged to be of comparable quality, are commonly referred to as high-yield securities or "junk" bonds and are considered speculative with respect to the issuer's capacity to pay dividends or interest and repay principal and are more susceptible to default or decline in market value than investment grade securities due to adverse economic and business developments. High-yield securities are often unsecured and subordinated to other creditors of the issuer. The market values for high-yield securities tend to be very volatile, and these securities are generally less liquid than investment grade securities. For these reasons, an investment in the Fund is subject to the following specific risks: (i) increased price sensitivity to changing interest rates and to a deteriorating economic environment; (ii) greater risk of loss due to default or declining credit quality; (iii) adverse company specific events more likely to render the issuer unable to make dividend, interest and/or principal payments; (iv) negative perception of the high-yield market which may depress the price and liquidity of high-yield securities; (v) volatility; and (vi) liquidity.
Page 27
Additional Information (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
Current Market Conditions Risk.Current market conditions risk is the risk that a particular investment, or shares of the Fund in general, may fall in value due to current market conditions. As a means to fight inflation, which remains at elevated levels, the Federal Reserve and certain foreign central banks have raised interest rates and expect to continue to do so, and the Federal Reserve has announced that it intends to reverse previously implemented quantitative easing. U.S. regulators have proposed several changes to market and issuer regulations which would directly impact the Fund, and any regulatory changes could adversely impact the Fund's ability to achieve its investment strategies or make certain investments. Recent and potential future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence in financial institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. The ongoing adversarial political climate in the United States, as well as political and diplomatic events both domestic and abroad, have and may continue to have an adverse impact the U.S. regulatory landscape, markets and investor behavior, which could have a negative impact on the Fund's investments and operations. Other unexpected political, regulatory and diplomatic events within the U.S. and abroad may affect investor and consumer confidence and may adversely impact financial markets and the broader economy. For example, ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East and the United States. The hostilities and sanctions resulting from those hostilities have and could continue to have a significant impact on certain Fund investments as well as Fund performance and liquidity. The economies of the United States and its trading partners, as well as the financial markets generally, may be adversely impacted by trade disputes and other matters. For example, the United States has imposed trade barriers and restrictions on China. In addition, the Chinese government is engaged in a longstanding dispute with Taiwan, continually threatening an invasion. If the political climate between the United States and China does not improve or continues to deteriorate, if China were to attempt invading Taiwan, or if other geopolitical conflicts develop or worsen, economies, markets and individual securities may be adversely affected, and the value of the Fund's assets may go down. The COVID-19 global pandemic, or any future public health crisis, and the ensuing policies enacted by governments and central banks have caused and may continue to cause significant volatility and uncertainty in global financial markets, negatively impacting global growth prospects. While vaccines have been developed, there is no guarantee that vaccines will be effective against emerging future variants of the disease. As this global pandemic illustrated, such events may affect certain geographic regions, countries, sectors and industries more significantly than others. Advancements in technology may also adversely impact markets and the overall performance of the Fund. For instance, the economy may be significantly impacted by the advanced development and increased regulation of artificial intelligence. These events, and any other future events, may adversely affect the prices and liquidity of the Fund's portfolio investments and could result in disruptions in the trading markets.
Cyber Security Risk.The Fund is susceptible to potential operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. Cyber security breaches may involve unauthorized access to the Fund's digital information systems through "hacking" or malicious software coding, but may also result from outside attacks such as denial-of-service attacks through efforts to make network services unavailable to intended users. In addition, cyber security breaches of the Fund's third-party service providers, such as its administrator, transfer agent, custodian, or Sub-Advisor, as applicable, or issuers in which the Fund invests, can also subject the Fund to many of the same risks associated with direct cyber security breaches. The Fund has established risk management systems designed to reduce the risks associated with cyber security. However, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers or third party service providers. Substantial costs may be incurred by the Fund in order to resolve or prevent cyber incidents in the future.
Illiquid and Restricted Securities Risk. The Fund may invest in securities that are restricted and/or illiquid. Restricted securities are securities that cannot be offered for public resale unless registered under the applicable securities laws or that have a contractual restriction that prohibits or limits their resale. Restricted securities may be illiquid as they generally are not listed on an exchange and may have no active trading market. Investments in restricted securities could have the effect of increasing the amount of the Fund's assets invested in illiquid securities if qualified institutional buyers are unwilling to purchase these securities. 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.
Inflation Risk. The Fund invests in securities that are subject to inflation risk. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. As inflation increases, the present value of the Fund's assets and distributions may decline. This risk is more prevalent with respect to debt securities. Inflation rates may change frequently and drastically as a result of various factors, including unexpected shifts in the domestic or global economy, and the Fund's investments may not keep pace with inflation, which may result in losses to Fund investors.
Page 28
Additional Information (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
Interest Rate and Duration Risk. Interest rate risk is the risk that securities will decline in value because of changes in market interest rates. For fixed rate securities, when market interest rates rise, the market value of such securities generally will fall. Investments in fixed rate securities with long-term maturities may experience significant price declines if long-term interest rates increase. During periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected prepayments. This may lock in a below-market yield, increase the security's duration and further reduce the value of the security. Fixed rate securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile 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. Although the Fund seeks to maintain a duration, under normal market circumstances, excluding the effects of leverage, of between three and eight years, if the effect of the Fund's use of leverage was included in calculating duration, it could result in a longer duration for the Fund.
The interest rates payable on floating rate securities are not fixed and may fluctuate based upon changes in market rates. As short-term interest rates decline, interest payable on floating rate securities typically decreases. Alternatively, during periods of rising interest rates, interest payable on floating rate securities typically increases. Changes in interest rates on floating rate securities may lag behind changes in market rates or may have limits on the maximum increases in interest rates. The value of floating rate securities may decline if their interest rates do not rise as much, or as quickly, as interest rates in general.
Many financial instruments use or may use a floating rate based upon the LIBOR. The United Kingdom's Financial Conduct Authority (the "FCA"), which regulates LIBOR, has ceased making LIBOR available as a reference rate over a phase-out period that began December 31, 2022. There is no assurance that any alternative reference rate, including the Secured Overnight Financing Rate ("SOFR") will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain Fund investments and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential effects of the transition away from LIBOR on the Fund or on certain instruments in which the Fund invests can be difficult to ascertain, and they may vary depending on a variety of factors, and they could result in losses to the Fund.
Interest Rate Swaps Risk.If short-term interest rates are lower than the Fund's fixed rate of payment on an interest rate swap, the swap will reduce common share net earnings. In addition, a default by the counterparty to a swap transaction could also negatively impact the performance of the common shares.
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. Leverage involves risks and special considerations for common shareholders including: (i) the likelihood of greater volatility of net asset value and market price of the common shares than a comparable portfolio without leverage; (ii) the risk that fluctuations in interest rates on borrowings will reduce the return to the common shareholders or will result in fluctuations in the dividends paid on the common shares; (iii) in a declining market, the use of leverage is likely to cause a greater decline in the net asset value of the common shares than if the Fund were not leveraged, which may result in a greater decline in the market price of the common shares; and (iv) when the Fund uses certain types of leverage, the investment advisory fee payable to the Advisor and by the Advisor to the Sub-Advisor will be higher than if the Fund did not use leverage.
Management Risk and Reliance on Key Personnel. The implementation of the Fund's investment strategy depends upon the continued contributions of certain key employees of the Advisor and Sub-Advisor, some of whom have unique talents and experience and would be difficult to replace. The loss or interruption of the services of a key member of the portfolio management team could have a negative impact on the Fund.
Market Discount from Net Asset Value. Shares of closed-end investment companies such as the Fund frequently trade at a discount from their net asset value. The Fund cannot predict whether its common shares will trade at, below or above net asset value.
Market Risk.Investments held by the Fund, as well as shares of the Fund itself, are subject to market fluctuations caused by real or perceived economic conditions, political events, regulatory factors or market developments, changes in interest rates and perceived trends in securities prices. Shares of the Fund could decline in value or underperform other investments as a result of the risk of loss associated with these market fluctuations. In addition, local, regional or global events such as war, acts of terrorism, market manipulation, government defaults, government shutdowns, regulatory actions, political changes, diplomatic developments, the imposition of sanctions and other similar measures, spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on the Fund and its investments. Any of such circumstances could have a materially negative impact on the value of the Fund's shares, the liquidity of an investment, and result in increased market volatility. During any such events, the Fund's shares may trade at increased premiums or discounts to their net asset value, the bid/ask spread on the Fund's shares may widen and the returns on investment may fluctuate.
Page 29
Additional Information (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
Non-U.S. Securities Risk. Investing in securities of non-U.S. issuers, which are generally denominated in non-U.S. currencies, 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. Foreign companies are generally not subject to the same accounting, auditing and financial reporting standards as are U.S. companies. In addition, there may be difficulty in obtaining or enforcing a court judgment abroad. These risks may be more pronounced to the extent that the Fund invests a significant amount of its assets in companies located in one region or in emerging markets.
Operational Risk.The Fund is subject to risks arising from various operational factors, including, but not limited to, human error, processing and communication errors, errors of the Fund's service providers, counterparties or other third-parties, failed or inadequate processes and technology or systems failures. The Fund relies on third-parties for a range of services, including custody. Any delay or failure relating to engaging or maintaining such service providers may affect the Fund's ability to meet its investment objective. Although the Fund and the Fund's investment advisor seek to reduce these operational risks through controls and procedures, there is no way to completely protect against such risks.
Potential Conflicts on Interest Risk. First Trust, Stonebridge and the portfolio managers have interests which may conflict with the interests of the Fund. In particular, First Trust and Stonebridge currently manage and may in the future manage and/or advise other investment funds or accounts with the same or substantially similar investment objective and strategies as the Fund. In addition, while the Fund is using leverage, the amount of the fees paid to First Trust (and by First Trust to Stonebridge) for investment advisory and management services are higher than if the Fund did not use leverage because the fees paid are calculated based on managed assets. Therefore, First Trust and Stonebridge have a financial incentive to leverage the Fund.
Preferred/Hybrid Preferred and Debt Securities Risk. An investment in preferred/hybrid preferred and debt securities is subject to certain risks, including:
•
Issuer Risk. The value of these securities may decline for a number of reasons which directly relate to the issuer, such as management performance, leverage and reduced demand for the issuer's goods and services.
•
Interest Rate Risk. Interest rate risk is the risk that fixed rate securities will decline in value because of changes in market interest rates. When market interest rates rise, the market value of fixed rate securities generally will fall. Market value generally falls further for fixed rate securities with longer duration. During periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected prepayments. This may lock in a below-market yield, increase the security's duration and further reduce the value of the security. Investments in fixed rate securities with long-term maturities may experience significant price declines if long-term interest rates increase.
•
Floating Rate and Fixed-to-Floating Rate 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. Securities with a floating or variable interest rate component can be less sensitive to interest rate changes than securities with fixed interest rates. 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.
•
Prepayment Risk. Prepayment risk is the risk that the issuer of a debt security will repay principal prior to the scheduled maturity date. During periods of declining interest rates, the issuer of a security may exercise its option to prepay principal earlier than scheduled, forcing the Fund to reinvest the proceeds from such prepayment in lower yielding securities, which may result in a decline in the Fund's income and distributions to common shareholders.
•
Reinvestment Risk. Reinvestment risk is the risk that income from the Fund's portfolio will decline if the Fund invests the proceeds from matured, traded or called securities at market interest rates that are below the Fund portfolio's current earnings rate.
•
Subordination Risk. Preferred securities are typically subordinated to bonds and other debt instruments in a company's capital structure, in terms of priority to corporate income and liquidation payments, and therefore will be subject to greater credit risk than those debt instruments.
In addition, preferred and hybrid preferred securities are subject to certain other risks, including deferral and omission risk, limited voting rights risk and special redemption rights risk.
Page 30
Additional Information (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
April 30, 2024 (Unaudited)
Reverse Repurchase Agreements Risk. The Fund's use of reverse repurchase agreements may involve leverage risk. There is also the risk that the market value of the securities acquired with the proceeds of the reverse repurchase agreement may decline below the price of the securities that the Fund has sold but remains obligated to repurchase. In addition, there is a risk that the market value of the securities retained by the Fund may decline. Reverse repurchase agreements also involve the risk that the purchaser fails to return the securities as agreed upon, files for bankruptcy or becomes insolvent. The Fund may be restricted from taking normal portfolio actions during such time, could be subject to loss to the extent that the proceeds of the agreement are less than the value of securities subject to the agreement and may experience adverse tax consequences.
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. The Fund may emphasize its investments in certain industries such as the banking and insurance industries and therefore may make the Fund more economically vulnerable in the event of a downturn in those industries. Financial companies are subject to extensive governmental regulation and intervention, which may adversely affect the scope of their activities, the prices they can charge, the amount and types of capital they must maintain and, potentially, their size. Governmental regulation may change frequently and may have significant adverse consequences for financial companies, including effects not intended by such regulation. The impact of more stringent capital requirements, or recent or future regulation in various countries, on any individual financial company or on financial companies as a whole cannot be predicted. Certain risks may impact the value of investments in financial companies more severely than those of investments in other issuers, including the risks associated with companies that operate with substantial financial leverage. Financial companies may also be adversely affected by volatility in interest rates, loan losses and other customer defaults, decreases in the availability of money or asset valuations, credit rating downgrades and adverse conditions in other related markets. Insurance companies in particular may be subject to severe price competition and/or rate regulation, which may have an adverse impact on their profitability. Financial companies are also a target for cyber attacks and may experience technology malfunctions and disruptions as a result.
Smaller Companies Risk.Small and/or mid capitalization companies may be more vulnerable to adverse general market or economic developments, and their securities may be less liquid and may experience greater price volatility than larger, more established companies as a result of several factors, including limited trading volumes, fewer products or financial resources, management inexperience and less publicly available information. Accordingly, such companies are generally subject to greater market risk than larger, more established companies.
Trust Preferred Securities Risk. The risks associated with trust preferred securities typically include the financial condition of the financial institution that creates the trust, as the trust typically has no business operations other than holding the subordinated debt issued by the financial institution and issuing the trust preferred securities and common stock backed by the subordinated debt. If a financial institution is financially unsound and defaults on interest payments to the trust, the trust will not be able to make payments to holders of the trust preferred securities such as the Fund. The issuer of trust preferred securities is generally able to defer or skip payments for up to five years without being in default and certain enhanced trust preferred securities may have longer interest payment deferral periods.
Valuation Risk. Unlike publicly traded common stock which trades on national exchanges, there is no central place or exchange for certain preferred securities and debt securities trading. Preferred securities and debt securities generally trade on an "over-the- counter" market which may be anywhere in the world where the buyer and seller can settle on a price. Due to the lack of centralized information and trading, the valuation of certain preferred securities and debt securities may carry more risk than that of common stock. Uncertainties in the conditions of the financial market, unreliable reference data, lack of transparency and inconsistency of valuation models and processes may lead to inaccurate asset pricing.
NOT FDIC INSURED
NOT BANK GUARANTEED
MAY LOSE VALUE
Page 31
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INVESTMENT ADVISOR
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
INVESTMENT SUB-ADVISOR
Stonebridge Advisors LLC
10 Westport Road, Suite C101
Wilton, CT 06897
ADMINISTRATOR,
FUND ACCOUNTANT &
CUSTODIAN
Brown Brothers Harriman & Co.
50 Post Office Square
Boston, MA 02110
TRANSFER AGENT
Computershare, Inc.
P.O. Box 43006
Providence, RI 02940
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 South Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
320 South Canal Street
Chicago, IL 60606

(b) Not applicable.

Item 2. Code of Ethics.

Not applicable.

Item 3. Audit Committee Financial Expert.

Not applicable.

Item 4. Principal Accountant Fees and Services.

Not applicable.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Investments.

(a) Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.
(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

(a) Not applicable.

(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.

There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.

Item 11. Controls and Procedures.

(a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the 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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

(a) Not applicable.
(b) Not applicable.

Item [18.]. Recovery of Erroneously Awarded Compensation.

Not applicable.

Item 14. Exhibits.

(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(registrant)

First Trust Intermediate Duration Preferred & Income Fund

By (Signature and Title)* /s/ James M. Dykas
James M. Dykas, President and Chief Executive Officer
(principal executive officer)
Date: July 8, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)* /s/ James M. Dykas
James M. Dykas, President and Chief Executive Officer
(principal executive officer)
Date: July 8, 2024
By (Signature and Title)* /s/ Derek D. Maltbie
Derek D. Maltbie, Treasurer, Chief Financial Officer
and Chief Accounting Officer
(principal financial officer)
Date: July 8, 2024

* Print the name and title of each signing officer under his or her signature.