N-CSR 1 fpf_ncsr.htm ANNUAL REPORT TO SHAREHOLDERS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-22795

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: October 31, 2018

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.

The Report to Shareholders is attached herewith.

 
First Trust
Intermediate Duration Preferred & Income Fund (FPF)
Annual Report
For the Year Ended
October 31, 2018

Table of Contents
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Annual Report
October 31, 2018
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 shares may therefore be less than what you paid for them. Accordingly, you can lose money by investing in the Fund. See “Risk Considerations” in the Additional Information section of this report for a discussion of certain other risks of investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit www.ftportfolios.com or speak with your financial advisor. Investment returns, net asset value and common share price will fluctuate and Fund shares, when sold, may be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund performance on the Fund’s 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)
Annual Letter from the Chairman and CEO
October 31, 2018
Dear Shareholders,
First Trust is pleased to provide you with the annual report for the First Trust Intermediate Duration Preferred & Income Fund (the “Fund”), which contains detailed information about the Fund for the twelve months ended October 31, 2018, including a market overview and a performance analysis. We encourage you to read this report carefully and discuss it with your financial advisor.
As I mentioned in my April 2018 letter, 2017 was a very strong year for U.S. and global markets. Investors were rewarded with rising markets and very little volatility. As 2018 began, investors were hoping for another strong year in the markets. For the entire first quarter, however, increased market volatility was the norm for U.S. and global markets. The markets continued their volatility throughout the second quarter. During April and May, the Dow Jones Industrial Average (“DJIA”) closed out each month slightly down, but ended both June and July slightly up. August was a strong month for stocks, and the DJIA finished August just under its previous high in January of 2018. At the close of the third quarter in September, the markets had moved higher into positive territory. In fact, all three major U.S. indices (the Nasdaq Composite Index, the DJIA and the S& P 500® Index) hit record levels during the third quarter. In October, markets were again very volatile, surprising analysts and investors alike. Both global and U.S. markets fell on fears of slowing growth, trade wars and higher interest rates. The DJIA was down 5% for October and the MSCI EAFE Index, an index of stocks in 21 developed markets (excluding the U.S. and Canada), was down 9% for the same period.
Based on continued strong job growth and the economic outlook in the U.S., the Federal Reserve (the “Fed”) raised interest rates in March, June and September. At their September meeting, the Fed also indicated the possibility of one more rate hike in 2018 as well as three more rate hikes in 2019.
Trade tensions have had an impact on markets around the world and could continue to do so in the future. However, our economists believe that the long-term impact of U.S. tariffs will be to encourage countries to come back to the table and talk about more equal trade. Despite market volatility, we continue to believe that the combination of low interest rates, low inflation and strong corporate earnings still point to a positive economic environment and further growth, though we understand that past performance can never guarantee future performance.
We continue to believe that you should invest for the long term and be prepared for market movements, which can happen at any time. You can do this by keeping current on your portfolio and by speaking regularly with your investment professional. Markets go up and they also go down, but savvy investors are prepared for either through careful attention to investment goals.
Thank you for giving First Trust the opportunity to be a part of your financial plan. 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 October 31, 2018 (Unaudited)
Fund Statistics  
Symbol on New York Stock Exchange FPF
Common Share Price $20.47
Common Share Net Asset Value (“NAV”) $22.84
Premium (Discount) to NAV (10.38)%
Net Assets Applicable to Common Shares $1,387,960,520
Current Distribution per Common Share(1) $0.1425
Current Annualized Distribution per Common Share $1.7100
Current Distribution Rate on Common Share Price(2) 8.35%
Current Distribution Rate on NAV(2) 7.49%
Common Share Price & NAV (weekly closing price)
  
 
Performance      
    Average Annual
Total Return
  1 Year Ended
10/31/18
5 Years Ended
10/31/18
Inception (5/23/13)
to 10/31/18
Fund Performance(3)      
NAV -2.23% 8.30% 7.72%
Market Value -10.78% 8.36% 4.68%
Index Performance      
ICE BofAML Fixed Rate Preferred Securities Index -1.23% 6.41% 4.63%
ICE BofAML U.S. Capital Securities Index -2.14% 4.45% 4.07%
Blended Index(4) -1.67% 5.44% 4.37%
    
(1) Most recent distribution paid or declared through 10/31/2018. Subject to change in the future.
(2) Distribution rates are calculated by annualizing the most recent distribution paid or declared through the report date and then dividing by Common Share Price or NAV, as applicable, as of 10/31/2018. 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 the following: ICE BofAML Fixed Rate Preferred Securities Index (50%) and ICE BofAML U.S. Capital Securities Index (50%). The Blended Index was added to reflect the diverse allocation of institutional preferred and hybrid securities in the Fund’s Portfolio. The indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Indexes are unmanaged and an investor cannot invest directly in an index.
Page 2

First Trust Intermediate Duration Preferred & Income Fund (FPF)
“AT A GLANCE” (Continued)
As of October 31, 2018 (Unaudited)
Industry Classification % of Total
Investments
Banks 47.2%
Insurance 19.7
Food Products 5.4
Oil, Gas & Consumable Fuels 4.8
Electric Utilities 4.7
Capital Markets 4.1
Multi-Utilities 2.3
Diversified Telecommunication Services 2.0
Metals & Mining 1.3
Energy Equipment & Services 1.3
Independent Power and Renewable Electricity Producers 1.1
Mortgage Real Estate Investment Trusts 1.1
Transportation Infrastructure 1.0
Automobiles 1.0
Equity Real Estate Investment Trusts 1.0
Diversified Financial Services 0.9
Thrifts & Mortgage Finance 0.5
Wireless Telecommunication Services 0.3
Consumer Finance 0.3
Total 100.0%
    
Top Ten Holdings % of Total
Investments
Enel S.p.A. 2.3%
Catlin Insurance Co., Ltd. 2.0
Emera, Inc., Series 16-A 1.9
Barclays PLC 1.8
Land O’Lakes, Inc. 1.8
Farm Credit Bank of Texas, Series 1 1.8
Credit Agricole S.A. 1.8
Cooperatieve Rabobank UA 1.7
Royal Bank of Scotland Group PLC 1.7
BNP Paribas S.A. 1.6
Total 18.4%
    
Credit Quality(5) % of Total
Fixed-Income
Investments
A- 3.8%
BBB+ 11.3
BBB 17.2
BBB- 25.1
BB+ 21.3
BB 11.8
BB- 2.0
B+ 2.5
B 0.2
Not Rated 4.8
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 Standard & Poor’s Ratings Group, a division of the McGraw Hill Companies, Inc., Moody’s Investors Service, Inc., Fitch Ratings or a comparably rated NRSRO. For situations in which a security is rated by more than one NRSRO and the ratings are not equivalent, the highest 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)
Annual Report
October 31, 2018 (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
Scott T. Fleming – Chief Executive Officer and President
Robert Wolf – Chief Investment Officer, Senior Vice President and Senior Portfolio Manager
Commentary
Market Recap
The fiscal year ended October 31, 2018 was a volatile period for the preferred and hybrid securities market with all parts of the market experiencing negative performance. This was largely driven by rising interest rates as well as economic and political headlines across the globe. The Federal Reserve (the “Fed”) guided short-term interest rates higher by 0.25% four times during the period as improving economic and employment data in the United States supported further rate hikes. Longer term interest rates also moved higher, but the curve flattened substantially as short-term rates increased at a faster pace. Credit spreads also managed to tighten within the preferred and hybrid securities market amid continued improvement in credit fundamentals, despite political uncertainty in Turkey, BREXIT negotiations, and trade tensions between China and the United States weighing on fixed income markets overall. These headlines pressured contingent capital securities (“CoCos”) in particular, which are largely issued by European banks. As a result, CoCos, as measured by the ICE BofAML USD Investment Grade Contingent Capital Index (“COCU”), were the worst performing part of the preferred and hybrid market during the period, as COCU was down -2.52%. Finally, the retail $25 par market outperformed the institutional $1000 par market during the period, as limited new issuance and net negative supply supported that part of the market. For the fiscal year, the retail market fell 1.23% while the institutional market lost 2.14% according to The ICE BofAML Fixed Rate Preferred Securities Index (“P0P1”) and the ICE BofAML U.S. Capital Securities Index (“C0CS”), respectively.
Performance Analysis
For the fiscal year ended October 31, 2018, the net asset value (“NAV”) and market price total returns for the Fund were -2.23% and -10.78%, respectively. This compares to a total return of -1.67% for the Fund’s benchmark, which is a 50/50 blend of P0P1 and C0CS. The Fund’s underperformance was primarily due to leverage and an overweight to CoCos. However, the Fund was able to partially offset the underperformance through security selection within $25 par securities and non-CoCo institutional securities and an overweight to floating rate securities.
While the Fund’s leverage weighed on performance in a negative market, CoCos issued by European banks, which are not held in the benchmark, were the primary reason for underperformance during the period. Political volatility in Italy, BREXIT negotiations, and tariffs from the United States all weighed on CoCos throughout the period, despite improvements in European bank capitalization. CoCos continue to offer some of the most attractive yields and structures in the preferred and hybrid securities market and the Fund’s CoCo holdings are issued by well-capitalized multinational banks with stable credit fundamentals that we believe will outperform longer term.
Positive contributors to the Fund’s performance relative to the benchmark included superior security selection within $25 par securities and non-CoCo institutional securities. The Fund’s focus on variable rate securities with wide back-end reset spreads and shorter durations both contributed positively to relative performance.
The Fund also benefited from overweighting floating rate securities, which appreciated with rising short-term interest rates, spread tightening and a flattening yield curve. In the current rising interest rate environment, we believe it is prudent to maintain a conservative stance in regard to interest rates relative to the benchmark and peers.
The Fund also employed a hedging strategy throughout the year in order to further manage its interest rate risk. This strategy consisted of an interest rate swap, which benefited from the rising rate environment. Going forward, we continue to believe it is prudent to
Page 4

Portfolio Commentary (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
Annual Report
October 31, 2018 (Unaudited)
maintain a conservative interest rate stance relative to the benchmark, particularly if we are able to do so while the Fund continues to pay the highest distribution rate of peer closed-end funds.
Market and Fund Outlook
As we approach 2019, we believe the preferred and hybrid securities market will be positively supported by strong issuer credit fundamentals, attractive yields compared to other fixed income asset classes and a positive market technical from limited net new issue supply into 2019. Although headline risks of global trade wars and other geopolitical events will likely persist for the next 6 to 12 months, in our opinion, preferred and hybrid securities valuations already reflect these risks, in our opinion, and we believe credit fundamentals of issuers in this asset class are generally strong enough to withstand the possibility of slowing economic growth.
We continue to believe that U.S. interest rates should broadly continue to shift higher and the Treasury yield curve is likely to remain relatively flat into 2019. We believe short-term rates are likely to increase due to Fed normalization, while inflation pressures are likely to slowly push longer term rates higher overall. In the current environment, we believe the best total return and risk profile will likely be achieved by overweighting short to intermediate term securities. Additionally, absolute yields and yield spreads of preferreds and hybrids relative to U.S. Treasuries and other credit spread products remain at attractive levels and may continue to provide a cushion against rising interest rates, in our opinion.
The Fund will attempt to position the portfolio to protect against the largest risks in the market and continue to identify the best securities in all parts of the preferred and hybrid securities market to construct balanced portfolios that we believe will lead to long term outperformance.
Page 5

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments
October 31, 2018
Shares   Description   Stated
Rate
  Stated
Maturity
  Value
$25 PAR PREFERRED SECURITIES – 19.6%
    Banks – 3.4%            
85,593  
Banc of California, Inc., Series E

  7.00%   (a)   $2,191,181
197,943  
Bank of America Corp., Series HH (b)

  5.88%   (a)   4,932,740
149,642  
FNB Corp. (b) (c)

  7.25%   (a)   4,097,198
864,211  
GMAC Capital Trust I, Series 2, 3 Mo. LIBOR + 5.79% (b) (d)

  8.10%   02/15/40   22,694,181
206,326  
JPMorgan Chase & Co., Series DD

  5.75%   (a)   5,133,391
166,268  
Synovus Financial Corp., Series D (b) (c)

  6.30%   (a)   4,248,147
44,878  
Valley National Bancorp, Series A (c)

  6.25%   (a)   1,145,735
98,964  
Wintrust Financial Corp., Series D (b) (c)

  6.50%   (a)   2,557,230
        46,999,803
    Capital Markets – 1.4%            
211,494  
Apollo Global Management, LLC, Series B (b)

  6.38%   (a)   5,221,787
145,201  
Apollo Investment Corp. (b)

  6.88%   07/15/43   3,651,805
3,067  
Ares Management L.P., Series A

  7.00%   (a)   79,712
388,704  
Morgan Stanley, Series F (b) (c)

  6.88%   (a)   10,421,154
        19,374,458
    Diversified Telecommunication Services – 1.3%            
302,222  
Qwest Corp. (b)

  6.88%   10/01/54   7,313,772
141,191  
Qwest Corp. (b)

  7.00%   02/01/56   3,525,539
128,413  
Qwest Corp.

  6.50%   09/01/56   2,832,791
200,000  
Qwest Corp. (b)

  6.75%   06/15/57   4,626,000
        18,298,102
    Electric Utilities – 0.3%            
73,257  
PPL Capital Funding, Inc., Series B

  5.90%   04/30/73   1,827,030
59,233  
Southern (The) Co.

  6.25%   10/15/75   1,515,772
        3,342,802
    Equity Real Estate Investment Trusts – 1.4%            
150,000  
Colony Capital, Inc., Series E (b)

  8.75%   (a)   3,873,000
193,100  
Farmland Partners, Inc., Series B, steps up 10/01/24 to 10.00% (b) (e)

  6.00%   (a)   4,228,890
91,002  
Global Net Lease, Inc., Series A

  7.25%   (a)   2,265,040
114,430  
Urstadt Biddle Properties, Inc., Series H

  6.25%   (a)   2,649,054
250,000  
VEREIT, Inc., Series F (b)

  6.70%   (a)   6,220,000
        19,235,984
    Food Products – 2.5%            
824,835  
CHS, Inc., Series 2 (b) (c)

  7.10%   (a)   21,231,253
546,059  
CHS, Inc., Series 3 (b) (c)

  6.75%   (a)   13,760,687
        34,991,940
    Insurance – 3.8%            
54,323  
Allstate Corp., Series E

  6.63%   (a)   1,376,545
193,648  
AmTrust Financial Services, Inc. (b)

  7.25%   06/15/55   4,473,269
210,480  
AmTrust Financial Services, Inc. (b)

  7.50%   09/15/55   5,001,005
100,000  
AmTrust Financial Services, Inc., Series F

  6.95%   (a)   1,600,000
59,196  
Aspen Insurance Holdings Ltd.

  5.63%   (a)   1,352,037
379,385  
Delphi Financial Group, Inc., 3 Mo. LIBOR + 3.19% (b) (d)

  5.50%   05/15/37   8,631,009
428,412  
Enstar Group Ltd., Series D (b) (c)

  7.00%   (a)   11,005,904
158,193  
Global Indemnity Ltd. (b)

  7.75%   08/15/45   3,957,989
190,380  
Global Indemnity Ltd. (b)

  7.88%   04/15/47   4,812,806
19,685  
National General Holdings Corp.

  7.63%   09/15/55   491,338
133,133  
National General Holdings Corp., Series C (b)

  7.50%   (a)   3,187,204
107,835  
PartnerRe Ltd., Series G (b)

  6.50%   (a)   2,774,594
Page 6
See Notes to Financial Statements

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
October 31, 2018
Shares   Description   Stated
Rate
  Stated
Maturity
  Value
$25 PAR PREFERRED SECURITIES (Continued)
    Insurance (Continued)            
225,000  
Phoenix Cos., Inc.

  7.45%   01/15/32   $3,853,125
        52,516,825
    Mortgage Real Estate Investment Trusts – 1.6%            
346,092  
Annaly Capital Management, Inc., Series F (b) (c)

  6.95%   (a)   8,697,292
121,000  
Invesco Mortgage Capital, Inc., Series B (b) (c)

  7.75%   (a)   3,115,750
207,000  
Two Harbors Investment Corp., Series B (b) (c)

  7.63%   (a)   5,108,760
220,000  
Two Harbors Investment Corp., Series C (b) (c)

  7.25%   (a)   5,337,200
        22,259,002
    Multi-Utilities – 2.4%            
221,976  
Algonquin Power & Utilities Corp. (c)

  6.88%   10/17/78   5,663,163
133,279  
CMS Energy Corp.

  5.88%   10/15/78   3,345,303
732,571  
Integrys Holding, Inc. (b) (c)

  6.00%   08/01/73   18,559,686
350,000  
Just Energy Group, Inc., Series A (b) (c)

  8.50%   (a)   6,268,500
        33,836,652
    Oil, Gas & Consumable Fuels – 0.3%            
148,780  
Enbridge, Inc., Series B (c)

  6.38%   04/15/78   3,671,890
24,279  
Energy Transfer Operating L.P., Series D (c)

  7.63%   (a)   608,189
        4,280,079
    Thrifts & Mortgage Finance – 0.7%            
379,159  
New York Community Bancorp, Inc., Series A (b) (c)

  6.38%   (a)   9,615,472
    Wireless Telecommunication Services – 0.5%            
262,545  
United States Cellular Corp. (b)

  7.25%   12/01/64   6,634,512
   
Total $25 Par Preferred Securities

  271,385,631
    (Cost $275,892,843)            
$100 PAR PREFERRED SECURITIES – 3.7%
    Banks – 3.7%            
80,000  
Agribank FCB (c) (f)

  6.88%   (a)   8,580,000
179,000  
CoBank ACB, Series F (b) (c) (f)

  6.25%   (a)   18,526,500
82,220  
CoBank ACB, Series G (b) (f)

  6.13%   (a)   8,250,777
54,250  
CoBank ACB, Series H (b) (c) (f)

  6.20%   (a)   5,663,700
100,000  
Farm Credit Bank of Texas (b) (c) (g)

  6.75%   (a)   10,650,000
   
Total $100 Par Preferred Securities

  51,670,977
    (Cost $50,687,346)            
$1,000 PAR PREFERRED SECURITIES – 7.4%
    Banks – 3.9%            
3,557  
CoBank ACB, 3 Mo. LIBOR + 1.18% (d) (g)

  3.59%   (a)   2,329,835
30,859  
Farm Credit Bank of Texas, Series 1 (b) (f)

  10.00%   (a)   35,333,555
15,364  
Sovereign Real Estate Investment Trust (g)

  12.00%   (a)   17,169,270
        54,832,660
    Diversified Financial Services – 0.9%            
12,000  
Compeer Financial ACA (b) (c) (g)

  6.75%   (a)   12,840,000
    Insurance – 2.0%            
27,596  
XLIT Ltd., Series D, 3 Mo. LIBOR + 3.12% (d)

  5.56%   (a)   27,733,980
See Notes to Financial Statements
Page 7

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
October 31, 2018
Shares   Description   Stated
Rate
  Stated
Maturity
  Value
$1,000 PAR PREFERRED SECURITIES (Continued)
    Oil, Gas & Consumable Fuels – 0.6%            
8,500  
Kinder Morgan GP, Inc., 3 Mo. LIBOR + 3.90% (d) (g)

  6.22%   08/18/57   $7,794,249
   
Total $1,000 Par Preferred Securities

  103,200,889
    (Cost $104,731,795)            
$1,000,000 PAR PREFERRED SECURITIES – 1.0%
    Banks – 1.0%            
12  
FT Real Estate Securities Co., Inc. (g) (h) (i)

  9.50%   (a)   14,552,328
    (Cost $15,990,000)            
Par
Amount
  Description   Stated
Rate
  Stated
Maturity
  Value
CAPITAL PREFERRED SECURITIES – 110.0%
    Automobiles – 1.4%            
$4,700,000  
General Motors Financial Co., Inc., Series A (c)

  5.75%   (a)   4,244,006
16,400,000  
General Motors Financial Co., Inc., Series B (b) (c)

  6.50%   (a)   15,457,000
        19,701,006
    Banks – 55.2%            
16,000,000  
Australia & New Zealand Banking Group Ltd. (b) (c) (j) (k)

  6.75%   (a)   16,460,000
6,800,000  
Banco Bilbao Vizcaya Argentaria S.A. (c) (k)

  6.13%   (a)   5,873,500
8,000,000  
Banco Mercantil del Norte S.A. (c) (j) (k)

  7.63%   (a)   7,860,080
12,200,000  
Banco Santander S.A. (b) (c) (k)

  6.38%   (a)   12,061,079
18,000,000  
Bank of America Corp., Series DD (b) (c)

  6.30%   (a)   19,012,500
5,000,000  
Bank of America Corp., Series X (c)

  6.25%   (a)   5,156,250
23,867,000  
Bank of America Corp., Series Z (b) (c)

  6.50%   (a)   25,339,594
40,000  
Barclays Bank PLC (j)

  10.18%   06/12/21   45,472
5,200,000  
Barclays PLC (c) (k)

  7.75%   (a)   5,201,040
35,136,000  
Barclays PLC (b) (c) (k)

  7.88%   (a)   36,277,920
2,000,000  
BNP Paribas S.A. (c) (j) (k)

  7.38%   (a)   2,057,500
29,774,000  
BNP Paribas S.A. (b) (c) (j) (k)

  7.63%   (a)   31,002,178
9,500,000  
BPCE S.A. (b) (c) (j)

  12.50%   (a)   10,213,260
5,000,000  
Citigroup, Inc., Series O (b) (c)

  5.88%   (a)   5,075,000
25,000,000  
Citigroup, Inc., Series R (b) (c)

  6.13%   (a)   25,593,750
5,250,000  
Citizens Financial Group, Inc., Series C (c)

  6.38%   (a)   5,262,521
25,000,000  
CoBank ACB, Series I (b) (c) (f)

  6.25%   (a)   26,250,000
32,104,000  
Cooperatieve Rabobank UA (b) (c) (j)

  11.00%   (a)   33,701,174
24,100,000  
Credit Agricole S.A. (b) (c) (j) (k)

  7.88%   (a)   24,976,131
32,500,000  
Credit Agricole S.A. (b) (c) (j) (k)

  8.13%   (a)   34,940,490
10,000,000  
Credit Agricole S.A. (b) (c) (j)

  8.38%   (a)   10,400,000
14,180,000  
Danske Bank A.S. (b) (c) (k)

  6.13%   (a)   12,712,966
3,450,000  
Farm Credit Bank of Texas, Series 3 (b) (c) (j)

  6.20%   (a)   3,458,625
16,500,000  
HSBC Holdings PLC (b) (c) (k)

  6.38%   (a)   16,066,875
3,000,000  
HSBC Holdings PLC (c) (k)

  6.38%   (a)   2,914,500
9,400,000  
HSBC Holdings PLC (b) (c) (k)

  6.88%   (a)   9,764,250
13,920,000  
ING Groep N.V. (b) (c) (k)

  6.50%   (a)   13,230,960
10,000,000  
ING Groep N.V. (b) (c) (k)

  6.88%   (a)   10,118,750
27,300,000  
Intesa Sanpaolo S.p.A. (b) (c) (j) (k)

  7.70%   (a)   24,808,875
7,884,000  
JPMorgan Chase & Co., Series I, 3 Mo. LIBOR + 3.47% (b) (d)

  5.99%   (a)   7,936,113
20,000,000  
JPMorgan Chase & Co., Series S (b) (c)

  6.75%   (a)   21,355,000
5,580,000  
JPMorgan Chase & Co., Series V (b) (c)

  5.00%   (a)   5,586,975
18,000,000  
Lloyds Bank PLC (b) (c) (j)

  12.00%   (a)   21,678,498
14,150,000  
Lloyds Bank PLC (b) (c)

  12.00%   (a)   17,041,708
27,313,000  
Lloyds Banking Group PLC (b) (c) (k)

  7.50%   (a)   27,620,271
12,000,000  
Lloyds Banking Group PLC (c) (k)

  7.50%   (a)   12,090,000
5,363,000  
Nordea Bank Abp (c) (k)

  6.13%   (a)   5,168,591
Page 8
See Notes to Financial Statements

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
October 31, 2018
Par
Amount
  Description   Stated
Rate
  Stated
Maturity
  Value
CAPITAL PREFERRED SECURITIES (Continued)
    Banks (Continued)            
$1,600,000  
Nordea Bank Abp (c) (j) (k)

  6.13%   (a)   $1,542,000
23,400,000  
Royal Bank of Scotland Group PLC (b) (c) (k)

  8.00%   (a)   24,204,375
31,050,000  
Royal Bank of Scotland Group PLC (b) (c) (k)

  8.63%   (a)   32,718,937
10,200,000  
Societe Generale S.A. (b) (c) (j) (k)

  6.00%   (a)   10,059,852
24,600,000  
Societe Generale S.A. (b) (c) (j) (k)

  7.38%   (a)   24,999,750
15,250,000  
Societe Generale S.A. (b) (c) (j) (k)

  7.88%   (a)   15,383,438
2,000,000  
Societe Generale S.A. (c) (k)

  7.38%   03/13/67   2,032,500
65,000  
Standard Chartered PLC (c)

  7.01%   (a)   67,540
12,400,000  
Standard Chartered PLC (b) (c) (j) (k)

  7.50%   (a)   12,570,500
7,500,000  
Standard Chartered PLC (c) (j) (k)

  7.75%   (a)   7,593,750
825,000  
Standard Chartered PLC (c) (k)

  7.75%   (a)   835,313
3,400,000  
Swedbank AB (c) (k)

  6.00%   (a)   3,336,250
29,746,000  
UniCredit S.p.A. (b) (c) (k)

  8.00%   (a)   26,813,342
16,000,000  
UniCredit S.p.A. (b) (c) (j)

  5.86%   06/19/32   13,735,392
21,500,000  
Wells Fargo & Co., Series K, 3 Mo. LIBOR + 3.77% (b) (d)

  6.10%   (a)   21,688,125
12,670,000  
Zions Bancorporation, Series J (b) (c)

  7.20%   (a)   13,588,575
        765,482,035
    Capital Markets – 4.5%            
5,100,000  
Credit Suisse Group AG (c) (j) (k)

  7.25%   (a)   5,055,375
17,079,000  
Credit Suisse Group AG (b) (c) (j) (k)

  7.50%   (a)   17,829,161
7,875,000  
Credit Suisse Group AG (c) (k)

  7.50%   (a)   8,220,894
12,000,000  
Credit Suisse Group AG (c) (j) (k)

  7.50%   (a)   12,240,000
3,350,000  
UBS Group Funding Switzerland AG (c) (k)

  7.00%   (a)   3,496,562
15,000,000  
UBS Group Funding Switzerland AG (b) (c) (k)

  7.13%   (a)   15,289,305
        62,131,297
    Consumer Finance – 0.4%            
6,200,000  
American Express Co., Series C (b) (c)

  4.90%   (a)   6,184,500
    Diversified Financial Services – 0.3%            
3,904,000  
Voya Financial, Inc. (b) (c)

  5.65%   05/15/53   3,855,200
    Diversified Telecommunication Services – 1.6%            
20,000,000  
Koninklijke KPN N.V. (b) (c) (j)

  7.00%   03/28/73   20,830,000
1,000,000  
Koninklijke KPN N.V. (b) (c)

  7.00%   03/28/73   1,041,500
        21,871,500
    Electric Utilities – 6.5%            
36,500,000  
Emera, Inc., Series 16-A (b) (c)

  6.75%   06/15/76   38,142,500
42,128,000  
Enel S.p.A. (b) (c) (j)

  8.75%   09/24/73   45,603,560
6,500,000  
Southern (The) Co., Series B (b) (c)

  5.50%   03/15/57   6,499,814
        90,245,874
    Energy Equipment & Services – 1.8%            
24,800,000  
Transcanada Trust, Series 16-A (b) (c)

  5.88%   08/15/76   24,475,120
    Food Products – 5.1%            
9,000,000  
Dairy Farmers of America, Inc. (b) (g)

  7.13%   (a)   9,427,500
14,488,000  
Land O’Lakes Capital Trust I (b) (g)

  7.45%   03/15/28   15,701,370
10,000,000  
Land O’Lakes, Inc. (b) (j)

  7.25%   (a)   10,400,000
33,000,000  
Land O’Lakes, Inc. (b) (j)

  8.00%   (a)   35,970,000
        71,498,870
    Independent Power and Renewable Electricity Producers – 1.6%            
9,850,000  
AES Gener S.A. (c) (j)

  8.38%   12/18/73   10,006,123
See Notes to Financial Statements
Page 9

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
October 31, 2018
Par
Amount
  Description   Stated
Rate
  Stated
Maturity
  Value
CAPITAL PREFERRED SECURITIES (Continued)
    Independent Power and Renewable Electricity
Producers (Continued)
           
$12,150,000  
AES Gener S.A. (c)

  8.38%   12/18/73   $12,342,577
        22,348,700
    Insurance – 21.6%            
9,600,000  
AG Insurance S.A. (b) (c)

  6.75%   (a)   9,708,883
5,350,000  
American International Group, Inc., Series A-9 (b) (c)

  5.75%   04/01/48   5,065,808
3,839,000  
Asahi Mutual Life Insurance Co. (b) (c)

  7.25%   (a)   3,932,672
16,975,000  
Assurant, Inc. (b) (c)

  7.00%   03/27/48   17,059,875
39,700,000  
Catlin Insurance Co., Ltd., 3 Mo. LIBOR + 2.98% (b) (d) (j)

  5.42%   (a)   39,104,500
10,600,000  
CNP Assurances (b) (c)

  6.88%   (a)   10,832,288
12,500,000  
Dai-Ichi Life Insurance (The) Co., Ltd. (b) (c) (j)

  7.25%   (a)   13,518,750
8,134,000  
Everest Reinsurance Holdings, Inc., 3 Mo. LIBOR + 2.39% (b) (d)

  4.70%   05/15/37   7,930,650
15,300,000  
Fortegra Financial Corp. (b) (c) (g)

  8.50%   10/15/57   15,567,750
14,876,000  
Friends Life Holdings PLC (c)

  7.88%   (a)   14,897,273
1,000,000  
Fukoku Mutual Life Insurance Co. (c)

  6.50%   (a)   1,068,125
9,200,000  
Hartford Financial Services Group (The), Inc., 3 Mo. LIBOR + 2.13% (b) (d) (j)

  4.44%   02/12/47   8,487,000
25,616,000  
La Mondiale SAM (b) (c)

  7.63%   (a)   26,108,980
14,115,000  
Liberty Mutual Group, Inc. (b) (j)

  7.80%   03/15/37   16,196,963
2,000,000  
Liberty Mutual Group, Inc. (b) (c)

  10.75%   06/15/58   2,945,000
5,000,000  
Liberty Mutual Group, Inc., 3 Mo. LIBOR + 2.91% (b) (d) (j)

  5.24%   03/15/37   4,837,500
320,000  
Meiji Yasuda Life Insurance, Co. (c) (j)

  5.10%   04/26/48   317,600
25,000,000  
Mitsui Sumitomo Insurance Co., Ltd. (b) (c) (j)

  7.00%   03/15/72   27,000,000
3,000,000  
Nationwide Financial Services Capital Trust (b) (f)

  7.90%   03/01/37   3,305,098
11,300,000  
Nationwide Financial Services, Inc. (b)

  6.75%   05/15/37   12,147,500
24,300,000  
QBE Insurance Group, Ltd. (b) (c) (j)

  7.50%   11/24/43   26,395,875
20,250,000  
QBE Insurance Group, Ltd. (b) (c)

  6.75%   12/02/44   20,806,875
8,130,000  
Sumitomo Life Insurance Co. (b) (c) (j)

  6.50%   09/20/73   8,720,238
3,800,000  
VIVAT N.V. (c)

  6.25%   (a)   3,795,972
        299,751,175
    Metals & Mining – 1.8%            
23,500,000  
BHP Billiton Finance USA Ltd. (b) (c) (j)

  6.75%   10/19/75   25,497,500
    Multi-Utilities – 0.8%            
5,150,000  
CenterPoint Energy, Inc., Series A (b) (c)

  6.13%   (a)   5,207,937
5,500,000  
NiSource, Inc. (b) (c) (j)

  5.65%   (a)   5,397,975
        10,605,912
    Oil, Gas & Consumable Fuels – 5.9%            
8,000,000  
DCP Midstream L.P., Series A (b) (c)

  7.38%   (a)   7,680,000
28,243,000  
Enbridge Energy Partners L.P., 3 Mo. LIBOR + 3.80% (b) (d)

  6.19%   10/01/37   28,104,751
5,400,000  
Enbridge, Inc. (b) (c)

  5.50%   07/15/77   4,815,165
14,700,000  
Enbridge, Inc. (b) (c)

  6.25%   03/01/78   13,799,446
5,000,000  
Enbridge, Inc., Series 16-A (b) (c)

  6.00%   01/15/77   4,699,780
20,700,000  
Energy Transfer Operating L.P., 3 Mo. LIBOR + 3.02% (b) (d)

  5.36%   11/01/66   17,595,000
4,200,000  
Energy Transfer Operating L.P., Series B (b) (c)

  6.63%   (a)   3,871,875
2,000,000  
Enterprise Products Operating LLC, 3 Mo. LIBOR + 2.78% (d)

  5.10%   06/01/67   1,985,254
        82,551,271
    Transportation Infrastructure – 1.5%            
19,817,000  
AerCap Global Aviation Trust (b) (c) (j)

  6.50%   06/15/45   20,411,510
   
Total Capital Preferred Securities

  1,526,611,470
    (Cost $1,572,301,751)            
Page 10
See Notes to Financial Statements

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
October 31, 2018
Principal
Value
  Description   Stated
Coupon
  Stated
Maturity
  Value
CORPORATE BONDS AND NOTES – 0.7%
    Insurance – 0.7%            
$10,000,000  
AmTrust Financial Services, Inc. (b)

  6.13%   08/15/23   $9,394,702
    (Cost $9,965,963)            
    
 
Total Investments – 142.4%

 1,976,815,997
  (Cost $2,029,569,698) (l)   
 
Outstanding Loan – (44.7)%

 (620,000,000)
 
Net Other Assets and Liabilities – 2.3%

 31,144,523
 
Net Assets – 100.0%

 $1,387,960,520

Interest Rate Swap Agreements:
Counterparty   Floating
Rate (1)
  Expiration Date   Notional
Amount
  Fixed
Rate (1)
  Unrealized
Appreciation
(Depreciation)/
Value
Bank of Nova Scotia   1 month LIBOR   01/23/25   $165,000,000   1.786%   $11,516,276
    
(1) The Fund pays the fixed rate and receives the floating rate. The floating rate on October 31, 2018 was 2.282%.
    

(a) Perpetual maturity.
(b) All or a portion of this security serves as collateral on the outstanding loan.
(c) Fixed-to-floating or fixed-to-variable rate security. The interest rate shown reflects the fixed rate in effect at October 31, 2018. At a predetermined date, the fixed rate will change to a floating rate or a variable rate.
(d) Floating rate security.
(e) Step-up security. A security where the coupon increases or steps up at a predetermined date.
(f) Pursuant to procedures adopted by the Fund’s Board of Trustees, this security has been determined to be illiquid by Stonebridge Advisors LLC (the “Sub-Advisor”).
(g) This security, sold within the terms of a private placement memorandum, is exempt from registration upon resale under Rule 144A under the Securities Act of 1933, as amended (the “1933 Act”), and may be resold in transactions exempt from registration, normally to qualified institutional buyers (see Note 2D - Restricted Securities in the Notes to Financial Statements).
(h) This security is fair valued by the Advisor’s Pricing Committee in accordance with procedures adopted by the Fund’s Board of Trustees, and in accordance with the provisions of the Investment Company Act of 1940, as amended. At October 31, 2018, securities noted as such are valued at $14,552,328 or 1.0% of net assets.
(i) This security’s value was determined using significant unobservable inputs (see Note 2A-Portfolio Valuation in the Notes to Financial Statements).
(j) This security, sold within the terms of a private placement memorandum, is exempt from registration upon resale under Rule 144A under the 1933 Act, and may be resold in transactions exempt from registration, normally to qualified institutional buyers. Pursuant to procedures adopted by the Fund’s Board of Trustees, this security has been determined to be liquid by the Sub-Advisor. Although market instability can result in periods of increased overall market illiquidity, liquidity for each security is determined based on security specific factors and assumptions, which require subjective judgment. At October 31, 2018, securities noted as such amounted to $661,306,595 or 47.6% of net assets.
(k) This security is a contingent convertible capital security which may be subject to conversion into common stock of the issuer under certain circumstances. At October 31, 2018, securities noted as such amounted to $535,427,260 or 26.7% of managed assets. Of these securities, 1.5% originated in emerging markets, and 98.5% originated in foreign markets.
(l) Aggregate cost for federal income tax purposes was $2,027,465,476. As of October 31, 2018, the aggregate gross unrealized appreciation for all investments in which there was an excess of value over tax cost was $40,523,403 and the aggregate gross unrealized depreciation for all investments in which there was an excess of tax cost over value was $79,656,606. The net unrealized depreciation was $39,133,203. The amounts presented are inclusive of derivative contracts.
See Notes to Financial Statements
Page 11

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Portfolio of Investments (Continued)
October 31, 2018

Valuation Inputs
A summary of the inputs used to value the Fund’s investments as of October 31, 2018 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
  Total
Value at
10/31/2018
Level 1
Quoted
Prices
Level 2
Significant
Observable
Inputs
Level 3
Significant
Unobservable
Inputs
$25 Par Preferred Securities:        
Insurance

$52,516,825 $40,032,691 $12,484,134 $
Multi-Utilities

33,836,652 15,276,966 18,559,686
Other industry categories*

185,032,154 185,032,154
$100 Par Preferred Securities*

51,670,977 51,670,977
$1,000 Par Preferred Securities*

103,200,889 103,200,889
$1,000,000 Par Preferred Securities*

14,552,328 14,552,328
Capital Preferred Securities*

1,526,611,470 1,526,611,470
Corporate Bonds and Notes*

9,394,702 9,394,702
Total Investments

1,976,815,997 240,341,811 1,721,921,858 14,552,328
Interest Rate Swap Agreement

11,516,276 11,516,276
Total

$1,988,332,273 $240,341,811 $1,733,438,134 $14,552,328
    
* See Portfolio of Investments for industry breakout.
Level 3 Par Preferred Securities are fair valued using broker quotes and are footnoted in the Portfolio of Investments. These 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, 2017  
$1,000,000 Par Preferred Securities $15,126,120
Net Realized Gain (Loss)
Net Change in Unrealized Appreciation/Depreciation (573,792)
Purchases
Sales
Transfers In
Transfers Out
Ending Balance at October 31, 2018  
$1,000,000 Par Preferred Securities 14,552,328
Total Level 3 holdings $14,552,328
There was a net change of $(573,792) in unrealized appreciation (depreciation) from Level 3 investments held as of October 31, 2018.
Page 12
See Notes to Financial Statements

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Statement of Assets and Liabilities
October 31, 2018
ASSETS:  
Investments, at value

(Cost $2,029,569,698)

$ 1,976,815,997
Cash

6,322,039
Swap contracts, at value

11,516,276
Receivables:  
Interest

21,532,287
Investment securities sold

1,268,963
Dividends

587,904
Interest reclaims

506,785
Dividend reclaims

85,323
Total Assets

2,018,635,574
LIABILITIES:  
Outstanding loan

620,000,000
Payables:  
Due to broker

7,169,022
Interest and fees on loan

1,674,333
Investment advisory fees

1,455,477
Administrative fees

190,883
Custodian fees

76,024
Shareholder reporting fees

57,473
Audit and tax fees

33,928
Legal fees

8,310
Financial reporting fees

2,313
Transfer agent fees

1,558
Trustees’ fees and expenses

1,317
Other liabilities

4,416
Total Liabilities

630,675,054
NET ASSETS

$1,387,960,520
NET ASSETS consist of:  
Paid-in capital

$ 1,443,781,239
Par value

607,660
Accumulated distributable earnings (loss)

(56,428,379)
NET ASSETS

$1,387,960,520
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share)

$22.84
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized)

60,765,997
See Notes to Financial Statements
Page 13

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Statement of Operations
For the Year Ended October 31, 2018
INVESTMENT INCOME:  
Interest (net of foreign withholding tax of $839)

$ 110,934,848
Dividends (net of foreign withholding tax of $69,575)

 30,653,753
Total investment income

141,588,601
EXPENSES:  
Investment advisory fees

 17,975,804
Interest and fees on loan

 16,904,106
Administrative fees

 686,480
Custodian fees

 334,040
Shareholder reporting fees

 209,164
Legal fees

 73,483
Listing expense

 53,542
Audit and tax fees

 34,181
Transfer agent fees

 20,505
Trustees’ fees and expenses

 17,660
Financial reporting fees

 9,250
Other

 33,848
Total expenses

36,352,063
NET INVESTMENT INCOME (LOSS)

105,236,538
NET REALIZED AND UNREALIZED GAIN (LOSS):  
Net realized gain (loss) on:  
Investments

(5,971,170)
Swap contracts

(159,110)
Net realized gain (loss)

(6,130,280)
Net change in unrealized appreciation (depreciation) on:  
Investments

(146,879,192)
Swap contracts

8,055,425
Net change in unrealized appreciation (depreciation)

(138,823,767)
NET REALIZED AND UNREALIZED GAIN (LOSS)

(144,954,047)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$(39,717,509)
Page 14
See Notes to Financial Statements

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Statements of Changes in Net Assets
  Year
Ended
10/31/2018
  Year
Ended
10/31/2017
OPERATIONS:      
Net investment income (loss)

$ 105,236,538   $ 113,143,853
Net realized gain (loss)

 (6,130,280)    2,811,134
Net change in unrealized appreciation (depreciation)

 (138,823,767)    74,197,864
Net increase (decrease) in net assets resulting from operations

(39,717,509)   190,152,851
DISTRIBUTIONS TO SHAREHOLDERS FROM:      
Investment operations

 (103,284,084)    
Net investment income

     (114,847,734)
Return of capital

 (4,271,731)    —
Total distributions to shareholders

(107,555,815)   (114,847,734)
Total increase (decrease) in net assets

 (147,273,324)    75,305,117
NET ASSETS:      
Beginning of period

 1,535,233,844    1,459,928,727
End of period

$ 1,387,960,520   $ 1,535,233,844
Accumulated net investment income (loss) at end of period

    $5,555,240
COMMON SHARES:      
Common Shares at end of period

60,765,997   60,765,997
See Notes to Financial Statements
Page 15

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Statement of Cash Flows
For the Year Ended October 31, 2018
Cash flows from operating activities:    
Net increase (decrease) in net assets resulting from operations

$(39,717,509)  
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:    
Purchases of investments

(597,187,123)  
Sales, maturities and paydown of investments

644,995,397  
Net amortization/accretion of premiums/discounts on investments

357,674  
Net realized gain/loss on investments

5,971,170  
Net change in unrealized appreciation/depreciation on investments

146,879,192  
Net change in unrealized appreciation/depreciation on swap contracts

(8,055,425)  
Decrease in cash segregated as collateral for open swap contracts

3,927,669  
Changes in assets and liabilities:    
Decrease in interest receivable

1,530,335  
Increase in interest reclaims receivable

(244,941)  
Increase in dividend reclaims receivable

(55,781)  
Decrease in dividends receivable

290,598  
Increase in interest and fees payable on loan

472,722  
Increase in due to broker

7,169,022  
Decrease in investment advisory fees payable

(135,001)  
Increase in audit and tax fees payable

431  
Decrease in legal fees payable

(784)  
Increase in shareholder reporting fees payable

3,618  
Decrease in administrative fees payable

(62,619)  
Increase in custodian fees payable

69,791  
Increase in transfer agent fees payable

8  
Decrease in Trustees’ fees and expenses payable

(206)  
Increase in financial reporting fees payable

1,542  
Increase in other liabilities payable

2,784  
Cash provided by operating activities

  $166,212,564
Cash flows from financing activities:    
Distributions to Common Shareholders from investment operations

(103,284,084)  
Distributions to Common Shareholders from return of capital

(4,271,731)  
Repayment of borrowing

(60,000,000)  
Cash used in financing activities

  (167,555,815)
Decrease in cash

  (1,343,251)
Cash at beginning of period

  7,665,290
Cash at end of period

  $6,322,039
Supplemental disclosure of cash flow information:    
Cash paid during the period for interest and fees

  $16,431,384
Page 16
See Notes to Financial Statements

First Trust Intermediate Duration Preferred & Income Fund (FPF)
Financial Highlights
For a Common Share outstanding throughout each period
  Year Ended October 31,
2018   2017   2016   2015   2014
Net asset value, beginning of period

$ 25.26   $ 24.03   $ 23.69   $ 24.42   $ 23.51
Income from investment operations:                  
Net investment income (loss)

1.73   1.86   1.94   1.96   1.85
Net realized and unrealized gain (loss)

(2.38)   1.26   0.35   (0.58)   0.97
Total from investment operations

(0.65)   3.12   2.29   1.38   2.82
Distributions paid to shareholders from:                  
Net investment income

(1.70)   (1.89)   (1.95)   (2.11)   (1.91)
Return of capital

(0.07)        
Total distributions paid to Common Shareholders

(1.77)        
Common Shares offering costs charged to paid-in capital

      0.00(a)  
Net asset value, end of period

$22.84   $25.26   $24.03   $23.69   $24.42
Market value, end of period

$20.47   $24.80   $22.66   $21.95   $21.94
Total return based on net asset value (b)

(2.23)%   13.85%   10.68%   6.68%   13.37%
Total return based on market value (b)

(10.78)%   18.53%   12.65%   10.02%   13.98%
Ratios to average net assets/supplemental data:                  
Net assets, end of period (in 000’s)

$ 1,387,961   $ 1,535,234   $ 1,459,929   $ 1,438,361   $ 1,482,490
Ratio of total expenses to average net assets

2.49%   2.09%   1.88%   1.76%   1.69%
Ratio of total expenses to average net assets excluding interest expense

1.33%   1.31%   1.34%   1.34%   1.33%
Ratio of net investment income (loss) to average net assets

7.21%   7.67%   8.34%   8.15%   7.66%
Portfolio turnover rate

29%   31%   50%   48%   62%
Indebtedness:                  
Total loan outstanding (in 000’s)

$ 620,000   $ 680,000   $ 645,000   $ 645,000   $ 665,000
Asset coverage per $1,000 of indebtedness (c)

$ 3,239   $ 3,258   $ 3,263   $ 3,230   $ 3,229
    
(a) Amount is less than $0.01.
(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) 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 17

Notes to Financial Statements
First Trust Intermediate Duration Preferred & Income Fund (FPF)
October 31, 2018
1. Organization
First Trust Intermediate Duration Preferred & Income Fund (the “Fund”) is a non-diversified, closed-end management investment company organized as a Massachusetts business trust on February 4, 2013, and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund trades under the ticker symbol FPF on the New York Stock Exchange (“NYSE”).
The primary investment objective is to seek a high level of current income. The Fund has a secondary objective of capital appreciation. The Fund seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its managed assets in preferred securities and other income producing securities issued by U.S. and non-U.S. companies, including traditional preferred securities, hybrid preferred securities that have investment and economic characteristics of both preferred securities and debt securities, floating rate and fixed-to-floating rate preferred securities, debt securities, convertible securities and contingent convertible securities. There can be no assurance that the Fund will achieve its investment objectives. The Fund seeks to maintain, under normal market conditions, a duration of between three and eight years. The Fund may not be appropriate for all investors.
2. Significant Accounting Policies
The Fund is considered an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment Companies.” The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of the financial statements. The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
A. Portfolio Valuation
The 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 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 adopted by the Fund’s Board of Trustees, and in accordance with provisions of the 1940 Act. Investments valued by the Advisor’s Pricing Committee, 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 The Nasdaq Stock Market LLC (“Nasdaq”) and the London Stock Exchange Alternative Investment Market (“AIM”)) are valued at the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price. Securities traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable, at the close of the securities exchange representing the principal market for such securities.
Corporate bonds, notes and other debt securities are fair valued on the basis of valuations provided by dealers who make markets in such securities or by a third-party pricing service approved by the Fund’s Board of Trustees, which may use the following valuation inputs when available:
1) benchmark yields;
2) reported trades;
3) broker/dealer quotes;
4) issuer spreads;
5) benchmark securities;
6) bids and offers; and
7) reference data including market research publications.
Page 18

Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
October 31, 2018
Securities traded in an over-the-counter market are fair valued at the mean of their most recent bid and asked price, if available, and otherwise at their closing bid price.
Swaps are fair valued utilizing quotations provided by a third-party pricing service or, if the third-party pricing service does not provide a value, by quotes provided by the selling dealer or financial institution.
Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Fund’s Board of Trustees or its delegate, the Advisor’s Pricing Committee, at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended (the “1933 Act”)) for which a third-party pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market 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 type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or third-party pricing services;
6) relationships among various securities;
7) information obtained by contacting the issuer, analysts, or the appropriate stock exchange;
8) an analysis of the issuer’s financial statements; and
9) the existence of merger proposals or tender offers that might affect the value of the security.
If the securities in question are foreign securities, the following additional information may be considered:
1) the value of similar foreign securities traded on other foreign markets;
2) ADR trading of similar securities;
3) closed-end fund trading of similar securities;
4) foreign currency exchange activity;
5) the trading prices of financial products that are tied to baskets of foreign securities;
6) factors relating to the event that precipitated the pricing problem;
7) whether the event is likely to recur; and
8) whether the effects of the event are isolated or whether they affect entire markets, countries or regions.
The Fund is subject to fair value accounting standards that define fair value, establish the framework for measuring fair value and provide a three-level hierarchy for fair valuation based upon the inputs to the valuation as of the measurement date. The three levels of the fair value hierarchy are as follows:
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 19

Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
October 31, 2018
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 October 31, 2018, is included with the Fund’s Portfolio of Investments.
B. Swap Agreements
The Fund may enter into interest rate swap agreements. A swap is a financial instrument that typically involves the exchange of cash flows between two parties (“Counterparties”) on specified dates (settlement dates) where the cash flows are based on agreed upon prices, rates, etc. Payment received or made by the Fund for interest rate swaps are recorded on the Statement of Operations as “Net realized gain (loss) on swap contracts.” When an interest rate swap is terminated, the Fund will record a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis in the contract, if any. Generally, the basis of the contracts, if any, is the premium received or paid. Swap agreements are individually negotiated and involve the risk of the potential inability of the Counterparties to meet the terms of the agreement. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. In the event of a default by a Counterparty, the Fund will seek withdrawal of the collateral and may incur certain costs exercising its rights with respect to the collateral. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances.
Swap agreements may increase or decrease the overall volatility of the investments of the Fund. The performance of swap agreements may be affected by changes in the specific interest rate, security, currency, or other factors that determine the amounts of payments due to and from the Fund. The Fund’s maximum interest rate risk to meet its future payments under swap agreements outstanding at October 31, 2018, is equal to the total notional amount as shown on the Portfolio of Investments. The notional amount represents the U.S. dollar value of the contract as of the day of the opening transaction or contract reset. When the Fund enters into a swap agreement, any premium paid is included in “Swap contracts, at value” on the Statement of Assets and Liabilities.
The Fund held interest rate swap agreements at October 31, 2018. An interest rate swap agreement involves the Fund’s agreement to exchange a stream of interest payments for another party’s stream of cash flows. Interest rate swaps do not involve the delivery of securities or other underlying assets or principal. Accordingly, the risk of loss with respect to interest rate swaps is limited to the net amount of interest payments that the Fund is contractually obligated to make.
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 Fund may hold the securities of real estate investments trusts (“REITs”). Distributions from such investments may include income, capital gains and return of capital. The actual character of amounts received during the year is not known until after the REITs’ fiscal year end. The Fund records the character of distributions received from the REITs during the year based on estimates available. The characterization of distributions received by the Fund may be subsequently revised based on information received from the REITs after their tax reporting periods conclude.
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 October 31, 2018, the Fund held restricted securities as shown in the following table that Stonebridge Advisors LLC (the “Sub-Advisor”) has deemed illiquid pursuant to procedures adopted by the Fund’s Board of Trustees. Although market instability can result in periods of increased overall market illiquidity, liquidity for each security is determined based on security-specific factors and assumptions, which require subjective judgment. The Fund does not have the right to demand that such securities be registered. These securities are valued according to the valuation procedures as stated in the Portfolio Valuation note (Note 2A) and are not expressed as a discount to the carrying value of a comparable unrestricted security. There are no unrestricted securities with the same maturity dates and yields for these issuers.
Page 20

Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
October 31, 2018
Security Acquisition
Date
Par
Amount/Shares
Current Price Carrying
Cost
  Value   % of
Net
Assets
CoBank ACB, 3.59% 3/29/18 3,557 $655.00 $2,409,867   $2,329,835   0.17%
Compeer Financial ACA, 6.75% 5/29/13 - 7/31/15 12,000 1,070.00 12,105,000   12,840,000   0.93
Dairy Farmers of America, Inc., 7.13% 9/15/16 $9,000,000 104.75 9,000,000   9,427,500   0.68
Farm Credit Bank of Texas, 6.75% 7/16/13 - 7/17/13 100,000 106.50 10,020,000   10,650,000   0.77
Fortegra Financial Corp., 8.50%, 10/15/57 10/12/17 - 3/12/18 $15,300,000 101.75 15,344,525   15,567,750   1.12
FT Real Estate Securities Co., Inc., 9.50% 6/15/16 12 1,212,694.00 15,990,000   14,552,328   1.05
Kinder Morgan GP, Inc., 6.22%,08/18/57 3/21/17 - 6/20/17 8,500 916.97 7,765,000   7,794,249   0.56
Land O’Lakes Capital Trust I, 7.45%, 03/15/28 6/6/14 - 7/7/17 $14,488,000 108.38 15,093,310   15,701,370   1.13
Sovereign Real Estate Investment Trust, 12.00% 6/11/13 - 3/22/16 15,364 1,117.50 20,231,885   17,169,270   1.24
        $107,959,587   $106,032,302   7.65%
E. 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. Permanent differences incurred during the fiscal year ended October 31, 2018, resulting in book and tax accounting differences, have been reclassified at year end to reflect a decrease in accumulated net investment income (loss) of $4,942,252 and an increase in accumulated net realized gain (loss) of $4,942,252. Accumulated distributable earnings (loss) consists of accumulated net investment income (loss), accumulated net realized gain (loss) on investments, and unrealized appreciation (depreciation) on investments. Net assets were not affected by this reclassification.
The tax character of distributions paid by the Fund during the fiscal years ended October 31, 2018 and 2017, was as follows:
Distributions paid from: 2018 2017
Ordinary income

$103,284,084 $114,847,734
Capital gains

Return of capital

4,271,731
Page 21

Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
October 31, 2018
As of October 31, 2018, 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

(17,295,176)
Net unrealized appreciation (depreciation)

(39,133,203)
Total accumulated earnings (losses)

(56,428,379)
Other

Paid-in capital

1,444,388,899
Total net assets

$1,387,960,520
F. Income Taxes
The Fund intends to continue to qualify as a regulated investment company by complying with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, which includes distributing substantially all of its net investment income and net realized gains to shareholders. Accordingly, no provision has been made for federal and state income taxes. However, due to the timing and amount of distributions, the Fund may be subject to an excise tax of 4% of the amount by which approximately 98% of the Fund’s taxable income exceeds the distributions from such taxable income for the calendar year.
The Fund intends to utilize provisions of the federal income tax laws, which allow it to carry a realized capital loss forward indefinitely following the year of the loss and offset such loss against any future realized capital gains. The Fund is subject to certain limitations under U.S. tax rules on the use of capital loss carryforwards and net unrealized built-in losses. These limitations apply when there has been a 50% change in ownership. At October 31, 2018, the Fund had $17,295,176 of capital loss carryforwards for federal income tax purposes.
The Fund is subject to accounting standards that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return. Taxable years ended 2015, 2016, 2017, and 2018 remain open to federal and state audit. As of October 31, 2018, management has evaluated the application of these standards to the Fund and has determined that no provision for income tax is required in the Fund’s financial statements for uncertain tax positions.
G. Expenses
The Fund will pay all expenses directly related to its operations.
H. New Accounting Pronouncements
On March 30, 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-08 “Premium Amortization on Purchased Callable Debt Securities,” which amends the amortization period for certain purchased callable debt securities held at a premium by shortening such period to the earliest call date. The new guidance requires an entity to amortize the premium on a callable debt security within its scope to the earliest call date, unless the guidance for considering estimated prepayments is applied. If the call option is not exercised at the earliest call date, the yield is reset to the effective yield using the payment terms of the security. If the security has more than one call date and the premium was amortized to a call price greater than the next call price, any excess of the amortized cost basis over the amount repayable at the next call date will be amortized to that date. If there are no other call dates, any excess of the amortized cost basis over the par amount will be amortized to maturity. Discounts on purchased callable debt securities will continue to be amortized to the security’s maturity date. ASU 2017-08 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Earlier adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the ASU in an interim period, any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. Management is still assessing the impact of the adoption of ASU 2017-08 on the financial statements but does not expect it to have a material impact.
On August 28, 2018, the FASB issued ASU 2018-13, “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements of ASC 820. The amendments of ASU 2018-13 include new, eliminated, and modified disclosure requirements of ASC 820. In addition, the amendments clarify that materiality is an appropriate consideration of entities when evaluating disclosure requirements. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for any eliminated or modified disclosures upon issuance of this ASU. The Fund has early adopted ASU 2018-13 for these financial statements, which did not result in a material impact.
Page 22

Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)
October 31, 2018
3. Investment Advisory Fee, Affiliated Transactions and Other Fee Arrangements
First Trust, the investment advisor to the Fund, is a limited partnership with one limited partner, Grace Partners of DuPage L.P., and one general partner, The Charger Corporation. The Charger Corporation is an Illinois corporation controlled by James A. Bowen, Chief Executive Officer of First Trust. First Trust is responsible for the ongoing monitoring of the Fund’s investment portfolio, managing the Fund’s business affairs and providing certain administrative services necessary for the management of the Fund. For these investment management services, First Trust is entitled to a monthly fee calculated at an annual rate of 0.85% of the Fund’s average daily net assets . First Trust also provides fund reporting services to the Fund for a flat annual fee in the amount of $9,250.
Stonebridge, a majority-owned affiliate of First Trust, serves as the Fund’s sub-advisor and manages the Fund’s portfolio subject to First Trust’s supervision. The Sub-Advisor receives a monthly portfolio management fee calculated at an annual rate of 0.425% of average daily net assets that is paid by First Trust out of its investment advisory fee.
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, or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit Committee, Nominating and Governance Committee and Valuation Committee are paid annual fees to serve in such capacities, with such compensation allocated pro rata among each fund in the First Trust Fund Complex based on net assets. Independent Trustees are reimbursed for travel and out-of-pocket expenses in connection with all meetings. The Lead Independent Trustee and Committee Chairmen rotate every three years. The officers and “Interested” Trustee receive no compensation from the Fund for acting in such capacities.
4. Purchases and Sales of Securities
For the fiscal year ended October 31, 2018, the cost of purchases and proceeds from sales of investments, excluding short term investments and in-kind transactions, were $595,096,695 and $638,050,717, respectively.
5. Derivative Transactions
The following table presents the type of derivatives held by the Fund at October 31, 2018, the primary underlying risk exposure and the location of these instruments as presented on the Statement of Assets and Liabilities.
        Asset Derivatives   Liability Derivatives
Derivative
Instrument
  Risk
Exposure
  Statement of Assets and
Liabilities Location
  Value   Statement of Assets and
Liabilities Location
  Value
Interest Rate Swap Agreements   Interest Rate Risk   Swap contracts, at value   $11,516,276   Swap contracts, at value   $ -
The following table presents the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized for the fiscal year ended October 31, 2018, on derivative instruments, as well as the primary underlying risk exposure associated with each instrument.
Statement of Operations Location  
Interest Rate Risk Exposure  
Net realized gain (loss) on swap contracts $(159,110)
Net change in unrealized appreciation (depreciation) on swap contracts 8,055,425
The average notional value of interest rate swaps was $165,000,000 for the fiscal year ended October 31, 2018.
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Notes to Financial Statements (Continued)
First Trust Intermediate Duration Preferred & Income Fund (FPF)