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Share Name | Share Symbol | Market | Type |
---|---|---|---|
First Trust Intermediate Duration Preferred and Income Fund | NYSE:FPF | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 18.05 | 0 | 09:05:51 |
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22795
(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, 2023
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, NW, 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. |
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1 |
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2 |
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4 |
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7 |
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15 |
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16 |
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17 |
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18 |
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19 |
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20 |
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27 |
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28 |
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33 |
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40 |
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42 |
Performance | ||||
Average Annual Total Returns | ||||
1
Year Ended 10/31/23 |
5
Years Ended 10/31/23 |
10
Years Ended 10/31/23 |
Inception
(5/23/13) to 10/31/23 | |
Fund Performance(3) | ||||
NAV | -1.56% | 1.19% | 4.68% | 4.54% |
Market Value | -5.86% | 0.10% | 4.15% | 2.46% |
Index Performance | ||||
ICE BofA US Investment Grade Institutional Capital Securities Index | 5.89% | 3.20% | 3.99% | 3.76% |
Blended Index(4) | 1.27% | 1.61% | N/A | N/A |
(1) | Most recent distribution paid through October 31, 2023. 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 October 31, 2023. 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. |
(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. |
Performance | ||||
Average Annual Total Returns | ||||
1
Year Ended 10/31/23 |
5
Years Ended 10/31/23 |
10
Years Ended 10/31/23 |
Inception (5/23/13) to 10/31/23 | |
Fund Performance(1) | ||||
NAV | -1.56% | 1.19% | 4.68% | 4.54% |
Market Value | -5.86% | 0.10% | 4.15% | 2.46% |
Index Performance | ||||
ICE BofA US Investment Grade Institutional Capital Securities Index | 5.89% | 3.20% | 3.99% | 3.76% |
Blended Index(2) | 1.27% | 1.61% | N/A | N/A |
(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. |
Shares | Description | Stated Rate |
Stated Maturity |
Value | ||||
$25 PAR PREFERRED SECURITIES – 20.3% | ||||||||
Automobiles – 0.3% | ||||||||
134,551 |
Ford Motor Co. (a) |
6.50% | 08/15/62 | $2,814,807 | ||||
Banks – 2.6% | ||||||||
227,073 |
Bank of America Corp., Series KK (b) |
5.38% | (c) | 4,691,328 | ||||
49,151 |
Bank of America Corp., Series SS (b) |
4.75% | (c) | 878,328 | ||||
20,101 |
Citizens Financial Group, Inc., Series D (b) (d) |
6.35% | (c) | 462,122 | ||||
2,028 |
Citizens Financial Group, Inc., Series E |
5.00% | (c) | 32,428 | ||||
77,002 |
JPMorgan Chase & Co., Series LL (b) |
4.63% | (c) | 1,445,328 | ||||
177,126 |
KeyCorp (b) (d) |
6.20% | (c) | 2,959,775 | ||||
250,531 |
Pinnacle Financial Partners, Inc., Series B (b) |
6.75% | (c) | 5,559,283 | ||||
85,686 |
US Bancorp, Series K |
5.50% | (c) | 1,688,014 | ||||
26,333 |
Wells Fargo & Co., Series AA (b) |
4.70% | (c) | 465,304 | ||||
39,302 |
Wells Fargo & Co., Series Z |
4.75% | (c) | 699,576 | ||||
133,769 |
WesBanco, Inc., Series A (b) (d) |
6.75% | (c) | 3,082,038 | ||||
174,262 |
Wintrust Financial Corp., Series E (b) (d) |
6.88% | (c) | 4,171,832 | ||||
26,135,356 | ||||||||
Capital Markets – 1.4% | ||||||||
29,434 |
Affiliated Managers Group, Inc. |
4.75% | 09/30/60 | 480,657 | ||||
173,946 |
Affiliated Managers Group, Inc. |
4.20% | 09/30/61 | 2,668,332 | ||||
476,799 |
Carlyle Finance LLC |
4.63% | 05/15/61 | 7,790,896 | ||||
182,488 |
KKR Group Finance Co., IX LLC |
4.63% | 04/01/61 | 3,022,001 | ||||
6,178 |
Oaktree Capital Group LLC, Series A |
6.63% | (c) | 118,679 | ||||
4,751 |
Oaktree Capital Group LLC, Series B |
6.55% | (c) | 89,699 | ||||
14,170,264 | ||||||||
Consumer Finance – 0.1% | ||||||||
5,099 |
Capital One Financial Corp., Series I |
5.00% | (c) | 83,063 | ||||
90,291 |
Capital One Financial Corp., Series J (b) |
4.80% | (c) | 1,420,277 | ||||
1,503,340 | ||||||||
Diversified REITs – 0.3% | ||||||||
168,343 |
Global Net Lease, Inc., Series A (a) |
7.25% | (c) | 2,888,766 | ||||
Diversified Telecommunication Services – 0.4% | ||||||||
208,086 |
AT&T, Inc., Series C (b) |
4.75% | (c) | 3,599,888 | ||||
Electric Utilities – 0.4% | ||||||||
89,789 |
SCE Trust IV, Series J (b) (d) |
5.38% | (c) | 1,764,354 | ||||
73,377 |
SCE Trust V, Series K (b) (d) |
5.45% | (c) | 1,617,963 | ||||
38,321 |
SCE Trust VI |
5.00% | (c) | 671,384 | ||||
4,053,701 | ||||||||
Financial Services – 1.6% | ||||||||
180,130 |
Apollo Global Management, Inc. (b) (d) |
7.63% | 09/15/53 | 4,712,201 | ||||
468,779 |
Equitable Holdings, Inc., Series A (b) |
5.25% | (c) | 8,452,085 | ||||
47,724 |
Jackson Financial, Inc. (b) (d) |
8.00% | (c) | 1,168,761 | ||||
102,133 |
Voya Financial, Inc., Series B (b) (d) |
5.35% | (c) | 2,113,132 | ||||
16,446,179 | ||||||||
Food Products – 0.3% | ||||||||
119,691 |
CHS, Inc., Series 3 (b) (d) |
6.75% | (c) | 2,830,692 | ||||
Gas Utilities – 0.3% | ||||||||
281,492 |
South Jersey Industries, Inc. |
5.63% | 09/16/79 | 3,536,947 |
Shares | Description | Stated Rate |
Stated Maturity |
Value | ||||
$25 PAR PREFERRED SECURITIES (Continued) | ||||||||
Independent Power & Renewable Electricity Producers – 0.6% | ||||||||
245,850 |
Brookfield BRP Holdings Canada, Inc. |
4.63% | (c) | $3,360,769 | ||||
161,321 |
Brookfield Renewable Partners, L.P., Series 17 (b) |
5.25% | (c) | 2,595,655 | ||||
5,956,424 | ||||||||
Insurance – 7.8% | ||||||||
456,764 |
Aegon Funding Co., LLC (b) |
5.10% | 12/15/49 | 8,509,513 | ||||
470,186 |
American Equity Investment Life Holding Co., Series A (b) (d) |
5.95% | (c) | 9,944,434 | ||||
259,357 |
American Equity Investment Life Holding Co., Series B (b) (d) |
6.63% | (c) | 5,944,462 | ||||
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 | 3,402,409 | ||||
192,000 |
Arch Capital Group Ltd., Series G (b) |
4.55% | (c) | 3,321,600 | ||||
15,137 |
Argo Group International Holdings Ltd. (d) |
7.00% | (c) | 332,711 | ||||
66,549 |
Aspen Insurance Holdings Ltd. (b) |
5.63% | (c) | 1,131,998 | ||||
346,650 |
Aspen Insurance Holdings Ltd. (b) |
5.63% | (c) | 5,497,869 | ||||
85,573 |
Athene Holding Ltd., Series A (b) (d) |
6.35% | (c) | 1,808,158 | ||||
52,936 |
Athene Holding Ltd., Series D |
4.88% | (c) | 856,504 | ||||
566,049 |
Athene Holding Ltd., Series E (b) (d) |
7.75% | (c) | 14,094,620 | ||||
133,393 |
CNO Financial Group, Inc. |
5.13% | 11/25/60 | 2,040,913 | ||||
584,250 |
Delphi Financial Group, Inc., 3 Mo. CME Term SOFR + CSA + 3.19% (a) (b) (e) |
8.82% | 05/15/37 | 13,072,594 | ||||
51,991 |
Lincoln National Corp., Series D (b) |
9.00% | (c) | 1,377,762 | ||||
193,528 |
Phoenix Cos. (The), Inc. |
7.45% | 01/15/32 | 3,450,604 | ||||
2 |
Reinsurance Group of America, Inc. (d) |
7.13% | 10/15/52 | 51 | ||||
114,588 |
RenaissanceRe Holdings Ltd., Series G |
4.20% | (c) | 1,768,093 | ||||
79,594,569 | ||||||||
Mortgage Real Estate Investment Trusts – 0.1% | ||||||||
32,675 |
AGNC Investment Corp., Series F (d) |
6.13% | (c) | 653,173 | ||||
Multi-Utilities – 0.7% | ||||||||
124,631 |
Algonquin Power & Utilities Corp., Series 19-A (a) (b) (d) |
6.20% | 07/01/79 | 3,064,677 | ||||
195,763 |
Brookfield Infrastructure Finance ULC |
5.00% | 05/24/81 | 2,993,216 | ||||
84,780 |
Brookfield Infrastructure Partners, L.P., Series 13 |
5.13% | (c) | 1,288,656 | ||||
5,032 |
Sempra |
5.75% | 07/01/79 | 113,220 | ||||
7,459,769 | ||||||||
Oil, Gas & Consumable Fuels – 1.6% | ||||||||
1,879 |
Energy Transfer, L.P., Series D (d) |
10.36% | (c) | 47,088 | ||||
410,156 |
Energy Transfer, L.P., Series E (b) (d) |
7.60% | (c) | 10,139,056 | ||||
230,511 |
NuStar Energy, L.P., Series A, 3 Mo. CME Term SOFR + CSA + 6.77% (b) (e) |
12.44% | (c) | 5,871,115 | ||||
1,370 |
NuStar Energy, L.P., Series C, 3 Mo. LIBOR + 6.88% (e) |
12.55% | (c) | 34,497 | ||||
16,091,756 | ||||||||
Real Estate Management & Development – 1.2% | ||||||||
307,185 |
Brookfield Property Partners, L.P., Series A |
5.75% | (c) | 3,010,413 | ||||
388,145 |
Brookfield Property Partners, L.P., Series A2 |
6.38% | (c) | 4,257,951 | ||||
392,902 |
Brookfield Property Preferred, L.P. |
6.25% | 07/26/81 | 4,714,824 | ||||
23,528 |
DigitalBridge Group, Inc., Series I (b) |
7.15% | (c) | 494,323 | ||||
1,939 |
DigitalBridge Group, Inc., Series J |
7.13% | (c) | 40,447 | ||||
12,517,958 | ||||||||
Specialized REITs – 0.0% | ||||||||
17,466 |
National Storage Affiliates Trust, Series A (b) |
6.00% | (c) | 365,214 |
Shares | Description | Stated Rate |
Stated Maturity |
Value | ||||
$25 PAR PREFERRED SECURITIES (Continued) | ||||||||
Wireless Telecommunication Services – 0.6% | ||||||||
124,977 |
United States Cellular Corp. |
6.25% | 09/01/69 | $2,062,121 | ||||
26,817 |
United States Cellular Corp. |
5.50% | 03/01/70 | 398,501 | ||||
264,391 |
United States Cellular Corp. |
5.50% | 06/01/70 | 3,865,396 | ||||
6,326,018 | ||||||||
Total $25 Par Preferred Securities |
206,944,821 | |||||||
(Cost $262,529,736) | ||||||||
$1,000 PAR PREFERRED SECURITIES – 4.2% | ||||||||
Banks – 3.5% | ||||||||
7,587 |
Bank of America Corp., Series L |
7.25% | (c) | 7,990,628 | ||||
26,113 |
Wells Fargo & Co., Series L |
7.50% | (c) | 27,583,162 | ||||
35,573,790 | ||||||||
Financial Services – 0.7% | ||||||||
7,000 |
Compeer Financial ACA (e) (f) |
10.20% | (c) | 6,976,187 | ||||
Total $1,000 Par Preferred Securities |
42,549,977 | |||||||
(Cost $52,212,599) | ||||||||
$1,000,000 PAR PREFERRED SECURITIES – 1.2% | ||||||||
Mortgage Real Estate Investment Trusts – 1.2% | ||||||||
12 |
FT Real Estate Securities Co., Inc. (g) (h) (i) |
9.50% | (c) | 12,480,000 | ||||
(Cost $15,990,000) | ||||||||
Par Amount |
Description | Stated Rate |
Stated Maturity |
Value | ||||
CAPITAL PREFERRED SECURITIES – 123.8% | ||||||||
Banks – 62.8% | ||||||||
$12,935,000 |
Australia & New Zealand Banking Group Ltd. (b) (d) (f) (j) |
6.75% | (c) | 12,560,336 | ||||
7,900,000 |
Banco Bilbao Vizcaya Argentaria S.A. (d) (j) |
9.38% | (c) | 7,637,333 | ||||
14,100,000 |
Banco Bilbao Vizcaya Argentaria S.A., Series 9 (b) (d) (j) |
6.50% | (c) | 13,319,117 | ||||
5,700,000 |
Banco Mercantil del Norte S.A. (d) (f) (j) |
7.50% | (c) | 4,923,655 | ||||
8,000,000 |
Banco Mercantil del Norte S.A. (d) (f) (j) |
7.63% | (c) | 7,255,335 | ||||
7,400,000 |
Banco Mercantil del Norte S.A. (d) (f) (j) |
8.38% | (c) | 6,755,752 | ||||
10,800,000 |
Banco Santander S.A. (d) (j) |
4.75% | (c) | 7,793,608 | ||||
13,400,000 |
Banco Santander S.A. (b) (d) (j) (k) |
7.50% | (c) | 13,035,118 | ||||
29,385,000 |
Bank of America Corp., Series TT (b) (d) |
6.13% | (c) | 27,701,832 | ||||
1,360,000 |
Bank of America Corp., Series X (b) (d) |
6.25% | (c) | 1,340,051 | ||||
16,920,000 |
Bank of Nova Scotia (The) (d) |
8.63% | 10/27/82 | 16,594,207 | ||||
1,300,000 |
Barclays PLC (d) (j) |
4.38% | (c) | 891,759 | ||||
22,600,000 |
Barclays PLC (b) (d) (j) |
8.00% | (c) | 22,160,301 | ||||
34,670,000 |
Barclays PLC (b) (d) (j) |
8.00% | (c) | 30,752,290 | ||||
8,550,000 |
BBVA Bancomer S.A. (a) (d) (f) (j) |
5.88% | 09/13/34 | 7,415,246 | ||||
9,900,000 |
BBVA Bancomer S.A. (b) (d) (f) (j) |
8.45% | 06/29/38 | 9,450,878 | ||||
12,000,000 |
BNP Paribas S.A. (d) (f) (j) |
4.63% | (c) | 8,351,678 | ||||
17,710,000 |
BNP Paribas S.A. (b) (d) (f) (j) |
7.75% | (c) | 16,464,514 | ||||
23,200,000 |
BNP Paribas S.A. (b) (d) (f) (j) |
8.50% | (c) | 22,287,978 | ||||
4,000,000 |
BNP Paribas S.A. (b) (d) (f) (j) |
9.25% | (c) | 4,075,956 | ||||
2,314,000 |
Citigroup, Inc. (b) (d) |
3.88% | (c) | 1,945,878 | ||||
21,800,000 |
Citigroup, Inc. (b) (d) |
7.38% | (c) | 20,846,895 | ||||
6,200,000 |
Citigroup, Inc. (b) (d) |
7.63% | (c) | 5,985,748 | ||||
9,351,000 |
Citigroup, Inc., Series M (b) (d) |
6.30% | (c) | 9,102,862 | ||||
8,600,000 |
Citigroup, Inc., Series P (b) (d) |
5.95% | (c) | 8,187,206 | ||||
6,500,000 |
Citizens Financial Group, Inc., Series F (b) (d) |
5.65% | (c) | 5,637,958 | ||||
607,000 |
Citizens Financial Group, Inc., Series G (d) |
4.00% | (c) | 414,805 |
Par Amount |
Description | Stated Rate |
Stated Maturity |
Value | ||||
CAPITAL PREFERRED SECURITIES (Continued) | ||||||||
Banks (Continued) | ||||||||
$25,000,000 |
CoBank ACB, Series I (b) (d) |
6.25% | (c) | $23,621,322 | ||||
9,695,000 |
CoBank ACB, Series K (b) (d) |
6.45% | (c) | 9,030,013 | ||||
2,800,000 |
Commerzbank AG (d) (j) (k) |
7.00% | (c) | 2,534,210 | ||||
5,000,000 |
Credit Agricole S.A. (b) (d) (f) (j) |
6.88% | (c) | 4,864,649 | ||||
8,940,000 |
Danske Bank A.S. (b) (d) (j) (k) |
7.00% | (c) | 8,555,267 | ||||
3,450,000 |
Farm Credit Bank of Texas, Series 3 (a) (d) (f) |
6.20% | (c) | 3,122,250 | ||||
7,500,000 |
Farm Credit Bank of Texas, Series 4 (b) (d) (f) |
5.70% | (c) | 7,087,500 | ||||
4,706,000 |
Fifth Third Bancorp, Series L (b) (d) |
4.50% | (c) | 4,012,041 | ||||
25,100,000 |
HSBC Holdings PLC (b) (d) (j) |
8.00% | (c) | 24,692,125 | ||||
15,092,000 |
ING Groep N.V. (b) (d) (j) |
5.75% | (c) | 13,286,695 | ||||
10,920,000 |
ING Groep N.V. (b) (d) (j) |
6.50% | (c) | 10,227,286 | ||||
12,900,000 |
ING Groep N.V. (d) (j) (k) |
7.50% | (c) | 11,592,791 | ||||
28,550,000 |
Intesa Sanpaolo S.p.A. (b) (d) (f) (j) |
7.70% | (c) | 26,733,335 | ||||
9,600,000 |
Lloyds Banking Group PLC (b) (d) (j) |
6.75% | (c) | 8,856,555 | ||||
17,912,000 |
Lloyds Banking Group PLC (b) (d) (j) |
7.50% | (c) | 16,663,534 | ||||
20,067,000 |
Lloyds Banking Group PLC (b) (d) (j) |
8.00% | (c) | 17,671,143 | ||||
648,000 |
M&T Bank Corp., Series F (d) |
5.13% | (c) | 491,102 | ||||
5,100,000 |
NatWest Group PLC (b) (d) (j) |
6.00% | (c) | 4,684,903 | ||||
10,150,000 |
NatWest Group PLC (b) (d) (j) |
8.00% | (c) | 9,864,582 | ||||
7,594,000 |
PNC Financial Services Group (The), Inc., Series U (b) (d) |
6.00% | (c) | 6,384,732 | ||||
10,976,000 |
PNC Financial Services Group (The), Inc., Series V (b) (d) |
6.20% | (c) | 9,792,627 | ||||
14,390,000 |
PNC Financial Services Group (The), Inc., Series W (b) (d) |
6.25% | (c) | 11,878,957 | ||||
24,100,000 |
Societe Generale S.A. (d) (f) (j) |
5.38% | (c) | 17,344,919 | ||||
20,300,000 |
Societe Generale S.A. (b) (d) (f) (j) |
9.38% | (c) | 19,647,834 | ||||
18,565,000 |
Standard Chartered PLC (d) (f) (j) |
4.30% | (c) | 13,037,661 | ||||
65,000 |
Standard Chartered PLC (d) (k) |
7.01% | (c) | 59,813 | ||||
5,300,000 |
Standard Chartered PLC (b) (d) (f) (j) |
7.75% | (c) | 5,098,293 | ||||
3,200,000 |
Svenska Handelsbanken AB (d) (j) (k) |
4.75% | (c) | 2,400,426 | ||||
1,000,000 |
Swedbank AB (d) (j) (k) |
7.63% | (c) | 930,873 | ||||
2,779,000 |
Texas Capital Bancshares, Inc. (b) (d) |
4.00% | 05/06/31 | 2,294,742 | ||||
19,000,000 |
Toronto-Dominion Bank (The) (a) (d) |
8.13% | 10/31/82 | 18,687,680 | ||||
15,601,000 |
UniCredit S.p.A. (b) (d) (j) (k) |
8.00% | (c) | 15,408,328 | ||||
5,000,000 |
UniCredit S.p.A. (a) (d) (f) |
5.46% | 06/30/35 | 4,104,073 | ||||
13,000,000 |
Wells Fargo & Co. (b) (d) |
7.63% | (c) | 13,049,360 | ||||
640,599,917 | ||||||||
Capital Markets – 6.9% | ||||||||
12,296,000 |
Apollo Management Holdings, L.P. (a) (b) (d) (f) |
4.95% | 01/14/50 | 10,930,435 | ||||
9,300,000 |
Ares Finance Co. III LLC (a) (b) (d) (f) |
4.13% | 06/30/51 | 6,972,499 | ||||
15,772,000 |
Charles Schwab (The) Corp., Series G (b) (d) |
5.38% | (c) | 15,055,290 | ||||
1,500,000 |
Charles Schwab (The) Corp., Series H (d) |
4.00% | (c) | 1,025,502 | ||||
660,000 |
Charles Schwab (The) Corp., Series I (d) |
4.00% | (c) | 524,648 | ||||
2,200,000 |
Charles Schwab (The) Corp., Series K (b) (d) |
5.00% | (c) | 1,743,036 | ||||
28,250,000 |
Credit Suisse Group AG, Claim (l) (m) |
3,107,500 | ||||||
6,400,000 |
Credit Suisse Group AG, Claim (l) (m) |
704,000 | ||||||
15,730,000 |
Credit Suisse Group AG, Claim (l) (m) |
1,730,300 | ||||||
19,220,000 |
Credit Suisse Group AG, Claim (l) (m) |
2,114,200 | ||||||
18,300,000 |
Deutsche Bank AG, Series 2020 (b) (d) (j) |
6.00% | (c) | 14,825,853 | ||||
2,540,000 |
EFG International AG (d) (j) (k) |
5.50% | (c) | 1,926,565 | ||||
7,900,000 |
Goldman Sachs Group (The), Inc., Series W (b) (d) |
7.50% | (c) | 7,767,697 | ||||
2,000,000 |
Macquarie Bank Ltd. (d) (f) (j) |
6.13% | (c) | 1,771,936 | ||||
70,199,461 | ||||||||
Construction Materials – 0.8% | ||||||||
7,800,000 |
Cemex SAB de CV (d) (f) |
9.13% | (c) | 8,005,803 |
Par Amount |
Description | Stated Rate |
Stated Maturity |
Value | ||||
CAPITAL PREFERRED SECURITIES (Continued) | ||||||||
Consumer Finance – 0.5% | ||||||||
$5,639,000 |
Ally Financial, Inc., Series B (d) |
4.70% | (c) | $3,677,890 | ||||
1,835,000 |
Ally Financial, Inc., Series C (d) |
4.70% | (c) | 1,075,878 | ||||
4,753,768 | ||||||||
Electric Utilities – 1.9% | ||||||||
7,950,000 |
American Electric Power Co., Inc. (a) (b) (d) |
3.88% | 02/15/62 | 6,283,079 | ||||
1,377,000 |
Edison International, Series A (b) (d) |
5.38% | (c) | 1,237,471 | ||||
6,976,000 |
Emera, Inc., Series 16-A (a) (d) |
6.75% | 06/15/76 | 6,586,649 | ||||
5,110,000 |
Southern California Edison Co., Series E, 3 Mo. LIBOR + 4.20% (b) (e) |
9.83% | (c) | 5,102,838 | ||||
19,210,037 | ||||||||
Financial Services – 4.5% | ||||||||
15,000,000 |
American AgCredit Corp. (b) (d) (f) |
5.25% | (c) | 13,800,000 | ||||
9,350,000 |
Capital Farm Credit ACA, Series 1 (b) (d) (f) |
5.00% | (c) | 8,461,750 | ||||
3,800,000 |
Compeer Financial ACA (b) (d) (f) |
4.88% | (c) | 3,439,000 | ||||
22,150,000 |
Corebridge Financial, Inc. (a) (b) (d) |
6.88% | 12/15/52 | 20,489,944 | ||||
46,190,694 | ||||||||
Food Products – 4.8% | ||||||||
6,000,000 |
Dairy Farmers of America, Inc. (b) (g) |
7.13% | (c) | 5,445,000 | ||||
7,329,000 |
Land O’Lakes Capital Trust I (a) (b) (g) |
7.45% | 03/15/28 | 6,779,325 | ||||
10,000,000 |
Land O’Lakes, Inc. (a) (b) (f) |
7.25% | (c) | 7,850,000 | ||||
33,000,000 |
Land O’Lakes, Inc. (b) (f) |
8.00% | (c) | 29,370,000 | ||||
49,444,325 | ||||||||
Insurance – 19.5% | ||||||||
3,000,000 |
Aegon N.V. (a) (d) |
5.50% | 04/11/48 | 2,716,417 | ||||
5,800,000 |
Allianz SE (a) (d) (f) |
6.35% | 09/06/53 | 5,545,892 | ||||
17,585,000 |
Assurant, Inc. (a) (b) (d) |
7.00% | 03/27/48 | 16,916,348 | ||||
5,150,000 |
Assured Guaranty Municipal Holdings, Inc. (a) (d) (f) |
6.40% | 12/15/66 | 4,404,770 | ||||
9,932,000 |
AXIS Specialty Finance LLC (a) (b) (d) |
4.90% | 01/15/40 | 7,862,861 | ||||
2,000,000 |
CNP Assurances SACA (d) (k) |
4.88% | (c) | 1,450,820 | ||||
8,704,000 |
Enstar Finance LLC (a) (d) |
5.75% | 09/01/40 | 7,694,306 | ||||
17,149,000 |
Enstar Finance LLC (a) (b) (d) |
5.50% | 01/15/42 | 13,698,724 | ||||
15,300,000 |
Fortegra Financial Corp. (a) (b) (d) (g) |
8.50% | 10/15/57 | 14,510,586 | ||||
4,400,000 |
Global Atlantic Fin Co. (a) (f) |
7.95% | 06/15/33 | 4,095,871 | ||||
25,121,000 |
Global Atlantic Fin Co. (a) (d) (f) |
4.70% | 10/15/51 | 17,523,342 | ||||
29,237,000 |
Hartford Financial Services Group (The), Inc., 3 Mo. CME Term SOFR + CSA + 2.13% (a) (b) (e) (f) |
7.75% | 02/12/47 | 25,067,792 | ||||
8,183,000 |
Kuvare US Holdings, Inc. (b) (d) (f) |
7.00% | 02/17/51 | 8,264,830 | ||||
2,000,000 |
La Mondiale SAM (b) (d) (k) |
5.88% | 01/26/47 | 1,858,080 | ||||
9,500,000 |
Lancashire Holdings Ltd. (b) (d) (k) |
5.63% | 09/18/41 | 7,652,782 | ||||
11,204,000 |
Liberty Mutual Group, Inc. (a) (b) (d) (f) |
4.13% | 12/15/51 | 8,914,464 | ||||
3,295,000 |
Liberty Mutual Group, Inc. (b) (f) |
4.30% | 02/01/61 | 1,724,268 | ||||
4,125,000 |
Lincoln National Corp., Series C (b) (d) |
9.25% | (c) | 4,162,113 | ||||
2,442,000 |
Nationwide Financial Services Capital Trust (a) (m) |
7.90% | 03/01/37 | 2,446,589 | ||||
2,910,000 |
Nationwide Financial Services, Inc. (a) (b) |
6.75% | 05/15/37 | 2,638,443 | ||||
16,684,000 |
Prudential Financial, Inc. (a) (d) |
6.00% | 09/01/52 | 14,957,601 | ||||
14,500,000 |
QBE Insurance Group Ltd. (b) (d) (f) |
5.88% | (c) | 13,894,199 | ||||
9,765,000 |
QBE Insurance Group Ltd. (b) (d) (k) |
6.75% | 12/02/44 | 9,621,522 | ||||
2,000,000 |
QBE Insurance Group Ltd. (b) (d) (k) |
5.88% | 06/17/46 | 1,897,419 | ||||
199,520,039 |
Par Amount |
Description | Stated Rate |
Stated Maturity |
Value | ||||
CAPITAL PREFERRED SECURITIES (Continued) | ||||||||
Multi-Utilities – 4.1% | ||||||||
$28,281,000 |
Algonquin Power & Utilities Corp. (a) (b) (d) |
4.75% | 01/18/82 | $22,356,272 | ||||
24,890,000 |
Sempra (b) (d) |
4.13% | 04/01/52 | 19,202,272 | ||||
41,558,544 | ||||||||
Oil, Gas & Consumable Fuels – 12.5% | ||||||||
9,000,000 |
Buckeye Partners, L.P., 3 Mo. LIBOR + 4.02% (b) (e) |
9.69% | 01/22/78 | 7,360,245 | ||||
27,810,000 |
Enbridge, Inc. (a) (b) (d) |
6.25% | 03/01/78 | 24,405,775 | ||||
8,800,000 |
Enbridge, Inc. (b) (d) |
8.50% | 01/15/84 | 8,434,563 | ||||
20,262,000 |
Enbridge, Inc., Series 16-A (a) (b) (d) |
6.00% | 01/15/77 | 17,667,096 | ||||
15,150,000 |
Enbridge, Inc., Series 20-A (b) (d) |
5.75% | 07/15/80 | 12,646,606 | ||||
2,543,000 |
Energy Transfer, L.P., Series B (b) (d) |
6.63% | (c) | 1,974,004 | ||||
11,909,000 |
Energy Transfer, L.P., Series F (b) (d) |
6.75% | (c) | 10,796,280 | ||||
14,694,000 |
Energy Transfer, L.P., Series G (b) (d) |
7.13% | (c) | 12,239,042 | ||||
2,000,000 |
Energy Transfer, L.P., Series H (b) (d) |
6.50% | (c) | 1,816,360 | ||||
494,000 |
Enterprise Products Operating LLC (d) |
5.38% | 02/15/78 | 420,749 | ||||
2,551,000 |
Enterprise Products Operating LLC, 3 Mo. LIBOR + 2.78% (b) (e) |
8.27% | 06/01/67 | 2,359,570 | ||||
4,151,000 |
Enterprise Products Operating LLC, Series D, 3 Mo. CME Term SOFR + CSA + 2.99% (b) (e) |
8.62% | 08/16/77 | 4,064,540 | ||||
990,000 |
Enterprise Products Operating LLC, Series E (b) (d) |
5.25% | 08/16/77 | 852,114 | ||||
21,650,000 |
Transcanada Trust (a) (b) (d) |
5.50% | 09/15/79 | 17,234,571 | ||||
6,450,000 |
Transcanada Trust (a) (b) (d) |
5.60% | 03/07/82 | 4,986,315 | ||||
127,257,830 | ||||||||
Retail REITs – 0.6% | ||||||||
1,200,000 |
Scentre Group Trust 2 (a) (d) (f) |
4.75% | 09/24/80 | 1,078,771 | ||||
6,450,000 |
Scentre Group Trust 2 (a) (b) (d) (f) |
5.13% | 09/24/80 | 5,326,079 | ||||
6,404,850 | ||||||||
Trading Companies & Distributors – 4.9% | ||||||||
35,945,000 |
AerCap Holdings N.V. (b) (d) |
5.88% | 10/10/79 | 33,773,668 | ||||
4,863,000 |
Air Lease Corp., Series B (b) (d) |
4.65% | (c) | 4,151,263 | ||||
15,335,000 |
Aircastle Ltd. (b) (d) (f) |
5.25% | (c) | 12,101,575 | ||||
50,026,506 | ||||||||
Total Capital Preferred Securities |
1,263,171,774 | |||||||
(Cost $1,441,303,934) | ||||||||
Principal Value |
Description | Stated Coupon |
Stated Maturity |
Value | ||||
FOREIGN CORPORATE BONDS AND NOTES – 2.8% | ||||||||
Insurance – 2.8% | ||||||||
29,795,925 |
Highlands Holdings Bond Issuer Ltd./Highlands Holdings Bond Co-Issuer, Inc. (a) (b) (f) (n) |
7.63% | 10/15/25 | 29,065,031 | ||||
(Cost $30,050,053) |
Total Investments – 152.3% |
1,554,211,603 | |||
(Cost $1,802,086,322) | ||||
Shares | Description | Value | ||
REVERSE REPURCHASE AGREEMENT – (9.8)% | ||||
(100,000,000) |
Scotia Bank, due 1/29/24, 1 month CME Term SOFR + CSA + 65bps |
(100,000,000) | ||
Outstanding Loan – (44.4)% |
(453,200,000) | |||
Net Other Assets and Liabilities – 1.9% |
19,653,663 | |||
Net Assets – 100.0% |
$1,020,665,266 |
(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 agreements is between 30-90 days. At October 31, 2023, securities noted as such are valued at $223,923,210. |
(b) | All or a portion of this security serves as collateral on the outstanding loan. At October 31, 2023, the segregated value of these securities amounts to $939,937,132. |
(c) | Perpetual maturity. |
(d) | Fixed-to-floating or fixed-to-variable rate security. The interest rate shown reflects the fixed rate in effect at October 31, 2023. At a predetermined date, the fixed rate will change to a floating rate or a variable rate. |
(e) | Floating or variable rate security. |
(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. 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 October 31, 2023, securities noted as such amounted to $435,166,336 or 42.6% of net assets. |
(g) | 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 (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 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 October 31, 2023, securities noted as such are valued at $12,480,000 or 1.2% 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 is a contingent convertible capital security which may be subject to conversion into common stock of the issuer under certain circumstances. At October 31, 2023, securities noted as such amounted to $447,750,617 or 28.5% of managed assets. Of these securities, 8.0% originated in emerging markets, and 92.0% originated in foreign markets. |
(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 fiscal year ended October 31, 2023, this security paid all of its interest in cash. |
Abbreviations throughout the Portfolio of Investments: | |
CME | – Chicago Mercantile Exchange |
CSA | – Credit Spread Adjustment |
LIBOR | – London Interbank Offered Rate |
SOFR | – Secured Overnight Financing Rate |
ASSETS TABLE | ||||
Total Value at 10/31/2023 |
Level
1 Quoted Prices |
Level
2 Significant Observable Inputs |
Level
3 Significant Unobservable Inputs | |
$25 Par Preferred Securities: | ||||
Gas Utilities |
$ 3,536,947 | $ — | $ 3,536,947 | $ — |
Insurance |
79,594,569 | 56,628,688 | 22,965,881 | — |
Other Industry Categories* |
123,813,305 | 123,813,305 | — | — |
$1,000 Par Preferred Securities: | ||||
Banks |
35,573,790 | 35,573,790 | — | — |
Financial Services |
6,976,187 | — | 6,976,187 | — |
$1,000,000 Par Preferred Securities* |
12,480,000 | — | — | 12,480,000 |
Capital Preferred Securities* |
1,263,171,774 | — | 1,263,171,774 | — |
Foreign Corporate Bonds and Notes* |
29,065,031 | — | 29,065,031 | — |
Total Investments |
$ 1,554,211,603 | $ 216,015,783 | $ 1,325,715,820 | $ 12,480,000 |
LIABILITIES TABLE | ||||
Total Value at 10/31/2023 |
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. |
Beginning Balance at October 31, 2022 | |
$1,000,000 Par Preferred Securities | $13,440,000 |
Net Realized Gain (Loss) | — |
Net Change in Unrealized Appreciation/Depreciation | (960,000) |
Purchases | — |
Sales | — |
Transfers In | — |
Transfers Out | — |
Ending Balance at October 31, 2023 | |
$1,000,000 Par Preferred Securities | 12,480,000 |
Total Level 3 holdings | $12,480,000 |
ASSETS: | |
Investments, at value |
$ 1,554,211,603 |
Cash |
5,822,487 |
Receivables: | |
Interest |
19,263,337 |
Dividends |
539,904 |
Investment securities sold |
367,938 |
Reclaims |
111,234 |
Total Assets |
1,580,316,503 |
LIABILITIES: | |
Outstanding loan |
453,200,000 |
Reverse repurchase agreement |
100,000,000 |
Payables: | |
Interest and fees on loan and repurchase agreement |
3,084,390 |
Investment securities purchased |
1,648,583 |
Investment advisory fees |
1,144,070 |
Administrative fees |
434,477 |
Shareholder reporting fees |
58,264 |
Audit and tax fees |
38,637 |
Custodian fees |
27,948 |
Legal fees |
2,249 |
Transfer agent fees |
1,627 |
Financial reporting fees |
771 |
Other liabilities |
10,221 |
Total Liabilities |
559,651,237 |
NET ASSETS |
$1,020,665,266 |
NET ASSETS consist of: | |
Paid-in capital |
$ 1,412,699,698 |
Par value |
608,478 |
Accumulated distributable earnings (loss) |
(392,642,910) |
NET ASSETS |
$1,020,665,266 |
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) |
$16.77 |
Number of |
|
Investments, at cost |
$1,802,086,322 |
INVESTMENT INCOME: | ||
Interest |
$ 93,102,866 | |
Dividends |
24,298,773 | |
Foreign withholding tax |
(297,473) | |
Other |
2,522 | |
Total investment income |
117,106,688 | |
EXPENSES: | ||
Interest and fees on loan and repurchase agreement |
32,087,782 | |
Investment advisory fees |
14,136,337 | |
Administrative fees |
604,074 | |
Shareholder reporting fees |
230,934 | |
Legal fees |
227,299 | |
Custodian fees |
179,912 | |
Listing expense |
61,137 | |
Audit and tax fees |
41,744 | |
Transfer agent fees |
20,433 | |
Trustees’ fees and expenses |
20,027 | |
Financial reporting fees |
9,250 | |
Other |
39,818 | |
Total expenses |
47,658,747 | |
NET INVESTMENT INCOME (LOSS) |
69,447,941 | |
NET REALIZED AND UNREALIZED GAIN (LOSS): | ||
Net realized gain (loss) on: | ||
Investments |
(91,750,693) | |
Foreign currency transactions |
1,588 | |
Net realized gain (loss) |
(91,749,105) | |
Net change in unrealized appreciation (depreciation) on investments |
(1,209,669) | |
NET REALIZED AND UNREALIZED GAIN (LOSS) |
(92,958,774) | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
$(23,510,833) |
Year Ended 10/31/2023 |
Year Ended 10/31/2022 | ||
OPERATIONS: | |||
Net investment income (loss) |
$ 69,447,941 | $ 86,952,196 | |
Net realized gain (loss) |
(91,749,105) | (11,458,089) | |
Net change in unrealized appreciation (depreciation) |
(1,209,669) | (377,373,900) | |
Net increase (decrease) in net assets resulting from operations |
(23,510,833) | (301,879,793) | |
DISTRIBUTIONS TO SHAREHOLDERS FROM: | |||
Investment operations |
(66,905,271) | (85,119,106) | |
Return of capital |
(12,805,383) | (6,147,414) | |
Total distributions to shareholders |
(79,710,654) | (91,266,520) | |
CAPITAL TRANSACTIONS: | |||
Proceeds from Common Shares reinvested |
— | 669,324 | |
Net increase (decrease) in net assets resulting from capital transactions |
— | 669,324 | |
Total increase (decrease) in net assets |
(103,221,487) | (392,476,989) | |
NET ASSETS: | |||
Beginning of period |
1,123,886,753 | 1,516,363,742 | |
End of period |
$ 1,020,665,266 | $ 1,123,886,753 | |
CAPITAL TRANSACTIONS were as follows: | |||
Common Shares at beginning of period |
60,847,827 | 60,820,579 | |
Common Shares issued as reinvestment under the Dividend Reinvestment Plan |
— | 27,248 | |
Common Shares at end of period |
60,847,827 | 60,847,827 |
Cash flows from operating activities: | ||
Net increase (decrease) in net assets resulting from operations |
$(23,510,833) | |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities: | ||
Purchases of investments |
(643,860,935) | |
Sales, maturities and paydown of investments |
654,562,770 | |
Net amortization/accretion of premiums/discounts on investments |
86,494 | |
Net realized gain/loss on investments |
91,750,693 | |
Net change in unrealized appreciation/depreciation on investments |
1,209,669 | |
Changes in assets and liabilities: | ||
Increase in interest receivable |
(256,060) | |
Decrease in interest reclaims receivable |
361,797 | |
Increase in dividend reclaims receivable |
(1) | |
Decrease in dividends receivable |
297,416 | |
Decrease in prepaid expenses |
328 | |
Increase in interest and fees payable on loan and reverse repurchase agreement |
1,067,616 | |
Decrease in investment advisory fees payable |
(65,155) | |
Decrease in audit and tax fees payable |
(10,526) | |
Decrease in legal fees payable |
(591) | |
Decrease in shareholder reporting fees payable |
(1,630) | |
Increase in administrative fees payable |
91,389 | |
Decrease in custodian fees payable |
(3,353) | |
Decrease in transfer agent fees payable |
(1,236) | |
Increase in other liabilities payable |
10,221 | |
Cash provided by operating activities |
$81,728,073 | |
Cash flows from financing activities: | ||
Distributions to Common Shareholders from investment operations |
(66,905,271) | |
Distributions to Common Shareholders from return of capital |
(12,805,383) | |
Repayment of borrowing |
(92,800,000) | |
Proceeds from borrowing |
96,400,000 | |
Cash used in financing activities |
(76,110,654) | |
Increase in cash |
5,617,419 | |
Cash at beginning of period |
205,068 | |
Cash at end of period |
$5,822,487 | |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest and fees |
$31,020,166 |
Year Ended October 31, | |||||||||
2023 | 2022 | 2021 | 2020 | 2019 | |||||
Net asset value, beginning of period |
$ 18.47 | $ 24.93 | $ 22.66 | $ 24.40 | $ 22.84 | ||||
Income from investment operations: | |||||||||
Net investment income (loss) |
1.14 (a) | 1.43 | 1.58 | 1.56 | 1.65 | ||||
Net realized and unrealized gain (loss) |
(1.53) | (6.39) | 2.22 | (1.71) | 1.61 | ||||
Total from investment operations |
(0.39) | (4.96) | 3.80 | (0.15) | 3.26 | ||||
Distributions paid to shareholders from: | |||||||||
Net investment income |
(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 |
(1.31) | (1.50) | (1.53) | (1.59) | (1.70) | ||||
Net asset value, end of period |
$ | $18.47 | $24.93 | $22.66 | $24.40 | ||||
Market value, end of period |
$ | $16.39 | $25.48 | $21.56 | $24.07 | ||||
Total return based on net asset value (b) |
(1.56)% | (20.30)% | 17.25% | (0.05)% | 15.44% | ||||
Total return based on market value (b) |
(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) |
$ 1,020,665 | $ 1,123,887 | $ 1,516,364 | $ 1,376,701 | $ 1,482,428 | ||||
Ratio of total expenses to average net assets |
4.34% | 2.22% | 1.72% | 1.98% | 2.70% | ||||
Ratio of total expenses to average net assets excluding interest expense |
1.42% | 1.35% | 1.33% | 1.31% | 1.33% | ||||
Ratio of net investment income (loss) to average net assets |
6.32% | 6.59% | 6.44% | 6.93% | 7.14% | ||||
Portfolio turnover rate |
39% | 25% | 39% | 45% | 40% | ||||
Indebtedness: | |||||||||
Total loan and reverse repurchase agreement outstanding (in 000’s) |
$ 553,200 | $ 549,600 | $ 676,000 | $ 616,000 | $ 646,000 | ||||
Asset coverage per $1,000 of indebtedness (c) |
$ 2,845 | $ 3,045 | $ 3,243 | $ 3,235 | $ 3,295 | ||||
Total loan outstanding (in 000’s) |
$ 453,200 | $ 449,600 | $ 576,000 | $ 516,000 | $ 646,000 | ||||
Asset coverage per $1,000 of indebtedness (d) |
$ 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) | 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. |
(d) | 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. |
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. |
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. |
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. |
• | 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. |
• | 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. |
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 | 90.75 | $6,000,000 | $5,445,000 | 0.53% | ||
Fortegra Financial Corp., 8.50%, 10/15/57 | 10/12/17 - 3/12/18 | $ 15,300,000 | 94.84 | 15,343,577 | 14,510,586 | 1.42 | ||
FT Real Estate Securities Co., Inc., 9.50% | 6/15/16 | 12 | 1,040,000.00 | 15,990,000 | 12,480,000 | 1.22 | ||
Land O’Lakes Capital Trust I, 7.45%, 03/15/28 | 3/20/15 - 2/25/19 | $ 7,329,000 | 92.50 | 7,621,707 | 6,779,325 | 0.66 | ||
$44,955,284 | $39,214,911 | 3.83% |
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 |
Cash Segregated as Collateral |
Net Amount | ||||||
Reverse Repurchase Agreements | $ (100,000,000) | $ — | $ (100,000,000) | $ 100,000,000 | $ — | $ — |
Distributions paid from: | 2023 | 2022 |
Ordinary income |
$66,905,271 | $85,119,106 |
Capital gains |
— | — |
Return of capital |
12,805,383 | 6,147,414 |
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 |
Tax Cost | Gross Unrealized Appreciation |
Gross Unrealized (Depreciation) |
Net
Unrealized Appreciation (Depreciation) | |||
$1,795,824,296 | $11,970,742 | $(253,583,435) | $(241,612,693) |
(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. |
Dividends Received Deduction | Qualified Dividend Income | |
37.84% | 88.91% |
• | The Fund invests at least 80% of its managed assets in a portfolio of preferred and other income-producing securities issued by U.S. and non-U.S. companies. These securities include traditional preferred securities, hybrid preferred securities and debt securities, floating rate and fixed-to-floating rate preferred securities, debt securities, convertible securities and contingent convertible securities. |
• | The Fund also invests at least 25% of its managed assets in the group of industries that are part of the financials sector as classified under the Global Industry Classification Standards, developed by MSCI, Inc. and S&P Dow Jones Indices. |
• | The Fund seeks to invest in a portfolio of securities that has an average weighted investment grade credit quality. |
• | The Fund may invest up to 20% of its managed assets in common stocks, which represent residual ownership interest in issuers and include rights or warrants to purchase common stocks. The Fund may invest in common stocks of companies of any market capitalization. |
• | The Fund may invest up to 20% of its managed assets in debt securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities or by a non-U.S. Government or its agencies or instrumentalities. The Fund may invest up to 20% of its managed assets in municipal securities, which include debt obligations of states, territories or possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities. |
• | The Fund may invest up to 25% of its managed assets in securities that, at the time of investment, are illiquid. The Fund also may invest, without limit, in restricted securities. |
• | The Fund seeks to maintain a weighted average effective duration of between three and eight years, excluding the effects of leverage. However, under certain market conditions, the Fund’s duration may be longer than eight years or shorter than three years. |
• | 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. |
NOT FDIC INSURED | NOT BANK GUARANTEED | MAY LOSE VALUE |
Assumed Portfolio Total Return (Net of Expenses) |
-10% | -5% | 0% | 5% | 10% |
Common Share Total Return |
- |
- |
- |
Name, Year of Birth and Position with the Fund | Term of Office and Year First Elected or Appointed(1) | Principal
Occupations During Past 5 Years |
Number of Portfolios in the First Trust Fund Complex Overseen by Trustee | Other Trusteeships or Directorships Held by Trustee During Past 5 Years |
INDEPENDENT TRUSTEES | ||||
Richard
E. Erickson, Trustee (1951) |
• Three Year Term• Since Fund Inception | Retired; Physician, Edward-Elmhurst Medical Group (2021 to September 2023); Physician and Officer, Wheaton Orthopedics (1990 to 2021) | 254 | None |
Thomas
R. Kadlec, Trustee (1957) |
• Three Year Term• Since Fund Inception | Retired; President, ADM Investor Services, Inc. (Futures Commission Merchant) (2010 to July 2022) | 254 | Director, National Futures Association and ADMIS Singapore Ltd.; Formerly, Director of ADM Investor Services, Inc., ADM Investor Services International, ADMIS Hong Kong Ltd., and Futures Industry Association |
Denise
M. Keefe, Trustee (1964) |
• Three Year Term• Since 2021 | Executive Vice President, Advocate Aurora Health and President, Advocate Aurora Continuing Health Division (Integrated Healthcare System) | 254 | Director and Board Chair of Advocate Home Health Services, Advocate Home Care Products and Advocate Hospice; Director and Board Chair of Aurora At Home (since 2018); Director of Advocate Physician Partners Accountable Care Organization; Director of RML Long Term Acute Care Hospitals; Director of Senior Helpers (since 2021); and Director of MobileHelp (since 2022) |
Robert
F. Keith, Trustee (1956) |
• Three Year Term• Since Fund Inception | President, Hibs Enterprises (Financial and Management Consulting) | 254 | Formerly, Director of Trust Company of Illinois |
Niel
B. Nielson, Trustee (1954) |
• Three Year Term• Since Fund Inception | Senior Advisor (2018 to Present), Managing Director and Chief Operating Officer (2015 to 2018), Pelita Harapan Educational Foundation (Educational Products and Services) | 254 | None |
(1) | Currently, Denise M. Keefe and Robert F. Keith, as Class I Trustees, are serving as trustees until the Fund’s 2026 annual meeting of shareholders. Richard E. Erickson, Thomas R. Kadlec and Bronwyn Wright as Class II Trustees, are serving as trustees until the Fund’s 2024 annual meeting of shareholders. James A. Bowen, Niel B. Nielson, as a Class III Trustees, are serving as trustees until the Fund’s 2025 annual meeting of shareholders. |
Name, Year of Birth and Position with the Fund | Term of Office and Year First Elected or Appointed(1) | Principal
Occupations During Past 5 Years |
Number of Portfolios in the First Trust Fund Complex Overseen by Trustee | Other Trusteeships or Directorships Held by Trustee During Past 5 Years |
Bronwyn
Wright, Trustee (1971) |
• Three Year Term• Since 2023 | Independent Director to a number of Irish collective investment funds (2009 to Present); Various roles at international affiliates of Citibank (1994 to 2009), including Managing Director, Citibank Europe plc and Head of Securities and Fund Services, Citi Ireland (2007 to 2009) | 229 | None |
INTERESTED TRUSTEE | ||||
James
A. Bowen(2), Trustee and Chairman of the Board (1955) |
• Three Year Term• Since Fund Inception | Chief Executive Officer, First Trust Advisors L.P. and First Trust Portfolios L.P.; Chairman of the Board of Directors, BondWave LLC (Software Development Company) and Stonebridge Advisors LLC (Investment Advisor) | 254 | None |
Name and Year of Birth | Position and Offices with Fund | Term of Office and Length of Service | Principal
Occupations During Past 5 Years |
OFFICERS(3) | |||
James
M. Dykas (1966) |
President and Chief Executive Officer | • Indefinite
Term • Since 2016 |
Managing Director and Chief Financial Officer, First Trust Advisors L.P. and First Trust Portfolios L.P.; Chief Financial Officer, BondWave LLC (Software Development Company) and Stonebridge Advisors LLC (Investment Advisor) |
Derek
D. Maltbie (1972) |
Treasurer, Chief Financial Officer and Chief Accounting Officer | • Indefinite
Term • Since 2023 |
Senior Vice President, First Trust Advisors L.P. and First Trust Portfolios L.P., July 2021 to Present. Previously, Vice President, First Trust Advisors L.P. and First Trust Portfolios L.P., 2014 to 2021. |
W.
Scott Jardine (1960) |
Secretary and Chief Legal Officer | • Indefinite
Term • Since Fund Inception |
General Counsel, First Trust Advisors L.P. and First Trust Portfolios L.P.; Secretary and General Counsel, BondWave LLC; Secretary, Stonebridge Advisors LLC |
Daniel
J. Lindquist (1970) |
Vice President | • Indefinite
Term • Since Fund Inception |
Managing Director, First Trust Advisors L.P. and First Trust Portfolios L.P. |
Kristi
A. Maher (1966) |
Chief Compliance Officer and Assistant Secretary | • Indefinite
Term • Since Fund Inception |
Deputy General Counsel, First Trust Advisors L.P. and First Trust Portfolios L.P. |
(2) | Mr. Bowen is deemed an “interested person” of the Fund due to his position as CEO of First Trust Advisors L.P., investment advisor of the Fund. |
(3) | The term “officer” means the president, vice president, secretary, treasurer, controller or any other officer who performs a policy making function. |
• | Information we receive from you and your broker-dealer, investment professional or financial representative through interviews, applications, agreements or other forms; |
• | Information about your transactions with us, our affiliates or others; |
• | Information we receive from your inquiries by mail, e-mail or telephone; and |
• | Information we collect on our website through the use of “cookies.” For example, we may identify the pages on our website that your browser requests or visits. |
• | In order to provide you with products and services and to effect transactions that you request or authorize, we may disclose your personal information as described above to unaffiliated financial service providers and other companies that perform administrative or other services on our behalf, such as transfer agents, custodians and trustees, or that assist us in the distribution of investor materials such as trustees, banks, financial representatives, proxy services, solicitors and printers. |
• | We may release information we have about you if you direct us to do so, if we are compelled by law to do so, or in other legally limited circumstances (for example to protect your account from fraud). |
Item 2. Code of Ethics.
(a) | The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
(c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. |
(d) | The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
(e) | Not applicable. |
(f) | A copy of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller is filed as an exhibit pursuant to Item 13(a)(1). |
Item 3. Audit Committee Financial Expert.
As of the end of the period covered by the report, the registrant’s board of trustees has determined that Thomas R. Kadlec, Robert F. Keith and Bronwyn Wright are qualified to serve as audit committee financial experts serving on its audit committee and that each of them is “independent,” as defined by Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) | Audit Fees (Registrant) -- The aggregate fees billed for the last fiscal year for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $30,000 for the fiscal year ended October 31, 2022 and $30,000 for the fiscal year ended October 31, 2023. |
(b) | Audit-Related Fees (Registrant) -- The aggregate fees billed in the last fiscal year for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023. |
Audit-Related Fees (Investment Advisor) -- The aggregate fees billed in the last fiscal year for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023.
Audit-Related Fees (Investment Sub-Advisor) -- The aggregate fees billed in the last fiscal year for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023.
(c) | Tax Fees (Registrant) -- The aggregate fees billed in the last fiscal year for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $14,000 for the fiscal year ended October 31, 2022 and $21,211 for the fiscal year ended October 31, 2023. These fees were for tax consultation and/or tax return preparation and professional services for PFIC (Passive Foreign Investment Company) Identification Services. |
Tax Fees (Investment Advisor) -- The aggregate fees billed in the last fiscal year for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023.
Tax Fees (Investment Sub-Advisor) -- The aggregate fees billed in the last fiscal year for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023.
(d) | All Other Fees (Registrant) -- The aggregate fees billed in the last fiscal year for products and services provided by the principal accountant to the registrant, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023. |
All Other Fees (Investment Advisor) The aggregate fees billed in the last fiscal year for products and services provided by the principal accountant to the registrant, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023.
All Other Fees (Investment Sub-Advisor) The aggregate fees billed in the last fiscal year for products and services provided by the principal accountant to the registrant, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended October 31, 2022 and $0 for the fiscal year ended October 31, 2023.
(e)(1) | Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. |
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval Policy, the Audit Committee (the “Committee”) is responsible for the pre-approval of all audit services and permitted non-audit services (including the fees and terms thereof) to be performed for the registrant by its independent auditors. The Chairman of the Committee is authorized to give such pre-approvals on behalf of the Committee up to $25,000 and report any such pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent auditor’s engagements for non-audit services with the registrant’s advisor (not including a sub-advisor whose role is primarily portfolio management and is sub-contracted or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant, subject to the de minimis exceptions for non-audit services described in Rule 2-01 of Regulation S-X. If the independent auditor has provided non-audit services to the registrant’s advisor (other than any sub-advisor whose role is primarily portfolio management and is sub-contracted with or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor that provides ongoing services to the registrant that were not pre-approved pursuant to its policies, the Committee will consider whether the provision of such non-audit services is compatible with the auditor’s independence.
(e)(2) | The percentage of services described in each of paragraphs (b) through (d) for the registrant and the registrant’s investment advisor of this Item that were approved by the audit committee pursuant to the pre-approval exceptions included in paragraph (c)(7)(i)(c) or paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X are as follows: |
(b) 0%
(c) 0%
(d) 0%
(f) | The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than fifty percent. |
(g) | The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to the registrant for the fiscal year ended October 31, 2022 were $14,000 for the registrant, $0 for the registrant’s investment advisor and $0 for the registrant’s investment sub-advisor and for the registrant’s fiscal year ended October 31, 2023 were $0 for the registrant, $44,000 for the registrant’s investment advisor and $16,000 for the registrant’s investment sub-advisor. |
(h) | The registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the investment advisor that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
(i) | Not applicable. |
(j) | Not applicable. |
Item 5. Audit Committee of Listed Registrants.
(a) | The registrant has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 consisting of all the independent directors of the registrant. The audit committee of the registrant is comprised of: Richard E. Erickson, Thomas R. Kadlec, Denise M. Keefe, Robert F. Keith, Niel B. Nielson and Bronwyn Wright. |
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.
A description of the policies and procedures used to vote proxies on behalf of the Fund is attached as an exhibit.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1) Identification of Portfolio Managers or Management Team Members and Description of Role of Portfolio Managers or Management Team Members
Information provided as of November 20, 2023
Stonebridge Advisors LLC is a registered investment advisor based in Wilton, Connecticut. Stonebridge specializes in the management of preferred and hybrid securities.
Scott T. Fleming, President and CEO of Stonebridge Advisors LLC
Mr. Fleming leads the Investment Team at Stonebridge and oversees and takes lead role over Investment Team decisions. Prior to founding Stonebridge, Mr. Fleming co-founded Spectrum Asset Management, Inc., an investment advisor that specializes in preferred securities asset management for institutional clients and mutual funds. During his 13-year tenure there, he served as Chairman of the Board of Directors, Chief Financial Officer and Chief Investment Officer. Under his leadership, Spectrum grew to be the largest preferred securities manager in the country. As Chief Investment Officer at Spectrum, Mr. Fleming established and implemented custom investment strategies for the firm’s clients. In this capacity he was instrumental in growing assets under management to over $2 billion by consistently outperforming stated benchmarks by solid margins. Mr. Fleming previously served as Vice President, Portfolio Manager for DBL Preferred Management, Inc. in New York City. There he managed over $300 million of institutional assets with a strategy specializing in preferred securities. Mr. Fleming received a BS in Accounting from Bentley College in Waltham, MA and his MBA in Finance from Babson College in Wellesley, MA.
Robert Wolf, CIO and Executive Vice President
Mr. Wolf is a member of the firm’s Investment Committee and oversees investment strategies and portfolio management activities across funds and separately managed accounts. He analyzes both investment grade and non-investment grade securities and makes security recommendations. Mr. Wolf brings 17 years of fixed-income experience to Stonebridge in both portfolio management and credit research. Prior to joining Stonebridge in 2006, Mr. Wolf was a high-yield fixed-income research analyst at Lehman Brothers. In this role, his responsibilities included detailed credit analysis across multiple sectors, relative value analysis, and developing trade recommendations for Lehman’s High-Yield proprietary trading effort. Mr. Wolf previously worked for Lehman Brothers Commercial Mortgage-Backed Securities (CMBS) trading desk as a credit analyst where he provided in-depth analysis of CMBS transactions and the underlying Commercial Real Estate. Mr. Wolf received his B.S. degree in Chemistry from Villanova University in 1999 and his MBA in Finance from the New York University Stern School of Business in 2004.
Eric Weaver, Chief Strategist and Executive Vice President
Mr. Weaver is a senior member of Stonebridge Advisors LLC’s Investment Committee and oversees the investment strategy across all fund products and separately managed accounts. In addition, Mr. Weaver leads the development of proprietary portfolio management, security selection, trading, and operational tools. Mr. Weaver has thirteen years of investment management experience in portfolio management, trading, risks analysis, and research. Mr. Weaver joined Stonebridge Advisors LLC in 2013. Prior to joining Stonebridge in 2013, Mr. Weaver worked at a private proprietary trading firm as a senior derivatives trader, with OTC and electronic trading experience on the NASDAQ OMX PHLX and CBOE options exchanges. In this role, Mr. Weaver focused on trading, portfolio and risk management, and pricing complex derivatives in a large and diverse portfolio of equities, options, and futures. Mr. Weaver received a B.A. degree in Economics and Mathematics and an MS degree in Economics from Lehigh University in Bethlehem, PA.
Angelo Graci, CFA, Executive Vice President and Head of Credit Research
Mr. Graci is a senior member of the Investment Committee and manages a team of analysts that oversees all of Stonebridge’s portfolio investments. Mr. Graci has over 25 years of credit and equity research experience with a focus on financials. His extensive knowledge of global banking, insurance, non-bank finance and REITs brings an impressive level of analytical depth to the Stonebridge research team.
Prior to joining Stonebridge in 2018, Mr. Graci was a global financials credit strategist at Stifel Financial, with a particular focus on hybrid/preferred strategy. At Stifel, he incorporated a multi-asset and cross-currency approach to analyzing global financials, which encompassed global banking systems (developed and emerging markets), insurance, non-bank finance and REITs. Before Stifel, he was a senior analyst at Caxton Associates, responsible for financial sector credit and equity analysis and portfolio management. Prior roles included global financials and hybrid strategy at Citadel Securities and credit analysis and trading at Merrill Lynch. Mr. Graci received a BS in Finance from SUNY Albany and an MBA in Finance from New York University. He holds the CFA® designation awarded by CFA Institute.
(a)(2) | Other Accounts Managed by Portfolio Managers or Management Team Member and Potential Conflicts of Interest |
Information provided as of October 31, 2023.
Name of Portfolio Manager or Team Member | Type of Accounts* | Total # of Accounts Managed |
Total Assets | # of Accounts Managed for which Advisory Fee is Based on Performance | Total Assets for which Advisory Fee is Based on Performance |
1. Scott T. Fleming | Registered Investment Companies | 3 | $6.109Bil | 0 | 0 |
Other Pooled Investment Vehicles | 0 | $0 | 0 | $0 | |
Other Accounts | 9,793 | $3.094Bil | 0 | $0 | |
2. Robert Wolf | Registered Investment Companies | 3 | $6.109Bil | 0 | $0 |
Other Pooled Investment Vehicles | 0 | $0 | 0 | $0 | |
Other Accounts | 9,793 | $3.094Bil | 0 | $0 | |
3. Eric Weaver | Registered Investment Companies: | 3 | $6.109Bil | 0 | $0 |
Other Pooled Investment Vehicles | 0 | $0 | 0 | $0 | |
Other Accounts: | 9,793 | $3.094Bil | 0 | $0 | |
4. Angelo Graci | Registered Investment Companies: | 3 | $6.109Bil | 0 | $0 |
Other Pooled Investment Vehicles | 0 | $0 | 0 | $0 | |
Other Accounts: | 9,793 | $3.094Bil | 0 | $0 |
*Information excludes the registrant
Portfolio Manager Potential Conflicts of Interests
Stonebridge Advisors LLC (“Stonebridge”) avoids material conflicts that may arise from side-by-side management of the CEF and other account strategies, including other FT funds and Separately Managed Accounts by policies and procedures that are designed to ensure that each client is treated fairly. Stonebridge’s investment team considers every investment opportunity for each of our portfolios based on the portfolio or fund guidelines, restrictions and compliance rules. Trades are pre-allocated to those client portfolios for which the trade is suitable, given the portfolio’s goals and guidelines. Partial fills are governed by allocation rules that are designed to treat each client fairly.
(a)(3) Compensation Structure of Portfolio Managers or Management Team Members
Portfolio Manager Compensation
Information provided as of October 31, 2023.
Stonebridge employees receive an annual salary, mid- and year-end bonuses based on company performance, medical benefits and a 401(k) plan.
Compensation consists of base salaries with upside potential in the form of mid-year and year-end performance bonuses. These bonuses are based on a number of factors: profitability of the firm, employee value to the firm success, investment performance and servicing of clients, employee ability to fit into the team, employee commitment, work ethic and effectiveness in carrying out assigned duties, employee dedication above and beyond expectations.
(a)(4) Disclosure of Securities Ownership
Information provided as of October 31, 2023.
Name | Dollar Range of Fund Shares Beneficially Owned |
Scott T. Fleming | $500,001-1,000,000 |
Robert Wolf | $10,001-$50,000 |
Eric Weaver | $10,001-50,000 |
Angelo Graci | $100,001-500,000 |
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 13. Exhibits.
(a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(c) | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies as required by Item 7 is 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: | January 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: | January 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: | January 8, 2024 |
* Print the name and title of each signing officer under his or her signature.
SENIOR FINANCIAL OFFICER
CODE OF CONDUCT
I. Introduction
This code of conduct is being adopted by the investment companies advised by First Trust Advisors L.P., from time to time, (the "FUNDS"). The reputation and integrity of the Funds are valuable assets that are vital to the Funds' success. Each officer of the Funds, and officers and employees of the investment adviser to the Funds who work on Fund matters, including each of the Funds' senior financial officers ("SFOS"), is responsible for conducting each Fund's business in a manner that demonstrates a commitment to the highest standards of integrity. SFOs include the Principal Executive Officer (who is the President), the Controller (who is the principal accounting officer), and the Treasurer (who is the principal financial officer), and any person who performs a similar function.
The Funds, First Trust Advisors L.P. and First Trust Portfolios have adopted Codes of Ethics under Rule 17j-1 under the Investment Company Act of 1940 (the "RULE 17J-1 CODE"). These Codes of Ethics are designed to prevent certain conflicts of interest that may arise when officers, employees, or directors of the Funds and the foregoing entities know about present or future Fund transactions and/or have the power to influence those transactions, and engage in transactions with respect to those same securities in their personal account(s) or otherwise take advantage of their position and knowledge with respect to those securities. In an effort to prevent these conflicts and in accordance with Rule 17j-1, the Funds adopted their Rule 17j-1 Code to prohibit transactions and conduct that create conflicts of interest, and to establish compliance procedures.
The Sarbanes-Oxley Act of 2002 was designed to address corporate malfeasance and to help assure investors that the companies in which they invest are accurately and completely disclosing financial information. Under Section 406 of the Act, all public companies (including the Funds) must either have a code of ethics for their SFOs, or disclose why they do not. The Act was intended to prevent future situations (such as occurred in well-reported situations involving such companies as Enron and WorldCom) where a company creates an environment in which employees are afraid to express their opinions or to question unethical and potentially illegal business practices.
The Funds have chosen to adopt a senior financial officer Code of Conduct to encourage their SFOs, and other Fund officers and employees of First Trust Advisors or First Trust Portfolios to act ethically and to question potentially unethical or illegal practices, and to strive to ensure that the Funds' financial disclosures are complete, accurate, and understandable.
II. Purposes of This Code of Conduct
The purposes of this Code are:
A. To promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
B. To promote full, fair, accurate, timely, and understandable disclosure in reports and documents that the Funds file with, or submits to, the SEC and in other public communications the Funds make;
C. To promote compliance with applicable governmental laws, rules and regulations;
D. To encourage the prompt internal reporting to an appropriate person of violations of the Code; and
E. To establish accountability for adherence to the Code.
III. Questions About This Code
The Funds' Boards of Trustees have designated W. Scott Jardine or other appropriate officer designated by the President of the respective Funds to be the Compliance Coordinator for the implementation and administration of the Code.
IV. Handling of Financial Information
The Funds have adopted guidelines under which its SFOs perform their duties. However, the Funds expect that all officers or employees of the adviser or distributor who participate in the preparation of any part of any Fund's financial statements follow these guidelines with respect to each Fund:
A. Act with honesty and integrity and avoid violations of this Code, including actual or apparent conflicts of interest with the Fund in personal and professional relationships.
B. Disclose to the Fund's Compliance Coordinator any material transaction or relationship that reasonably could be expected to give rise to any violations of the Code, including actual or apparent conflicts of interest with the Fund. You should disclose these transactions or relationships whether you are involved or have only observed the transaction or relationship. If it is not possible to disclose the matter to the Compliance Coordinator, it should be disclosed to the Fund's Principal Financial Officer or Principal Executive Officer.
C. Provide information to the Fund's other officers and appropriate employees of service providers (adviser, administrator, outside auditor, outside counsel, custodian, etc.) that is accurate, complete, objective, relevant, timely, and understandable.
D. Endeavor to ensure full, fair, timely, accurate, and understandable disclosure in the Fund's periodic reports.
E. Comply with the federal securities laws and other applicable laws and rules, such as the Internal Revenue Code.
F. Act in good faith, responsibly, and with due care, competence and diligence, without misrepresenting material facts or allowing your independent judgment to be subordinated.
G. Respect the confidentiality of information acquired in the course of your work except when you have Fund approval to disclose it or where disclosure is otherwise legally mandated. You may not use confidential information acquired in the course of your work for personal advantage.
H. Share and maintain skills important and relevant to the Fund's needs.
I. Proactively promote ethical behavior among peers in your work environment.
J. Responsibly use and control all assets and resources employed or entrusted to you.
K. Record or participate in the recording of entries in the Fund's books and records that are accurate to the best of your knowledge.
V. Waivers of This Code
SFOs and other parties subject to this Code may request a waiver of a provision of this Code (or certain provisions of the Fund's Rule 17j-1 Code) by submitting their request in writing to the Compliance Coordinator for appropriate review. An executive officer of the Fund or the Audit Committee will decide whether to grant a waiver. All waivers of this Code must be disclosed to the Fund's shareholders to the extent required by SEC rules. A good faith interpretation of the provisions of this Code, however, shall not constitute a waiver.
VI. Annual Certification
Each SFO will be asked to certify on an annual basis that he/she is in full compliance with the Code and any related policy statements.
VII. Reporting Suspected Violations
A. SFOs or other officers of the Funds or employees of the First Trust group who work on Fund matters who observe, learn of, or, in good faith, suspect a violation of the Code MUST immediately report the violation to the Compliance Coordinator, another member of the Funds' or First Trust's senior management, or to the Audit Committee of the Fund Board. An example of a possible Code violation is the preparation and filing of financial disclosure that omits material facts, or that is accurate but is written in a way that obscures its meaning.
B. Because service providers such as an administrator, outside accounting firm, and custodian provide much of the work relating to the Funds' financial statements, you should be alert for actions by service providers that may be illegal, or that could be viewed as dishonest or unethical conduct. You should report these actions to the Compliance Coordinator even if you know, or think, that the service provider has its own code of ethics for its SFOs or employees.
C. SFOs or other officers or employees who report violations or suspected violations in good faith will not be subject to retaliation of any kind. Reported violations will be investigated and addressed promptly and will be treated confidentially to the extent possible.
VIII. Violations of The Code
A. Dishonest, unethical or illegal conduct will constitute a violation of this Code, regardless of whether this Code specifically refers to that particular conduct. A violation of this Code may result in disciplinary action, up to and including termination of employment. A variety of laws apply to the Funds and their operations, including the Securities Act of 1933, the Investment Company Act of 1940, state laws relating to duties owed by Fund directors and officers, and criminal laws. The federal securities laws generally prohibit the Funds from making material misstatements in its prospectus and other documents filed with the SEC, or from omitting to state a material fact. These material misstatements and omissions include financial statements that are misleading or omit materials facts.
B. Examples of criminal violations of the law include stealing, embezzling, misapplying corporate or bank funds, making a payment for an expressed purpose on a Fund's behalf to an individual who intends to use it for a different purpose; or making payments, whether corporate or personal, of cash or other items of value that are intended to influence the judgment or actions of political candidates, government officials or businesses in connection with any of the Funds' activities. The Funds must and will report all suspected criminal violations to the appropriate authorities for possible prosecution, and will investigate, address and report, as appropriate, non-criminal violations.
Amended: June 1, 2009
Certification Pursuant to Rule 30a-2(a)
under the 1940 Act and Section 302
of the Sarbanes-Oxley Act
I, James M. Dykas, certify that:
1. | I have reviewed this report on Form N-CSR of First Trust Intermediate Duration Preferred & Income Fund; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting 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; and |
5. | The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | January 8, 2024 | /s/ James M. Dykas | |||
James M. Dykas, President and Chief Executive Officer (principal executive officer) |
Certification Pursuant to Rule 30a-2(a)
under the 1940 Act and Section 302
of the Sarbanes-Oxley Act
I, Derek D. Maltbie, certify that:
1. | I have reviewed this report on Form N-CSR of First Trust Intermediate Duration Preferred & Income Fund; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting 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; and |
5. | The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | January 8, 2024 | /s/ Derek D. Maltbie | |||
Derek D. Maltbie, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
Certification Pursuant to Rule 30a-2(b) under
the 1940 Act and Section 906
of the Sarbanes-Oxley Act
I, James M. Dykas, President and Chief Executive Officer of First Trust Intermediate Duration Preferred & Income Fund (the “registrant”), certify that:
1. | The Form N-CSR of the registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant. |
Date: | January 8, 2024 | /s/ James M. Dykas | |||
James M. Dykas, President and Chief Executive Officer (principal executive officer) |
I, Derek D. Maltbie, Treasurer, Chief Financial Officer and Chief Accounting Officer of First Trust Intermediate Duration Preferred & Income Fund (the “registrant”), certify that:
1. | The Form N-CSR of the registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant. |
Date: | January 8, 2024 | /s/ Derek D. Maltbie | |||
Derek D. Maltbie, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
Proxy Voting and Class Actions
________________________________________________________________________________
Most Recently Revised:
_____________________________________________________________
Background
In Proxy Voting by Investment Advisers, Investment Advisers Act Release No. 2106 (January 31, 2003), the SEC noted that, “The federal securities laws do not specifically address how an adviser must exercise its proxy voting authority for its clients. Under the Advisers Act, however, an adviser is a fiduciary that owes each of its clients a duty of care and loyalty with respect to all services undertaken on the client’s behalf, including proxy voting. The duty of care requires an adviser with proxy voting authority to monitor corporate events and to vote the proxies.”
Rule 206(4)-6 under the Advisers Act requires each registered investment adviser that exercises proxy voting authority with respect to client securities to:
• | Adopt and implement written policies and procedures reasonably designed to ensure that the adviser votes client securities in the clients’ best interests. Such policies and procedures must address the manner in which the adviser will resolve material conflicts of interest that can arise during the proxy voting process; |
• | Disclose to clients how they may obtain information from the adviser about how the adviser voted with respect to their securities; and |
• | Describe to clients the adviser’s proxy voting policies and procedures and, upon request, furnish a copy of the policies and procedures. |
Rule 206(4)-6 is supplemented by:
• | Investment Advisers Act Release No. 5325 (September 10, 2019) (“Release No. 5325”), which contains guidance regarding the proxy voting responsibilities of investment advisers under the Advisers Act. Among other subjects, Release No. 5325 addresses the oversight of proxy advisory firms by investment advisers; and |
• | Investment Advisers Act Release No. 5547 (July 22, 2020), which contains supplementary guidance addressing: the risk of voting a proxy before an issuer files additional soliciting materials with the SEC; and associated client disclosures in this regard. |
Additionally, paragraph (c)(2) of Rule 204-2 imposes additional recordkeeping requirements on investment advisers that execute proxy voting authority, as described in the Maintenance of Books and Records section of this Manual.
The Advisers Act lacks specific guidance regarding an adviser’s duty to direct clients’ participation in class actions. However, many investment advisers adopt policies and procedures regarding class actions.
Risks
In developing these policies and procedures, SB considered numerous risks associated with the proxy voting process. This analysis includes risks such as:
• | SB lacks written proxy voting policies and procedures; |
• | Proxies are not identified and processed in a timely manner; |
• | Proxies are not voted in Clients’ best interests; |
• | Conflicts of interest between SB and a Client are not identified or resolved appropriately; |
• | Third-party proxy voting services do not vote proxies according to SB’s instructions and in Clients’ best interests; |
• | SB does not conduct sufficient oversight of any proxy advisory firms whose services it uses; |
• | SB votes a proxy before the issuer files additional soliciting materials with the SEC; |
• | Proxy voting records, Client requests for proxy voting information, and SB’s responses to such requests, are not properly maintained; |
• | SB lacks policies and procedures regarding Clients’ participation in class actions; and |
• | SB fails to maintain documentation associated with Clients’ participation in class actions. |
SB has established the following guidelines as an attempt to mitigate these risks.
Policies and Procedures
General Proxy Voting Policy
The preferred and hybrid securities in which we generally invest do not normally carry proxy voting rights, and we do not anticipate acquiring other equity securities that have such rights. But if a proxy vote is solicited on a security held in client portfolios, Stonebridge will strive to cast its vote in the best economic interests of the client, following the Proxy Voting Guidelines detailed below. Stonebridge currently votes proxies for the sub-advised mutual funds using the Broadridge Corporate Issuer Solutions, Inc. website ProxyVote.com, which is available to us through UBS. The trader or credit analyst assigned the duty of monitoring the particular Firm is the person assigned to inform Operations of how the proxy will be voted. SB will vote “Abstain” on proxies received for in-kind securities slated for immediate resale.
Proxy Voting Guidelines.
We will normally vote proxies in accordance with the following guidelines unless we determine that it is in the best economic interests of our clients do otherwise:
• | We will consider the proposal’s expected impact on shareholder value and will not consider any benefit to us, our employees or affiliates. |
• | We consider the reputation, experience and competence of a Firm’s management when we evaluate the merits of investing in a particular Firm, and we invest in companies in which we believe management goals and shareholder goals are aligned. Therefore, on most issues, we cast our votes in accordance with management’s recommendations. However, when we believe management’s position on a particular issue is not in the best interests our clients, we will vote contrary to management’s recommendation. |
• | With respect to a Firm’s board of directors, we believe there should be a majority of independent directors on Firm boards, and that audit, compensation and nominating committees should consist solely of independent directors. Therefore, we will normally vote in favor of proposals that insure such independence. |
• | With respect to auditors, we believe that the relationship between a public Firm and its auditors should be limited primarily to the audit engagement, and we will normally vote in favor of proposals to prohibit or limit fees paid to auditors for any services other than auditing or closely-related activities that do not raise any appearance of impaired independence. |
• | With respect to equity-based compensation plans, we believe that appropriately designed plans approved by a Firm’s shareholders can be an effective way to align the interests of long-term shareholders and the interests of management, employees and directors. However, we will normally vote against plans that substantially dilute our ownership interest in the Firm or provide participants with excessive awards. We will also normally vote in favor of proposals to require the expensing of options. |
• | With respect to shareholder rights, we believe that all shareholders of a Firm should have an equal voice and that barriers that limit the ability of shareholders to effect corporate change and to realize the full value of their investment are not desirable. Therefore, we will normally vote against proposals for supermajority voting rights, against the adoption of poison pill plans, and against proposals for different classes of stock with different voting rights. |
• | With respect to “social responsibility” issues, we believe that matters related to a Firm’s day-to-day business operations are primarily the responsibility of management. We are focused on maximizing long-term shareholder value and will normally vote against shareholder proposals requesting that a Firm disclose or change certain business practices, unless we believe the proposal would have a substantial, positive economic impact on the Firm. |
• | Sometimes a client will fund an account with in-kind securities. When this happens, we review the in-kind portfolio, retain those preferred and hybrid securities that fit Stonebridge’s strategies, and quickly sell the rest to produce cash which can then be invested in securities that do fit our strategies. It may occur that a proxy vote solicitation is received on a security that was received in-kind and slated for immediate sale without further analysis. It is our policy to vote “Abstain” on such securities as we have only transitory possession of them. |
In other circumstances, we may also decide to refrain from voting a particular proxy. In these instances, we will document the reasons for our decision.
SB will retain the following information in connection with each proxy vote:
o | The Issuer’s name; |
o | The security’s ticker symbol or CUSIP, as applicable; |
o | The shareholder meeting date; |
o | The number of shares that SB voted; |
o | A brief identification of the matter voted on; |
o | Whether the matter was proposed by the Issuer or a security-holder; |
o | Whether SB cast a vote; |
o | How SB cast its vote (for the proposal, against the proposal, or abstain); and |
o | Whether SB cast its vote with or against management. |
Any attempt to influence the proxy voting process by Issuers or others not identified in these policies and procedures should be promptly reported to the CCO. Similarly, any Client’s attempt to influence proxy voting with respect to other Clients’ securities should be promptly reported to the CCO.
Form N-PX
Rule 14Ad-1 requires institutional investment managers to file reports under Section 13(f) of the Exchange Act to report their “say-on-pay” votes on Form N-PX.
“Institutional investment manager” is defined as “any person, other than a natural person, investing in or buying and selling securities for its own account, and any person exercising investment discretion with respect to the account of any other person.”
Rule 14Ad-1 requires institutional investment managers to report “say-on-pay” votes on Form N-PX. “Say- on-pay” refers to shareholder voting relating to: (1) approval of the compensation of a company’s named executive officers; (2) the frequency of such votes; and (3) approval of “golden parachute” compensation in connection with a merger or acquisitions. The rule provides a two-part test for determining whether an institutional investment manager “exercised voting power” over a security and must therefore report a say- on-pay vote on Form N-PX:
• | The institutional investment manager has the power to vote, or direct the voting of, a security. |
• | The institutional manager “exercises” this power to influence a voting decision for the security. |
The Final Rule states that “voting power could exist or be exercised either directly or indirectly by way of a contract, arrangement, understanding, or relationship.” Further, the rule states that “multiple parties could both have and exercise voting power over the same securities even where the institutional investment manager is not the sole decision-maker.” An institutional investment manager would have no reporting obligation with respect to a voting decision that is entirely determined by its client or another party.
Class Actions
As a fiduciary, SB always seeks to act in Clients’ best interests with good faith, loyalty, and due care. SB participates in class actions when provided the authority. SB generally does not serve as the lead plaintiff in class actions because the costs of such participation typically exceed any extra benefits that accrue to lead plaintiffs.
Disclosures to Clients
SB includes a description of its policies and procedures regarding proxy voting and class actions in Part 2 of Form ADV, along with a statement that Clients can contact the CCO to obtain a copy of these policies and procedures and information about how SB voted with respect to the Client’s securities.
Any request for information about proxy voting or class actions should be promptly forwarded to the CCO, who will respond to any such requests.
As a matter of policy, SB does not disclose how it expects to vote on upcoming proxies. Additionally, SB does not disclose the way it voted proxies to unaffiliated third parties without a legitimate need to know such information.
N-2 |
12 Months Ended | ||||||||||||||
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Oct. 31, 2023
$ / shares
shares
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Cover [Abstract] | |||||||||||||||
Entity Central Index Key | 0001567569 | ||||||||||||||
Amendment Flag | false | ||||||||||||||
Entity Inv Company Type | N-2 | ||||||||||||||
Document Type | N-CSR | ||||||||||||||
Entity Registrant Name | First Trust Intermediate Duration Preferred & Income Fund | ||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Investment Objectives and Practices [Text Block] | Investment
Objectives
The
Fund’s primary investment objective is to seek a high level of current income. The Fund has a secondary objective of capital appreciation.
Principal
Investment Policies
In
pursuit of its investment objectives, under normal market conditions:
To
the extent the Fund enters into derivatives transactions, it will do so pursuant to Rule 18f-4 under the 1940 Act. Rule 18f-4 requires
the Fund to implement certain policies and procedures designed to manage its derivatives risks, dependent upon the Fund’s level
of exposure to derivative instruments.
The
Fund may utilize leverage through the issuance preferred shares of beneficial interest and/or through borrowings and/or the issuance of
notes. The Fund is also permitted to use other portfolio techniques, including the use of reverse repurchase agreements, that have the
economic effect of leverage. The Fund’s effective leverage varies from time to time, based upon market conditions and variations
in the value of the portfolio’s holdings, but will not exceed 40% of the Fund’s managed assets.
Fundamental
Investment Policies
The
Fund, as a fundamental policy, may not:
1.
Issue senior securities, as defined in the Investment Company Act of 1940, as amended, other than (i) preferred shares which immediately
after issuance will have asset coverage of at least 200%, (ii) indebtedness which immediately after issuance will have asset coverage
of at least 300%, or (iii) the borrowings permitted by investment restriction (2) set forth below;
2.
Borrow money, except as permitted by the Investment Company Act of 1940, as amended, the rules thereunder and interpretations thereof
or pursuant to a Securities and Exchange Commission (“SEC”) exemptive order;
3.
Act as underwriter of another issuer’s securities, except to the extent that the Fund may be deemed to be an underwriter within
the meaning of the Securities Act of 1933, as amended, in connection with the purchase and sale of portfolio securities; 4.
Purchase or sell real estate, but this shall not prevent the Fund from investing in securities of companies that deal in real estate or
are engaged in the real estate business, including real estate investment trusts, and securities secured by real estate or interests therein
and the Fund may hold and sell real estate or mortgages on real estate acquired through default, liquidation, or other distributions of
an interest in real estate as a result of the Fund’s ownership of such securities;
5.
Purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options, futures contracts, derivative instruments or from investing in securities or other
instruments backed by physical commodities);
6.
Make loans of funds or other assets, other than by entering into repurchase agreements, lending portfolio securities and through the purchase
of securities in accordance with its investment objectives, policies and limitations; or
7.
Concentrate (invest 25% or more of total assets) the Fund’s investments in any particular industry, except that the Fund will concentrate
its assets in the group of industries that are part of the financials sector; provided, however, that such limitation shall not apply
to obligations issued or guaranteed by the United States government or by its agencies or instrumentalities.
The
Fund does not currently intend to apply for exemptive relief from the Securities and Exchange Commission with respect to fundamental investment
policy number two listed above.
The
Fund may incur borrowings and/or issue series of notes or other senior securities in an amount up to 33-1/3% of its total assets (including
the amount borrowed) less all liabilities other than borrowings.
The
Fund’s investment objectives are considered fundamental and may not be changed without the approval of the holders of a “majority
of the outstanding voting securities” of the Fund, which includes common shares of beneficial interest and preferred shares of beneficial
interest (“Preferred Shares”), if any, voting together as a single class, and the holders of the outstanding Preferred Shares,
if any, voting as a single class. The remainder of the Fund’s investment policies other than the Fund’s fundamental investment
restrictions listed above, including its investment strategy, are considered non-fundamental and may be changed by the Board of Trustees
of the Fund without the approval of the holders of a “majority of the outstanding voting securities,” provided that the holders
of the voting securities of the Fund receive at least 60 days prior written notice of any change. When used with respect to particular
shares of the Fund, a “majority of the outstanding voting securities” means (i) 67% or more of the shares present at a meeting,
if the holders of more than 50% of the shares are present or represented by proxy, or (ii) more than 50% of the shares, whichever is less.
|
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Risk Factors [Table Text Block] | 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.
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, in February 2022, Russia invaded Ukraine which has caused and could continue to cause significant
market disruptions and volatility within the markets in Russia, Europe, 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
securities. 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 creates uncertainty over the future real value (after inflation) of an investment. 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.
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.
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:
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.
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.
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Effects of Leverage [Text Block] | Effects
of Leverage
The
aggregate principal amount of borrowings under the credit agreement (the “Credit Agreement”) with The Bank of Nova Scotia
represented 30.75% of the Managed Assets as of October 31, 2023. Asset coverage with respect to the borrowings under the Credit
Agreement was 325.21% as of October 31, 2023, and the Fund had $271,800,000 of unutilized funds available for borrowing under the Credit
Agreement as of that date. As of October 31, 2023, the maximum commitment amount under the credit agreement was $725,000,000.
As of October 31, 2023, the approximate average annual interest and fee rate payable on such borrowings was 6.17%.
Assuming
that the Fund’s leverage costs remain as described above (at an assumed average annual cost of 6.17%), the annual return that the
Fund’s portfolio must experience (net of expenses) in order to cover its leverage costs would be 1.90%
The
following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on Common
Share total return, assuming investment portfolio total returns (comprised of income and changes in the value of securities held in the
Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed investment portfolio returns are hypothetical figures and are
not necessarily indicative of the investment portfolio returns experienced or expected to be experienced by the Fund.
The
table further assumes leverage representing 30.75% of the Fund’s Managed Assets, net of expenses, and an annual leverage interest
and fee rate of 6.17%.
Common
Share total return is composed of two elements: the Common Share dividends paid by the Fund (the amount of which is largely determined
by the net investment income of the Fund after paying dividends or interest on its leverage) and gains or losses on the value of the securities
the Fund owns. As required by SEC rules, the table above assumes that the Fund is more likely to suffer capital losses than to enjoy capital
appreciation. For example, to assume a total return of 0% the Fund must assume that the distributions it receives on its investments are
entirely offset by losses in the value of those securities.
|
||||||||||||||
Annual Interest Rate [Percent] | 6.17% | ||||||||||||||
Annual Coverage Return Rate [Percent] | 1.90% | ||||||||||||||
Effects of Leverage [Table Text Block] |
|
||||||||||||||
Return at Minus Ten [Percent] | (17.18%) | ||||||||||||||
Return at Minus Five [Percent] | (9.96%) | ||||||||||||||
Return at Zero [Percent] | (2.74%) | ||||||||||||||
Return at Plus Five [Percent] | 4.48% | ||||||||||||||
Return at Plus Ten [Percent] | 11.70% | ||||||||||||||
Effects of Leverage, Purpose [Text Block] | The
following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on Common
Share total return, assuming investment portfolio total returns (comprised of income and changes in the value of securities held in the
Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed investment portfolio returns are hypothetical figures and are
not necessarily indicative of the investment portfolio returns experienced or expected to be experienced by the Fund.
The
table further assumes leverage representing 30.75% of the Fund’s Managed Assets, net of expenses, and an annual leverage interest
and fee rate of 6.17%.
|
||||||||||||||
Share Price | $ 14.23 | ||||||||||||||
NAV Per Share | $ 16.77 | ||||||||||||||
Capital Stock, Long-Term Debt, and Other Securities [Abstract] | |||||||||||||||
Outstanding Security, Title [Text Block] | Common Shares outstanding (unlimited number of Common Shares has been authorized) | ||||||||||||||
Outstanding Security, Held [Shares] | shares | 60,847,827 | ||||||||||||||
Contingent Convertible Securities Risk [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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.
|
||||||||||||||
Current Market Conditions Risk [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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, in February 2022, Russia invaded Ukraine which has caused and could continue to cause significant
market disruptions and volatility within the markets in Russia, Europe, 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | Illiquid
and Restricted Securities Risk. The Fund may invest in securities that are restricted and/or illiquid
securities. 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 creates uncertainty over the future real value (after inflation) of an investment. 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.
|
||||||||||||||
Interest Rate And Duration Risk [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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.
|
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Market Discount From Net Asset Value [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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.
|
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Non U S Securities Risk [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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.
|
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Operational Risk [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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.
|
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Potential Conflicts On Interest Risk [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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.
|
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Preferred Hybrid Preferred And Debt Securities Risk [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | Preferred/Hybrid
Preferred and Debt Securities Risk. An investment in preferred/hybrid preferred and debt securities
is subject to certain risks, including:
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.
|
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Reverse Purchase Agreements Risk [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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.
|
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Risk Of Concentration In The Financials Sector [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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 [Member] | |||||||||||||||
General Description of Registrant [Abstract] | |||||||||||||||
Risk [Text Block] | 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.
|
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