UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-21876
----------------------------
FIRST TRUST TAX-ADVANTAGED PREFERRED INCOME FUND
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1001 Warrenville Road, Suite 300
LISLE, IL 60532
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
1001 Warrenville Road, Suite 300
LISLE, IL 60532
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (630) 241-4141
---------------
Date of fiscal year end: OCTOBER 31
-----------
Date of reporting period: JANUARY 31, 2007
-----------------
Form N-Q is to be used by management investment companies, other than small
business investment companies registered on Form N-5 (ss.ss. 239.24 and 274.5 of
this chapter), to file reports with the Commission, not later than 60 days after
the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under
the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use
the information provided on Form N-Q in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-Q, and
the Commission will make this information public. A registrant is not required
to respond to the collection of information contained in Form N-Q 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 the
Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC
20549. The OMB has reviewed this collection of information under the clearance
requirements of 44 U.S.C. ss. 3507.
ITEM 1. SCHEDULE OF INVESTMENTS.
The Schedule(s) of Investments is attached herewith.
FIRST TRUST TAX-ADVANTAGE PREFERRED INCOME FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 2007 (UNAUDITED)
PRINCIPAL MARKET
VALUE DESCRIPTION VALUE
------ ---------------------------------------------------------------- ---------------
PREFERRED SECURITIES - 122.6%
CAPITAL MARKETS - 16.6%
140,000 Deutsche Bank Capital Funding Trust VIII, 6.38%................... $ 3,575,600
120,000 Goldman Sachs Group Inc., Series D, 5.88% +....................... 3,144,000
18,600 Lehman Brothers Holdings, Inc., Series G, 6.07% +................. 485,460
80,000 Merrill Lynch & Company, Series H, 6.05% +........................ 2,080,000
10,000 Morgan Stanley, Series A, 6.19% +................................. 264,500
----------------
9,549,560
----------------
COMMERCIAL BANKS - 48.4%
3,200 ABN Amro Capital Fund Trust V, Series E, 5.90%.................... 78,496
100,000 Barclays Bank PLC, Series 2, 6.63%................................ 2,653,000
6,000 Heartland Financial, 9.60% **..................................... 6,000,000
100,000 HSBC Holdings PLC, Series A, 6.20%................................ 2,550,000
6,000 Irwin Financial Corporation, 8.61% **............................. 6,000,000
7,900 Royal Bank of Scotland PLC, Series M, 6.40%....................... 203,267
80,000 Royal Bank of Scotland PLC, Series R, 6.13%....................... 1,998,400
40,000 Santander Finance Preferred SA Unipersonal, 6.50% **.............. 1,008,752
100,000 Santander Finance Preferred SA Unipersonal, 6.80% **.............. 2,515,630
19,900 SunTrust Banks, Series A, 5.92% +................................. 525,857
101,400 U.S. Bancorp, Series B, 5.97% +................................... 2,692,170
63,000 Zions Bancorporation, Series A, 5.87% +........................... 1,601,460
----------------
27,827,032
----------------
DIVERSIFIED FINANCIAL SERVICES - 3.3%
40,000 Bank of America Corp., Series D, 6.20%............................ 1,064,000
31,900 ING Groep NV, 6.13%............................................... 803,880
----------------
1,867,880
----------------
ELECTRIC UTILITIES - 7.1%
40,000 Alabama Power Company, 5.63%...................................... 996,252
80,000 PPL Electric Utilities Corp., 6.25%............................... 2,090,000
10,000 Southern California Edison Company, 6.13%......................... 1,020,313
----------------
4,106,565
----------------
INSURANCE - 23.6%
38,700 Aspen Insurance Holdings Ltd., 7.40% +............................ 996,525
1,000,000 AXA SA, 6.46% +**................................................. 978,437
115,000 Axis Capital Holdings Ltd., Series A, 7.25%....................... 2,986,550
80,000 Endurance Specialty Holdings Ltd., Series A, 7.75%................ 2,092,000
36,573 Prudential PLC, 6.50%............................................. 943,583
20,000 Renaissancere Holdings Ltd., Series B, 7.30%...................... 519,400
80,000 Renaissancere Holdings Ltd., Series D, 6.60%...................... 1,976,000
120,000 XL Capital Ltd., Series B, 7.63%.................................. 3,076,800
----------------
13,569,295
----------------
OIL, GAS & CONSUMABLE FUELS - 4.6%
100,000 GMX Resources Inc., Series B, 9.25%............................... 2,657,000
----------------
See Notes to Quarterly Portfolio of Investments. Page 1
FIRST TRUST TAX-ADVANTAGE PREFERRED INCOME FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
JANUARY 31, 2007 (UNAUDITED)
PRINCIPAL MARKET
VALUE DESCRIPTION VALUE
------ ---------------------------------------------------------------- ---------------
PREFERRED SECURITIES - (CONTINUED)
THRIFTS & MORTGAGE FINANCE - 14.4%
17,000 FannieMae, Series H, 5.81%........................................ $ 847,450
40,000 Franklin Bank Corp., Series A, 7.50%.............................. 1,012,000
40,000 FreddieMac, Series S, 5.87% +..................................... 2,110,000
73,000 FreddieMac, Series V, 5.57%....................................... 1,825,000
90,100 Sovereign Bancorp, Inc., Series C, 7.30%.......................... 2,459,730
----------------
8,254,180
----------------
TRADING COMPANIES & DISTRIBUTORS - 4.6%
250,400 Willis Lease Finance Corp., Series A, 9.00%....................... 2,644,224
----------------
TOTAL PREFERRED SECURITIES........................................ 70,475,736
----------------
(Cost $69,145,608)
CANADIAN INCOME TRUSTS - 10.0%
110,000 Atlantic Power Corp., IPS......................................... 1,009,517
21,800 BFI Canada Income Fund............................................ 495,950
78,000 Boralex Power Income Fund......................................... 610,740
60,000 Crescent Point Energy Trust....................................... 855,030
80,900 Energy Savings Income Fund........................................ 880,192
115,000 Teranet Income Fund............................................... 899,048
90,000 Yellow Pages Income Fund.......................................... 990,398
----------------
TOTAL CANADIAN INCOME TRUSTS...................................... 5,740,875
----------------
(Cost $6,506,011)
TOTAL INVESTMENTS - 132.6%........................................ 76,216,611
----------------
(Cost $75,651,619)*
NET OTHER ASSETS & LIABILITIES - 5.7%............................. 3,247,782
AUCTION PREFERRED SHARES, AT LIQUIDATION VALUE - (38.3)%.......... (22,000,000)
----------------
NET ASSETS - 100.0%............................................... $ 57,464,393
================
-----------------
* Aggregate cost for federal income tax and financial reporting purposes.
** Securities are restricted and cannot be offered for public sale without
first being registered under the Securities Act of 1933, as amended. Prior
to registration, restricted securities may only be resold, in transactions
exempt from registration. At January 31, 2007, these securities amounted to
$16,502,819, or 28.72% of net assets (Note 1C).
+ Variable rate security. The interest rate shown reflects the rate in effect
at January 31, 2007.
IPS Income Participating Securities
SCHEDULE OF FOREIGN CURRENCY FUTURES CONTRACTS:
UNREALIZED
NUMBER OF APPRECIATION/
CONTRACTS DESCRIPTION VALUE (DEPRECIATION)
------------ -------------------------------------------- ------------ ----------------
FUTURE CONTRACTS - SHORT POSITION
50 Canadian Dollar March 2007...................... $ 4,259,000 $ 141,640
--------------- ----------------
$ 4,259,000 $ 141,640
=============== ================
Page 2 See Notes to Quarterly Portfolio of Investments.
--------------------------------------------------------------------------------
NOTES TO QUARTERLY PORTFOLIO OF INVESTMENTS - (UNAUDITED)
--------------------------------------------------------------------------------
FIRST TRUST TAX-ADVANTAGE PREFERRED INCOME FUND
JANUARY 31, 2007
1. VALUATION AND INVESTMENT PRACTICES
A. PORTFOLIO VALUATION:
First Trust Tax-Advantaged Preferred Income Fund (the "Fund") determines the net
asset value ("NAV") of its shares daily, as of the close of regular session
trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m. Eastern
time, on each day the NYSE is open for trading. Domestic debt securities and
foreign securities are priced using data reflecting the earlier closing of the
principal markets for those securities. The Fund calculates NAV per Common Share
by subtracting the Fund's liabilities (including accrued expenses, dividends
payable and any borrowings of the Fund) and the liquidation value of any
outstanding Preferred Shares from the Fund's Total Assets (the value of the
securities and other investments the Fund holds plus cash or other assets,
including interest accrued but not yet received) and dividing the result by the
total number of Common Shares outstanding.
The Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value according
to procedures adopted by the Fund's Board of Trustees. A majority of the Fund's
assets are valued using market information supplied by third parties. In the
event that market quotations are not readily available, the pricing service does
not provide a valuation for a particular asset, or the valuations are deemed
unreliable, or if events occurring after the close of the principal markets for
particular securities (e.g., domestic debt and foreign securities), but before
the Fund values its assets, would materially affect NAV, First Trust Advisors
L.P. may use a fair value method to value the Fund's securities and investments.
The use of fair value pricing by the Fund is governed by valuation procedures
adopted by the Fund's Board of Trustees, and in accordance with the provisions
of the Investment Company Act of 1940, as amended. Short-term investments that
mature in less than 60 days are valued at amortized cost.
B. SECURITIES TRANSACTIONS:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income on such securities
is not accrued until settlement date. The Fund maintains liquid assets with a
current value at least equal to the amount of its when-issued purchase
commitments.
C. RESTRICTED SECURITIES:
The Fund may invest in restricted securities, which are securities that may not
be offered for public sale without first being registered under the Securities
Act of 1933, as amended. Prior to registration, restricted securities may only
be resold in transactions exempt from registration. As of January 31, 2007, the
Fund held restricted securities as shown in the following table. The Fund does
not have the right to demand that such securities be registered. These
securities are valued according to the valuation procedures as stated in the
Portfolio Valuation footnote (Note 1A) and are not expressed as a discount to
the carrying value of a comparable unrestricted security.
ACQUISITION CARRYING VALUE
SECURITY DATE PER UNIT COST
-------- ------------ ---------- -----------
AXA SA, 6.46%...................................... 12/07/06 $ 0.98 $1,000,000
Heartland Financial, 9.60% ........................ 12/21/06 1,000.00 6,000,000
Irwin Financial Corporation, 8.61% ................ 12/22/06 1,000.00 5,940,000
Santander Finance Preferred SA Unipersonal, 6.80% . 10/31/06 25.16 2,500,000
Santander Finance Preferred SA Unipersonal, 6.50%.. 01/11/07 25.22 1,000,000
2. UNREALIZED APPRECIATION/(DEPRECIATION)
As of January 31, 2007, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $1,498,720
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $933,726.
Page 3
ITEM 2. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's last fiscal
quarter that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 3. EXHIBITS.
Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of
the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) FIRST TRUST TAX-ADVANTAGED PREFERRED INCOME FUND
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date MARCH 22, 2007
----------------------------------------------------------------------------
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 A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date MARCH 22, 2007
----------------------------------------------------------------------------
By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief Financial
Officer and Chief Accounting Officer
(principal financial officer)
Date MARCH 22, 2007
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.