UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21549
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ENERGY INCOME AND GROWTH FUND
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(Exact name of registrant as specified in charter)
1001 Warrenville Road
Suite 300
LISLE, IL 60532
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(Address of principal executive offices) (Zip code)
W. Scott Jardine
First Trust Portfolios L.P.
1001 Warrenville Road
Suite 300
LISLE, IL 60532
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(Name and address of agent for service)
registrant's telephone number, including area code: 630-241-4141
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Date of fiscal year end: NOVEMBER 30
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Date of reporting period: MAY 31, 2005
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
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ENERGY INCOME AND GROWTH FUND
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED MAY 31, 2005
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TABLE OF CONTENTS
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ENERGY INCOME AND GROWTH FUND
SEMI-ANNUAL REPORT
MAY 31, 2005
Shareholder Letter ........................................................ 1
Portfolio Components ...................................................... 2
Portfolio of Investments .................................................. 3
Statement of Assets and Liabilities ....................................... 4
Statement of Operations ................................................... 5
Statements of Changes in Net Assets ....................................... 6
Statement of Cash Flows ................................................... 7
Financial Highlights ...................................................... 8
Notes to Financial Statements ............................................. 9
Additional Information .................................................... 15
Dividend Reinvestment Plan
Proxy Voting Policies and Procedures
Portfolio Holdings
Submission of Matters to a Vote of Shareholders
HOW TO READ THIS REPORT
This report contains information that can help you evaluate your investment. It
includes details about the Energy Income and Growth Fund (the "Fund") and
presents data and analysis that provide insight into the Fund's performance and
investment approach.
By reading the letter from the Fund's President, James A. Bowen, you will obtain
an understanding of how the market environment affected its performance. The
statistical information that follows can help you understand the Fund's
performance compared to that of relevant market benchmarks.
It is important to keep in mind that the opinions expressed by Mr. Bowen are
just that: informed opinions. They should not be considered to be promises or
advice. The opinions, like the statistics, cover the period through the date on
the cover of this report. Of course, the risks of investing in the Fund are
spelled out in the prospectus.
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SHAREHOLDER LETTER
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ENERGY INCOME AND GROWTH FUND (FEN)
SEMI-ANNUAL REPORT
MAY 31, 2005
Dear Shareholders:
We are pleased to report that the Energy Income and Growth Fund (the "Fund"),
which began trading on June 29, 2004, delivered substantial upside to
shareholders for the 11-month period ended May 31, 2005. Based on market price,
the Fund's total return was 18.8%. Its net asset value ("NAV") total return was
23.1%. The S&P 500 Index gained 6.2% for the same period. For the six months
ended May 31, 2005, the market value total return was 5.7% and the NAV total
return was 8.5%. This compared to a 2.4% total return for the S&P 500 Index. On
top of the good returns, the Fund traded at a 1.3% premium to its NAV on May 31.
Its current distribution rate was 5.8% based on the market price at May 31,
2005.
As we mentioned in the Fund's annual report, we were fortunate that we were in a
position to launch FEN at the end of June 2004. Though we did not know it at the
time, a quick look back shows that the spike in interest rates (based on the
10-yr. T-Note) that persisted throughout much of the first half of 2004 peaked
on June 13. As a result, Jim Cunnane, the Fund's portfolio manager, was able to
invest the proceeds raised from the IPO in Master Limited Partnerships ("MLPs")
at more attractive valuation levels than would have been available in the months
prior. This is not to suggest that rising interest rates will always have a
negative impact on the portfolio. MLPs may in some cases be in a position to
offer greater resiliency to rising rates than other income-oriented securities
because of their tax appeal and the ability to potentially grow their
distributions over time. As Jim mentioned in his commentary in the November 30,
2004 annual report, new legislation allowing institutional investors to purchase
MLPs will be worth monitoring. Institutional investors, including pension plans,
for example, have just started to embrace the REIT market in the past few years.
REITs, like MLPs, carry a low correlation to common stocks, so they can offer
investors some meaningful diversification, especially for those with a long term
horizon.
The Fund's first distribution in October 2004 of $0.325 per share was classified
as a return of capital. With respect to dividend distributions during fiscal
year 2005, the Fund's regularly scheduled quarterly payout increased slightly to
$0.33 per share.
The performance of MLPs should be influenced more by the demand for
energy-related products than the prices of those products. Financial news today
is extremely attentive to the plight of the energy sector. But for MLPs, the
interest lies more in the discussion of what is fueling all the speculation -
namely potential supply constraints - rather than if the price of a barrel of
oil will exceed $60 or surge toward $100. If you have been following this story
closely, much of the focus of late has been directed toward those companies that
prospect and drill for oil and gas. It is a case of supply struggling to meet
demand. What should be appealing to MLP investors today is the talk that these
companies are beginning to increase their prospecting efforts in an effort to
boost the production levels of oil and gas.
We continue to appreciate your interest in the Fund.
Sincerely,
/s/ James A. Bowen
James A. Bowen
President of the Energy Income and Growth Fund
July 8, 2005
Page 1
ENERGY INCOME AND GROWTH FUND
PORTFOLIO COMPONENTS WITHIN OIL, GAS & CONSUMABLE FUELS INDUSTRY*
MAY 31, 2005 (UNAUDITED)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
Storage & Transporation 83.0%
Refining & Marketing 6.1%
Coal 9.6%
Integrated 1.3%
* Percentages are based on total investments; please note that the
percentages shown on the Portfolio of Investments are based on net assets.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933. Forward-looking statements
include statements regarding the goals, beliefs, plans or current expectations
of First Trust Advisors L.P. and/or Fiduciary Asset Management, LLC and their
respective representatives, taking into account the information currently
available to them. Forward-looking statements include all statements that do not
relate solely to current or historical fact. For example, forward-looking
statements include the use of words such as "anticipate," "estimate," "intend,"
"expect," "believe," "plan," "may," "should," "would," or other words that
convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the Fund's actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. When
evaluating the information included in this Annual Report, you are cautioned not
to place undue reliance on these forward-looking statements, which reflect the
judgment of First Trust Advisors L.P. and/or Fiduciary Asset Management, LLC and
their respective representatives only as of the date hereof. We undertake no
obligation to publicly revise or update these forward-looking statements to
reflect events and circumstances that arise after the date hereof.
Page 2 See Notes to Financial Statements.
ENERGY INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 2005 (UNAUDITED)
MARKET
SHARES VALUE
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MASTER LIMITED PARTNERSHIPS - 132.0%
OIL, GAS & CONSUMABLE FUELS - 132.0%
154,045 Alliance Resource Partners, L.P. .............. $ 10,969,544
131,300 Atlas Pipeline Partners, L.P. ................. 5,473,897
53,576 Buckeye Partners, L.P. ........................ 2,384,132
317,272 Crosstex Energy, L.P. ......................... 11,643,882
164,057 Enbridge Energy Partners, L.P. ................ 8,463,701
197,000 Energy Transfer Partners, L.P. ................ 6,223,230
370,370 Energy Transfer Partners, L.P. + .............. 11,177,026
644,998 Enterprise Product Partners, L.P. ............. 16,576,449
73,100 Hiland Partners, L.P. ......................... 2,558,500
250,000 Holly Energy Partners, L.P. ................... 10,175,000
385,275 Inergy, L.P. .................................. 12,066,813
103,212 Kaneb Pipeline Partners, L.P. ................. 6,329,992
140,771 Kinder Morgan Energy Partners, L.P. ........... 6,723,223
347,826 Magellan Midstream Partners, L.P. ............. 10,264,457
136,330 Magellan Midstream Partners, L.P. ............. 4,283,489
85,250 MarkWest Energy Partners, L.P. ................ 4,109,050
144,928 MarkWest Energy Partners, L.P. + .............. 6,706,108
25,477 Martin Midstream Partners, L.P. ............... 799,978
128,169 Natural Resource Partners, L.P. ............... 7,455,591
124,774 Northern Border Partners, L.P. ................ 5,939,242
203,843 Pacific Energy Partners, L.P. ................. 6,339,517
344,956 Plains All American Pipeline, L.P. ............ 14,567,492
134 Sunoco Logistics Partners, L.P. ............... 4,978
14,000 Teekay LNG Partners, L.P. ..................... 369,180
97,932 TEPPCO Partners, L.P. ......................... 4,049,488
32,975 TransMontaigne Partners, L.P. ................. 809,536
70,000 U.S. Shipping Partners, L.P. .................. 1,792,000
215,895 Valero, L.P. .................................. 13,053,012
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191,308,507
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TOTAL MASTER LIMITED PARTNERSHIPS ............. 191,308,507
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(Cost $148,315,058)
COMMON STOCKS - 0.8%
OIL, GAS & CONSUMABLE FUELS - 0.8%
40,000 Copano Energy, LLC ............................ 1,194,000
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TOTAL COMMON STOCKS ........................... 1,194,000
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(Cost $800,000)
TOTAL INVESTMENTS - 132.8% .................... 192,502,507
(Cost $149,115,058)*
NET OTHER ASSETS & LIABILITIES - (9.3)% ....... (13,544,867)
NOTES PAYABLE OUTSTANDING - (23.5)% ........... (34,000,000)
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NET ASSETS - 100.0% ........................... $ 144,957,640
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* Aggregate cost for federal income tax purposes.
+ Securities are restricted securities and market value is
determined in accordance with procedures adopted by the Board of
Trustees.
See Notes to Financial Statements. Page 3
ENERGY INCOME AND GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2005 (UNAUDITED)
ASSETS:
Investments, at value
(Cost $149,115,058) ................................................... $ 192,502,507
Cash ..................................................................... 1,211,786
Prepaid interest rate cap (cost $543,733) ................................ 438,582
Prepaid expenses ......................................................... 517,480
Interest receivable ...................................................... 2,522
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Total Assets ........................................................ 194,672,877
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LIABILITIES:
Energy notes payable ..................................................... 34,000,000
Deferred income tax liability ............................................ 15,451,976
Investment advisory fee payable .......................................... 113,379
Audit and legal fees payable ............................................. 55,436
Interest payable on Energy Notes ......................................... 35,770
Printing fees payable .................................................... 25,455
Payable to administrator ................................................. 15,117
Accrued expenses and other payables ...................................... 18,104
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Total Liabilities ................................................... 49,715,237
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NET ASSETS ............................................................... $ 144,957,640
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NET ASSETS CONSIST OF:
Accumulated net investment loss .......................................... $ (2,026,468)
Accumulated net realized gain on investments sold ........................ 2,491,650
Net unrealized appreciation of investments ............................... 27,830,322
Par value ................................................................ 64,470
Paid-in capital .......................................................... 116,597,666
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Net Assets .......................................................... $ 144,957,640
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NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) ..... $ 22.48
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Number of Common Shares outstanding ...................................... 6,446,995
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Page 4 See Notes to Financial Statements.
ENERGY INCOME AND GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED)
INVESTMENT INCOME:
Dividends ............................................................... $ 24,800
Interest ................................................................ 25,235
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Total investment income ............................................ 50,035
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EXPENSES:
Investment advisory fee ................................................. 872,989
Interest expense ........................................................ 496,339
Audit and legal fees .................................................... 151,220
Administration fee ...................................................... 87,297
Trustees' fees and expenses ............................................. 28,814
Printing fees ........................................................... 17,498
Custodian fees .......................................................... 8,408
Other ................................................................... 125,116
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Total expenses .......................................................... 1,787,681
Expenses reimbursed by investment advisor ............................... (218,263)
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Net expenses ....................................................... 1,569,418
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NET INVESTMENT LOSS BEFORE TAXES ........................................ (1,519,383)
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NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain/(loss) on:
Investments sold ................................................... 2,678,172
Written option transactions ........................................ (186,522)
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Net realized gain on investments during the period ...................... 2,491,650
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Net change in unrealized appreciation/(depreciation) of:
Investments ........................................................ 17,039,453
Written option transactions ........................................ 183,243
Interest rate cap transaction ...................................... (105,151)
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Net change in unrealized appreciation/(depreciation) of investments
and interest rate cap transaction during the period .................. 17,117,545
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Net realized and unrealized gain on investments ......................... 19,609,195
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS BEFORE TAXES ....... 18,089,812
Deferred income tax expense ............................................. 6,474,564
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS AFTER INCOME
TAX EXPENSE .......................................................... $ 11,615,248
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See Notes to Financial Statements. Page 5
ENERGY INCOME AND GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX
MONTHS
ENDED PERIOD
5/31/2005 ENDED
(UNAUDITED) 11/30/2004*
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Net investment loss before taxes .................................................. $ (1,519,383) $ (824,050)
Net realized gain on investments .................................................. 2,491,650 316,965
Net change in unrealized appreciation/(depreciation) of investments
and interest rate cap transaction during the period ............................ 17,117,545 26,164,753
Deferred income tax expense ....................................................... (6,474,564) (8,977,412)
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Net increase in net assets resulting from operations after income tax expense ..... 11,615,248 16,680,256
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Return of capital ................................................................. (4,242,142) (2,081,702)
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Total distributions to shareholders ............................................... (4,242,142) (2,081,702)
CAPITAL TRANSACTIONS:
Net proceeds from sale of 6,405,236 shares of Common Shares ....................... -- 122,083,798
Proceeds from 26,352 and 15,407 shares reinvested ................................. 591,262 310,920
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Net increase in net assets ........................................................ 7,964,368 136,993,272
NET ASSETS:
Beginning of period ............................................................... 136,993,272 --
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End of period ..................................................................... $ 144,957,640 $ 136,993,272
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Accumulated net investment loss at end of period .................................. $ (2,026,468) $ (507,085)
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* The Fund commenced operations on June 17, 2004.
Page 6 See Notes to Financial Statements.
ENERGY INCOME AND GROWTH FUND
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations ...................... $ 11,615,248
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided by operating activities:
Changes in assets and liabilities:
Increase in investments* ............................................. (18,344,504)
Increase in interest rate cap** ...................................... (438,582)
Decrease in interest and dividends receivable ........................ 43,634
Increase in other assets ............................................. (517,480)
Decrease in receivable for investments sold .......................... 906,212
Decrease in written options .......................................... (397,435)
Decrease in payable for investments purchased ........................ (2,048,358)
Decrease in interest expense ......................................... (39,249)
Decrease in accrued expenses ......................................... 5,549
Increase in deferred income tax expense .............................. 6,474,564
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CASH USED BY OPERATING ACTIVITIES ......................................... $ (2,740,401)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions paid (net of proceeds from 26,352 shares reinvested) ..... (3,650,880)
Decrease in loan outstanding ........................................... (30,000,000)
Issuance of Energy Notes ............................................... 34,000,000
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CASH PROVIDED BY OPERATING ACTIVITIES ..................................... 349,120
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Decrease in cash .......................................................... (2,391,281)
Cash at beginning of period ............................................... 3,603,067
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Cash at end of period ..................................................... 1,211,786
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest .................................... $ (535,588)
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* Includes net change in unrealized appreciation on investments of
$17,039,453.
** Includes net change in unrealized depreciation on interest rate cap of
$(105,151).
See Notes to Financial Statements. Page 7
ENERGY INCOME AND GROWTH FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
SIX
MONTHS
ENDED PERIOD
5/31/2005 ENDED
(UNAUDITED) 11/30/2004*
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Net asset value, beginning of period .................................................. $ 21.34 $ 19.10
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INCOME FROM INVESTMENT OPERATIONS:
Net investment loss before taxes ...................................................... (0.24) (0.13)
Net realized and unrealized gain on investments and interest rate cap transactions .... 2.04 2.74
----------- -----------
Total from investment operations after income tax expense ............................. 1.80 2.61
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Return of capital ..................................................................... (0.66) (0.33)
----------- -----------
Total from distributions .............................................................. (0.66) (0.33)
----------- -----------
Common Shares offering costs charged to paid-in capital ............................... -- (0.04)
----------- -----------
Net asset value, end of period ........................................................ $ 22.48 $ 21.34
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Market value, end of period ........................................................... $ 22.70 $ 22.12
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TOTAL RETURN BASED ON NET ASSET VALUE (A)+ ............................................ 8.46% 13.53%
=========== ===========
TOTAL RETURN BASED ON MARKET VALUE (B)+ ............................................... 5.66% 12.38%
=========== ===========
Net assets, end of period (in 000's) .................................................. $ 144,958 $ 136,993
RATIOS OF EXPENSES TO AVERAGE NET ASSETS**:
Excluding interest expense and tax expense and including reimbursements .............. 1.51% 1.36%
Excluding tax expense and reimbursements and including interest expense .............. 2.52% 2.20%
Excluding tax expense and including interest expense and reimbursements .............. 2.21% 1.91%
Including tax expense, reimbursements and interest expense ........................... 11.34% 18.09%
RATIOS OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS**:
Excluding tax expense and including interest expense and reimbursements .............. (2.14)% (1.49)%
Including tax expense, reimbursements and interest expense ........................... (11.27)% (17.67)%
Portfolio turnover rate .............................................................. 16.14% 34.86%
SENIOR INDEBTEDNESS:
Total loan outstanding (in 000's) ..................................................... N/A $ 30,000
Asset coverage per $1,000 loan outstanding (c) ........................................ N/A $ 5,566
Total Energy Notes outstanding ........................................................ 1,360 N/A
Principal amount and market value per Energy Note (d) ................................. $ 25,026 N/A
Asset coverage per Energy Note (e) .................................................... $ 131,587 N/A
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* The Fund commenced operations on June 17, 2004.
** Annualized.
(a) Total return based on net asset value is the combination of reinvested
dividend income and reinvested capital gains distributions, at prices
obtained by the Dividend Reinvestment Plan, if any, and changes in net
asset value per share and does not reflect sales load.
(b) Total return based on market value is the combination of reinvested
dividend income and reinvested capital gains distributions, at prices
obtained by the Dividend Reinvestment Plan, if any, and changes in stock
price per share, all based on market price per share.
(c) Calculated by subtracting the Fund's total liabilities (not including loan
outstanding) from the Fund's total assets and dividing this by the amount
of senior indebtedness.
(d) Includes accumulated and unpaid interest.
(e) Calculated by subtracting the Fund's total liabilities (not including the
Energy Notes) from the Fund's total assets, and dividing this by the
number of Energy Notes outstanding.
+ Total return is not annualized for periods less than one year.
Page 8 See Notes to Financial Statements.
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NOTES TO FINANCIAL STATEMENTS
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ENERGY INCOME AND GROWTH FUND
MAY 31, 2005 (UNAUDITED)
1. FUND DESCRIPTION
Energy Income and Growth Fund (the "Fund") is a non-diversified closed-end
management investment company organized as a Massachusetts business trust on
March 25, 2004, and is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "1940 Act").
The Fund trades under the ticker symbol FEN on the American Stock Exchange.
The Fund's investment objective is to seek a high level of after-tax total
return with an emphasis on current distributions paid to shareholders. The Fund
seeks to provide its shareholders with an efficient vehicle to invest in a
portfolio of cash-generating securities of energy companies. The Fund will focus
on investing in publicly traded master limited partnerships ("MLPs") and related
public entities in the energy sector, which the Fund's sub-adviser believes
offer opportunities for income and growth. Due to the tax treatment of cash
distributions made by MLPs to their investors, the Fund believes that a
significant portion of the distributions received will be tax deferred, thereby
maximizing cash available for distribution by the Fund to its shareholders.
There can be no assurance that the Fund's investment objective will be achieved.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
PORTFOLIO VALUATION:
The Fund will determine the net asset value of its Common Shares as of the close
of regular session trading on the New York Stock Exchange ("NYSE"), normally
4:00 p.m. Eastern time, no less frequently than weekly on Friday of each week.
Net asset value is computed by dividing the value of all assets of the Fund
(including option premiums, accrued interest and dividends), less all Fund
liabilities (including accrued expenses, dividends payable, current and deferred
income taxes, any borrowings of the Fund and the market value of written call
options) by the total number of shares outstanding. The Fund will rely to some
extent on information provided by the MLPs, which is not necessarily timely, to
estimate taxable income allocable to the MLP units held in the Fund's portfolio
and to estimate the associated deferred tax liability. From time to time the
Fund will modify its estimates and/or assumptions regarding its deferred tax
liability as new information becomes available. To the extent the Fund modifies
its estimates and/or assumptions, the net asset value of the Fund would likely
fluctuate.
The Fund's investments are valued 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. Portfolio securities listed
on any exchange other than the NASDAQ National Market ("NASDAQ") are valued at
the last sale price on the business day as of which such value is being
determined. If there has been no sale on such day, the securities are valued at
the mean of the most recent bid and asked prices on such day. Securities traded
on the NASDAQ are valued at the NASDAQ Official Closing Price as determined by
NASDAQ. Portfolio securities traded on more than one securities exchange are
valued at the last sale price on the business day as of which such value is
being determined at the close of the exchange representing the principal market
for such securities. Portfolio securities traded in the over-the-counter market,
but excluding securities traded on the NASDAQ, are valued at the closing bid
prices. Fixed income securities with a remaining maturity of 60 days or more
will be valued by the Fund using a pricing service. When price quotes are not
available, fair market value is based on prices of comparable securities.
Short-term investments that mature in 60 days or less are valued at amortized
cost.
Exchange traded options and futures contracts are valued at the closing price in
the market where such contracts are principally traded.
OPTION CONTRACTS:
The Fund may enter into various hedging and strategic transactions to seek to
reduce interest rate risks arising from any use of financial leverage by the
Fund, to facilitate portfolio management and mitigate risks.
Call options are contracts representing the right to purchase a common stock at
a specified price (the "strike price") through a specified future date (the
"expiration date"). The price of the option is determined from trading activity
in the broad options market, and generally reflects the relationship between the
current market price for the underlying common stock and the strike price, as
well as the time remaining until the expiration date. The Fund will write call
options only if they are "covered." In the case of a call option on a common
stock or other security, the option is "covered" if the Fund owns the security
underlying the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or, if additional cash
consideration is required, cash or other assets determined to be liquid by
Fiduciary Asset Management, LLC (the "Sub-Adviser") (in accordance with
procedures adopted by the Board of Trustees) in such amount are segregated by
the Fund's custodian) upon conversion or exchange of other securities held by
the Fund.
Page 9
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NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
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ENERGY INCOME AND GROWTH FUND
MAY 31, 2005 (UNAUDITED)
If an option written by the Fund expires unexercised, the Fund realizes on the
expiration date a capital gain equal to the premium received by the Fund at the
time the option was written. If an option purchased by the Fund expires
unexercised, the Fund realizes a capital loss equal to the premium paid at the
time the option expires. Prior to the earlier of exercise or expiration, an
exchange-traded option may be closed out by an offsetting purchase or sale of an
option of the same series (type, underlying security, exercise price, and
expiration). There can be no assurance, however, that a closing purchase or sale
transaction can be effected when the Fund desires. The Fund may sell put or call
options it has previously purchased, which could result in a net gain or loss
depending on whether the amount realized on the sale is more or less than the
premium and other transaction costs paid on the put or call option purchased.
CASH FLOW INFORMATION:
The Fund issues its shares and distributes dividends from return of capital
(which are either paid in cash or reinvested at the discretion of shareholders).
These activities are reported in the Statement of Changes in Net Assets.
Information on cash receipts and disbursements is presented in the Statement of
Cash Flows. Accounting practices that do not affect reporting activities on a
cash basis include unrealized gain or loss on investment securities.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is
recognized and recorded on the accrual basis, including amortization of premiums
and accretion of discounts.
Distributions received from the Fund's investments in MLPs generally are
comprised of return of capital from the MLP. The Fund records investment income
and return of capital based on estimates made at the time such distributions are
received. Such estimates are based on historical information available from each
MLP and other industry sources. These estimates may subsequently be revised
based on information received from MLPs after their tax reporting periods are
concluded.
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 instructs the custodian to
segregate assets of the Fund with a current value at least equal to the amount
of its when-issued purchase commitments.
RESTRICTED SECURITIES:
The Fund may invest up to 35% of its Managed Assets, the average daily gross
asset value of the Fund minus accrued liabilities (excluding the principal of
any borrowings), in restricted securities. The Fund currently holds the
restricted securities shown in the following table consisting of limited
partnership units of Energy Transfer Partners, L.P. ("Energy Transfer"), and
limited partnership units of MarkWest Energy Partners, L.P. ("MarkWest"), which
were purchased in private placement transactions. Restricted securities are
valued at fair value in accordance with procedures adopted by the Fund's Board
of Trustees.
ENERGY TRANSFER. The Fund has certain automatic registration rights with respect
to the Energy Transfer restricted securities. On March 29, 2005, the Securities
and Exchange Commission ("SEC") declared a registration statement on Form S-3
effective with respect to the Energy Transfer restricted shares held by the
Fund. The Fund is in the process of having the restrictive legend removed from
such securities.
MARKWEST. The Fund has certain demand and piggy back registration rights with
respect to the MarkWest restricted securities. On January 21, 2005, the SEC
declared a registration statement on Form S-3 effective with respect to the
MarkWest restricted securities held by the Fund. The Fund is in the process of
having the restrictive legend removed from such securities.
Page 10
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
MAY 31, 2005 (UNAUDITED)
CARRYING CARRYING VALUE PER
VALUE PER COST PER SHARE SHARE AT
SHARE AT ACQUISITION ACQUISITION 5/31/05
ACQUISITION 5/31/05 DATE DATE VALUE % OF
SECURITY DATE SHARES (RESTRICTED) (RESTRICTED) (UNRESTRICTED) (RESTRICTED) NET ASSETS
----------------------------------------------------------------------------------------------------------------------
Energy Transfer
Partners, L.P. 1/26/05 370,370 $30.18 $27.54 $29.74* $ 11,177,026 7.71%
MarkWest
Energy
Partners, L.P. 7/30/04 144,928 46.27 34.50 43.92** 6,706,108 4.63
------- ------------ -----
515,298 $ 17,883,134 12.34%
======= ============ =====
* This is the carrying value of unrestricted shares of Energy Transfer at
1/26/05 adjusted for the 2 for 1 stock split effective on March 16, 2005,
which is the date of purchase and date an enforceable right to acquire the
restricted Energy Transfer securities was obtained by the Fund.
** This is the carrying value of unrestricted shares of MarkWest at 7/30/04,
which is the date of purchase and date an enforceable right to acquire the
restricted MarkWest securities was obtained by the Fund.
DISTRIBUTIONS TO SHAREHOLDERS:
The Fund intends to make quarterly distributions to Common Shareholders. The
Fund's distributions generally will consist of cash and paid-in-kind
distributions from MLPs or their affiliates, dividends from common stocks,
interest from debt instruments and income from other investments held by the
Fund less operating expenses, including taxes. Distributions made from current
and accumulated earnings and profits of the Fund will be taxable to shareholders
as dividend income.
Distributions that are in an amount greater than the Fund's current and
accumulated earnings and profits will represent a tax-deferred return of capital
to the extent of a shareholder's basis in its Common Shares, and such
distributions would correspondingly reduce the amount of realized loss upon the
sale of the Common Shares. A reduction in the shareholder's basis would increase
the realized gain or reduce the amount of realized loss upon the sale of the
Common Shares. Additionally, distributions not paid from current and accumulated
earnings and profits that exceed a shareholder's tax basis in its Common Shares
will be taxed as a capital gain.
Distributions paid during the six months ended May 31, 2005, of $4,242,142 have
been characterized as return of capital for tax purposes. Distributions will
automatically be reinvested in additional Common Shares pursuant to the Fund's
Dividend Reinvestment Plan unless cash distributions are elected by the
shareholder.
INCOME TAXES:
The Fund has elected to be treated as a regular C corporation for U.S. federal
income tax purposes and as such will be obligated to pay federal and applicable
state and foreign corporate taxes on its taxable income. The current U.S.
federal maximum graduated income tax rate for corporations is 35%. In addition,
the United States also imposes a 20% alternative minimum tax on the recalculated
alternative minimum taxable income of an entity treated as a corporation. This
differs from most investment companies, which elect to be treated as "regulated
investment companies" under the United States Internal Revenue Code of 1986, as
amended.
The tax deferral benefit the Fund derives from its investment in MLPs results
largely because the MLPs are treated as partnerships for federal income tax
purposes. As a partnership, an MLP has no income tax liability at the entity
level. As a limited partner in the MLPs in which it invests, the Fund will be
allocated its pro rata share of income, gains, losses, deductions and credits
from the MLPs, regardless of whether or not any cash is distributed from the
MLPs.
To the extent that the distributions received from the MLPs exceed the net
taxable income realized by the Fund from its investment, a tax liability
results. This tax liability is a deferred liability to the extent that MLP
distributions received have not exceeded the Fund's adjusted tax basis in the
respective MLPs. To the extent that distributions from an MLP exceed the Fund's
adjusted tax basis, the Fund will recognize a taxable capital gain.
Page 11
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
MAY 31, 2005 (UNAUDITED)
For the six months ended May 31, 2005, distributions of $5,344,893 received from
MLPs have been classified as return of capital. The cost basis of applicable
MLPs has been reduced accordingly.
The Fund's provision for income taxes is calculated in accordance with SFAS No.
109 ACCOUNTING FOR INCOME TAXES and consists of the following:
Current federal and state income taxes ........................ $ --
Deferred federal income taxes ................................. 6,231,398
Deferred state income taxes ................................... 243,166
------------
Total income tax expense ...................................... $ 6,474,564
============
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for tax purposes. Components of the Fund's
deferred tax assets and liabilities as of May 31, 2005 are as follows:
DEFERRED TAX ASSETS:
Net operating loss carryforwards .............................. $ 857,004
State income taxes ............................................ 104,230
------------
$ 961,234
============
DEFERRED TAX LIABILITIES:
Unrealized gains on investment securities ..................... $ 16,413,210
------------
Total net deferred tax liability .............................. $ 15,451,976
============
The components of income tax expense include $6,231,398 and $243,166 for
deferred federal and state income taxes, respectively. For the period ended
November 30, 2004, the Fund had a net operating loss for federal income tax
purposes of approximately $616,469. This net loss may be carried forward for 20
years, and accordingly would expire after the year ended November 30, 2024.
Total income taxes differ from the amount computed by applying the federal
statutory income tax rate of 35% to net investment income and realized and
unrealized gains on investments.
Application of statutory income tax rate ...................... $ 6,331,434
Dividends received deduction .................................. (14,928)
State income taxes, net ....................................... 158,058
------------
Total ......................................................... $ 6,474,564
============
EXPENSES:
The Fund will pay all expenses directly related to its operations.
ORGANIZATIONAL AND OFFERING COSTS:
Organization costs consist of costs incurred to establish the Fund and enable it
to legally do business. These costs include filing fees, legal services
pertaining to the organization of the business and audit fees relating to the
initial registration and auditing the initial statement of assets and
liabilities, among other fees. Offering costs consist of legal fees pertaining
to the Fund's shares offered for sale, registration fees, underwriting fees, and
printing of the initial prospectus, among other fees. First Trust Advisors, L.P.
("First Trust") the Fund's investment advisor, has paid all organizational
expenses. The Fund's estimated share of Common Share offering costs, $256,209,
were recorded as a reduction of the proceeds from the sale of Common Shares
during the period ended November 30, 2004.
Page 12
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
MAY 31, 2005 (UNAUDITED)
INTEREST RATE CAP:
The Fund has entered into an interest rate cap transaction with Lehman Brothers
Special Financing Inc. for the purpose of limiting the impact that higher
short-term interest rates would have on the leverage costs of the Fund. The
transaction has a notional amount of $34,000,000, a cap rate of 5.00% per annum
and a termination date of May 3, 2010 and is marked to market with the change in
value reflected in unrealized appreciation/(depreciation). The initial cost of
the transaction, $552,500, was recorded as a prepaid asset and is being
amortized to expense on a straight line basis over the term of the transaction.
3. INVESTMENT ADVISORY FEE AND OTHER AFFILIATED TRANSACTIONS
First Trust is a limited partnership with one limited partner, Grace Partners of
DuPage L.P., and one general partner, The Charger Corporation. First Trust
serves as investment advisor to the Fund pursuant to an Investment Management
Agreement. First Trust is responsible for the ongoing monitoring of the Fund's
investment portfolio, managing the Fund's business affairs and certain
administrative services necessary for the management of the Fund. For these
services, First Trust is entitled to a monthly fee calculated at an annual rate
of 1.00% of the Fund's Managed Assets, the average daily gross asset value of
the Fund minus accrued liabilities.
Fiduciary Asset Management, LLC (the "Sub-Adviser") serves as the Fund's
sub-adviser and manages the Fund's portfolio subject to First Trust's
supervision. The Sub-Adviser receives a portfolio management fee of 0.50% of
Managed Assets that is paid monthly by First Trust out of the First Trust
investment advisory fee.
First Trust has agreed to reimburse the Fund for fees and expenses in an amount
equal to 0.25% of the average daily Managed Assets of the Fund for the first two
years of the Fund's operations through June 24, 2006. The Sub-Adviser has agreed
to bear a portion of this expense reimbursement obligation by reducing the
amount of its full sub-advisory fee by 0.382%. Reimbursements are reported as
"expenses reimbursed by investment advisor" in the statement of operations.
PFPC Inc. ("PFPC"), an indirect, majority-owned subsidiary of The PNC Financial
Services Group Inc., serves as the Fund's Administrator and Transfer Agent in
accordance with certain fee arrangements. PFPC Trust Company, an indirect,
majority-owned subsidiary of The PNC Financial Services Group Inc., serves as
the Fund's Custodian in accordance with certain fee arrangements.
The Fund pays each Trustee who is not an officer or employee of First Trust or
any of its affiliates an annual retainer of $10,000, which includes compensation
for all regular quarterly board meetings and regular committee meetings. No
additional meeting fees are paid in connection with regular quarterly board
meetings or regular committee meetings. Additional fees of $1,000 and $500 are
paid to non-interested Trustees for special board meetings and non-regular
committee meetings, respectively. These additional fees are shared by the funds
in the First Trust fund complex that participate in the particular meeting and
are not per fund fees. Trustees are also reimbursed for travel and out-of-pocket
expenses in connection with all meetings.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, for the six months ended May 31, 2005, aggregated
amounts were $30,029,053 and $31,402,174, respectively.
As of May 31, 2005, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $43,499,070
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $111,621.
WRITTEN OPTION ACTIVITY FOR THE FUND WAS AS FOLLOWS:
NUMBER
OF
CONTRACTS PREMIUMS
---------- ----------
WRITTEN OPTIONS
Options outstanding at November 30, 2004 ......... 1,139 $ 214,192
Options written .................................. 65 21,969
Options closed ................................... (1,204) (236,161)
---------- ----------
Options outstanding at May, 2005 ................. -- $ --
========== ==========
Page 13
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
MAY 31, 2005 (UNAUDITED)
5. COMMON SHARES
As of May 31, 2005, 6,446,995 of $0.01 par value Common Shares were issued and
outstanding. An unlimited number of Common Shares has been authorized under the
Fund's Dividend Reinvestment Plan.
COMMON SHARE TRANSACTIONS WERE AS FOLLOWS:
SIX MONTHS ENDED PERIOD ENDED
MAY 31, 2005 NOVEMBER 30, 2004
------------ -----------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Proceeds from shares sold ..................... -- $ -- 6,405,236 $ 122,340,007
Issued as reinvestment of dividends under
the Dividend Reinvestment Plan ............. 26,352 591,262 15,407 310,920
Offering cost of Common Shares ................ -- -- -- (256,209)
--------- --------- --------- -------------
26,352 $ 591,262 6,420,643 $ 122,394,718
========= ========= ========= =============
6. ENERGY NOTES
The Fund's Declaration of Trust authorizes the issuance of notes as determined
by the Board of Trustees without the approval of Common Shareholders. As of May
31, 2005, the Fund has 1,360 Series A Energy Notes ("Energy Notes") outstanding
at a principal value of $25,000 per note. The principal amount of the Energy
Notes will be due and payable on March 2, 2045. The Energy Notes offering costs
of $158,761 and commissions of $340,000 paid directly to Lehman Brothers, were
recorded as prepaid assets and are being amortized to expense on a straight line
basis over the term of the Energy Notes.
An auction of the Energy Notes is generally held every 28 days. The Energy Notes
will pay interest at an annual rate that may vary for each auction rate period.
Existing note holders may submit an order to buy, sell or hold such notes on
each auction date.
The annual interest rate in effect as of May 31, 2005, was 3.018%. The interest
rate, as set by the auction process, is generally expected to vary with
short-term interest rates.
7. CREDIT AGREEMENT
The Fund has a credit agreement with the Custodial Trust Company of Bear
Stearns, under which the Fund may borrow from the Custodial Trust Company an
aggregate amount of up to the lesser of $30,000,000 or the maximum amount the
Fund is permitted to borrow under the 1940 Act. For the six months ended May 31,
2005, the average amount outstanding was $9,560,440 with a weighted average
interest rate of 3.34%. This credit agreement has no maturity date and can be
paid or called at any time.
8. CONCENTRATION OF CREDIT RISK
The Fund intends to invest at least 85% of its Managed Assets in securities
issued by energy companies, energy sector MLPs and MLP related entities. Given
this industry concentration, the Fund will be more susceptible to adverse
economic or regulatory occurrences affecting that industry than an investment
company that is not concentrated in a single industry. Energy issuers may be
subject to a variety of factors that may adversely affect their business or
operations, including high interest costs in connection with capital
construction programs, high leverage costs associated with environmental and
other regulations, the effects of economic slowdown, surplus capacity, increased
competition from other providers of services, uncertainties concerning the
availability of fuel at reasonable prices, the effects of energy conservation
policies and other factors.
An investment in MLP units involves risks which differ from an investment in
common stock of a corporation. Holders of MLP units have limited control and
voting rights on matters affecting the partnership. In addition, there are
certain tax risks associated with an investment in MLP units and conflicts of
interest exist between common unit holders and the general partner, including
those arising from incentive distribution payments.
9. SUBSEQUENT EVENTS
On June 20, 2005, the Fund declared a dividend of $0.33 per share to Common
Shareholders of record July 14, 2005, payable July 29, 2005.
Page 14
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
MAY 31, 2005 (UNAUDITED)
DIVIDEND REINVESTMENT PLAN
If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect to receive cash distributions,
all dividends and distributions on your Common Shares will be automatically
reinvested by PFPC (the "Plan Agent"), in additional Common Shares under the
Plan. If you elect to receive cash distributions, you will receive all
distributions in cash paid by check mailed directly to you by PFPC, as dividend
paying agent.
If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:
(1) If the Common Shares are trading at or above net asset value at the
time of valuation, the Fund will issue new shares at a price equal
to the greater of (i) net asset value per Common Share on that date
or (ii) 95% of the market price on that date.
(2) If the Common Shares are trading below net asset value 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 American Stock Exchange or elsewhere, for the
participants' accounts. It is possible that the market price for the
Common Shares may increase before the Plan Agent has completed its
purchases. Therefore, the average purchase price per share paid by
the Plan Agent may exceed the market price at the time of valuation,
resulting in the purchase of fewer shares than if the dividend or
distribution had been paid in Common Shares issued by the Fund. The
Plan Agent will use all dividends and distributions received in cash
to purchase Common Shares in the open market within 30 days of the
valuation date except where temporary curtailment or suspension of
purchases is necessary to comply with federal securities laws.
Interest will not be paid on any uninvested cash payments.
You may withdraw from the Plan at any time by giving written notice to the Plan
Agent, or by telephone in accordance with such reasonable requirements as the
Plan Agent and Fund may agree upon. If you withdraw or the Plan is terminated,
you will receive a certificate for each whole share in your account under the
Plan and you will receive a cash payment for any fraction of a share in your
account. If you wish, the Plan Agent will sell your shares and send you the
proceeds, minus brokerage commissions.
The Plan Agent maintains all shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.
Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized, although cash is not received by you.
If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.
Consult your financial advisor for more information.
The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing PFPC Inc., 301 Bellevue
Parkway, Wilmington, Delaware 19809.
--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Fund's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's website located at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available (1) by calling (800)
988-5891; (2) on the Fund's website located at http://www.ftportfolios.com; (3)
on the SEC's website at http://www.sec.gov; and (4) for review and copying at
the SEC's Public Reference Room ("PRR") in Washington, DC. Information regarding
the operation of the PRR may be obtained by calling 1-800-SEC-0330.
Page 15
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION - (CONTINUED)
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
MAY 31, 2005
SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Joint Annual Meeting of the Shareholders of Energy Income and Growth Fund,
First Trust Value Line(R) 100 Fund, First Trust/Fiduciary Asset Management
Covered Call Fund and First Trust/Aberdeen Global Opportunity Income Fund was
held on April 18, 2005. At the Annual Meeting the Fund's Board of Trustees,
consisting of James A. Bowen, Niel B. Nielson, Thomas R. Kadlec, Richard E.
Erickson and David M. Oster, were elected to serve an additional one year term.
The number of votes cast for James A. Bowen was 6,352, 956, the number of votes
withheld was 50,441 and the number of abstentions was 6,282,515. The number of
votes cast for Niel B. Nielson was 6,332,956, the number of votes withheld was
50,100 and the number of abstentions was 6,282,856. The number of votes cast for
Richard E. Erickson was 6,332,956, the number of votes withheld was 47,965 and
the number of abstentions was 6,284,991. The number of votes cast for Thomas R.
Kadlec was 6,332,956, the number of votes withheld was 48,492 and the number of
abstentions was 6,284,464. The number of votes cast for David M. Oster was
6,352,956, the number of votes withheld was 48,565 and the number of abstentions
was 6,284,391.
Page 16
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
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.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) 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 registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) ENERGY INCOME AND GROWTH 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 JULY 28, 2005
----------------------------------------------------------------------------
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 JULY 28, 2005
----------------------------------------------------------------------------
By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief
Financial Officer and Chief Accounting Officer
(principal financial officer)
Date JULY 28, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.