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 811-21549
ENERGY INCOME AND GROWTH 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
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: NOVEMBER 30, 2005
Date of reporting period: FEBRUARY 28, 2005
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, 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. SCHEDULE OF INVESTMENTS.
The Schedule(s) of Investments is attached herewith.
ENERGY INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 2005 (UNAUDITED)
MARKET
SHARES VALUE
---------- -------------
MASTER LIMITED PARTNERSHIPS - 129.8%
OIL & GAS - 92.3%
131,300 Atlas Pipeline Partners, L.P. .................. $ 5,861,232
73,576 Buckeye Partners, L.P. ......................... 3,230,722
317,272 Crosstex Energy, L.P. .......................... 11,206,364
164,057 Enbridge Energy Partners, L.P. ................. 8,867,281
644,998 Enterprise Product Partners, L.P. .............. 17,234,347
73,100 Hiland Partners, L.P. .......................... 2,225,895
250,000 Holly Energy Partners, L.P. .................... 9,737,500
103,212 Kaneb Pipeline Partners, L.P. .................. 6,332,056
158,771 Kinder Morgan Energy Partners, L.P. ............ 7,460,649
68,165 Magellan Midstream Partners, L.P. .............. 4,134,207
85,250 MarkWest Energy Partners, L.P. ................. 4,189,185
144,928 MarkWest Energy Partners, L.P. + ............... 6,836,892
124,774 Northern Border Partners, L.P. ................. 6,375,951
209,843 Pacific Energy Partners, L.P. .................. 6,801,012
344,956 Plains All American Pipeline, L.P. ............. 13,501,578
78,134 Sunoco Logistics Partners, L.P. ................ 3,273,815
109,932 TEPPCO Partners, L.P. .......................... 4,819,419
215,895 Valero, L.P. ................................... 13,422,192
--------------
135,510,297
--------------
GAS UTILITIES - 20.1%
98,500 Energy Transfer Partners, L.P. ................. 6,284,300
185,185 Energy Transfer Partners, L.P. + ............... 10,721,934
385,275 Inergy, L.P. ................................... 12,559,965
--------------
29,566,199
--------------
METALS & MINING - 15.5%
154,045 Alliance Resource Partners, L.P. ............... 11,864,546
135,169 Natural Resource Partners, L.P. ................ 8,249,364
47,500 Penn Virginia Resource Partners, L.P. .......... 2,574,025
--------------
22,687,935
--------------
MARINE - 1.3%
70,000 U.S. Shipping Partners, L.P. ................... 1,898,400
--------------
CHEMICALS - 0.6%
25,477 Martin Midstream Partners, L.P. ................ 839,212
--------------
TOTAL MASTER LIMITED PARTNERSHIPS .............. 190,502,043
--------------
(Cost $150,262,764)
See Notes to Quarterly Portfolio of Investments Page 1
ENERGY INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
FEBRUARY 28, 2005 (UNAUDITED)
MARKET
SHARES VALUE
---------- -------------
COMMON STOCKS - 0.8%
GAS UTILITIES - 0.8%
40,000 Copano Energy, LLC ............................. $ 1,116,800
--------------
TOTAL COMMON STOCKS ............................ 1,116,800
--------------
(Cost $800,000)
TOTAL INVESTMENTS - 130.6% ..................... 191,618,843
(Cost $151,062,764)*
NET OTHER ASSETS & LIABILITIES - (7.4)% ........ (10,829,984)
--------------
NOTES PAYABLE OUTSTANDING - (23.2)% ............ (34,000,000)
--------------
NET ASSETS - 100.0% ............................ $ 146,788,859
==============
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* Aggregate cost for federal tax purposes
+ Securities are restricted securities and market value is determined
in accordance with procedures adopted by the Board of Trustees
(Note 1).
Page 2 See Notes to Quarterly Portfolio of Investments
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NOTES TO QUARTERLY PORTFOLIO OF INVESTMENTS (UNAUDITED)
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ENERGY INCOME AND GROWTH FUND
FEBRUARY 28, 2005
1. VALUATION AND INVESTMENT PRACTICES
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 (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
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.
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.
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.
RESTRICTED SECURITIES:
The Fund may invest up to 35% of its managed assets in restricted securities.
The Fund currently holds the restricted securities shown in the following table
consisting of limited partnership units of MarkWest Energy Partners, L.P.
("MarkWest") and limited partnership units of Energy Transfer Partners, L.P.
("Energy Partners"), 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.
Page 3
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NOTES TO QUARTERLY PORTFOLIO OF INVESTMENTS (UNAUDITED) - (CONTINUED)
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ENERGY INCOME AND GROWTH FUND
FEBRUARY 28, 2005
MARKWEST ENERGY PARTNERS. As of February 28, 2005, the Fund valued the MarkWest
restricted secutities at a 4% discount to the publicly traded MarkWest
securities. The Fund has certain demand and piggy back registration rights with
respect to the MarkWest restricted securities and on January 21, 2005, the
Securities and Exchange Commission ("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.
ENERGY TRANSFER PARTNERS. As of February 28, 2005, the Fund valued the Energy
Partners restricted securities at a 9.25% discount to the publicly traded Energy
Partners securities. The Fund has certain automatic registration rights with
respect to the Energy Partners restricted securities. On March 29, 2005, the SEC
declared a registration statement on Form S-3 effective with respect to the
Energy Partners restricted shares held by the Fund. The Fund is in the process
of having the restrictive legend removed from such securities.
CARRYING
CARRYING COST VALUE PER
VALUE PER PER SHARE SHARE
SHARE AT ACQUISITION AT ACQUISITION 2/28/05
ACQUISITION 2/28/05 DATE DATE VALUE % OF
SECURITY DATE SHARES (RESTRICTED) (RESTRICTED) (UNRESTRICTED) (RESTRICTED) NET ASSETS
-----------------------------------------------------------------------------------------------------------------------------
Energy Transfer
Partners, L.P. 1/26/05 185,185 $57.90 $ 55.08 $59.48* $10,721,934 7.30%
MarkWest Energy
Partners, L.P. 7/30/04 144,928 47.17 34.50 43.92** 6,836,892 4.66
------- ------ ------- ------ ----------- -----
330,113 $17,558,826 11.96%
======= =========== =====
* This is the carrying value of unrestricted shares of Energy Transfer at
1/26/05, 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.
2. UNREALIZED APPRECIATION/(DEPRECIATION)
As of February 28, 2005, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $40,556,079
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $0.
Page 4
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) ENERGY INCOME AND GROWTH FUND
By (Signature and Title)* /S/ JAMES A. BOWEN
-----------------------------------------------------
James A. Bowen, President and Chief Executive Officer
(principal executive officer)
Date APRIL 18, 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, President and Chief Executive Officer
(principal executive officer)
Date APRIL 18, 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 APRIL 18, 2005
--------------
* Print the name and title of each signing officer under his or her
signature.