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
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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, LP
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, 2004
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Date of reporting period: AUGUST 31, 2004
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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 of Investments is attached herewith.
Energy Income and Growth Fund
Portfolio of Investments
August 31, 2004 (Unaudited)
MARKET
SHARES VALUE
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MASTER LIMITED PARTNERSHIPS - 90.8%
OIL & GAS - 76.1%
131,300 Atlas Pipeline Partners, L.P. $ 4,693,975
89,576 Buckeye Partners, L.P. 3,748,756
238,572 Crosstex Energy, L.P. 6,796,916
116,057 Enbridge Energy Partners, L.P. 5,641,531
369,026 Enterprise Product Partners, L.P. 8,225,590
190,169 GulfTerra Energy Partners, L.P. 7,637,187
250,000 Holly Energy Partners, L.P. 7,200,000
107,512 Kaneb Pipeline Partners, L.P. 5,321,844
219,571 Kinder Morgan Energy Partners, L.P. 9,775,301
115,965 Magellan Midstream Partners, L.P. 6,064,970
500 Markwest Energy Partners, L.P. 22,010
144,928 Markwest Energy Partners, L.P. + 5,837,453
182,274 Northern Border Partners, L.P. 7,363,870
202,843 Pacific Energy Partners, L.P. 5,738,428
351,956 Plains All American Pipeline, L.P. 11,723,654
79,834 Sunoco Logistics Partners, L.P. 3,074,407
286,432 TEPPCO Partners, L.P. 11,425,773
155,595 Valero, L.P. 8,300,993
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118,592,658
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COAL - 7.2%
160,345 Alliance Resource Partners, L.P. 7,885,767
84,169 Natural Resource Partners, L.P. 3,362,552
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11,248,319
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UTILITIES - 7.0%
340,886 Inergy, L.P. 8,372,160
118,741 Star Gas Partners, L.P. 2,494,748
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10,866,908
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CHEMICALS - 0.5%
25,477 Martin Midstream Partners, L.P. 714,630
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TOTAL MASTER LIMITED PARTNERSHIPS 141,422,515
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(Cost $136,929,241)
COMMON STOCKS - 11.2%
ENERGY - 6.5%
31,700 BP PLC, Sponsored ADR ++ 1,702,290
27,000 ChevronTexaco Corp. ++ 2,632,500
84,000 Exxon Mobil Corp. ++ 3,872,400
31,400 Kinder Morgan, Inc. ++ 1,899,700
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10,106,890
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CAPITAL GOODS - 3.3%
34,700 Emerson Electric Company ++ 2,160,075
89,200 General Electric Company ++ 2,924,868
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5,084,943
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UTILITIES - 1.4%
100,000 Duke Energy Corp. ++ 2,214,000
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TOTAL COMMON STOCKS 17,405,833
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(Cost $16,964,294)
1
Energy Income and Growth Fund - (Continued)
Portfolio of Investments
August 31, 2004 (Unaudited)
MARKET
VALUE
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TOTAL INVESTMENTS - 102.0% $ 158,828,348
(Cost $153,893,535)**
CALL OPTIONS WRITTEN - (0.5%) (814,495)
(Premiums received $848,807)
NET OTHER ASSETS & LIABILITIES - (1.5%) (2,260,022)
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NET ASSETS - 100.0% $ 155,753,831
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* Non-income producing security.
** Aggregate cost for federal tax purposes.
+ Security is a private placement.
++ Securities or partial securities on which call options were
written.
ADR American Depository Receipt
NUMBER OF MARKET
CONTRACTS VALUE
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CALL OPTIONS WRITTEN - (0.5%)
317 BP PLC Call
@ 60 due Jan 06 $ (69,740)
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ChevronTexaco Corp. Call
90 @ 100 due Mar 05 (31,500)
180 @ 105 due Jan 06 (81,000)
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(112,500)
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1,000 Duke Energy Corp. Call
@ 22.5 due Jan 06 (200,000)
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Emerson Electric Company Call
107 @ 65 due Dec 04 (15,515)
240 @ 70 due Jan 06 (69,600)
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(85,115)
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Exxon Mobil Corp. Call
382 @ 47.5 due Jan 05 (42,020)
458 @ 50 due Jan 06 (93,890)
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(135,910)
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General Electric Company Call
262 @ 32.5 due Dec 04 (35,370)
630 @ 35 due Jan 06 (129,150)
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(164,520)
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85 Kinder Morgan, Inc. Call
@ 65 due Feb 05 (8,925)
229 @ 70 due Jan 06 (37,785)
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(46,710)
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TOTAL CALL OPTIONS WRITTEN (814,495)
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(Premiums received $848,807)
2
Notes to Quarterly Portfolio of Investments
August 31, 2004 (Unaudited)
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
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)
and the liquidation value of any outstanding Preferred Shares, 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 as determined by,
or under the direction of 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 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 trading
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 trading 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") at 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 the
Sub-Adviser (in accordance with procedures established 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.
3
Notes to Quarterly Portfolio of Investments
August 31, 2004 (Continued) (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.
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 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.
2. UNREALIZED APPRECIATION/(DEPRECIATION)
On August 31, 2004, net unrealized appreciation for Federal tax purposes was
$4,934,813 consisting of $5,622,201 aggregate gross unrealized appreciation for
all securities in which there is an excess of value over tax cost and $687,388
aggregate gross unrealized depreciation for all securities in which there is an
excess of tax cost over value.
3. SUBSEQUENT EVENT
The Fund held 118,741 shares of Star Gas Partners, L.P. at August 31, 2004, with
a market value of $2,494,748, or $21.01 per share. Over the period of September
1 through October 19, all shares of Star Gas Partners were sold by the Fund at
an average sale price of $21.16 per share.
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 has materially affected, or is 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
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By (Signature and Title)* /S/ JAMES A. BOWEN
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James A. Bowen, President and Chief Executive Officer
(principal executive officer)
Date OCTOBER 28, 2004
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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
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James A. Bowen, President and Chief Executive Officer
(principal executive officer)
Date OCTOBER 28, 2004
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By (Signature and Title)* /S/ MARK R. BRADLEY
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Mark R. Bradley, Treasurer, Controller,
Chief Financial Officer and Chief Accounting Officer
(principal financial officer)
Date OCTOBER 28, 2004
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* Print the name and title of each signing officer under his or her signature.