Edgar Filing: ENERGY INCOME & GROWTH FUND

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

ENERGY INCOME AND GROWTH FUND
------------------------------------------------------------
(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
------------------------------------------------------------
(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: NOVEMBER 30, 2006
------------------

Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. 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.

ENERGY INCOME AND GROWTH FUND (FEN)
ANNUAL REPORT
NOVEMBER 30, 2006

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TABLE OF CONTENTS
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ENERGY INCOME AND GROWTH FUND (FEN)
ANNUAL REPORT
NOVEMBER 30, 2006

Shareholder Letter ....................................................... 1
Portfolio Commentary ..................................................... 2
Portfolio Components ..................................................... 4
Portfolio of Investments ................................................. 5
Statement of Assets and Liabilities ...................................... 7
Statement of Operations .................................................. 8
Statements of Changes in Net Assets ...................................... 9
Statement of Cash Flows .................................................. 10
Financial Highlights ..................................................... 11
Notes to Financial Statements ............................................ 12
Report of Independent Registered Public Accounting Firm .................. 18
Additional Information ................................................... 19
Dividend Reinvestment Plan
Proxy Voting Policies and Procedures
Portfolio Holdings
By-Law Amendments
Submission of Matters to a Vote of Shareholders
Board of Trustees and Officers ........................................... 21

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. (the "Advisor") and/or Fiduciary Asset Management,
LLC ("Fiduciary" or the "Sub-Advisor") 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 actual results, performance or achievements of
the Energy Income and Growth Fund (the "Fund") 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 the Advisor and/or
Fiduciary 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.

HOW TO READ THIS REPORT

This report contains information that can help you evaluate your investment. It
includes details about 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, together with
the portfolio commentary by James J. Cunnane, Jr., the Senior Portfolio Manager
of Fiduciary, the Fund's Sub-Advisor, you may obtain an understanding of how the
market environment affected the Fund's performance. The statistical information
that follows may 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, the
Advisor's personnel and Mr. Cunnane 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. 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)
ANNUAL REPORT
NOVEMBER 30, 2006

Dear Shareholders:

We are pleased to report that the Energy Income and Growth Fund (American Stock
Exchange Symbol: FEN) continued to provide growth in net asset value ("NAV") and
increases in distributions. A complete overview of the portfolio returns and the
outlook for the master limited partnership ("MLP") market are presented in this
annual report for the fiscal year ended November 30, 2006.

Over the past year, the trend in the MLP marketplace has been double digit
increases in distributions. This, in turn, attracted more investors and
ultimately led to capital appreciation in the marketplace and in most of the
Fund's holdings. For a discussion of the specific market conditions that
affected the Fund and a review of the Fund's performance, please read the
portfolio commentary found on the following pages.

On December 11, 2006, the Fund announced that its Board of Trustees approved a
managed distribution policy increasing the Fund's current quarterly distribution
level to $0.375 per share. This represents a 5.63% increase from the previous
quarterly distribution amount of $0.355 per share. The Fund will make its first
quarterly distribution under the new managed distribution policy beginning in
January 2007. Additional information regarding this policy change is included in
the portfolio commentary on the following pages.

We thank you for your continued confidence in the Energy Income and Growth Fund
and remain dedicated to assisting you in achieving your financial goals.

Sincerely,

/S/ JAMES A. BOWEN
James A. Bowen
President of the Energy Income and Growth Fund
January 24, 2007

Page 1

[GRAPHIC OMITTED]
JAMES J. CUNNANE, JR., CFA
MANAGING DIRECTOR, SENIOR PORTFOLIO MANAGER
MEMBER OF STRATEGY COMMITTEE AND INVESTMENT COMMITTEE

Mr. Cunnane joined Fiduciary Asset Management in 1996 and has 14 years of
portfolio management and securities research experience. Mr. Cunnane has managed
institutional and private client equity portfolios and has an industry leading
role as portfolio manager of the master limited partnership assets of Fiduciary
Asset Management, LLC ("Fiduciary"). He is actively involved with the Strategy
Committee's macroeconomic assessment and top-down approach to portfolio
management. Prior to joining Fiduciary, Mr. Cunnane worked as a research analyst
with A.G. Edwards & Sons. Mr. Cunnane also worked as an analyst for Maguire
Investment Advisors, where he gained extensive experience in the development of
master limited partnership and small- and mid-cap stock portfolios. Mr. Cunnane
holds a B.S. in finance from Indiana University, is a Chartered Financial
Analyst (CFA) and serves on the investment committee of the Archdiocese of St.
Louis.

FIDUCIARY ASSET MANAGEMENT, LLC

Fiduciary Asset Management, LLC was founded in 1994 as an employee-owned
investment management firm. The investment manager is a federally-registered
investment advisor which manages a broad range of equity and fixed-income
strategies, including both traditional and hedged strategies, for institutional
and private wealth clients. Prior to 1994, Fiduciary was the internal asset
management group for a large corporate pension plan for nearly 22 years. It
continues to function as such plan's chief investment officer. The investment
manager currently supervises and manages approximately $17 billion in client
assets.
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PORTFOLIO COMMENTARY
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OVERVIEW
The fiscal year ended November 30, 2006 was very productive in the Master
Limited Partnership ("MLP") market. Overall, MLP distribution growth exceeded
our expectations and was driven by continued strong fundamental operating
performance and a solid growth environment for infrastructure assets. The
increased distributions provided a boost to MLP unit prices. Investor interest
in MLPs continued to grow as the market capitalization and liquidity of the
group expanded.

In our view, the MLPs' combination of high yield, growth potential, tax
deferrals and low correlation to other asset classes continues to make them very
attractive in comparison to alternatives which offer growth and income. An
investment in the Fund, which produces a Form 1099 and is eligible for ownership
in tax-deferred and tax-exempt accounts, is a convenient way to access the MLP
market.

PERFORMANCE
On an NAV basis, the Fund provided a total return of 22.2%, including the
reinvestment of distributions for the year ended November 30, 2006. On a market
price basis, the Fund provided an even higher total return of 24.6%. This
compares to a total return of 14.2% for the Standard & Poor's 500 Index and 6.0%
for the Citigoup Broad Investment Grade Index over the same period. The Fund's
market price discount to NAV narrowed significantly over the course of the
fiscal year. On November 30, 2006, the Fund's NAV was $25.88 versus a share
price of $24.49, representing a market price discount of 5.4%. At the start of
the fiscal year, the Fund's NAV was $22.53 and its share price was $20.92,
representing a market price discount of 7.1%.

When considering the contrast between market value and NAV performance, it is
important to consider the special tax structure of the Fund. The Fund gained
substantial ground on an NAV basis, but the portfolio gains of the Fund were
even higher. For every dollar earned by the Fund, the NAV tends to rise by a
smaller amount. That is because the Fund is a taxable entity, meaning that there
is a deferred tax liability that builds up in the NAV as the portfolio
appreciates. This structure provides a mechanism to keep the NAV reflecting the
after-tax value of the portfolio. With that said, we still have those additional
assets to manage until we sell the underlying securities, subsequently realize
any gains and finally pay taxes on the sold securities, all of which could be
years away.

The universe of MLPs continued to increase their cash distributions at an
average annualized rate of about 12% during the fiscal year ended November 30,
2006. These rising distributions attracted more investors to the market and
ultimately led to capital appreciation in the market and specifically in most of
the Fund's holdings. The Fund's use of leverage helped from a capital
appreciation standpoint as we were able to increase our investment during the
positive market environment. It is important to note, however, that the cost of
the Fund's leverage increased during the period as short-term interest rates
moved higher and had a negative impact in terms of cash flow.

In mid-December, subsequent to the close of this fiscal period, the Board of
Trustees of the Fund announced that it would increase the quarterly dividend by
5.6% to $0.375 per share, effective with the January 2007 distribution. This
dividend represents a distribution rate of 6.1% based upon the closing market
price of $24.49 on November 30, 2006.

Page 2

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PORTFOLIO COMMENTARY - CONTINUED
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The increased dividend is the result of a modification to the Fund's
distribution policy, which we believe better aligns it with the after-tax total
return investment objective of the Fund. The revised policy reflects our belief
that distributions from a taxable closed-end fund like FEN should reflect the
expected long-term after-tax total return potential of the portfolio. The
revised policy enables the Fund to generate distributions from both the MLP
distributions and the capital appreciation of portfolio securities. This
flexibility aligns well with our investment philosophy of managing the portfolio
with a focus on total return. We will continue to invest in securities that we
believe offer the best long-term total return potential.

We believe our total return focus continued to be the primary contributor to the
Fund's NAV performance. We strive to buy MLPs that we believe offer the highest
long-term after-tax returns. In many cases, that belief has led us to overweight
MLPs offering lower-than-average yields but higher-than-average expected
distribution growth rates. During the fiscal year, these higher growth MLPs
continued to significantly outperform their lower growth counterparts. On a
sector basis, the Fund was helped by its large position in the midstream energy
infrastructure MLPs and was hurt by the overweight in coal MLPs, which pulled
back in the period after a strong upward run in fiscal 2005.

The outlook for MLPs remains solid. Historically, a sustained increase in
commodity prices has been followed by a surge in drilling activity and spending
for energy infrastructure. When commodity prices rise, new regions of
undeveloped resources look more attractive, advanced technologies become more
economical and politicians create legislation to prompt the development of new
supply.

Even as crude oil and natural gas prices retreated from peak levels, they remain
high from an historical perspective and support the fundamental growth catalysts
outlined below. That said, the decline in commodity prices and sell off in
energy stocks may carry over to the valuations of MLPs, but we suspect that
rising equity markets and falling long-term interest rates will provide support
against a significant sell-off.

NEW SUPPLY REGIONS. With oil and natural gas prices remaining high, companies
expanded exploration and production spending. There was a surge in rig counts
throughout Texas, the mid-continent and Colorado. Spending for the development
of the Canadian oil sands also remains robust. Expanding supply requires more
pipelines and transportation capacity to get the oil and gas to market. This
demand directly benefited many of the MLPs in the midstream energy sector. We
believe that our portfolio of MLPs is well positioned to benefit from supply
growth.

TECHNOLOGY. Relatively high commodity prices make advanced technologies for
energy recovery more economical. Producers seek new and more cost-efficient ways
to retrieve high cost reserves and to increase recovery of existing resources.
In the coal industry, we are seeing increased application of new technologies
such as coal-to-gas and coal-to-liquids technologies which are more feasible at
higher commodity price levels. Our portfolio seeks to own MLPs benefiting from
increased applications of advanced technologies.

LEGISLATION. As gasoline prices at the pump rose sharply in the first half of
the fiscal year, legislation was enacted to prompt the development of new,
domestic supplies. Recently passed legislation requires the use of renewable
fuel sources, such as ethanol and biodiesel, to approximately double by 2012.
Several MLPs are already active in building infrastructure needed to handle the
increased inventory of these renewable fuel sources. We are interested in owning
MLPs positioned to benefit from legislative change.

We kept the Fund invested across the MLP market but maintained most of its
exposure in just a couple of sectors. As in the past, we perceived the best
opportunities for investment to be within the midstream energy infrastructure
and coal groups in which we were overweighted. We remained underweighted in the
propane and marine transport groups.

MIDSTREAM ENERGY INFRASTRUCTURE MLPS. The midstream energy sector remained the
Fund's largest allocation and was also the strongest contributor to positive
performance. A variety of factors came together to support the midstream MLPs
this period. Higher commodity prices enabled energy companies to spend more to
find and produce more resources. Expanding supply sources requires
infrastructure expansions. The resulting growth opportunities for MLPs are
substantial. Additionally, merger and acquisition levels remained above
long-term average levels. High price volatility in a variety of product lines
and wide natural gas price differentials between regional markets boosted profit
margins and provided benefits to many midstream MLPs. The result was growing
cash flow and higher distributions to unitholders. Higher distributions tend to
create more investor demand, which ultimately helps price performance. It is
important to note that while we're pleased with a high growth rate of
distributions, we don't think that distribution growth is sustainable at current
levels over the long term. The average annualized distribution growth rate was
approximately 12% over the fiscal period. We think a growth level of about 6% is
reasonable to expect over the long term.

COAL MLPS. The price of the portfolio's coal MLPs declined and detracted from
returns. While we were disappointed with the performance in this brief period,
we believe that the valuations of coal MLPs remain attractive. Fundamentally, we
believe the long-term coal demand outlook remains strong. Coal is an abundant
resource in the U.S. Oil and natural gas prices remain at elevated levels.
Therefore, we expect coal to remain the primary fuel source in the base-load
generation of electricity. Of course, coal MLPs are subject to price risk.
Should the prices of oil and natural gas decline substantially, spot

Page 3

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PORTFOLIO COMMENTARY - CONTINUED
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coal prices will most likely decrease and could impact the results of the coal
MLPs. We are encouraged by the growing global demand and domestic supply
constraints we've witnessed over the last several years. We are optimistic about
the prospects of an expanded market for coal-generated energy, aided by higher
commodity prices and advancements in coal-conversion technologies.

MARINE MLPS. The Fund's position in marine transportation modestly
underperformed the market, but did not impact performance significantly because
of its small allocation within the Fund. These MLPs facilitate the
transportation of energy products over water. They provide an alternative to
transporting energy through pipelines, which is not always feasible between some
geographic areas. Although the marine MLPs have generally met the expectations
of the market, investors have recently been drawn to MLPs producing results
above their expectations.

LEVERAGE

The purpose of leverage is to fund the purchase of additional securities that
provide increased income and potentially greater appreciation to common
shareholders than could be achieved from an unleveraged portfolio. Of course,
leverage results in greater NAV volatility and entails more downside risk than
an unleveraged portfolio.

From a capital appreciation standpoint, the Fund's use of leverage was
beneficial. It enabled the Fund to increase its participation in the growing MLP
market which performed well. Although the Fund appreciated in value more that it
could have without the leverage, the cost of the leverage rose in the fiscal
year. So, in terms of cash flow, the leverage had a negative impact during this
period, but in terms of overall capital appreciation, it helped. It is our
opinion that we are nearing the end of the Federal Reserve Board's short-term
interest rate tightening cycle. Over the next year, we expect short-term rates
to be flat or to trend down slightly, which would potentially enhance the
benefits from the Fund's leverage. The Fund maintains an interest rate cap
against 57.6% of the Fund's leverage, which limits the cost of that portion of
the leverage at 5.0% through May 3, 2010.

OUTLOOK

We remain bullish on the MLP market. In our opinion, MLPs continue to offer the
best combination of current yield and growth potential available in the
marketplace and outshine other types of income-oriented investments such as
fixed-income, utilities and real estate investment trusts.

Although we have an overall positive outlook for MLPs, the sector's prospects
are not without its challenges. The increased number of publicly-traded
partnerships has increased competition for the acquisition of assets which has
led to higher premiums paid. Additionally, the MLP market periodically struggles
to digest a large amount of new supply in the form of MLP initial public
offerings and secondary offerings from existing MLPs.

ENERGY INCOME AND GROWTH FUND
PORTFOLIO COMPONENTS*
NOVEMBER 30, 2006

[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
Oil & Gas Storage & Transportation 82.4%
Oil & Gas Refining & Marketing 6.0%
Coal & Consumable Fuels 10.1%
Integrated Oil & Gas 1.5%

* Percentages are based on total investments. Please note that the percentages
shown on the Portfolio of Investments are based on net assets.

Page 4

ENERGY INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 2006

MARKET
SHARES VALUE
---------- --------------

MASTER LIMITED PARTNERSHIPS - 153.4%

OIL, GAS & CONSUMABLE FUELS - 153.4%
76,540 Alliance Holdings GP, L.P....................... $ 1,422,113
278,290 Alliance Resource Partners, L.P................. 9,528,649
131,300 Atlas Pipeline Partners, L.P.................... 6,284,018
465,471 Clearwater Natural Resources, L.P. + (a)........ 8,145,742
293,201 Copano Energy, LLC.............................. 17,331,111
317,272 Crosstex Energy, L.P............................ 11,913,563
106,910 Crosstex Energy, L.P., Senior Subordinated
Series C Units (a)........................... 3,367,153
100,860 DCP Midstream Partners, L.P..................... 3,353,595
112,132 Enbridge Energy Management, LLC*................ 5,528,133
23,912 Enbridge Energy Partners, L.P................... 1,197,035
567,370 Energy Transfer Partners, L.P................... 30,978,402
591,138 Enterprise Product Partners, L.P................ 16,717,383
73,100 Hiland Partners, L.P............................ 3,854,563
250,000 Holly Energy Partners, L.P...................... 10,047,500
148,000 Inergy Holdings, L.P............................ 5,721,680
385,275 Inergy, L.P..................................... 11,407,993
360,521 Kinder Morgan Energy Partners, L.P.............. 17,481,663
42,660 Kinder Morgan Management, LLC*.................. 1,962,340
461,756 Magellan Midstream Partners, L.P................ 17,874,575
230,178 MarkWest Energy Partners, L.P................... 13,028,075
25,477 Martin Midstream Partners, L.P.................. 790,042
128,169 Natural Resource Partners, L.P.................. 6,728,873
564,516 Plains All American Pipeline, L.P............... 28,508,058
52,600 Regency Energy Partners, L.P.................... 1,416,518
14,000 Teekay LNG Partners, L.P........................ 441,980
90,605 U.S. Shipping Partners, L.P..................... 1,678,005
38,067 U.S. Shipping Partners, L.P. + (a).............. 644,013
90,647 U.S. Shipping Partners, L.P., Class B + (a)..... 1,436,019
186,726 Valero, L.P..................................... 10,247,523
178,600 Williams Partners, L.P.......................... 6,908,248
--------------
255,944,565
--------------
TOTAL MASTER LIMITED PARTNERSHIPS............... 255,944,565
(Cost $159,321,875) --------------

RIGHTS - 0.0%

OIL, GAS & CONSUMABLE FUELS - 0.0%
17 Clearwater Natural Resources, L.P. -
Rights **+ (a)............................... 0
--------------
TOTAL RIGHTS.................................... 0
(Cost $0) --------------

See Notes to Financial Statements. Page 5

ENERGY INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS - (CONTINUED)
NOVEMBER 30, 2006

MARKET
VALUE
--------------

TOTAL INVESTMENTS - 153.4%...................... $ 255,944,565
(Cost $159,321,875)***

NET OTHER ASSETS & LIABILITIES - (18.0%)........ (30,094,412)

ENERGY NOTES SERIES A PAYABLE - (20.4)%......... (34,000,000)

ENERGY NOTES SERIES B PAYABLE - (15.0)%......... (25,000,000)
--------------
NET ASSETS - 100.0%............................. $ 166,850,153
==============

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* Non-income producing security which pays regular in-kind
distributions.
** Non-income producing.
*** Aggregate cost for federal income tax purposes is $149,631,708.
+ Securities are restricted and cannot be offered for public sale
without first being registered under the Securities Act of 1933, as
amended. Market value is determined in accordance with procedures
adopted by the Board of Trustees (See Note 2C).
(a) Security is fair valued in accordance with procedures adopted by the
Fund's Board of Trustees.

Page 6 See Notes to Financial Statements.

ENERGY INCOME AND GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2006

ASSETS

Investments, at value
Cost ($159,321,875)...................................... $ 255,944,565
Cash........................................................ 2,366,105
Interest rate cap (Cost $378,013)........................... 355,218
Prepaid expenses............................................ 820,915
Receivables:
Investment securities sold............................... 618,580
Income taxes............................................. 439,207
Interest................................................. 8,462
Dividends................................................ 3,760
--------------
Total Assets.......................................... 260,556,812
--------------

LIABILITIES:
Series A Energy Notes payable............................... 34,000,000
Series B Energy Notes payable............................... 25,000,000
Deferred income tax liability............................... 33,873,855
Payables:
Income taxes............................................. 233,792
Investment advisory fees................................. 183,765
Audit and legal fees..................................... 148,598
Interest on Energy Notes................................. 161,906
Printing fees............................................ 46,610
Administrative fees...................................... 17,989
Accrued expenses............................................ 40,144
--------------
Total Liabilities..................................... 93,706,659
--------------
NET ASSETS.................................................. $ 166,850,153
==============

NET ASSETS CONSIST OF:
Undistributed net investment loss, net of income taxes...... $ (3,228,662)
Accumulated net realized loss on investments sold,
net of income taxes...................................... (1,961,476)
Net unrealized appreciation of investments and interest
rate cap, net of income taxes............................ 62,916,526
Par value................................................... 64,470
Paid-in capital............................................. 109,059,295
--------------
Total Net Assets............................................ $ 166,850,153
==============
NET ASSET VALUE, per Common Share
(par value $0.01 per Common Share)....................... $ 25.88
==============
Number of Common Shares outstanding
(unlimited number of Common Shares has been authorized).. 6,446,995

See Notes to Financial Statements. Page 7

ENERGY INCOME AND GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 2006

INVESTMENT INCOME:
Dividends................................................... $ 232,787
Interest.................................................... 54,576
--------------
Total investment income.................................. 287,363
--------------
EXPENSES:
Interest expense............................................ 2,570,103
Investment advisory fees.................................... 2,041,933
Administration fees......................................... 202,431
Audit and legal fees........................................ 134,164
Trustees' fees and expenses................................. 44,096
Printing fees............................................... 81,331
Transfer agent fees......................................... 35,297
Custodian fees.............................................. 22,411
Other....................................................... 378,244
--------------
Total expenses........................................... 5,510,010
--------------
Fees waived by investment advisor........................ (276,127)
--------------
Net expenses................................................ 5,233,883
--------------
NET INVESTMENT LOSS BEFORE TAXES ........................... (4,946,520)
Current federal income tax benefit..... 985,081
Current income tax expense - other..... (296,792)
Deferred federal income tax benefit.... 1,249,197
Deferred income tax expense - other ... (219,628)
--------------
Total income tax benefit................................. 1,717,858
--------------
Net investment loss......................................... (3,228,662)
--------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND INTEREST RATE CAP:
Net realized gain on investments during the year before taxes 1,031,420
--------------
Current federal income tax expense..... (545,874)
Deferred federal income tax benefit.... 184,506
Deferred income tax benefit - other.... 1,060
--------------
Total income tax expense................................. (360,308)
--------------
Net realized gain on investments during the year............ 671,112
Change in unrealized appreciation of:
Investments.............................................. 50,988,815
Interest rate cap transaction............................ (132,065)
--------------
Net unrealized gain on investments and interest rate cap
during the year before tax................................. 50,856,750
Deferred federal income tax expense.... (17,692,708)
Deferred income tax expense - other.... (121,247)
--------------
Total income tax expense................................. (17,813,955)
--------------
Net change in unrealized appreciation of investments
and interest rate cap during the year.................... 33,042,795
--------------
Net realized and unrealized gain on investments and
interest rate transaction................................ 33,713,907
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 30,485,245
==============

Page 8 See Notes to Financial Statements.

ENERGY INCOME AND GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS

YEAR YEAR
ENDED ENDED
11/30/2006 11/30/2005
------------ ------------

OPERATIONS:
Net investment loss..................................................... $ (3,228,662) $ (2,206,923)
Net realized gain on investments during the year........................ 671,112 5,671,909
Net change in unrealized appreciation of investments
and interest rate cap during the year................................ 33,042,795 12,686,390
Net increase from payment by the investment advisor and sub-advisor*.... -- 23,012
------------ ------------
Net increase in net assets resulting from operations.................... 30,485,245 16,174,388

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments........................................ -- (5,613,501)
Return of capital....................................................... (8,864,619) (2,915,894)
------------ ------------
Total distributions to shareholders..................................... (8,864,619) (8,529,395)
------------ ------------

CAPITAL TRANSACTIONS:
Proceeds from 26,352 Common Shares reinvested........................... -- 591,262
------------ ------------
Total capital transactions.............................................. -- 591,262
------------ ------------
Net increase in net assets.............................................. 21,620,626 8,236,255

NET ASSETS:
Beginning of year....................................................... 145,229,527 136,993,272
------------ ------------
End of year............................................................. $166,850,153 $145,229,527
============ ============
Undistributed net investment loss at end of year, net of income taxes... $ (3,228,662) $ --
============ ============

--------------------------------------------------
* See Note 3 in Notes to Financial Statements.

See Notes to Financial Statements. Page 9

ENERGY INCOME AND GROWTH FUND
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED NOVEMBER 30, 2006

CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations, after
income tax expense..................................................... $ 30,485,245
Adjustments to reconcile net increase in net assets resulting
from operations to net cash used by operating activities:
Changes in assets and liabilities:
Increase in investments, at value*................................... (62,772,467)
Decrease in interest rate cap**...................................... 242,444
Increase in dividends receivable..................................... (3,760)
Increase in interest receivable...................................... (3,447)
Increase in income tax receivable.................................... (439,207)
Increase in prepaid expenses......................................... (338,517)
Increase in receivable for investment securities sold................ (444,213)
Increase in interest payable on Energy Notes......................... 61,555
Decrease in income tax payable....................................... (299,062)
Increase in investment advisory fees payable......................... 71,555
Increase in audit and legal fees payable............................. 8,049
Increase in printing fees payable.................................... 19,003
Increase in administrative fees payable.............................. 3,028
Increase in accrued expenses......................................... 24,941
Increase in deferred income tax liability............................ 16,634,164
------------
CASH USED BY OPERATING ACTIVITIES......................................... $(16,750,689)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid..................................................... (8,864,619)
Issuance of Series B Energy Notes...................................... 25,000,000
------------
CASH PROVIDED BY FINANCING ACTIVITIES..................................... 16,135,381
------------
Decrease in cash ......................................................... (615,308)
Cash at beginning of year................................................. 2,981,413
------------
Cash at end of year....................................................... $ 2,366,105
============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest.................................... $ 2,508,548

--------------------------------------------------------------------------------
* Includes net change in unrealized appreciation on investments of
$50,988,815.
** Includes net change in unrealized appreciation on interest rate cap
of $(132,065).

Page 10 See Notes to Financial Statements.

ENERGY INCOME AND GROWTH FUND
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD

YEAR YEAR PERIOD
ENDED ENDED ENDED
11/30/2006 11/30/2005 11/30/2004*
------------ ------------ -------------

Net asset value, beginning of period..................... $ 22.53 $ 21.34 $ 19.10 (h)
------------ ------------ -------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss...................................... (0.50) (0.34) (0.13)
Net realized and unrealized gain/(loss) on
investments and interest rate cap..................... 5.23 2.86 2.74
------------ ------------ -------------
Total from investment operations after income tax........ 4.73 2.52 2.61
------------ ------------ -------------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net realized gain on investments......................... -- (0.88) --
Return of capital........................................ (1.38) (0.45) (0.33)
------------ ------------ -------------
Total from distributions................................. (1.38) (1.33) (0.33)
------------ ------------ -------------
Common Shares offering costs charged to paid-in capital.. -- -- (0.04)
------------ ------------ -------------
Net asset value, end of period........................... $ 25.88 $ 22.53 $ 21.34
============ ============ =============
Market value, end of period.............................. $ 24.49 $ 20.92 $ 22.12
============ ============ =============
TOTAL RETURN BASED ON NET ASSET VALUE (A)+............... 22.23% 11.96%(f) 13.53%
============ ============ =============
TOTAL RETURN BASED ON MARKET VALUE (B)+.................. 24.57% 0.29% 12.38%
============ ============ =============
Net assets, end of period (in 000's)..................... $ 166,850 $ 145,230 $ 136,993

RATIOS OF EXPENSES TO AVERAGE NET ASSETS:
Net expense ratio excluding interest expense............ 1.76% 1.57% 1.36%**
Total expense ratio..................................... 3.63% 2.64% 2.20%**
Net expense ratio....................................... 3.45% 2.33% 1.91%**
Net expense ratio including tax expenses (g)............ 14.29% 8.31% 18.09%**

RATIOS OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS:
Net investment loss ratio before tax expenses........... (3.26)% (2.29)% (1.49)%**
Net investment loss ratio including tax expenses (g).... (14.10)% (8.27)% (17.67)%**
Portfolio turnover rate................................. 17% 38% 35%

DEBT:
Total Energy Notes outstanding ($25,000 per note)........ 2,360 1,360 N/A
Principal amount and market value per Energy Note (d).... $ 25,069 $ 25,074 N/A
Asset coverage per Energy Note (e)....................... $ 95,699 $ 131,786 N/A
Total loan outstanding (in 000's)........................ N/A N/A $ 30,000
Asset coverage per $1,000 senior indebtedness (c)........ N/A N/A $ 5,566

--------------------------------------------------
* The Fund commenced operations on June 17, 2004.
** Annualized.
(a) Total return based on net asset value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan, 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 distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan, and changes in Common
Share price per share, all based on Common Share market price per share.
(c) Calculated by subtracting the Fund's total liabilities (not including the
loan outstanding) from the Fund's total assets, and dividing by the
outstanding 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 by the outstanding
Energy Notes.
(f) In 2005, the Fund received reimbursements from the investment advisor and
sub-advisor. This reimbursement had no effect on the Fund's total returns.
(g) Includes tax expenses associated with each component of the Statement of
Operations.
(h) Net of sales load of $0.90 per Common Share on initial offering.
+ Total return is not annualized for periods less than one year.
N/A Not applicable.

See Notes to Financial Statements. Page 11

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
NOVEMBER 30, 2006

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 Fiduciary Asset Management, LLC (the
"Sub-Advisor") believes offer opportunities for income and growth. Due to the
tax treatment of cash distributions made by MLPs to their investors, a portion
of the distributions received may 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.

A. PORTFOLIO VALUATION:

The Fund determines 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 accrued interest and dividends), less all Fund liabilities (including
accrued expenses, dividends payable, current and deferred income taxes and any
borrowings of the Fund) 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 less than 60 days are valued at amortized
cost.

B. 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 to the extent of the cost basis of
such MLP investments. Cumulative distributions received in excess of the Fund's
cost basis in an MLP generally are recorded as dividend income.

Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income on such securities
is not accrued until settlement date. The Fund maintains liquid assets with a
current value at least equal to the amount of its when-issued or
delayed-delivery purchase commitments.

Page 12

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
NOVEMBER 30, 2006

C. RESTRICTED SECURITIES:

The Fund may invest up to 35% of its Managed Assets, which is the average daily
gross asset value of the Fund minus accrued liabilities (excluding the principal
amount of any borrowings), in restricted securities. Restricted securities are
securities that cannot be offered for public sale without first being registered
under the Securities Act of 1933, as amended. The Fund currently holds the
restricted securities shown in the following table. The Fund does not have the
right to demand that such securities be registered. Restricted securities are
valued at fair value in accordance with procedures adopted by the Fund's Board
of Trustees.

CARRYING CARRYING
VALUE PER COST PER SHARE 11/30/06
SHARE AT ACQUISITION MARKET
ACQUISITION 11/30/06 DATE VALUE % OF
SECURITY DATE SHARES (RESTRICTED) (RESTRICTED) (RESTRICTED) NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------

Clearwater Natural
Resources, L.P. 08/01/05 465,471 $17.50 $20.00 $ 8,145,742 4.88%

Clearwater Natural
Resources, L.P. - Rights 08/01/05 17 $ 0.00 $ 0.00 $ 0 0.00%

U.S. Shipping Partners, L.P. 08/07/06 38,067 $16.92 $18.34 $ 644,013 0.39%
U.S. Shipping Partners, L.P.,
Class B 08/07/06 90,647 $15.84 $17.12 $ 1,436,019 0.86%
------- ----------- ----
594,202 $10,225,774 6.13%
======= =========== ====

D. 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 the 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 the Common Shares
will be taxed as a capital gain.

Distributions of $8,864,619 paid during the year ended November 30, 2006, 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.

E. INCOME TAXES:

The Fund is 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 Fund's tax expense or benefit
is included in the Statement of Operations based on the component of income or
gains/(losses) to which such expense or benefit relates. 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 various investments of the Fund may cause the Fund to be subject to
state income taxes on a portion of its income at various rates.

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.

Page 13

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.

For the year ended November 30, 2006, distributions of $13,970,939 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 income taxes............. $ (439,207)
Current other taxes...................... 296,792
Deferred federal income taxes............ 16,259,005
Deferred other income taxes.............. 339,815
-------------
Total income tax expense................. $ 16,456,405
=============

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. At November 30, 2006, the Fund
had a net operating loss for federal and state income tax purposes of $9,122,635
and $1,617,320, respectively. The Fund's 2006 income tax provision includes a
full valuation allowance against the deferred tax assets associated with this
net operating loss. Components of the Fund's deferred tax assets and liabilities
as of November 30, 2006 are as follows:

DEFERRED TAX ASSETS:
Federal net operating loss................ $ 3,319,896
State net operating loss.................. 80,866
State income taxes........................ 209,285
Other..................................... 44,546
-------------
Total deferred tax assets................. 3,654,593
Less: valuation allowance................. (80,866)
-------------
Net deferred tax assets................... $ 3,573,727
=============

DEFERRED TAX LIABILITIES:
Unrealized gains on investment securities. $ 37,447,582
-------------
Total deferred tax liabilities............ 37,447,582
-------------
Total net deferred tax liabilities........ $ 33,873,855
=============

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.. $ 16,429,578
State income taxes, net................... 110,640
Change in valuation allowance............. 58,308
Other..................................... (142,121)
-------------
Total..................................... $ 16,456,405
=============

F. EXPENSES:

The Fund will pay all expenses directly related to its operations.

G. 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 a "Change in unrealized appreciation of interest rate cap
transaction" on the Statement of Operations. The initial cost of the
transaction, $552,500, was capitalized and is being amortized to expense on a
straight line basis over the term of the transaction.

Page 14

H. NEW ACCOUNTING PRONOUNCEMENTS:

In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes."
This pronouncement provides guidance on the recognition, measurement,
classification, and disclosures related to uncertain tax positions, along with
any related interest and penalties. FIN 48 is effective for fiscal years
beginning after December 15, 2006. Management is evaluating the implications of
FIN 48 and its impact on the financial statements which has not yet been
determined.

In addition, in September 2006, Statement of Financial Accounting Standards No.
157 Fair Value Measurements ("SFAS 157") was issued by the FASB and is effective
for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.

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.

During the year ended November 30, 2005, the Fund's investment advisor and
sub-advisor reimbursed the Fund for $35,403 in connection with an affiliated
transaction.

Fiduciary Asset Management, LLC serves as the Fund's Sub-Advisor
and manages the Fund's portfolio subject to First Trust's supervision. The
Sub-Advisor receives an annual portfolio management fee of 0.50% of Managed
Assets that is paid monthly by First Trust.

First Trust waived fees and reimbursed the Fund for expenses in an amount equal
to 0.25% of the average daily Managed Assets of the Fund through June 24, 2006.
The Sub-Advisor has agreed to bear a portion of this fee waiver and expense
reimbursement obligation by reducing the amount of its full sub-advisory fee to
0.382% of the average daily Managed Assets. Waivers and reimbursements are
reported as "Fees waived by investment advisor" on the Statement of Operations.

PFPC Inc., 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, also 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 ("Disinterested Trustees") an annual retainer of $10,000,
which includes compensation for all board and committee meetings. 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 year ended November 30, 2006, were $61,955,320
and $37,431,516, respectively.

As of November 30, 2006, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $107,010,800
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $697,943.

Page 15

5. COMMON SHARES

As of November 30, 2006, 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:

YEAR ENDED YEAR ENDED
NOVEMBER 30, 2006 NOVEMBER 30, 2005
----------------- -----------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Issued as reinvestment of dividends
under the Dividend Reinvestment Plan -- $ -- 26,352 $591,262
------- ------ ------ --------
-- $ -- 26,352 $591,262
======= ====== ====== ========

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
November 30, 2006, the Fund has 1,360 Series A Energy Notes, and 1,000 Series B
Energy Notes outstanding at a principal value of $25,000 per note. The principal
amounts of the Series A and Series B Energy Notes will be due and payable on
March 2, 2045 and March 30, 2046, respectively. The Series A and Series B Energy
Notes offering costs of $158,761 and $99,326 and commissions of $340,000 and
$250,000, respectively, were capitalized and are being amortized to expense on a
straight line basis over the term of each of the Series A and Series B Energy
Notes.

An auction of the Series A Energy Notes is generally held every 28 days. An
Auction of the Series B Energy Notes is generally held every 7 days. The Series
A and Series B Energy Notes will pay interest at annual rates 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 Series A Energy Notes annual interest rate in effect as of November 30, 2006
was 5.243%. The interest rate, as set by the auction process, is generally
expected to vary with short-term interest rates. The high and low annual
interest rates during the year ended November 30, 2006, were 5.284% and 4.014%,
respectively, and the average interest rate was 4.883%.

The Series B Energy Notes annual interest rate in effect as of November 30, 2006
was 5.274%. The interest rate, as set by the auction process, is generally
expected to vary with short-term interest rates. The high and low annual
interest rates from March 23, 2006 (issuance date) through November 30, 2006,
were 5.344% and 4.739%, respectively, and the average interest rate was 5.149%.

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 year ended November 30,
2006, the average amount outstanding was $4,031,646 with a weighted average
interest rate of 5.694%. This credit agreement has no maturity date and can be
paid or called at any time. As of November 30, 2006, the Fund had no outstanding
borrowings under this credit agreement.

8. CONCENTRATION OF CREDIT RISKS

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.

Page 16

9. SUBSEQUENT EVENTS

On December 18, 2006, the Fund declared a dividend of $0.375 per share, which
represents a dividend from net investment income to Common Shareholders of
record January 18, 2007, payable January 31, 2007.

The Board of Trustees of the Fund adopted a compensation policy pursuant to
which, effective January 1, 2007, the Independent Trustees shall be paid an
annual retainer of $10,000 by each investment company of the First Trust Fund
Complex up to a total of 14 investment companies (the "Trustees Compensation I")
and an annual retainer of $7,500 by each subsequent investment company added to
the First Trust Fund Complex (the "Trustees Compensation II" and together with
Trustees Compensation I, the "Aggregate Trustee Compensation"). The Aggregate
Trustee Compensation shall be divided equally among each of the investment
companies in the First Trust Fund Complex. No additional meeting fees are paid
in connection with regular board or committee meetings. The Trustees shall also
be paid $1,000 for each meeting held in connection with the organization of a
new investment company for the First Trust Fund Complex. These additional fees
are paid by First Trust. Trustees are also reimbursed for travel and
out-of-pocket expenses in connection with all meetings.

Additionally, Thomas R. Kadlec is paid annual compensation of $10,000 to serve
as the Lead Trustee and Niel B. Nielson is paid annual compensation of $5,000 to
serve as the chairman of the Audit Committee of each of the investment companies
in the First Trust Fund Complex. Such additional compensation to Messrs. Kadlec
and Nielson are paid by the investment companies in the First Trust Fund Complex
and the fees are divided equally among those investment companies.

Page 17

--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF ENERGY INCOME AND GROWTH FUND:

We have audited the accompanying statement of assets and liabilities of Energy
Income and Growth Fund (the "Fund"), including the portfolio of investments, as
of November 30, 2006, the related statements of operations and cash flows for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of November 30, 2006, by correspondence with the Fund's
custodian. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of November 30, 2006, the results of its operations and its cash flows,
the changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with accounting principles generally accepted in
the United States of America.

/S/ DELOITTE & TOUCHE LLP
Chicago, Illinois
January 24, 2007

Page 18

ADDITIONAL INFORMATION

ENERGY INCOME AND GROWTH FUND
NOVEMBER 30, 2006 (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, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by PFPC
Inc. (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 Inc., 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 Common Shares are trading at or above net asset value ("NAV") at
the time of valuation, the Fund will issue new shares at a price
equal to the greater of (i) NAV per Common Share on that date or
(ii) 95% of the market price on that date.

(2) If Common Shares are trading below NAV at the time of valuation,
the Plan Agent will receive the dividend or distribution in cash
and will purchase Common Shares in the open market, on the 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 elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (800) 331-1710, 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 Common 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.
Consult your financial advisor for more information.

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.

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 at http://www.sec.gov.

Page 19

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION - (CONTINUED)
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
NOVEMBER 30, 2006 (UNAUDITED)

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.

BY-LAW AMENDMENTS

On December 12, 2005, June 12, 2006 and December 11, 2006, the Board
of Trustees of the Fund approved certain changes to the By-Laws of the Fund
which may have the effect of delaying or preventing a change in control of the
Fund, including the implementation of a staggered Board of Trustees. These
changes were not required to be, and were not approved by the Fund's
shareholders. To receive a copy of the revised By-Laws, investors may call the
Fund at (800) 988-5891.

SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

The Joint Annual Meeting of Shareholders of First Trust Strategic High Income
Fund, Energy Income and Growth Fund, First Trust Value Line 100(R) Fund, First
Trust/Fiduciary Asset Management Covered Call Fund, First Trust/Aberdeen Global
Opportunity Income Fund and First Trust/FIDAC Mortgage Income Fund was held on
April 17, 2006. At the Annual Meeting, the Fund's Board of Trustees, then
consisting of James A. Bowen, Niel B. Nielson, Thomas R. Kadlec and Richard E.
Erickson, were elected to serve an additional one-year term. The number of votes
cast for James A. Bowen was 6,042,567, the number of votes withheld was 68,435
and the number of abstentions was 335,993. The number of votes cast for Niel B.
Nielson was 6,040,846, the number of votes withheld was 70,156 and the number of
abstentions was 335,993. The number of votes cast for Thomas R. Kadlec was
6,041,157, the number of votes withheld was 69,845 and the number of abstentions
was 335,993. The number of votes cast for Richard E. Erickson was 6,042,453, the
number of votes withheld was 68,549 and the number of abstentions was 335,993.

Page 20

--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS (UNAUDITED)
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
NOVEMBER 30, 2006

Information pertaining to the Trustees and officers* of the Fund as of December
10, 2006 is set forth below.

NUMBER OF OTHER
PORTFOLIOS TRUSTEESHIPS/
NAME, D.O.B., ADDRESS AND TERM OF OFFICE AND PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
POSITION(S) WITH THE FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
DISINTERESTED TRUSTEES

Richard E. Erickson, Trustee o One year term Physician; 34 portfolios None
D.O.B. 04/51 o 3 years served President, Wheaton
c/o First Trust Advisors L.P. Orthopedics;
1001 Warrenville Road Co-owner and
Suite 300 Co-Director, Sports
Lisle, IL 60532 Med Center for
Fitness; Limited
Partner, Gundersen
Real Estate
Partnership

Thomas R. Kadlec, Trustee o One year term Vice President and 34 portfolios None
D.O.B. 11/57 o 3 years served Chief Financial
c/o First Trust Advisors L.P. Officer (1990 to
1001 Warrenville Road present); ADM
Suite 300 Investor Services,
Lisle, IL 60532 Inc. (Futures
Commission
Merchant);
Registered
Representative (2000
to present),
Segerdahl & Company,
Inc., an NASD member
(Broker-Dealer)
President, ADM
Derivatives, Inc.
(May 2005 to present)

Robert F. Keith, Trustee o One year term President, Hibs 22 portfolios None
D.O.B. 11/56 o 6 months served Enterprises
c/o First Trust Advisors L.P. (Financial and
1001 Warrenville Road Management
Suite 300 Consulting) (2003 to
Lisle, IL 60532 present); Aramark
Service Master
Management (2001 to
2003); President and
Chief Operating
Officer, Service
Master Management
Services (1998 to
2003)

Page 21

--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS (UNAUDITED) - (CONTINUED)
--------------------------------------------------------------------------------
ENERGY INCOME AND GROWTH FUND
NOVEMBER 30, 2006

Niel B. Nielson, Trustee o One year term President, Covenant 34 portfolios Director of Good
D.O.B. 03/54 o 3 years served College (June 2002 News
c/o First Trust Advisors L.P. to present); Pastor, Publishers-Crossway
1001 Warrenville Road College Church in Books; Covenant
Suite 300 Wheaton (1997 to Transport, Inc.
Lisle, IL 60532 June 2002)

INTERESTED TRUSTEE

James A. Bowen, Trustee o One year Trustee President, First 34 portfolios Trustee of Wheaton
President, Chairman of the term and indefinite Trust Advisors L.P. College
Board and CEO officer term and First Trust
D.O.B. 09/55 o 3 years served Portfolios L.P;
1001 Warrenville Road Chairman of the
Suite 300 Board, BondWave LLC
Lisle, IL 60532 and Stonebridge
Advisors LLC

OFFICERS WHO ARE NOT TRUSTEES
Mark R. Bradley, Treasurer, o Indefinite term Chief Financial N/A N/A
Controller, Chief Financial o 3 years served Officer, Managing
Officer, Chief Accounting Director, First
Officer Trust Advisors L.P.
D.O.B. 11/57 and First Trust
1001 Warrenville Road Portfolios L.P.;
Suite 300 Chief Financial
Lisle, IL 60532 Officer, BondWave
LLC and Stonebridge
Advisors LLC

Kelley Christensen o Indefinite term Assistant Vice N/A N/A
Vice President o Since December President of First
D.O.B. 09/70 10, 2006 Trust Portfolios
1001 Warrenville Road L.P. and First Trust
Suite 300 Advisors L.P.
Lisle, IL 60532

James M. Dykas o Indefinite term Vice President, N/A N/A
Assistant Treasurer o 1 year served First Trust Advisors
D.O.B. 01/66 L.P. and First Trust
1001 Warrenville Road Portfolios L.P.
Suite 300 (January 2005 to
Lisle, IL 60532 present); Executive
Director, Van Kampen
Asset Management and
Morgan Stanley
Investment
Management
(1999-2005)

Page 22

Christopher R. Fallow o Indefinite term Assistant Vice N/A N/A
Assistant Vice President o Since December President of First
D.O.B. 04/79 10, 2006 Trust Portfolios
1001 Warrenville Road L.P. and First Trust
Suite 300 Advisors L.P.
Lisle, IL 60532

W. Scott Jardine, o Indefinite term General Counsel, N/A N/A
Secretary and Chief o 3 years served First Trust Advisors
Compliance Officer L.P. and First Trust
D.O.B. 05/60 1001 Portfolios L.P.;
Warrenville Road Secretary, BondWave
Suite 300 Lisle, IL LLC and Stonebridge
60532 Advisors LLC

Daniel J. Lindquist o Indefinite term Senior Vice N/A N/A
Vice President o 1 year served President, First
D.O.B. 02/70 Trust Advisors L.P.
1001 Warrenville Road and First Trust
Suite 300 Portfolios L.P.
Lisle, IL 60532 (April 2004 to
present); Chief
Operating Officer,
Mina Capital
Management, LLC
(January 2004-April
2004); Chief
Operating Officer,
Samaritan Asset
Management Services,
Inc. (April
2000-January 2004)

Kristi A. Maher o Indefinite term Assistant General N/A N/A
Assistant Secretary o 3 years served Counsel, First Trust
D.O.B. 12/66 Advisors L.P. and
1001 Warrenville Road First Trust
Suite 300 Portfolios L.P.
Lisle, IL 60532 (March 2004 to
present); Associate,
Chapman and Cutler
LLP (1995-2004)

--------------------------------
* The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.

Page 23

This Page Left Blank Intentionally.

ITEM 2. CODE OF ETHICS.

(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.

(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics definition enumerated in paragraph (b) of this
item's instructions.

(d) The registrant has not, during the period covered by this report,
granted any waivers, including an implicit waiver, from a provision of
the code of ethics that applies to the registrant's principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third
party, that relates to one or more of the items set forth in paragraph
(b) of this item's instructions.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

As of the end of the period covered by the report, the Registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each of them is "independent," as defined by Item 3 of Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a) AUDIT FEES (REGISTRANT) -- The aggregate fees billed for each of
the last two fiscal years for professional services rendered by the principal
accountant for the audit of the Registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements were $54,340 for 2005 and
$54,750 for 2006.

(b) AUDIT-RELATED FEES (REGISTRANT) -- The aggregate fees billed in
each of the last two fiscal years, for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the Registrant's financial statements and are not reported under paragraph
(a) of this Item were $0.

AUDIT-RELATED FEES (INVESTMENT ADVISER) -- The aggregate fees
billed in each of the last two fiscal years of the Registrant for assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit of the Registrant's financial statements and are not
reported under paragraph (a) of this Item were $0.

(c) TAX FEES (REGISTRANT) -- The aggregate fees billed in each of the
last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning to the Registrant
were $50,000 in 2005 and $11,000 in 2006. These fees were for tax consultation
and tax preparation.

TAX FEES (INVESTMENT ADVISER) -- The aggregate fees billed in
each of the last two fiscal years of the Registrant for professional services
rendered by the principal accountant for tax compliance, tax advice, and tax
planning to the Registrant's adviser were $6,000 for 2005 and $0 for 2006.

(d) ALL OTHER FEES (REGISTRANT) -- The aggregate fees billed in each of
the last two fiscal years for products and services provided by the principal
accountant to the Registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $3,264 for 2005 and $451 for 2006. These fees were
for compliance consulting services.

ALL OTHER FEES (INVESTMENT ADVISER) -- The aggregate fees billed
in each of the last two fiscal years for products and services provided by the
principal accountant to the Registrant's investment adviser, other than services
reported in paragraphs (a) through (c) of this Item were $ 124,069 for 2005 and
$15,808 for 2006. These fees were for Canadian tax consultation, compliance
consulting and AIMR-PPS Verification Services.

(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

Pursuant to its charter and its Audit and Non-Audit Services
Pre-Approval Policy, both amended as of December 10, 2006, the Audit Committee
(the "COMMITTEE") is responsible for the pre-approval of all audit services and
permitted non-audit services (including the fees and terms thereof) to be
performed for the Registrant by its independent auditors. The Chairman of the
Committee authorized to give such pre-approvals on behalf of the Committee up to
$25,000 and report any such pre-approval to the full Committee.

The Committee is also responsible for the pre-approval of the
independent auditor's engagements for non-audit services with the Registrant's
adviser (not including a sub-adviser whose role is primarily portfolio
management and is sub-contracted or overseen by another investment adviser) and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the Registrant, if the
engagement relates directly to the operations and financial reporting of the
Registrant, subject to the DE MINIMIS exceptions for non-audit services
described in Rule 2-01 of Regulation S-X. If the independent auditor has
provided non-audit services to the Registrant's adviser (other than any
sub-adviser whose role is primarily portfolio management and is sub-contracted
with or overseen by another investment adviser) and any entity controlling,
controlled by or under common control with the investment adviser that provides
ongoing services to the Registrant that were not pre-approved pursuant to its
pre-approval policies, the Committee will consider whether the provision of such
non-audit services is compatible with the auditor's independence.

(e)(2) The percentage of services described in each of paragraphs (b) through
(d) for the Registrant and the Registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the
pre-approval exceptions included in paragraph (c)(7)(i)(c) or paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X are as follows:

(b) 0%

(d) 0%

(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than fifty percent.

(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the Registrant for 2005 were $53,264 and $130,069 for the Registrant
and the Registrant's investment adviser, respectively and for 2006 were
$11,451 and $46,983 for the Registrant and the Registrant's investment
adviser, respectively.

(h) On December 10, 2006, the Registrant's audit committee of its Board of
Trustees determined that the provision of non-audit services that were
rendered to the Registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the Registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

(a) The Registrant has a separately designated audit committee consisting of
all the independent trustees of the Registrant. The members of the audit
committee are: Thomas R. Kadlec, Niel B. Nielson, Richard E. Erickson and
Robert F. Keith.

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.

The Proxy Voting Policies are attached herewith.

FAM INVESTMENT ADVISER

POLICIES AND PROCEDURES MANUAL

PROXY VOTING

POLICY

FAM, as a matter of policy and as a fiduciary to our clients, has
responsibility for voting proxies for portfolio securities consistent
with the best economic interests of the clients. Our firm maintains
written policies and procedures as to the handling, research, voting
and reporting of proxy voting and makes appropriate disclosures about
our firm's proxy policies and practices. Our policy and practice
includes the responsibility to monitor corporate actions, receive and
vote client proxies and disclose any potential conflicts of interest as
well as making information available to clients about the voting of
proxies for their portfolio securities and maintaining relevant and
required records.

BACKGROUND

Proxy voting is an important right of shareholders and reasonable care
and diligence must be undertaken to ensure that such rights are
properly and timely exercised. Investment advisers registered with the
SEC, and which exercise voting authority with respect to client
securities, are required by Rule 206(4)-6 of the Advisers Act to (a)
adopt and implement written policies and procedures that are reasonably
designed to ensure that client securities are voted in the best
interests of clients, which must include how an adviser addresses
material conflicts that may arise between an adviser's interests and
those of its clients; (b) to disclose to clients how they may obtain
information from the adviser with respect to the voting of proxies for
their securities; (c) to describe to clients a summary of its proxy
voting policies and procedures and, upon request, furnish a copy to its
clients; and (d) maintain certain records relating to the adviser's
proxy voting activities when the adviser does have proxy voting
authority.

RESPONSIBILITY

FAM's Vice President, Client Administration has the responsibility for
the implementation and monitoring of our proxy voting policy,
practices, disclosures and record keeping, including outlining our
voting guidelines in our procedures.

PROCEDURE

FAM has adopted procedures to implement the firm's policy and reviews
to monitor and insure the firm's policy is observed, implemented
properly and amended or updated, as appropriate, which include the
following:

It is the policy of FAM to vote all proxies over which it has voting
authority in the best interest of FAM's clients.

By "best interest of FAM's clients," FAM means clients' best economic
interest over the long term -- that is, the common interest that all
clients share in seeing the value of a common investment increase over
time. Clients may have differing political or social interests, but
their best economic interest is generally uniform.

By "material conflict of interest," FAM means circumstances when FAM
itself knowingly does business with a particular proxy issuer or
closely affiliated entity, and may appear to

have a significant conflict of interest between its own interests and
the interests of clients in how proxies of that issuer are voted.

FAM INVESTS WITH MANAGEMENT TEAMS THAT SEEK SHAREHOLDERS' BEST INTERESTS

Under its investment philosophy, FAM generally invests client funds in
a company only if FAM believes that the company's management seeks to
serve shareholders' best interests. Because FAM has confidence in the
managements of the companies in which it invests, it believes that
management decisions and recommendations on issues such as proxy voting
GENERALLY are likely to be in shareholders' best interests.

FAM may periodically reassess its view of company managements. If FAM
concludes that a company's management no longer serves shareholders'
best interests, FAM generally sells its clients' shares of the company.
FAM believes that clients do not usually benefit from holding shares of
a poorly managed company or engaging in proxy contests with management.

FAM'S PROXY VOTING PROCEDURES

When companies in which FAM has invested client funds issue proxies,
FAM routinely votes the proxies as recommended by management, because
it believes that recommendations by these companies' managements
generally are in shareholders' best interests, and therefore in the
best economic interest of FAM's clients.

If FAM has decided to sell the shares of a company, whether because of
concerns about the company's management or for other reasons, FAM
generally abstains from voting proxies issued by the company after FAM
has made the decision to sell. FAM generally will not notify clients
when this type of routine abstention occurs.

FAM also may abstain from voting proxies in other circumstances. FAM
may determine, for example, that abstaining from voting is appropriate
if voting may be unduly burdensome or expensive, or otherwise not in
the best economic interest of clients, such as when foreign proxy
issuers impose unreasonable voting or holding requirements. FAM
generally will not notify clients when this type of routine abstention
occurs.

The procedures in this policy apply to all proxy voting matters over
which FAM has voting authority, including changes in corporate
governance structures, the adoption or amendment of compensation plans
(including stock options), and matters involving social issues or
corporate responsibility.

ALTERNATIVE PROCEDURES FOR POTENTIAL MATERIAL CONFLICTS OF INTEREST

In certain circumstances, such as when the proponent of a proxy
proposal is also a client of FAM, an appearance might arise of a
potential conflict between FAM's interests and the interests of
affected clients in how the proxies of that issuer are voted.

Because FAM does not exercise discretion in voting proxies, but
routinely votes proxies as recommended by management, no potential
conflict of interest could actually affect FAM's voting of the proxies.

Nevertheless, when FAM itself knowingly does business with a particular
proxy issuer and a material conflict of interest between FAM's
interests and clients' interests may appear to exist, FAM generally
would, to avoid any appearance concerns, follow an alternative

procedure rather than vote proxies as recommended by management. Such
an alternative procedure generally would involve causing the proxies to
be voted in accordance with the recommendations of an independent
service provider that FAM may use to assist in voting proxies.

FAM generally will not notify clients if it uses this procedure to
resolve an apparent material conflict of interest. FAM will document
the identification of any material conflict of interest and its
procedure for resolving the particular conflict.

In unusual cases, FAM may use other alternative procedures to address
circumstances when a material conflict of interest may appear to exist,
such as, without limitation:

(i) Notifying affected clients of the conflict of interest (if
practical), and seeking a waiver of the conflict to permit FAM to vote
the proxies under its usual policy;

(ii) Abstaining from voting the proxies; or

(iii) Forwarding the proxies to clients so that clients may vote the
proxies themselves.

FAM generally will notify clients if it uses one of these alternative
procedures to resolve a material conflict of interest.

VOTING BY CLIENT INSTEAD OF FAM

A FAM client may vote its own proxies instead of directing FAM to do
so. FAM recommends this approach if a client believes that proxies
should be voted based on political or social interests.

FAM generally will not accept proxy voting authority from a client (and
will encourage the client to vote its own proxies) if the client seeks
to impose client-specific voting guidelines that may be inconsistent
with FAM's guidelines or with the client's best economic interest in
FAM's view.

FAM generally will abstain from voting on (or otherwise participating
in) the commencement of legal proceedings such as shareholder class
actions or bankruptcy proceedings.

RESPONSIBILITY

FAM's client services staff has primary responsibility for implementing
FAM's proxy voting procedures, including ensuring that proxies are
timely submitted. FAM also may use a service provider to assist in
voting proxies, recordkeeping, and other matters.

FAM's security analysts routinely review proxy proposals as part of
their ongoing reassessment of companies and their managements.

RECORDKEEPING

FAM or a service provider maintains, in accordance with Rule 204-2 of
the Investment Advisers Act:

(i) Copies of all proxy voting policies and procedures;

(ii) Copies of proxy statements received (unless maintained elsewhere
as described below);

(iii) Records of proxy votes cast on behalf of clients;

(iv) Documents prepared by FAM that are material to a decision on how
to vote or memorializing the basis for a decision;

(v) Written client requests for proxy voting information, and (vi)
written responses by FAM to written or oral client requests.

FAM will obtain an undertaking from any service provider that the
service provider will provide copies of proxy voting records and other
documents promptly upon request if FAM relies on the service provider
to maintain related records.

FAM or its service provider may rely on the SEC's EDGAR system to keep
records of certain proxy statements if the proxy statements are
maintained by issuers on that system (as is generally true in the case
of larger U.S.-based issuers).

All proxy related records will be maintained in an easily accessible
place for five years (and an appropriate office of FAM or a service
provider for the first two years).

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

(A)(1) IDENTIFICATION OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS AND
DESCRIPTION OF ROLE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM MEMBERS

James J. Cunnane, Jr., Managing Director and Senior Portfolio Manager
for Fiduciary Asset Management, LLC, the sub-advisor to the Registrant
("Fiduciary"), serves as the primary portfolio manager for the Registrant (the
"Fund").

LENGTH OF
NAME TITLE SERVICE BUSINESS EXPERIENCE PAST 5 YEARS
----- ----- ------- --------------------------------
James J. Cunnane, Jr. Managing Director and 10 years Mr. Cunnane manages institutional and private
Senior Portfolio client equity portfolios and has an industry
Manager of Fiduciary leading role as portfolio manager of Fiduciary's
Master Limited Partnership (MLP) assets. He is
actively involved with the Strategy Committee's
macroeconomic assessment and top-down approach
to portfolio management.

(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER AND POTENTIAL CONFLICTS OF
INTEREST

OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGER AS OF NOVEMBER 30, 2006

---------------------------------------------------------------------------------------------------------------------
NAME OF PORTFOLIO TOTAL # OF # OF ACCOUNTS MANAGED TOTAL ASSETS FOR WHICH
MANAGER OR TEAM ACCOUNTS FOR WHICH ADVISORY FEE ADVISORY FEE IS BASED
MEMBER TYPE OF ACCOUNTS* MANAGED TOTAL ASSETS IS BASED ON PERFORMANCE ON PERFORMANCE
------ ----------------- ------- ------------ ----------------------- ------------

James J. Cunnane, Registered 1 $624,518,838 0 $0
Jr. Investment
Companies:
---------------------------------------------------------------------------------------------------------------------
Other Pooled 0 $0 0 $0
Investment
Vehicles:
---------------------------------------------------------------------------------------------------------------------
Other Accounts: 78 $341,776,006 0 $0
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POTENTIAL CONFLICTS OF INTERESTS

Actual or apparent conflicts of interest may arise when a portfolio manager has
day-to-day management responsibilities with respect to more than one fund or
other account. More specifically, portfolio managers who manage multiple funds
and/or other accounts may be presented with one or more of the following
potential conflicts:

The management of multiple funds and/or other accounts may result in a portfolio
manager devoting unequal time and attention to the management of each fund
and/or other account. Fiduciary seeks to manage such competing interests for the
time and attention of a portfolio manager by having the portfolio manager's
focus on a particular investment discipline. Most other accounts managed by a
portfolio manager are managed using the same investment models that are used in
connection with the management of the Fund.

If a portfolio manager identifies a limited investment opportunity which may be
suitable for more than one fund or other account, a fund may not be able to take
full advantage of that opportunity due to an allocation of filled purchase or
sale orders across all eligible funds and other accounts. To deal with these
situations, Fiduciary and the Fund have adopted procedures for allocating
portfolio transactions across multiple accounts. With respect to securities
transactions for the funds, Fiduciary determines which broker to use to execute
each order, consistent with its duty to seek best execution of the transaction.
However, with respect to certain other accounts (such as mutual funds for which
Fiduciary acts as sub-advisor, other pooled investment vehicles that are not
registered mutual funds, and other accounts managed for organizations and
individuals), Fiduciary may be limited by the client with respect to the
selection of brokers or may be instructed to direct trades through a particular
broker. In these cases, trades for a fund in a particular security may be placed
separately from, rather than aggregated with, such other accounts. Having
separate transactions with respect to a security may temporarily affect the
market price of the security or the execution of the transaction, or both, to
the possible detriment of the Fund or other account(s) involved

Fiduciary and the Fund have adopted certain compliance procedures which are
designed to address these types of conflicts. However, there is no guarantee
that such procedures will detect each and every situation in which a conflict
arises.

(A)(3) COMPENSATION STRUCTURE OF PORTFOLIO MANAGER(S) OR MANAGEMENT TEAM
MEMBERS

The portfolio manager is paid a fixed base salary and an annual bonus. The base
salary is set at a level determined to be appropriate based upon the
individual's experience and responsibilities. The annual

bonus is discretionary and is determined by the CEO. It is not based on the
performance of the Fund or managed accounts.

(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP

o Information provided as of November 30, 2006.

Dollar Range of Fund Shares
NAME Beneficially Owned
-----
James J. Cunnane, Jr. $ 50,001-$100,000

(B) Not 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 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.

ITEM 11. CONTROLS AND PROCEDURES.

(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).

(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the 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) Code of ethics, or any amendment thereto, that is the subject
of disclosure required by Item 2 is attached hereto.

(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act
and Section 302 of the Sarbanes-Oxley Act of 2002 are attached
hereto.

(a)(3) Not applicable.

(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

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 JANUARY 18, 2007
----------------------------------------------------------------------------

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Date JANUARY 18, 2007
----------------------------------------------------------------------------

By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief Financial
Officer and Chief Accounting Officer
(principal financial officer)

Date JANUARY 18, 2007
----------------------------------------------------------------------------

* Print the name and title of each signing officer under his or her signature.