CHAPMAN AND CUTLER LLP
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
May 4, 2009
Houghton R. Hallock Jr., Esq.
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E. .
Washington, D.C. 20549
Re: Energy Income and Growth Fund (the "Fund")
(File Nos. 333-154254; 811-21549)
Dear Mr. Hallock:
We received your comments regarding the Registration Statement
for the above captioned Fund during our conference call on April 27,
2009. This letter serves to respond to your comments. For your
convenience, we have structured our response to address each of your
comments in the order in which they were presented in our call.
SUMMARY OF FUND EXPENSES
1. THIS SECTION PROVIDES THAT THE "TOTAL NET ANNUAL EXPENSES" OF
THE FUND, AS A PERCENTAGE OF THE TOTAL NET ASSETS ATTRIBUTABLE TO COMMON
SHARES OF THE FUND (ASSUMING A 26% LEVERAGE RATIO) IS 3.48%, AS OF MARCH
10, 2009. IN CONTRAST, THE "FINANCIAL HIGHLIGHTS" SECTION OF THE
REGISTRATION STATEMENT STATES THAT THE RATIO OF EXPENSES TO AVERAGE NET
ASSETS IS 4.80%, AS OF NOVEMBER 30, 2008. PLEASE EXPLAIN THE DISCREPANCY
BETWEEN THESE PERCENTAGES.
Response: We have provided Jeffrey Long, Staff Accountant,
information relating to the differences in the expense ratio calculations
in these sections. As noted in your comments, there is a beneficial
variance in the amount of 1.32% when comparing the expense ratio of 3.48%
in the March 10, 2009 pro forma calculation to the actual expense ratio
of 4.80% in the November 30, 2008 information derived from the Fund's
annual report. The Fund's calculations confirm that the beneficial
variance can be attributed primarily to the following:
o 1.01% variance due to lower borrowing interest rates in the
March 10, 2009 pro forma calculations versus the November 30,
2008 annual report information; and
o 0.30% variance due to a write-off of unamortized leverage costs
in the November 30, 2008 annual report calculation which was not
applicable to the March 10, 2009 pro forma calculation.
2. IN FOOTNOTE 5 OF THIS SECTION, THE FUND REFERS TO CURRENT AND
DEFERRED INCOME TAX EXPENSES AND BENEFITS, AS A PERCENTAGE OF AVERAGE NET
ASSETS BY FISCAL YEAR, FROM FUND INCEPTION THROUGH NOVEMBER 30, 2008.
PLEASE EXPLAIN THE CIRCUMSTANCES IN WHICH THE FUND MAY REALIZE THE
CURRENT AND DEFERRED INCOME TAX BENEFIT FOR THE YEAR ENDED NOVEMBER 30,
2008, DISCLOSED IN THE PROSPECTUS AS 24.83%.
Response: Current income tax expense can vary by year based upon
the Fund's net investment income and realized gain (loss). Since it is
"current" income tax expense, it is realized as an expense in the current
year and the circumstances in which it is realized have occurred. In
contrast, deferred income tax expense is accrued daily as the Fund's
assets appreciate, which will decrease net asset value accordingly. If
assets subsequently depreciate in value, the deferred income tax expense
will be reduced (i.e. an income tax benefit recorded), which will
increase net asset value accordingly. Since the Fund accrues tax expense
(benefit) on a daily basis on both unrealized appreciation and
depreciation, there is minimal net asset value impact when the Fund
realizes a gain (loss) on the sale of a security.
PLAN OF DISTRIBUTION
3. THE PROSPECTUS STATES IN THE "PLAN OF DISTRIBUTION" SECTION
THE VARIOUS METHODS THE FUND MAY UTILIZE TO DISTRIBUTE THE COMMON
SHARESAND PROVIDES THAT THE SPECIFIC METHOD OF DISTRIBUTION WILL BE
FURTHER DESCRIBED IN A PROSPECTUS SUPPLEMENT TO THE PROSPECTUS. PLEASE
CONFIRM THE MAXIMUM AMOUNT OF COMMISSION OR DISCOUNTS THAT MAY BE PAYABLE
BY THE FUND IN ANY OF THESE DISTRIBUTION ALTERNATIVES.
Response: The Fund will add the following in an additional
paragraph in the prospectus section entitled "Plan of Distribution,":
"The maximum commission or discount to be received by any member
of the Financial Industry Regulatory Authority will not be greater than
eight percent of the initial gross proceeds from the sale of any security
being sold."
4. PLEASE EXPLAIN HOW EACH OF THE VARIOUS ALTERNATIVES OF THE
FUND'S OFFERING OF COMMON SHARES AS REFERENCED IN THE "PLAN OF
DISTRIBUTION" SECTION OF THE PROSPECTUS WILL BE REGISTERED ON A
CONTINUOUS OR DELAYED BASIS PURSUANT TO RULE 415 OF THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT").
Response: Rule 415(a) under the Securities Act allows issuers to
register certain offerings on a delayed or continuous basis (a "shelf
offering"). Rule 415(a)(1)(x) applies to securities registered (or
qualified to be registered) on Form S-3 or Form F-3 which are to be
offered and sold on a continuous or delayed basis by or on behalf of the
registrant. As a closed-end management investment company, the Fund is
required to use Form N-2 to register its securities under the Securities
Act and, therefore, cannot utilize Form S-3. However, in certain
previously issued no-action letters, including Nuveen Virginia Premium
Income Municipal Fund (Available October 6, 2006), and Pilgrim America
Prime Rate Trust (Available May 1, 1998), the Staff allowed closed-end
funds that meet the requirements of Form S-3 to utilize Form N-2 to
conduct shelf offerings pursuant to Rule 415(a)(i)(x).
The Fund presently has no intention to register a traditional,
non-shelf offering because of the risk that the market price of the
Fund's shares will decline below net asset value before the issue is
completely sold. However, the Fund may seek to conduct a delayed at the
market shelf offering of its common shares under Rule 415(a)(1)(x) and
Rule 415(a)(4) under the Securities Act so that the Fund may issue new
shares when the Fund's shares are trading at a premium to net asset
value. In addition, as set forth in the "Plan of Distribution" section of
the prospectus, the Fund may sell through agents, to or through
underwriters, directly to purchasers or through dealers at a fixed price
or prices or negotiated prices, pursuant to Rule 415(a)(1)(x) and Rule
415(a)(2) under the Securities Act. The particular method of distribution
for any offering under the registration statement will be more
specifically described in a prospectus supplement to the prospectus filed
pursuant to Rule 497 under the Securities Act.
DESCRIPTION OF SHARES
5. AT A SPECIAL MEETING OF THE FUND'S SHAREHOLDERS ON JANUARY 8,
2008, THE FUND OBTAINED AUTHORITY FROM ITS SHAREHOLDERS TO ISSUE AND SELL
COMMON SHARES AT A NET PRICE LESS THAN ITS THEN-CURRENT NET ASSET VALUE
PER SHARE, SUBJECT TO CERTAIN CONDITIONS. PLEASE STATE IN THE PROSPECTUS
WHETHER THE FUND INTENDS ON OFFERING AND SELLING THE COMMON SHARES AT A
NET PRICE LESS THAN THE FUND'S THEN-CURRENT NET-ASSET VALUE PURSUANT TO
THIS SHAREHOLDER AUTHORITY.
Response: The Fund has inserted an additional paragraph in the
"The "Description of Shares" section of the prospectus after the second
paragraph, as follows:
"Section 23(b) of the 1940 Act, in relevant part, provides that
a registered closed-end fund may not sell any of its common stock at a
price below the current net asset value of such stock, exclusive of any
distribution commission or discount, except with the consent of a
majority of its common stockholders, or under certain other
circumstances. At a special meeting of shareholders of the Fund held on
January 8, 2008, the Fund obtained authority from its shareholders to
issue and sell common shares at a net price less than its then-current
net asset value per share, subject to the following conditions:
o The per share offering price, before the deduction of
underwriting fees, commissions and offering expenses, will not
be less than the net asset value per share of the Fund's common
shares, as determined at any time within two business days prior
to the pricing of the common shares to be sold in the offering.
o Immediately following each offering of such common shares, after
deducting underwriting fees, commissions and offering expenses,
the net asset value per share of the Fund's common shares, as
determined at any time within two business days prior to the
pricing of the common shares to be sold, would not have been
diluted by greater than a total of 1% of the net asset value per
share of all of the Fund's outstanding common shares. The Fund
will not be subject to a maximum number of common shares that
can be sold or a defined minimum sales price per share in any
offering so long as for each offering the number of common
shares offered and the price at which such common shares are
sold together would not result in dilution of the net asset
value per share of the Fund's common shares in excess of the 1%
limitation described above.
o A majority of the Independent Trustees makes a determination,
based on information and a recommendation from the Adviser, that
they reasonably expect that the investments to be made with the
net proceeds of such issuance will lead to a long-term increase
in the Fund's net asset value or a long-term increase in the
level of the Fund's distributions to shareholders.
In connection with any sale of Common Shares below net asset
value as described above, the Adviser and Sub-Adviser have committed to
waive a portion of their investment advisory fees and sub-advisory fees
following any offering of Common Shares in the following manner:
o the Adviser and Sub-Adviser will waive all investment advisory
fees and sub-advisory fees with respect to the Fund's assets
attributable to newly issued Common Shares (including any assets
attributable to associated financial leverage) for the first
three-month period following any offering of Common Shares; and
o the Adviser and Sub-Adviser will waive 50% of investment
advisory fees and sub-advisory fees with respect to the Fund's
assets attributable to newly issued Common Shares (including any
assets attributable to associated financial leverage) for the
second three-month period following any offering of Common
Shares.
See "Management of the Fund - Investment Management Agreement"
for a description of the investment advisory and sub-advisory fees
payable to the Adviser and the Sub-Adviser.
The Fund will not issue and sell Common Shares at a price less
than its then-current net asset value per share in accordance with the
above conditions unless specifically set forth in a prospectus supplement
to this prospectus."
CORPORATE FINANCE SERVICE AND CONSULTING FEE
6. THE PROSPECTUS STATES IN THE "CORPORATE FINANCE SERVICES AND
CONSULTING FEE" SECTION THAT FIRST TRUST ADVISORS L.P. PAYS SERVICE FEES
BASED ON THE AVERAGE DAILY NET ASSETS OF THE FUND PURSUANT TO THE
CORPORATE FINANCE SERVICES AND CONSULTING AGREEMENT. PLEASE CONFIRM
WHETHER THESE SERVICE FEES ARE LIMITED TO 4.461% OF THE OFFERING PRICE OF
THE COMMON SHARES INITIALLY OFFERED BY THE FUND OR WHETHER THESE SERVICE
FEES WILL BE AFFECTED BY THE COMMON SHARES ISSUABLE UNDER THE PROSPECTUS.
Response: The maximum amount of fees payable under the Corporate
Finance Services and Consulting Agreement will not change as a result of
the issuance of Common Shares under the prospectus. The maximum amount of
fees payable pursuant to the Corporate Finance Services and Consulting
Agreement are attributable to the common shares initially offered by the
Fund and will not exceed 4.461% of the aggregate offering price of the
initially offered shares. Reference to "Common Shares" in the final
sentence of this section will appropriately be changed to "common
shares".
We appreciate your prompt attention to this Registration
Statement. If you have any questions or comments or would like to discuss
our responses to your questions please feel free to contact Eric F. Fess
at (312) 845-3781 or the undersigned at (312) 845-3273.
Very truly yours,
CHAPMAN AND CUTLER LLP
By /s/ Walter L. Draney
--------------------------------
Walter L. Draney