ttpnq.htm




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY




Investment Company Act file number 811-22585



Tortoise Pipeline & Energy Fund, Inc.
(Exact name of registrant as specified in charter)


11550 Ash Street, Suite 300, Leawood, KS 66211
(Address of principal executive offices) (Zip code)



Terry Matlack
Diane Bono
11550 Ash Street, Suite 300, Leawood, KS 66211

(Name and address of agent for service)



913-981-1020
Registrant's telephone number, including area code



Date of fiscal year end: November 30


Date of reporting period: August 31, 2013
 
 
 
Item 1. Schedule of Investments.

 
Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
August 31, 2013
  
Common Stock - 85.1%(1)
  
Shares
    
Fair Value
  
Crude/Refined Products Pipelines - 5.9%(1)
            
Canada - 5.9%(1)
            
Enbridge Inc.
     268,300     $ 10,986,885  
Pembina Pipeline Corporation
     199,200       6,180,439  
                17,167,324  
Local Distribution Companies - 12.6%(1)
                
United States - 12.6%(1)
                
CenterPoint Energy, Inc.
     926,500       21,244,645  
NiSource Inc.
     533,600       15,613,136  
                36,857,781  
Marine Transportation - 2.4%(1)
                
Republic of the Marshall Islands - 2.4%(1)
                
Teekay Offshore Partners L.P.
     223,330       7,095,194  
                   
Natural Gas Gathering Pipelines - 3.9%(1)
                
United States - 3.9%(1)
                
Targa Resources Corp.
     166,600       11,343,794  
                   
Natural Gas Pipelines - 39.0%(1)
                
Canada - 3.1%(1)
                
Keyera Corp.
     17,550       960,226  
TransCanada Corporation
     187,700       8,187,474  
United States - 35.9%(1)
                
Kinder Morgan, Inc.
     266,000       10,089,380  
National Fuel Gas Company
     13,400       874,752  
ONEOK, Inc.
     450,200       23,158,288  
Questar Corporation
     330,750       7,250,040  
Spectra Energy Corp
     965,100       31,954,461  
Williams Companies, Inc.
     880,900       31,923,816  
                114,398,437  
Oil and Gas Production - 19.9%(1)
                
United Kingdom - 1.0%(1)
                
BP p.l.c. (ADR)(2)
     69,800       2,882,740  
United States - 18.9%(1)
                
Anadarko Petroleum Corporation(2)
     46,900       4,287,598  
Apache Corporation(2)
     55,000       4,712,400  
Cabot Oil & Gas Corporation(2)
     126,400       4,946,032  
Chesapeake Energy Corporation(2)
     69,200       1,786,052  
Continental Resources, Inc.(2)(3)
     46,300       4,271,638  
Denbury Resources Inc.(2)(3)
     66,000       1,141,140  
EOG Resources, Inc.(2)
     24,300       3,816,315  
Hess Corporation(2)
     38,700       2,896,695  
Marathon Oil Corporation(2)
     132,700       4,568,861  
Newfield Exploration Company(2)(3)
     48,700       1,160,034  
Noble Energy, Inc.(2)
     74,400       4,570,392  
Occidental Petroleum Corporation(2)
     50,000       4,410,500  
Pioneer Natural Resources Company(2)
     29,500       5,161,615  
Range Resources Corporation(2)
     53,300       3,996,434  
Southwestern Energy Company(2)(3)
     35,600       1,359,920  
Whiting Petroleum Corporation(2)(3)
     49,500       2,498,265  
                58,466,631  
Power/Utility - 1.4% (1)
                
United States - 1.4% (1)
                
NRG Yield, Inc.
     145,100       4,042,486  
                   
Total Common Stock (Cost $208,861,566)
             249,371,647  
                   
Master Limited Partnerships and Related Companies - 44.4% (1)
                
Crude/Refined Products Pipelines - 17.3%(1)
                
United States - 17.3%(1)
                
Buckeye Partners, L.P.
     83,000       5,810,000  
Enbridge Energy Management, L.L.C.(4)
     547,317       16,414,031  
Genesis Energy L.P.
     18,700       910,129  
Holly Energy Partners, L.P.
     63,900       2,270,367  
Magellan Midstream Partners, L.P.
     76,700       4,161,742  
MPLX LP
     102,268       3,650,968  
Phillips 66 Partners LP
     59,100       1,818,507  
Plains All American Pipeline, L.P.
     213,300       10,784,448  
Rose Rock Midstream, L.P.
     28,714       938,086  
Sunoco Logistics Partners L.P.
     61,400       3,944,336  
 
               50,702,614  
Natural Gas/Natural Gas Liquids Pipelines - 19.4%(1)
                
United States - 19.4%(1)
                
Energy Transfer Partners, L.P.
     199,700       10,238,619  
Enterprise Products Partners L.P.
     163,200       9,697,344  
Inergy Midstream, L.P.
     165,333       3,842,339  
Kinder Morgan Management, LLC(4)
     260,464       20,795,427  
ONEOK Partners, L.P.
     48,900       2,424,951  
Regency Energy Partners LP
     219,600       5,935,788  
Williams Partners L.P.
     75,200       3,709,616  
                56,644,084  
Natural Gas Gathering/Processing - 7.7%(1)
                
United States - 7.7%(1)
                
Access Midstream Partners, L.P.
     119,700       5,459,517  
DCP Midstream Partners, LP
     97,900       4,692,347  
MarkWest Energy Partners, L.P.
     59,850       3,997,381  
Targa Resources Partners LP
     70,000       3,420,200  
Western Gas Equity Partners, LP
     61,652       2,427,856  
Western Gas Partners LP
     42,905       2,537,402  
                22,534,703  
                   
Total Master Limited Partnerships and Related Companies (Cost $107,198,873)
             129,881,401  
                   
Short-Term Investment - 0.0%(1)
                
United States Investment Company - 0.0%(1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.05%(5) (Cost $100,637)
     100,637       100,637  
                   
Total Investments - 129.5%(1) (Cost $316,161,076)
             379,353,685  
Long-Term Debt Obligations - (16.7%)(1)
             (49,000,000 )
Mandatory Redeemable Preferred Stock at Liquidation Value - (5.5%)(1)
             (16,000,000 )
Total Value of Options Written (Premiums received $626,731) - (0.2%)(1)
             (587,445 )
Other Assets and Liabilities - (7.1%)(1)
             (20,808,684 )
Total Net Assets Applicable to Common Stockholders - 100.0%(1)
           $ 292,957,556  
                   
                   
(1)
Calculated as a percentage of net assets applicable to common stockholders.
                
(2)
All or a portion of the security represents cover for outstanding call option contracts written.
          
(3)
Non-income producing security.
                
(4)
Security distributions are paid-in-kind.
                
(5)
Rate indicated is the current yield as of August 31, 2013.
                
                   
Key to abbreviation
                
ADR = American Depository Receipts
                
 
 
 

 
 
 

Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
        
August 31, 2013
    
 
        
               
Call Options Written
ExpirationDate
Strike Price
Contracts
  
 Fair Value
Anadarko Petroleum Corporation
September 2013
 $                             97.50
  
                469
  
 $                             (20,167)
Apache Corporation
September 2013
             80.00
  
                180
  
        (108,900)
Apache Corporation
September 2013
             87.50
  
                370
  
          (41,440)
BP p.l.c. (ADR)
September 2013
             43.00
  
                695
  
          (10,425)
Cabot Oil & Gas Corporation
September 2013
             40.00
  
             1,264
  
          (94,800)
Chesapeake Energy Corporation
September 2013
             26.00
  
                692
  
          (45,672)
Continental Resources, Inc.
September 2013
           100.00
  
                463
  
          (11,575)
Denbury Resources Inc.
September 2013
             18.00
  
                660
  
          (10,560)
EOG Resources, Inc.
September 2013
           165.00
  
                243
  
          (27,216)
Hess Corporation
September 2013
             80.00
  
                387
  
            (8,901)
Marathon Oil Corporation
September 2013
             36.00
  
             1,327
  
          (31,848)
Newfield Exploration Company
September 2013
             26.00
  
                487
  
            (7,305)
Noble Energy, Inc.
September 2013
             67.50
  
                744
  
            (7,440)
Occidental Petroleum Corporation
September 2013
             92.50
  
                500
  
          (18,500)
Pioneer Natural Resources Company
September 2013
           180.00
  
                295
  
          (82,600)
Range Resources Corporation
September 2013
             82.50
  
                533
  
          (13,325)
Southwestern Energy Company
September 2013
             40.00
  
                356
  
          (14,596)
Whiting Petroleum Corporation
September 2013
             52.50
  
                495
  
          (32,175)
               
Total Value of Call Options Written (Premiums received $626,731)
      
 $                           (587,445)
               
Key to abbreviation
              
ADR = American Depository Receipts
              

 
 
 

Various inputs are used in determining the fair value of the Company’s financial instruments.  These inputs are summarized in the three broad levels listed below:

Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.)
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following table provides the fair value measurements of applicable Company assets and liabilities by level within the fair value hierarchy as of August 31, 2013.  These assets and liabilities are measured on a recurring basis.

Description
Fair Value at
August 31, 2013
  
Level 1
  
Level 2
  
Level 3
  
Assets
                
Equity Securities:
                
Common Stock (a)
 $ 249,371,647   $ 249,371,647   $ -   $ -  
Master Limited Partnerships and Related Companies(a)
   129,881,401     129,881,401     -     -  
Total Equity Securities
   379,253,048     379,253,048     -     -  
Other Securities:
                        
Short-Term Investment(b)
   100,637     100,637     -     -  
Total Assets
 $ 379,353,685   $ 379,353,685   $ -   $ -  
Liabilities
                        
Written Call Options
 $ 587,445   $ 587,445   $ -   $ -  

(a)  
All other industry classifications are identified in the Schedule of Investments.
(b)  
Short-term investment is a sweep investment for cash balances in the Company at August 31, 2013.

The Company did not hold any Level 3 securities during the period ended August 31, 2013.

Valuation Techniques
In general, and where applicable, the Company uses readily available market quotations based upon the last updated sales price from the principal market to determine fair value.  This pricing methodology applies to the Company’s Level 1 investments and liabilities. 

An equity security of a publicly traded company acquired in a private placement transaction without registration under the Securities Act of 1933, as amended (the “1933 Act”), is subject to restrictions on resale that can affect the security's fair value.  If such a security is convertible into publicly-traded common shares, the security generally will be valued at the common share market price adjusted by a percentage discount due to the restrictions and categorized as Level 2 in the fair value hierarchy.  If the security has characteristics that are dissimilar to the class of security that trades on the open market, the security will generally be valued and categorized as Level 3 in the fair value hierarchy.

The Company utilizes the beginning of reporting period method for determining transfers between levels.  There were no transfers between levels during the period from December 1, 2012 through August 31, 2013.

As of August 31, 2013, the aggregate cost of securities for federal income tax purposes was $307,709,469.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $73,318,285, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $1,674,069 and the net unrealized appreciation was $71,644,216.

 
 
 


Item 2. Controls and Procedures.
(a)
The registrant’s Chief Executive Officer and its Chief Financial Officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)
There was no change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 3. Exhibits.
Separate certifications for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) are filed herewith.

 
 
 

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.


 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: October 24, 2013
By:
/s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       



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.

 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: October 24, 2013
By:
/s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: October 24, 2013
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer