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: February 28, 2014
 
 
 
Item 1. Schedule of Investments.

 
Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
February 28, 2014
  
Common Stock - 85.5%(1)
  
Shares
    
Fair Value
  
Crude/Refined Products Pipelines - 6.9%(1)
            
Canada - 5.7%(1)
            
Enbridge Inc.
     268,300     $ 11,346,407  
Pembina Pipeline Corporation
     199,200       7,179,691  
United States - 1.2%(1)
                
Plains GP Holdings, L.P.
     139,677       3,910,956  
                22,437,054  
Local Distribution Companies - 11.8%(1)
                
United States - 11.8%(1)
                
CenterPoint Energy, Inc.
     758,400       17,936,160  
NiSource Inc.
     593,500       20,665,670  
                38,601,830  
Marine Transportation - 2.3%(1)
                
Republic of the Marshall Islands - 2.3%(1)
                
Teekay Offshore Partners L.P.
     223,330       7,316,291  
                   
Natural Gas Gathering Pipelines - 4.9%(1)
                
United States - 4.9%(1)
                
Targa Resources Corp.
     166,600       16,120,216  
                   
Natural Gas Pipelines - 39.6%(1)
                
Canada - 2.9%(1)
                
Keyera Corp.
     17,550       1,058,579  
TransCanada Corporation
     187,700       8,264,431  
United States - 36.7%(1)
                
Kinder Morgan, Inc.
     138,500       4,411,225  
ONEOK, Inc.
     625,754       37,007,092  
Spectra Energy Corp.
     1,074,900       40,072,272  
Williams Companies, Inc.
     932,500       38,512,250  
                129,325,849  
Oil and Gas Production - 18.3%(1)
                
United States - 18.3%(1)
                
Anadarko Petroleum Corporation(2)
     46,900       3,947,104  
Antero Resources Corporation(2)(3)
     26,500       1,599,010  
Apache Corporation(2)
     53,000       4,202,370  
Cabot Oil & Gas Corporation(2)
     113,000       3,955,000  
Chesapeake Energy Corporation(2)
     67,200       1,741,152  
Concho Resources Inc.(2)(3)
     18,400       2,228,792  
Continental Resources, Inc.(2)(3)
     42,800       5,115,456  
EOG Resources, Inc.(2)
     29,200       5,531,064  
Hess Corporation(2)
     38,300       3,065,149  
Marathon Oil Corporation(2)
     132,700       4,445,450  
Newfield Exploration Company(2)(3)
     43,500       1,226,265  
Noble Energy, Inc.(2)
     72,300       4,971,348  
Occidental Petroleum Corporation(2)
     49,700       4,797,044  
Pioneer Natural Resources Company(2)
     30,900       6,216,462  
Range Resources Corporation(2)
     50,200       4,319,710  
Rice Energy Inc.(2)(3)
     38,520       924,480  
Whiting Petroleum Corporation(2)(3)
     23,700       1,628,427  
                59,914,283  
Power/Utility - 1.7% (1)
                
United States - 1.7% (1)
                
NRG Yield, Inc.
     145,100       5,539,918  
                   
Total Common Stock (Cost $216,129,733)
             279,255,441  
                   
Master Limited Partnerships and Related Companies - 41.7% (1)
                
Crude/Refined Products Pipelines - 17.1%(1)
                
United States - 17.1%(1)
                
Buckeye Partners, L.P.
     83,000       6,078,090  
Enbridge Energy Management, L.L.C.(4)
     568,347       15,203,295  
Genesis Energy L.P.
     18,700       1,028,500  
Magellan Midstream Partners, L.P.
     93,000       6,293,310  
MPLX LP
     102,268       4,991,701  
Phillips 66 Partners LP
     59,100       2,707,962  
Plains All American Pipeline, L.P.
     194,400       10,530,648  
Rose Rock Midstream, L.P.
     28,714       1,117,549  
Sunoco Logistics Partners L.P.
     74,400       6,155,856  
Tesoro Logistics LP
     16,700       1,005,340  
Valero Energy Partners LP
     23,059       852,952  
 
               55,965,203  
Natural Gas/Natural Gas Liquids Pipelines - 16.7%(1)
                
United States - 16.7%(1)
                
Crestwood Midstream Partners LP
     165,333       3,701,806  
Energy Transfer Partners, L.P.
     177,700       9,867,681  
Enterprise Products Partners L.P.
     163,200       10,952,352  
Kinder Morgan Management, LLC(4)
     269,779       18,830,595  
ONEOK Partners, L.P.
     48,900       2,597,079  
Regency Energy Partners LP
     189,149       4,965,161  
Williams Partners L.P.
     75,200       3,730,672  
                54,645,346  
Natural Gas Gathering/Processing - 7.9%(1)
                
United States - 7.9%(1)
                
Access Midstream Partners, L.P.
     107,900       6,090,955  
Crosstex Energy, L.P.
     36,800       1,136,752  
DCP Midstream Partners, LP
     97,900       4,777,520  
MarkWest Energy Partners, L.P.
     87,300       5,574,105  
Targa Resources Partners LP
     70,000       3,758,300  
Western Gas Equity Partners, LP
     46,500       1,998,570  
Western Gas Partners LP
     36,300       2,297,427  
                25,633,629  
                   
Total Master Limited Partnerships and Related Companies (Cost $109,043,803)
             136,244,178  
                   
Short-Term Investment - 0.1%(1)
                
United States Investment Company - 0.1%(1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.04%(5) (Cost $364,196)
     364,196       364,196  
                   
Total Investments - 127.3%(1) (Cost $325,537,732)
             415,863,815  
Long-Term Debt Obligations - (15.0%)(1)
             (49,000,000 )
Mandatory Redeemable Preferred Stock at Liquidation Value - (4.9%)(1)
             (16,000,000 )
Total Value of Options Written (Premiums received $659,073) - (0.3%)(1)
             (824,988 )
Other Assets and Liabilities - (7.1%)(1)
             (23,299,682 )
Total Net Assets Applicable to Common Stockholders - 100.0%(1)
           $ 326,739,145  
                   
                   
(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 February 28, 2014.
                
                   

 
 
 


Tortoise Pipeline & Energy Fund, Inc.
                    
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
              
February 28, 2014
    
 
              
                     
Call Options Written
Expiration
Date
  
Strike Price
    
Contracts
    
Fair Value
  
Anadarko Petroleum Corporation
March 2014
   $ 87.50       469     $ (34,706 )
Antero Resources Corporation
March 2014
     60.00       265       (51,675 )
Apache Corporation
March 2014
     87.50       530       (4,770 )
Cabot Oil & Gas Corporation
March 2014
     37.50       1,130       (28,250 )
Chesapeake Energy Corporation
March 2014
     27.00       672       (20,832 )
Concho Resources Inc.
March 2014
     125.00       184       (31,464 )
Continental Resources, Inc.
March 2014
     125.00       428       (62,060 )
EOG Resources, Inc.
March 2014
     190.00       292       (105,412 )
Hess Corporation
March 2014
     85.00       383       (6,511 )
Marathon Oil Corporation
March 2014
     35.00       1,327       (18,578 )
Newfield Exploration Company
March 2014
     27.00       435       (68,295 )
Noble Energy, Inc.
March 2014
     70.00       723       (56,394 )
Occidental Petroleum Corporation
March 2014
     100.00       497       (14,910 )
Pioneer Natural Resources Company
March 2014
     200.00       309       (212,901 )
Range Resources Corporation
March 2014
     92.50       502       (22,088 )
Rice Energy Inc.
March 2014
     25.00       385       (23,100 )
Whiting Petroleum Corporation
March 2014
     67.50       237       (63,042 )
                           
Total Value of Call Options Written (Premiums received $659,073)
             $ (824,988 )
                           

 
 
 

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 February 28, 2014.  These assets and liabilities are measured on a recurring basis.

Description
  
Fair Value at
February 28, 2014
    
Level 1
    
Level 2
    
Level 3
  
Assets
                        
Equity Securities:
                        
Common Stock (a)
   $ 279,255,441     $ 279,255,441     $ -     $ -  
Master Limited Partnerships and Related Companies(a)
     136,244,178       136,244,178       -       -  
Total Equity Securities
     415,499,619       415,499,619       -       -  
Other Securities:
                                
Short-Term Investment(b)
     364,196       364,196       -       -  
Total Assets
   $ 415,863,815     $ 415,863,815     $ -     $ -  
Liabilities
                                
Written Call Options
   $ 824,988     $ 824,988     $ -     $ -  

(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 February 28, 2014.

The Company did not hold any Level 3 securities during the period ended February 28, 2014.  The Company utilizes the beginning of reporting period method for determining transfers between levels.  There were no transfers between levels during the period ended February 28, 2014.

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.

As of February 28, 2014, the aggregate cost of securities for federal income tax purposes was $317,895,694.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $99,371,147, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $1,403,026 and the net unrealized appreciation was $97,968,121.


 
 
 


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: April 22, 2014
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: April 22, 2014
By:
/s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: April 22, 2014
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer