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, 2014
 
 
 
Item 1. Schedule of Investments.
 
Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
August 31, 2014
  
 
  
Shares
    
Fair Value
  
Common Stock - 81.4%(1)            
Crude/Refined Products Pipelines - 9.2%(1)
            
Canada - 8.0%(1)
            
Enbridge Inc.
     268,300     $ 13,374,755  
Inter Pipeline Ltd.
     314,300       10,487,266  
Pembina Pipeline Corporation
     199,200       9,154,809  
United States - 1.2%(1)
                
Plains GP Holdings, L.P.
     153,000       4,721,580  
                37,738,410  
Local Distribution Companies - 9.3%(1)
                
United States - 9.3%(1)
                
CenterPoint Energy, Inc.
     499,000       12,395,160  
NiSource Inc.
     652,100       25,868,807  
                38,263,967  
Marine Transportation - 1.9%(1)
                
Republic of the Marshall Islands - 1.9%(1)
                
Teekay Offshore Partners L.P.
     223,330       7,870,149  
                   
Natural Gas Gathering Pipelines - 5.7%(1)
                
United States - 5.7%(1)
                
Targa Resources Corp.
     166,600       23,249,030  
                   
Natural Gas Pipelines - 38.4%(1)
                
Canada - 2.5%(1)
                
TransCanada Corporation
     187,700       10,094,506  
United States - 35.9%(1)
                
Kinder Morgan, Inc.
     138,500       5,576,010  
ONEOK, Inc.
     625,754       43,927,931  
Spectra Energy Corp.
     1,017,545       42,390,925  
Williams Companies, Inc.
     932,500       55,427,800  
                157,417,172  
Oil and Gas Production - 15.0%(1)
                
United States - 15.0%(1)
                
Anadarko Petroleum Corporation(2)
     38,299       4,315,914  
Antero Resources Corporation(2)(3)
     24,900       1,440,465  
Cabot Oil & Gas Corporation(2)
     108,000       3,622,320  
Carrizo Oil & Gas, Inc.(2)(3)
     16,800       1,053,696  
Chesapeake Energy Corporation(2)
     59,800       1,626,560  
Cimarex Energy Co.(2)
     22,000       3,193,520  
Concho Resources Inc.(2)(3)
     34,900       4,957,196  
Continental Resources, Inc.(2)(3)
     36,800       5,935,472  
Eclipse Resources Corporation(3)
     41,614       761,120  
EOG Resources, Inc.(2)
     53,700       5,900,556  
Hess Corporation(2)
     13,300       1,344,630  
Marathon Oil Corporation(2)
     120,800       5,036,152  
Newfield Exploration Company(2)(3)
     71,000       3,182,220  
Noble Energy, Inc.(2)
     44,400       3,203,016  
Occidental Petroleum Corporation(2)
     31,400       3,257,122  
Pioneer Natural Resources Company(2)
     27,700       5,779,605  
Range Resources Corporation(2)
     50,200       3,945,218  
Rice Energy Inc.(2)(3)
     38,520       1,127,866  
Whiting Petroleum Corporation(2)(3)
     20,200       1,871,732  
                61,554,380  
Power/Utility - 1.9%(1)
                
United States - 1.9%(1)
                
NRG Yield, Inc.
     145,100       7,891,989  
                   
                   
Total Common Stock (Cost $216,541,291)
             333,985,097  
                   
Master Limited Partnerships and Related Companies - 40.9%(1)
                
Crude/Refined Products Pipelines - 17.4%(1)
                
United States - 17.4%(1)
                
Buckeye Partners, L.P.
     83,000       6,557,000  
Enbridge Energy Management, L.L.C.(4)
     588,254       21,071,269  
Genesis Energy L.P.
     18,700       1,041,590  
Magellan Midstream Partners, L.P.
     93,000       7,805,490  
MPLX LP
     102,268       6,238,348  
Oiltanking Partners, L.P.
     25,600       1,256,704  
Phillips 66 Partners LP
     59,100       4,373,400  
Plains All American Pipeline, L.P.
     194,400       11,650,392  
Rose Rock Midstream, L.P.
     28,714       1,751,267  
Sunoco Logistics Partners L.P.
     148,800       7,362,624  
Tesoro Logistics LP
     16,700       1,173,676  
Valero Energy Partners LP
     23,059       1,229,275  
 
               71,511,035  
Natural Gas/Natural Gas Liquids Pipelines - 16.2%(1)
                
United States - 16.2%(1)
                
Crestwood Midstream Partners LP
     165,333       3,862,179  
Energy Transfer Partners, L.P.
     177,700       10,208,865  
Enterprise Products Partners L.P.
     326,400       13,261,632  
Kinder Morgan Management, LLC(4)
     264,264       25,823,874  
ONEOK Partners, L.P.
     48,900       2,906,127  
Regency Energy Partners LP
     189,149       6,238,134  
Williams Partners L.P.
     75,200       3,986,352  
                66,287,163  
Natural Gas Gathering/Processing - 7.3%(1)
                
United States - 7.3%(1)
                
Access Midstream Partners, L.P.
     76,928       4,950,317  
DCP Midstream Partners, LP
     97,900       5,539,182  
EnLink Midstream Partners, L.P.
     55,955       1,734,045  
MarkWest Energy Partners, L.P.
     87,300       6,960,429  
Targa Resources Partners LP
     70,000       5,208,000  
Western Gas Equity Partners, LP
     46,500       2,787,675  
Western Gas Partners LP
     36,300       2,812,887  
                29,992,535  
                   
Total Master Limited Partnerships and Related Companies (Cost $106,284,525)
             167,790,733  
                   
Short-Term Investment - 0.0%(1)
                
United States Investment Company - 0.0%(1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.05%(5) (Cost $83,492)
     83,492       83,492  
                   
Total Investments - 122.3%(1) (Cost $322,909,308)
             501,859,322  
Senior Notes - (11.9%)(1)
             (49,000,000 )
Mandatory Redeemable Preferred Stock at Liquidation Value - (3.9%)(1)
             (16,000,000 )
Total Value of Options Written (Premiums received $620,141) - (0.4%)(1)
             (1,483,825 )
Other Assets and Liabilities - (6.1%)(1)
             (24,970,344 )
Total Net Assets Applicable to Common Stockholders - 100.0%(1)
           $ 410,405,153  
                   
                   
(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, 2014.
                

 
 
 


Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
        
August 31, 2014
    
 
        
               
Call Options Written
Expiration Date
Strike Price
Contracts
  
 Fair Value
Anadarko Petroleum Corporation
September 2014
 $                        115.00
  
                382
  
 $                                 (63,030)
Antero Resources Corporation
September 2014
             60.00
  
                249
  
          (13,073)
Cabot Oil & Gas Corporation
September 2014
             35.00
  
             1,080
  
          (16,200)
Carrizo Oil & Gas, Inc.
September 2014
             62.50
  
                168
  
          (31,920)
Chesapeake Energy Corporation
September 2014
             27.00
  
                598
  
          (41,262)
Cimarex Energy Co.
September 2014
           145.00
  
                220
  
          (74,800)
Concho Resources Inc.
September 2014
           140.00
  
                349
  
        (163,332)
Continental Resources, Inc.
September 2014
           150.00
  
                368
  
        (429,088)
EOG Resources, Inc.
September 2014
           110.00
  
                537
  
        (107,937)
Hess Corporation
September 2014
           105.00
  
                133
  
            (3,857)
Marathon Oil Corporation
September 2014
             41.00
  
             1,208
  
        (134,088)
Newfield Exploration Company
September 2014
             43.00
  
                710
  
        (159,750)
Noble Energy, Inc.
September 2014
             75.00
  
                444
  
          (17,760)
Occidental Petroleum Corporation
September 2014
           105.00
  
                314
  
          (19,782)
Pioneer Natural Resources Company
September 2014
           215.00
  
                277
  
          (48,475)
Range Resources Corporation
September 2014
             80.00
  
                502
  
          (50,200)
Rice Energy Inc.
September 2014
             30.00
  
                385
  
          (28,875)
Whiting Petroleum Corporation
September 2014
             90.00
  
                202
  
          (80,396)
Total Value of Call Options Written (Premiums received $620,141)
      
 $                            (1,483,825)

 
 
 

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

Description
  
Fair Value at
August 31, 2014
    
Level 1
    
Level 2
    
Level 3
  
Assets
                        
Equity Securities:
                        
Common Stock (a)
   $ 333,985,097     $ 333,985,097     $ -     $ -  
Master Limited Partnerships and Related Companies(a)
     167,790,733       167,790,733       -       -  
Total Equity Securities
     501,775,830       501,775,830       -       -  
Other Securities:
                                
Short-Term Investment(b)
     83,492       83,492       -       -  
Total Assets
   $ 501,859,322     $ 501,859,322     $ -     $ -  
Liabilities
                                
Written Call Options
   $ 1,483,825     $ 1,483,825     $ -     $ -  

(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, 2014.

The Company did not hold any Level 3 securities during the period ended August 31, 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 August 31, 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.
 
Exchange-traded options are valued at the mean of the highest bid and lowest asked prices across all option exchanges.
 
As of August 31, 2014, the aggregate cost of securities for federal income tax purposes was $308,845,383.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $193,832,022, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $818,083 and the net unrealized appreciation was $193,013,939.

 
 
 

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 30, 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: October 30, 2014
By:
/s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: October 30, 2014
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer