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
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, 2013
 
 
 
Item 1. Schedule of Investments.

 
Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
February 28, 2013
  
Common Stock - 86.0% (1)
  
Shares
    
Fair Value
  
Crude/Refined Products Pipelines - 6.0% (1)
            
Canada - 6.0% (1)
            
Enbridge Inc.
     268,300     $ 11,955,448  
Pembina Pipeline Corporation
     168,800       4,737,040  
                16,692,488  
Local Distribution Companies - 12.3% (1)
                
United States - 12.3% (1)
                
CenterPoint Energy, Inc.
     728,600       15,613,898  
NiSource Inc.
     663,200       18,370,640  
                33,984,538  
Marine Transportation - 2.2% (1)
                
Republic of the Marshall Islands - 2.2% (1)
                
Teekay Offshore Partners L.P.
     223,330       6,251,007  
                   
Natural Gas Gathering Pipelines - 3.7% (1)
                
United States - 3.7% (1)
                
Targa Resources Corp.
     166,600       10,162,600  
                   
Natural Gas Pipelines - 40.9% (1)
                
Canada - 6.3% (1)
                
Keyera Corp.
     17,550       926,640  
TransCanada Corporation
     350,500       16,301,755  
United States - 34.6% (1)
                
Kinder Morgan, Inc.
     266,000       9,860,620  
National Fuel Gas Company
     13,400       779,746  
ONEOK, Inc.
     373,900       16,821,761  
Questar Corporation
     330,750       7,775,932  
Spectra Energy Corp
     910,300       26,435,112  
Williams Companies, Inc.
     978,950       33,979,354  
                112,880,920  
Oil and Gas Production - 19.8% (1)
                
United Kingdom - 1.0% (1)
                
BP p.l.c. (ADR) (2)
     68,500       2,767,400  
United States - 18.8% (1)
                
Anadarko Petroleum Corporation (2)
     63,200       5,029,456  
Apache Corporation (2)
     50,900       3,780,343  
Chevron Corporation
     13,300       1,558,095  
Continental Resources, Inc. (2)(3)
     38,800       3,414,400  
Denbury Resources Inc. (2)(3)
     184,600       3,344,952  
Devon Energy Corporation (2)
     48,800       2,647,888  
EOG Resources, Inc. (2)
     27,100       3,406,741  
Exxon Mobil Corporation
     16,900       1,513,395  
Hess Corporation (2)
     49,000       3,258,500  
Marathon Oil Corporation (2)
     150,400       5,038,400  
Newfield Exploration Company (2)(3)
     119,300       2,758,216  
Occidental Petroleum Corporation (2)
     49,200       4,050,636  
Pioneer Natural Resources Company (2)
     41,800       5,258,858  
Range Resources Corporation (2)
     43,100       3,310,080  
Whiting Petroleum Corporation (2)(3)
     71,900       3,501,530  
                54,638,890  
Refining - 1.1% (1)
                
United States - 1.1% (1)
                
HollyFrontier Corporation (2)
     52,400       2,944,880  
                   
                   
Total Common Stock (Cost $208,675,213)
             237,555,323  
                   
Master Limited Partnerships and Related Companies - 44.3% (1)
                
Crude/Refined Products Pipelines - 15.3% (1)
                
United States - 15.3% (1)
                
Buckeye Partners, L.P.
     48,796       2,717,937  
Enbridge Energy Management, L.L.C. (4)
     465,647       12,726,130  
Holly Energy Partners, L.P.
     63,900       2,636,514  
Magellan Midstream Partners, L.P.
     76,700       3,847,272  
MPLX LP
     102,268       3,343,141  
Plains All American Pipeline, L.P.
     240,400       13,161,900  
Rose Rock Midstream, L.P.
     28,714       976,276  
Sunoco Logistics Partners L.P.
     45,800       2,863,874  
 
               42,273,044  
Natural Gas/Natural Gas Liquids Pipelines - 21.8% (1)
                
United States - 21.8% (1)
                
Energy Transfer Partners, L.P.
     179,900       8,619,009  
Enterprise Products Partners L.P.
     175,093       9,922,520  
Inergy Midstream, L.P.
     82,000       1,963,080  
Inergy Midstream, L.P. (5)
     83,333       1,929,992  
Kinder Morgan Management, LLC (4)
     252,704       20,931,492  
ONEOK Partners, L.P.
     82,000       4,494,420  
Regency Energy Partners LP
     219,600       5,224,284  
Williams Partners L.P.
     141,800       7,047,460  
                60,132,257  
Natural Gas Gathering/Processing - 7.2% (1)
                
United States - 7.2% (1)
                
Access Midstream Partners, L.P.
     119,700       4,457,628  
Copano Energy, L.L.C.
     48,265       1,861,098  
DCP Midstream Partners, LP
     36,350       1,476,901  
MarkWest Energy Partners, L.P.
     59,850       3,421,625  
Southcross Energy Partners, L.P.
     39,112       896,056  
Targa Resources Partners LP
     84,825       3,493,942  
Western Gas Equity Partners, LP
     61,652       2,094,319  
Western Gas Partners LP
     42,905       2,352,910  
                20,054,479  
                   
Total Master Limited Partnerships and Related Companies (Cost $108,001,300)
             122,459,780  
                   
Short-Term Investment - 0.1% (1)
                
United States Investment Company - 0.1% (1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.12% (6) (Cost $271,724)
     271,724       271,724  
                   
Total Investments - 130.4% (1) (Cost $316,948,237)
             360,286,827  
Long-Term Debt Obligations - (17.7%) (1)
             (49,000,000 )
Mandatory Redeemable Preferred Stock at Liquidation Value - (5.8%) (1)
             (16,000,000 )
Total Value of Options Written (Premiums received $520,575) - (0.1%) (1)
             (273,042 )
Other Assets and Liabilities - (6.8%) (1)
             (18,803,133 )
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 276,210,652  
                   
                   
(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)
Restricted securities have been fair valued in accordance with procedures approved by the Board of Directors and have
  
 
a total fair value of $1,929,992, which represents 0.7% of net assets.
 
(6)
Rate indicated is the current yield as of February 28, 2013.
                
                   
Key to abbreviation
                
ADR = American Depository Receipts
                

 
 
 
Tortoise Pipeline & Energy Fund, Inc.
              
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
          
February 28, 2013
    
 
          
                 
Call Options Written
Expiration Date
  
Strike Price
  
Contracts
  
Fair Value
  
Anadarko Petroleum Corporation
March 2013
   $ 87.50     626   $ (14,398 )
Apache Corporation
March 2013
     82.50     509     (2,036 )
BP p.l.c. (ADR)
March 2013
     44.00     685     (6,165 )
Continental Resources, Inc.
March 2013
     90.00     388     (36,860 )
Denbury Resources Inc.
March 2013
     20.00     1,846     (9,230 )
Devon Energy Corporation
March 2013
     62.50     488     (1,464 )
EOG Resources, Inc.
March 2013
     140.00     271     (2,168 )
Hess Corporation
March 2013
     72.50     490     (10,290 )
HollyFrontier Corporation
March 2013
     58.50     524     (28,820 )
Marathon Oil Corporation
March 2013
     36.00     1,504     (7,520 )
Newfield Exploration Company
March 2013
     29.00     1,193     (3,579 )
Occidental Petroleum Corporation
March 2013
     90.00     484     (1,452 )
Pioneer Natural Resources Company
March 2013
     140.00     418     (6,270 )
Range Resources Corporation
March 2013
     75.00     431     (124,990 )
Whiting Petroleum Corporation
March 2013
     52.50     712     (17,800 )
                       
Total Value of Call Options Written (Premiums received $520,575)
         $ (273,042 )
                       
Key to abbreviation
                      
ADR = American Depository Receipts
                      

 
 
 

Various inputs are used in determining the value of the Company’s investments.  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, 2013.  These assets and liabilities are measured on a recurring basis.

Description
Fair Value at
February 28, 2013
  
Level 1
  
Level 2
  
Level 3
  
Assets
                
Equity Securities:
                
Common Stock (a)
 $ 237,555,323   $ 237,555,323   $ -   $ -  
Master Limited  Partnerships and Related Companies(a)
   122,459,780     120,529,788     1,929,992     -  
Total Equity Securities
   360,015,103     358,085,111     1,929,992     -  
Other:
                        
Short-Term Investment(b)
   271,724     271,724     -     -  
Total Assets
 $ 360,286,827   $ 358,356,835   $ 1,929,992   $ -  
Liabilities
                        
Written Call Options
 $ 273,042   $ 273,042   $ -   $ -  

(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, 2013.

The Company did not hold any Level 3 securities during the period ended February 28, 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 February 28, 2013.

Certain of the Company’s investments are restricted and are valued as determined in accordance with procedures established by the Board of Directors.  The table below shows the number of units held, acquisition date, acquisition cost, fair value, fair value per share and percent of net assets which the security comprises at February 28, 2013.

Investment Security
Number of Shares
Acquisition Date
Acquisition
Cost
Fair Value
Fair Value
Per Share
Fair Value as
Percent of
Net Assets
Inergy Midstream, L.P.
Unregistered Common Units
83,333
12/7/12
$ 1,749,993
$ 1,929,992
   $  23.16
     0.7%

The carrying value per unit of unrestricted common units of Inergy Midstream, L.P. was $23.10 on November 3, 2012, the date of the purchase agreement and the date an enforceable right to acquire the restricted Inergy Midstream, L.P. units was obtained by the Company.
As of February 28, 2013, the aggregate cost of securities for federal income tax purposes was $314,251,218.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $51,437,466, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $5,401,857 and the net unrealized appreciation was $46,035,609.
 
 
 


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 23, 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: April 23, 2013
By:
/s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: April 23, 2013
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer