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)



David J. Schulte
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 29, 2012

 
 
 
 
Item 1. Schedule of Investments.
 
 
Tortoise Pipeline & Energy Fund, Inc.
SCHEDULE OF INVESTMENTS (Unaudited)
     
February 29, 2012
  
    Shares     Fair Value  
Common Stock - 86.4% (1)
            
Crude/Refined Products Pipelines - 8.7% (1)
            
Canada - 5.5% (1)
            
Enbridge Inc.
     251,050     $ 9,693,040  
Pembina Pipeline Corporation
     168,800       4,788,737  
United States - 3.2% (1)
                
Kinder Morgan, Inc.
     244,250       8,607,370  
                23,089,147  
Local Distribution Companies - 11.9% (1)
                
United States - 11.9% (1)
                
CenterPoint Energy, Inc.
     728,600       14,200,414  
NiSource Inc.
     716,914       17,205,936  
                31,406,350  
Marine Transportation - 2.5% (1)
                
Republic of the Marshall Islands - 2.5% (1)
                
Teekay Offshore Partners L.P.
     223,330       6,563,669  
                   
Natural Gas Gathering Pipelines - 3.0% (1)
                
United States - 3.0% (1)
                
Targa Resources Corp.
     181,505       8,064,267  
                   
Natural Gas Pipelines - 36.0% (1)
                
Canada - 6.7% (1)
                
Keyera Corp.
     17,550       748,507  
TransCanada Corporation
     386,051       16,978,523  
United States - 29.3% (1)
                
EQT Corporation
     13,000       689,260  
National Fuel Gas Company
     13,400       674,422  
ONEOK, Inc.
     198,000       16,362,720  
Questar Corporation
     330,750       6,357,015  
Spectra Energy Corp.
     820,106       25,734,926  
Williams Companies, Inc.
     930,500       27,803,340  
                95,348,713  
Oil and Gas Production - 23.0% (1)(2)
                
Canada - 1.4% (1)
                
Canadian Natural Resources Limited
     97,700       3,625,647  
United Kingdom - 1.3% (1)
                
BP PLC (ADR)
     71,700       3,381,372  
United States - 20.3% (1)
                
Anadarko Petroleum Corporation
     42,300       3,558,276  
Apache Corporation
     34,000       3,669,620  
Chevron Corporation
     14,900       1,625,888  
Continental Resources, Inc. (3)
     48,900       4,434,252  
Devon Energy Corporation
     59,800       4,383,938  
EOG Resources, Inc.
     44,800       5,100,928  
Exxon Mobil Corporation
     19,900       1,721,350  
Hess Corporation
     84,700       5,498,724  
Marathon Oil Corporation
     152,800       5,178,392  
Noble Energy, Inc.
     39,900       3,896,235  
Occidental Petroleum Corporation
     69,100       7,211,967  
Pioneer Natural Resources Company
     44,500       4,878,980  
Range Resources Corporation
     43,600       2,776,448  
                60,942,017  
Oilfield Services - 1.3% (1)(2)
                
United Kingdom - 1.3% (1)
                
Ensco PLC (ADR)
     61,000       3,556,300  
                   
                   
Total Common Stock (Cost $209,450,864)
             228,970,463  
                   
Master Limited Partnerships and Related Companies - 43.5% (1)
                
Crude/Refined Products Pipelines - 22.0% (1)
                
United States - 22.0% (1)
                
Buckeye Partners, L.P.
     99,000       5,920,200  
Enbridge Energy Management, L.L.C. (4)
     471,952       15,937,807  
Holly Energy Partners, L.P.
     58,100       3,557,463  
Kinder Morgan Management, LLC (4)
     221,375       17,747,643  
Magellan Midstream Partners, L.P.
     48,320       3,535,574  
Plains All American Pipeline, L.P.
     120,200       9,940,540  
Sunoco Logistics Partners L.P.
     45,800       1,788,490  
 
               58,427,717  
Natural Gas/Natural Gas Liquids Pipelines - 16.0% (1)
                
United States - 16.0% (1)
                
Energy Transfer Partners, L.P.
     179,900       8,527,260  
Enterprise Products Partners L.P.
     175,093       9,083,825  
Inergy Midstream, L.P.
     82,000       1,737,580  
ONEOK Partners, L.P.
     125,946       7,330,057  
Regency Energy Partners LP
     219,600       5,819,400  
TC PipeLines, LP
     68,000       3,157,920  
Williams Partners L.P.
     109,100       6,787,111  
                42,443,153  
Natural Gas Gathering/Processing - 5.5% (1)
                
United States - 5.5% (1)
                
Chesapeake Midstream Partners, L.P.
     60,600       1,730,736  
Copano Energy, L.L.C.
     48,265       1,794,493  
DCP Midstream Partners, LP
     36,350       1,770,245  
MarkWest Energy Partners, L.P.
     59,850       3,579,628  
Targa Resources Partners LP
     84,825       3,609,304  
Western Gas Partners LP
     42,905       1,964,620  
                14,449,026  
                   
Total Master Limited Partnerships and Related Companies (Cost $102,635,701)
       115,319,896  
                   
Short-Term Investment - 0.1% (1)
                
United States Investment Company - 0.1% (1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.21% (5) (Cost $247,622)
     247,622       247,622  
                   
Total Investments - 130.0% (1) (Cost $312,334,187)
             344,537,981  
Long-Term Debt Obligations - (18.5%) (1)
             (49,000,000 )
Mandatory Redeemable Preferred Stock at Liquidation Value - (6.0%) (1)
       (16,000,000 )
Total Value of Options Written (Premiums received $713,516) - (0.1%) (1)
       (287,766 )
Other Assets and Liabilities - (5.4%) (1)
             (14,216,223 )
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 265,033,992  
                   
                   
(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 29, 2012.
                
                   
Key to abbreviation
                
ADR = American Depository Receipts
                
 

SCHEDULE OF OPTIONS WRITTEN (Unaudited)
              
February 29, 2012
                    
                     
Call Options Written
Expiration Date
  
Expiration Price
    
Contracts
    
Fair Value
  
Anadarko Petroleum Corporation
March 2012
   $ 90.00       188     $ (8,460 )
Anadarko Petroleum Corporation
March 2012
     95.00       235       (4,465 )
Apache Corporation
March 2012
     115.00       340       (11,560 )
BP PLC (ADR)
March 2012
     50.00       717       (18,642 )
Canadian Natural Resources Limited
March 2012
     40.00       977       (19,540 )
Chevron Corporation
March 2012
     110.00       149       (18,625 )
Continental Resources, Inc.
March 2012
     95.00       489       (63,570 )
Devon Energy Corporation
March 2012
     80.00       598       (7,774 )
Ensco PLC (ADR)
March 2012
     60.00       610       (27,450 )
EOG Resources, Inc.
March 2012
     125.00       448       (10,304 )
Exxon Mobil Corporation
March 2012
     90.00       199       (2,786 )
Hess Corporation
March 2012
     70.00       847       (17,787 )
Marathon Oil Corporation
March 2012
     36.00       1,528       (24,448 )
Noble Energy, Inc.
March 2012
     110.00       399       (3,990 )
Occidental Petroleum Corporation
March 2012
     110.00       691       (17,966 )
Pioneer Natural Resources Company
March 2012
     120.00       445       (15,575 )
Range Resources Corporation
March 2012
     70.00       436       (14,824 )
                           
Total Value of Call Options Written (Premiums received $713,516)
             $ (287,766 )
                           
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 29, 2012.  These assets and liabilities are measured on a recurring basis.

Description
Fair Value at
February 29, 2012
  
Level 1
  
Level 2
  
Level 3
  
Assets
                
Equity Securities:
                
Common Stock (a)
 $ 228,970,463   $ 228,970,463   $ -   $ -  
Master Limited  Partnerships and Related Companies (a)
   115,319,896     115,319,896     -     -  
Total Equity Securities
   344,290,359     344,290,359     -     -  
Other:
                        
Short-Term Investment (b)
   247,622     247,622     -     -  
Total Assets
 $ 344,537,981   $ 344,537,981   $ -   $ -  
 
Liabilities
                        
Written Call Options
 $ 287,766   $ 287,766   $ -   $ -  

(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 29, 2012.

The Company did not hold any Level 3 securities during the period ended February 29, 2012.

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. 

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.  For the period from December 1, 2011 through February 29, 2012, Teekay Offshore Partners, L.P. common units in the amount of $3,944,394 were transferred from Level 2 to Level 1 when they converted into registered units and quoted prices in active markets were available.  There were no other transfers between levels.

As of February 29, 2012, the aggregate cost of securities for federal income tax purposes was $312,132,456.  The aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $33,423,200, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $1,017,675 and the net unrealized appreciation was $32,405,525.
 
 
 
 

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 25, 2012
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 25, 2012
By:
  /s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer   
       
 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date:  April 25, 2012
By:
 /s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer