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, 2015
 
 
 
Item 1. Schedule of Investments.
 
Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
       February 28, 2015  
       Shares
Fair Value
  
Common Stock - 89.3%(1)
  
 
    
 
  
Crude/Refined Products Pipelines - 12.2%(1)
            
Canada - 8.2%(1)
            
Enbridge Inc.
     333,377     $ 15,482,028  
Inter Pipeline Ltd.
     388,462       10,316,725  
Pembina Pipeline Corporation
     30,265       967,918  
United States - 4.0%(1)
                
Plains GP Holdings, L.P.
     370,961       10,624,323  
VTTI Energy Partners LP
     88,441       2,287,084  
                39,678,078  
Local Distribution Companies - 10.6%(1)
                
United States - 10.6%(1)
                
CenterPoint Energy, Inc.
     253,253       5,265,130  
NiSource Inc.
     683,109       29,312,207  
                34,577,337  
Marine Transportation - 1.5%(1)
                
Republic of the Marshall Islands - 1.5%(1)
                
Teekay Offshore Partners L.P.
     223,330       4,899,860  
                   
Natural Gas Gathering/Processing - 17.3%(1)
                
United States - 17.3%(1)
                
Targa Resources Corp.
     172,680       17,195,475  
The Williams Companies, Inc.
     802,105       39,335,229  
                56,530,704  
                   
Natural Gas/Natural Gas Liquids Pipelines- 35.0%(1)
                
Canada - 7.5%(1)
                
TransCanada Corporation
     561,318       24,602,568  
United States - 27.5%(1)
                
Kinder Morgan, Inc.
     820,870       33,663,879  
ONEOK, Inc.
     492,706       21,807,168  
Spectra Energy Corp
     958,996       34,034,768  
                114,108,383  
Oil and Gas Production - 12.7%(1)
                
United States - 12.7%(1)
                
Anadarko Petroleum Corporation(2)
     33,400       2,813,282  
Antero Resources Corporation(2)(3)
     24,800       978,360  
Cabot Oil & Gas Corporation(2)
     130,300       3,778,700  
Carrizo Oil & Gas, Inc.(2)(3)
     15,600       742,404  
Chesapeake Energy Corporation(2)
     50,100       835,668  
Cimarex Energy Co.(2)
     20,900       2,292,312  
Concho Resources Inc.(2)(3)
     27,000       2,940,840  
Continental Resources, Inc.(2)(3)
     49,100       2,184,459  
Diamondback Energy, Inc.(2)(3)
     11,200       797,552  
EOG Resources, Inc.(2)
     53,700       4,817,964  
EP Energy Corporation (3)
     41,200       463,500  
Hess Corporation(2)
     13,300       998,564  
Laredo Petroleum, Inc. (2)(3)
     64,800       773,064  
Marathon Oil Corporation(2)
     123,700       3,446,282  
Newfield Exploration Company(2)(3)
     43,200       1,426,896  
Noble Energy, Inc.(2)
     44,400       2,097,012  
Occidental Petroleum Corporation(2)
     31,400       2,445,432  
Pioneer Natural Resources Company(2)
     27,700       4,224,804  
Range Resources Corporation(2)
     50,200       2,486,908  
Whiting Petroleum Corporation(2)(3)
     28,300       957,389  
                41,501,392  
                   
Total Common Stock (Cost $247,635,493)
             291,295,754  
                   
Master Limited Partnerships and Related Companies - 38.2%(1)
                
Crude/Refined Products Pipelines - 21.9%(1)
                
United States - 21.9%(1)
                
Buckeye Partners, L.P.
     83,000       6,452,420  
Enbridge Energy Management, L.L.C.(4)
     558,665       20,827,038  
Genesis Energy L.P.
     18,700       860,200  
Magellan Midstream Partners, L.P.
     97,361       8,003,074  
MPLX LP
     102,268       8,406,430  
Phillips 66 Partners LP
     59,100       4,207,329  
Plains All American Pipeline, L.P.
     194,400       9,698,616  
Rose Rock Midstream, L.P.
     23,329       1,081,999  
Shell Midstream Partners, L.P.
     32,430       1,266,716  
Sunoco Logistics Partners L.P.
     148,800       6,579,936  
Tesoro Logistics LP
     50,588       2,904,763  
Valero Energy Partners LP
     23,059       1,228,814  
 
               71,517,335  
Natural Gas/Natural Gas Liquids Pipelines - 7.0%(1)
                
United States - 7.0%(1)
                
Columbia Pipeline Partners LP
     38,484       1,065,622  
Energy Transfer Partners, L.P.
     177,700       10,569,596  
Enterprise Products Partners L.P.
     272,508       9,085,417  
ONEOK Partners, L.P.
     48,900       2,043,531  
                22,764,166  
Natural Gas Gathering/Processing - 9.3%(1)
                
United States - 9.3%(1)
                
Antero Midstream Partners LP
     40,013       1,040,338  
DCP Midstream Partners, LP
     97,900       3,896,420  
EnLink Midstream Partners, L.P.
     55,955       1,502,951  
MarkWest Energy Partners, L.P.
     87,300       5,670,135  
Regency Energy Partners LP
     171,089       4,172,861  
Targa Resources Partners LP
     70,000       3,067,400  
Western Gas Equity Partners, LP
     46,500       2,908,110  
Western Gas Partners, LP
     36,300       2,525,754  
Williams Partners L.P.
     105,679       5,404,424  
                30,188,393  
                   
Total Master Limited Partnerships and Related Companies (Cost $85,328,451)
             124,469,894  
                   
Short-Term Investment - 0.0%(1)
                
United States Investment Company - 0.0%(1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.08%(5) (Cost $114,384)
     114,384       114,384  
                   
Total Investments - 127.5%(1) (Cost $333,078,328)
             415,880,032  
Senior Notes - (16.5%)(1)
             (54,000,000 )
Mandatory Redeemable Preferred Stock at Liquidation Value - (4.9%)(1)
             (16,000,000 )
Total Value of Options Written (Premiums received $435,747) - (0.1%)(1)
             (212,164 )
Other Assets and Liabilities - (6.0%)(1)
             (19,516,196 )
Total Net Assets Applicable to Common Stockholders - 100.0%(1)
           $ 326,151,672  
                   
                   
(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, 2015.
                
 
 
 
 

 
 
 

Tortoise Pipeline & Energy Fund, Inc.
                    
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
                  
February 28, 2015
    
 
              
                     
Call Options Written
Expiration
Date
  
Strike Price
    
Contracts
    
Fair Value
  
Anadarko Petroleum Corporation
March 2015
   $ 92.50       334     $ (8,016 )
Antero Resources Corporation
March 2015
     45.00       248       (4,960 )
Cabot Oil & Gas Corporation
March 2015
     30.00       1,303       (65,150 )
Carrizo Oil & Gas, Inc.
March 2015
     57.50       156       (3,510 )
Chesapeake Energy Corporation
March 2015
     23.00       501       (1,002 )
Cimarex Energy Co.
March 2015
     125.00       209       (5,016 )
Concho Resources Inc.
March 2015
     130.00       270       (3,375 )
Continental Resources, Inc.
March 2015
     52.50       491       (7,365 )
Diamondback Energy, Inc.
March 2015
     82.50       112       (3,080 )
EOG Resources, Inc.
March 2015
     100.00       537       (7,518 )
Hess Corporation
March 2015
     82.50       133       (2,460 )
Laredo Petroleum, Inc.
March 2015
     15.00       648       (11,340 )
Marathon Oil Corporation
March 2015
     31.00       1,237       (8,659 )
Newfield Exploration Company
March 2015
     35.00       432       (23,760 )
Noble Energy, Inc.
March 2015
     52.50       444       (13,320 )
Occidental Petroleum Corporation
March 2015
     85.00       314       (3,454 )
Pioneer Natural Resources Company
March 2015
     170.00       277       (21,329 )
Range Resources Corporation
March 2015
     57.50       502       (7,530 )
Whiting Petroleum Corporation
March 2015
     41.00       283       (11,320 )
                           
Total Value of Call Options Written (Premiums received $435,747)
                   $ (212,164 )
                           

 
 
 

Various inputs are used in determining the fair value of the Company’s investments and 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, 2015.  These assets and liabilities are measured on a recurring basis.
 
Description
Level 1
  
Level 2
  
Level 3
  
Total
  
Assets
                
Investments:
                
Common Stock(a)
 $ 291,295,754   $ -   $ -   $ 291,295,754  
Master Limited Partnerships and Related Companies(a)
   124,469,894     -     -     124,469,894  
Short-Term Investment(b)
   114,384     -     -     114,384  
Total Assets
 $ 415,880,032   $ -   $ -   $ 415,880,032  
Liabilities
                        
Written Call Options
 $ 212,164   $ -   $ -   $ 212,164  
 
(a)  
All other industry classifications are identified in the Schedule of Investments.
(b)  
Short-term investment is a sweep investment for cash balances.

The Company did not hold any Level 3 securities during the period ended February 28, 2015.  The Company utilizes the beginning of reporting period method for determining transfers between levels.  There were no transfers between levels for the Company during the period ended February 28, 2015.

 
 
 


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.  The Company primarily owns securities that are listed on a securities exchange or over-the-counter market. The Company values those securities at their last sale price on that exchange or over-the-counter market on the valuation date.  If the security is listed on more than one exchange, the Company uses the price from the exchange that it considers to be the principal exchange on which the security is traded. Securities listed on the NASDAQ are valued at the NASDAQ Official Closing Price, which may not necessarily represent the last sale price.  If there has been no sale on such exchange or over-the-counter market on such day, the security is valued at the mean between the last bid price and last ask price on such day. These securities are categorized as Level 1 in the fair value hierarchy as further described below.
 
Restricted securities are subject to statutory or contractual restrictions on their public resale, which may make it more difficult to obtain a valuation and may limit a fund’s ability to dispose of them. Investments in private placement securities and other securities for which market quotations are not readily available are valued in good faith by using certain fair value procedures. Such fair value procedures consider factors such as discounts to publicly traded issues, time until conversion date, securities with similar yields, quality, type of issue, coupon, duration and rating. If events occur that affect the value of the Company’s portfolio securities before the net asset value has been calculated (a “significant event”), the portfolio securities so affected are generally priced using fair value procedures.

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 liquidity and 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.  To the extent that such securities are convertible or otherwise become freely tradable within a time frame that may be reasonably determined, an amortization schedule may be used to determine the discount.  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 last reported sale price on any exchange on which they trade.  If no sales are reported on any exchange on the measurement date, exchange-traded options are valued at the mean between the highest bid and last lowest asked prices obtained as of the closing of the exchanges on which the option is traded.  The value of Flexible Exchange Options (FLEX Options) are determined (i) by an evaluated price as determined by a third-party valuation service; or (ii) by using a quotation provided by a broker-dealer.

The Company generally values debt securities at evaluated bid prices obtained from an independent third-party pricing service that utilizes a pricing matrix based upon yield data for securities with similar characteristics, or based on a direct written broker-dealer quotation from a dealer who has made a market in the security.  Debt securities with 60 days or less to maturity are valued on the basis of amortized cost, which approximates market value.

As of February 28, 2015, the aggregate cost of securities for federal income tax purposes was $321,423,084.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $108,111,622, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $13,654,674 and the net unrealized appreciation was $94,456,948.
 
 
 
 
 

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 29, 2015
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 29, 2015
By:
/s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: April 29, 2015
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer