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 C. 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: August 31, 2012

 
 
 
Item 1. Schedule of Investments.
 
Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
August 31, 2012
  
 
 
Shares
    
Fair Value
  
Common Stock - 88.0% (1)            
Crude/Refined Products Pipelines - 9.2% (1)
            
Canada - 5.7% (1)
            
Enbridge Inc.
     251,050     $ 9,896,391  
Pembina Pipeline Corporation
     168,800       4,575,537  
United States - 3.5% (1)
                
Kinder Morgan, Inc.
     244,250       8,736,822  
                23,208,750  
Local Distribution Companies - 12.8% (1)
                
United States - 12.8% (1)
                
CenterPoint Energy, Inc.
     728,600       14,856,154  
NiSource Inc.
     716,914       17,449,687  
                32,305,841  
Marine Transportation - 2.5% (1)
                
Republic of the Marshall Islands - 2.5% (1)
                
Teekay Offshore Partners L.P.
     223,330       6,340,339  
                   
Natural Gas Gathering Pipelines - 3.3% (1)
                
United States - 3.3% (1)
                
Targa Resources Corp.
     181,505       8,216,731  
                   
Natural Gas Pipelines - 38.5% (1)
                
Canada - 7.2% (1)
                
Keyera Corp.
     17,550       801,167  
TransCanada Corporation
     386,051       17,399,319  
United States - 31.3% (1)
                
EQT Corporation
     13,000       701,480  
National Fuel Gas Company
     13,400       668,660  
ONEOK, Inc.
     396,000       17,633,880  
Questar Corporation
     330,750       6,532,312  
Spectra Energy Corp
     820,106       23,176,196  
Williams Companies, Inc.
     930,500       30,027,235  
                96,940,249  
Oil and Gas Production - 20.5% (1)(2)
                
Canada - 1.1% (1)
                
Canadian Natural Resources Limited
     93,900       2,854,560  
United Kingdom - 1.2% (1)
                
BP p.l.c. (ADR)
     70,200       2,952,612  
United States - 18.2% (1)
                
Anadarko Petroleum Corporation
     64,000       4,433,280  
Apache Corporation
     50,900       4,364,675  
Chevron Corporation
     13,300       1,491,728  
Continental Resources, Inc. (3)
     40,400       2,992,024  
Denbury Resources Inc. (3)
     190,800       2,955,492  
Devon Energy Corporation
     51,100       2,955,113  
EOG Resources, Inc.
     27,100       2,934,930  
Exxon Mobil Corporation
     16,900       1,475,370  
Hess Corporation
     60,200       3,041,906  
Marathon Oil Corporation
     165,100       4,593,082  
Noble Energy, Inc.
     33,300       2,927,070  
Occidental Petroleum Corporation
     50,400       4,284,504  
Pioneer Natural Resources Company
     45,200       4,400,672  
Range Resources Corporation
     43,700       2,848,803  
                51,505,821  
Oilfield Services - 1.2% (1)(2)
                
United Kingdom - 1.2% (1)
                
Ensco plc (ADR)
     52,800       3,029,136  
                   
Total Common Stock (Cost $208,206,739)
             221,546,867  
                   
Master Limited Partnerships and Related Companies - 44.1% (1)
                
Crude/Refined Products Pipelines - 22.2% (1)
                
United States - 22.2% (1)
                
Buckeye Partners, L.P.
     65,100       3,217,242  
Enbridge Energy Management, L.L.C. (4)
     449,759       14,000,983  
Holly Energy Partners, L.P.
     58,100       3,913,035  
Kinder Morgan Management, LLC (4)
     244,822       18,146,239  
Magellan Midstream Partners, L.P.
     48,320       4,009,111  
Plains All American Pipeline, L.P.
     120,200       10,400,906  
Sunoco Logistics Partners L.P.
     45,800       2,136,570  
 
              55,824,086  
Natural Gas/Natural Gas Liquids Pipelines - 15.8% (1)
                
United States - 15.8% (1)
                
Energy Transfer Partners, L.P.
     179,900       7,685,328  
Enterprise Products Partners L.P.
     175,093       9,349,966  
Inergy Midstream, L.P.
     82,000       1,910,600  
ONEOK Partners, L.P.
     96,200       5,466,084  
Regency Energy Partners LP
     219,600       5,081,544  
TC PipeLines, LP
     68,000       3,088,560  
Williams Partners L.P.
     141,800       7,314,044  
                39,896,126  
Natural Gas Gathering/Processing - 6.1% (1)
                
United States - 6.1% (1)
                
Access Midstream Partners, L.P.
     119,700       3,606,561  
Copano Energy, L.L.C.
     48,265       1,481,253  
DCP Midstream Partners, LP
     36,350       1,568,139  
MarkWest Energy Partners, L.P.
     59,850       3,178,035  
Targa Resources Partners LP
     84,825       3,437,109  
Western Gas Partners LP
     42,905       2,048,714  
                15,319,811  
Total Master Limited Partnerships and Related Companies (Cost $100,418,541)
             111,040,023  
                   
Short-Term Investment - 0.1% (1)
                
United States Investment Company - 0.1% (1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.16% (5) (Cost $119,204)
     119,204       119,204  
                   
Total Investments - 132.2% (1) (Cost $308,744,484)
             332,706,094  
Long-Term Debt Obligations - (19.5%) (1)
             (49,000,000 )
Mandatory Redeemable Preferred Stock at Liquidation Value - (6.4%) (1)
             (16,000,000 )
Total Value of Options Written (Premiums received $698,522) - (0.1%) (1)
             (303,626 )
Other Assets and Liabilities - (6.2%) (1)
             (15,654,466 )
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 251,748,002  
                   
                   
(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, 2012.
                
                   
Key to abbreviation
                
ADR = American Depository Receipts
                

 
 
 

Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
        
August 31, 2012
              
               
Call Options Written
Expiration Date
Strike Price
Contracts
  
Fair Value
Anadarko Petroleum Corporation
September 2012
$ 72.50
  
80
  
$                               (5,600)
Anadarko Petroleum Corporation
September 2012
75.00
  
560
  
(12,880)
Apache Corporation
September 2012
92.50
  
509
  
(9,162)
BP p.l.c. (ADR)
September 2012
44.00
  
702
  
(14,742)
Canadian Natural Resources Limited
September 2012
34.00
  
939
  
(9,390)
Chevron Corporation
September 2012
120.00
  
133
  
(931)
Continental Resources, Inc.
September 2012
80.00
  
404
  
(28,280)
Denbury Resources Inc.
September 2012
17.00
  
1,908
  
(28,620)
Devon Energy Corporation
September 2012
62.50
  
511
  
(7,154)
Ensco plc (ADR)
September 2012
60.00
  
528
  
(14,784)
EOG Resources, Inc.
September 2012
115.00
  
271
  
(29,810)
Exxon Mobil Corporation
September 2012
92.50
  
169
  
(1,014)
Hess Corporation
September 2012
52.50
  
602
  
(38,528)
Marathon Oil Corporation
September 2012
29.00
  
1,651
  
(37,973)
Noble Energy, Inc.
September 2012
95.00
  
333
  
(4,995)
Occidental Petroleum Corporation
September 2012
92.50
  
504
  
(6,048)
Pioneer Natural Resources Company
September 2012
105.00
  
452
  
(38,420)
Range Resources Corporation
September 2012
72.50
  
437
  
(15,295)
               
Total Value of Call Options Written (Premiums received $698,522)
      
$                           (303,626)
               
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 August 31, 2012. These assets and liabilities are measured on a recurring basis.

Description
Fair Value at
August 31, 2012
  
Level 1
  
Level 2
  
Level 3
  
Assets
                
Equity Securities:
                
Common Stock(a)
 $ 221,546,867   $ 221,546,867   $ -   $ -  
Master Limited Partnerships and Related Companies(a)
   111,040,023     111,040,023     -     -  
Total Equity Securities
   332,586,890     332,586,890     -     -  
Other:
                        
Short-Term Investment(b)
   119,204     119,204     -     -  
Total Assets
 $ 332,706,094   $ 332,706,094   $ -   $ -  
Liabilities
                        
Written Call Options
 $ 303,626   $ 303,626   $ -   $ -  

(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, 2012.

The Company did not hold any Level 3 securities during the period ended August 31, 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 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. For the period from December 1, 2011 through August 31, 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 August 31, 2012, the aggregate cost of securities for federal income tax purposes was $307,817,269. The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $31,459,294, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $6,570,469 and the net unrealized appreciation was $24,888,825.

 
 
 

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 29, 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: October 29, 2012
By:
/s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: October 29, 2012
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer