tpz.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 811-22106



Tortoise Power and Energy Infrastructure 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 28, 2010


 
 
 
 
 
Item 1. Schedule of Investments.
 
Tortoise Power and Energy Infrastructure Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
February 28, 2010
  
     
Principal Amount/Shares
  
Corporate Bonds - 66.7% (1)
        
Fair Value
  
Crude/Refined Products Pipelines - 1.5% (1)
            
Canada - 1.5% (1)
            
Gibson Energy ULC/GEP Midstream Finance Corp., 10.000%, 01/15/2018 (2)
   $ 2,250,000     $ 2,193,750  
                   
Natural Gas/Natural Gas Liquids Pipelines - 17.2% (1)
                
Canada - 3.7% (1)
                
TransCanada Pipelines Limited, 6.350%, 05/15/2067
     6,000,000       5,638,680  
United States - 13.5% (1)
                
El Paso Corp., 12.000%, 12/12/2013
     4,000,000       4,650,000  
Midcontinent Express Pipeline LLC, 6.700%, 09/15/2019 (2)
     5,000,000       5,262,290  
Southern Star Central Corp., 6.750%, 03/01/2016
     2,745,000       2,717,550  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016 (2)
     2,000,000       2,050,000  
Southern Union Co., 7.600%, 02/01/2024
     3,500,000       3,972,070  
The Williams Companies, Inc., 8.750%, 03/15/2032
     1,482,000       1,873,724  
                26,164,314  
                   
Natural Gas Gathering/Processing - 5.3% (1)
                
United States - 5.3% (1)
                
DCP Midstream LLC, 9.750%, 03/15/2019 (2)
     4,000,000       5,068,588  
Enogex LLC, 6.250%, 03/15/2020 (2)
     3,000,000       3,034,884  
                8,103,472  
Oil and Gas Exploration and Production - 4.5% (1)
                
United States - 4.5% (1)
                
Encore Acquisition Co., 9.500%, 05/01/2016
     1,500,000       1,597,500  
Newfield Exploration Co., 7.125%, 05/15/2018
     1,000,000       1,000,000  
Pioneer Natural Resources Co., 6.875%, 05/01/2018
     1,000,000       983,508  
Plains Exploration & Production Co., 10.000%, 03/01/2016
     3,000,000       3,262,500  
                6,843,508  
Oilfield Services - 2.2% (1)
                
United States - 2.2% (1)
                
Pride International, Inc., 8.500%, 06/15/2019
     3,000,000       3,352,500  
                   
Power/Utility - 34.0% (1)
                
United States - 34.0% (1)
                
Ameren Corp., 8.875%, 05/15/2014
     2,000,000       2,327,672  
CenterPoint Energy, Inc., 6.500%, 05/01/2018
     5,000,000       5,327,125  
CMS Energy Corp., 6.250%, 02/01/2020
     1,000,000       978,803  
CMS Energy Corp., 8.750%, 06/15/2019
     4,185,000       4,710,690  
Dominion Resources, Inc., 8.375%, 06/15/2064
     183,000       5,206,350  
FPL Group Capital, Inc., 6.650%, 06/15/2067
     1,029,000       956,970  
Illinois Power Co., 9.750%, 11/15/2018
     2,000,000       2,598,492  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016 (2)
     2,000,000       2,020,000  
NiSource Finance Corp., 10.750%, 03/15/2016
     5,000,000       6,408,875  
North American Energy Alliance LLC, 10.875%, 06/01/2016 (2)
     2,800,000       2,968,000  
NRG Energy, Inc., 8.500%, 06/15/2019
     6,000,000       5,992,500  
PPL Capital Funding, Inc., 6.700%, 03/30/2067
     6,000,000       5,190,000  
Sierra Pacific Resources, 6.750%, 08/15/2017
     3,000,000       3,030,741  
Wisconsin Energy Corp., 6.250%, 05/15/2067
     3,450,000       3,182,625  
WPS Resources Corp., 6.110%, 12/01/2066
     1,000,000       870,000  
 
               51,768,843  
Refining - 2.0% (1)
                
United States - 2.0% (1)
                
Holly Corp., 9.875%, 06/15/2017 (2)
     3,000,000       3,075,000  
                   
Total Corporate Bonds (Cost $97,234,385)
             101,501,387  
                   
Master Limited Partnerships and Related Companies - 52.3% (1)
                
                   
Crude/Refined Products Pipelines - 25.4% (1)
                
United States - 25.4% (1)
                
Buckeye Partners, L.P.
     25,300       1,487,387  
Enbridge Energy Management, L.L.C. (3)
     284,339       14,214,115  
Holly Energy Partners, L.P.
     27,549       1,173,312  
Kinder Morgan Management, LLC (3)(4)
     282,415       16,196,500  
Magellan Midstream Partners, L.P.
     21,600       977,184  
NuStar Energy L.P.
     32,600       1,870,914  
Plains All American Pipeline, L.P.
     16,500       914,265  
Sunoco Logistics Partners L.P.
     26,481       1,797,001  
 
               38,630,678  
                   
Natural Gas/Natural Gas Liquids Pipelines - 15.5% (1)
                
United States - 15.5% (1)
                
Boardwalk Pipeline Partners, LP
     120,000       3,592,800  
Duncan Energy Partners L.P.
     243,900       6,217,011  
El Paso Pipeline Partners, L.P.
     35,600       921,684  
Energy Transfer Equity, L.P.
     37,600       1,215,232  
Energy Transfer Partners, L.P.
     107,700       4,984,356  
Enterprise Products Partners L.P.
     33,600       1,100,736  
ONEOK Partners, L.P.
     66,600       4,039,290  
Spectra Energy Partners, LP
     26,960       808,261  
Williams Pipeline Partners L.P.
     23,645       690,197  
                23,569,567  
                   
Natural Gas Gathering/Processing - 6.7% (1)
                
United States - 6.7% (1)
                
Copano Energy, L.L.C.
     93,200       2,218,160  
DCP Midstream Partners, LP
     85,200       2,625,864  
MarkWest Energy Partners, L.P.
     56,700       1,677,186  
Targa Resources Partners LP
     132,417       3,310,425  
Western Gas Partners LP
     15,300       327,114  
                10,158,749  
                   
Propane Distribution - 4.7% (1)
                
United States - 4.7% (1)
                
Inergy, L.P.
     200,900       7,256,508  
                   
                   
Total Master Limited Partnerships and Related Companies (Cost $62,198,811)
       79,615,502  
                   
Short-Term Investment - 0.0% (1)
                
United States Investment Company - 0.0% (1)
                
Fidelity Institutional Government Portfolio - Class I, 0.03% (5) (Cost $22,611)
     22,611       22,611  
                   
Total Investments - 119.0% (1) (Cost $159,455,807)
             181,139,500  
Long-Term Debt Obligations - (13.1%) (1)
             (20,000,000 )
Interest Rate Swap Contracts - (0.2%) (1)
                
$27,000,000 notional - Unrealized Depreciation
            (297,073 )
Other Assets and Liabilities - (5.7%) (1)
             (8,611,351 )
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 152,231,076  
                   
(1)
Calculated as a percentage of net assets applicable to common stockholders.
          
(2)
Restricted securities have been fair valued in accordance with procedures approved by the Board of Directors and have
  
 
a total fair value of $25,672,512, which represents 16.9% of net assets.
 
(3)
Security distributions are paid-in-kind.
                
(4)
All or a portion of the security is segregated as collateral for the unrealized depreciation of interest rate swap contracts.
  
(5)
Rate indicated is the current yield as of February 28, 2010.
                


 
 
 

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, 2010.  These assets and liabilities are measured on a recurring basis.

         
Fair Value Measurements at Reporting Date Using
  
         
Quoted Prices in
          
Significant
  
         
Active Markets for
    
Significant Other
    
Unobservable
  
   
Fair Value at
    
Identical Assets
    
Observable Inputs
    
Inputs
  
Description
  
February 28, 2010
    
(Level 1)
    
(Level 2)
    
(Level 3)
  
Assets
                        
 Debt Securities:                        
    Corporate Bonds(a)
   $ 101,501,387     $ 5,206,350     $ 96,295,037     $ -  
Total Debt Securities
     101,501,387       5,206,350       96,295,037       -  
Equity Securities:
                                
    Master Limited Partnerships and Related Companies(a)
     79,615,502       79,615,502       -       -  
Total Equity Securities
     79,615,502       79,615,502       -       -  
 Other:
                                
Short-Term Investment(b)
     22,611       22,611       -       -  
Total Other
     22,611       22,611       -       -  
Total Assets
   $ 181,139,500     $ 84,844,463     $ 96,295,037     $ -  
Liabilities
   $ 297,073     $ -     $ 297,073     $ -  
 Interest Rate Swap Contracts                                
Total
   $ 180,842,427     $ 84,844,463     $ 95,997,964     $ -  

(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, 2010.

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. 

Some debt securities are fair valued using a market value obtained from an approved pricing service which utilizes a pricing matrix based upon yield data for securities with similar characteristics or from a direct written broker-dealer quotation from a dealer who has made a market in the security.  This pricing methodology applies to the Company’s Level 2 investments.

Interest rate swap contracts are valued by using industry-accepted models which discount the estimated future cash flows based on a forward rate curve and the stated terms of the interest rate swap agreement by using interest rates currently available in the market, or based on dealer quotations, if available, which applies to the Company’s Level 2 liabilities.

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 principal amount, acquisition date(s), acquisition cost, fair value and percent of net assets which the securities comprise at February 28, 2010.

Principal
Amount
Acquisition
Date(s)
Acquisition
Cost
Fair
Value
Fair Value as Percent of Net Assets
 
 
 
DCP Midstream LLC,
          
   9.750%, 03/15/2019
$4,000,000
08/07/09-08/27/09
$4,769,350
$5,068,588
3.3%
Enogex LLC,
          
   6.250%, 03/15/2020
3,000,000
02/26/10
3,079,770
3,034,884
2.0
Gibson Energy ULC/GEP Midstream
          
   Finance Corp., 10.000%, 01/15/2018
2,250,000
01/13/10-01/29/10
2,210,870
2,193,750
1.4
Holly Corp.,
          
   9.875%, 06/15/2017
3,000,000
10/21/09-01/07/10
3,120,000
3,075,000
2.0
IPALCO Enterprises, Inc.,
          
   7.250%, 04/01/2016
2,000,000
11/03/2009
2,015,000
2,020,000
1.3
Midcontinent Express Pipelines, LLC,
          
   6.700%, 09/15/2019
5,000,000
09/09/2009
4,993,200
5,262,290
3.5
North American Energy Alliance, LLC,
          
   10.875%, 06/01/2016
2,800,000
09/24/09-10/08/09
2,895,000
2,968,000
2.0
Southern Star Central Gas Pipeline, Inc.,
          
   6.000%, 06/01/2016
2,000,000
08/24/2009
1,970,000
2,050,000
1.4
 
    
$25,053,190
$25,672,512
16.9%

As of February 28, 2010, the aggregate cost of securities for federal income tax purposes was $159,194,681.  The aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $21,944,819, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $0 and the net unrealized appreciation was $21,944,819.

 
 
 


Item 2. Controls and Procedures.
 
(a)  
The registrant’s President and 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 Power and Energy Infrastructure Fund, Inc.  
       
Date:  April 26, 2010
By:
 /s/ David J. Schulte  
    David J. Schulte  
    President and 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 Power and Energy Infrastructure Fund, Inc.  
       
Date:  April 26, 2010
By:
 /s/ David J. Schulte  
    David J. Schulte   
    President and Chief Executive Officer  
       
  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date:  April 26, 2010
By:
 /s/ Terry Matlack  
    Terry Matlack  
    Chief Financial Officer