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: August 31, 2015
 
 
 
Item 1. Schedule of Investments.
 
Tortoise Pipeline & Energy Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
     
August 31, 2015
  
     
Shares
     Fair Value  
Common Stock - 95.8%(1)
  
 
    
 
  
Crude/Refined Product Pipelines - 13.9%(1)
            
Canada - 9.7%(1)
            
Enbridge Inc.
     358,182     $ 14,767,844  
Inter Pipeline Ltd.
     415,182       8,899,462  
Pembina Pipeline Corporation
     30,265       839,672  
United States - 4.2%(1)
                
Plains GP Holdings, L.P.
     363,244       7,115,950  
VTTI Energy Partners LP
     157,465       3,420,140  
                35,043,068  
Local Distribution Companies - 6.4%(1)
                
United States - 6.4%(1)
                
CenterPoint Energy, Inc.
     253,253       4,715,571  
NiSource Inc.
     683,109       11,469,400  
                16,184,971  
Marine Transportation - 1.6%(1)
                
Republic of the Marshall Islands - 1.6%(1)
                
Teekay Offshore Partners L.P.
     223,330       3,952,941  
                   
Natural Gas Gathering/Processing- 17.2%(1)
                
United States - 17.2%(1)
                
Targa Resources Corp.
     139,209       9,196,147  
The Williams Companies, Inc.
     706,210       34,039,322  
                43,235,469  
                   
Natural Gas/Natural Gas Liquids Pipelines - 44.1%(1)
                
Canada - 7.7%(1)
                
TransCanada Corporation
     561,318       19,432,829  
United States - 36.4%(1)
                
Columbia Pipeline Group
     683,109       17,323,644  
Kinder Morgan, Inc.
     873,571       28,312,436  
ONEOK, Inc.
     442,735       15,942,887  
Spectra Energy Corp
     1,042,043       30,292,190  
                111,303,986  
Oil and Gas Production - 12.6%(1)
                
United States - 12.6%(1)
                
Anadarko Petroleum Corporation(2)
     31,400       2,247,612  
Antero Resources Corporation(2)(3)
     24,100       622,744  
Cabot Oil & Gas Corporation(2)
     115,900       2,743,353  
Carrizo Oil & Gas, Inc.(2)(3)
     14,600       531,878  
Cimarex Energy Co.(2)
     19,500       2,154,945  
Concho Resources Inc.(2)(3)
     26,000       2,812,160  
Continental Resources, Inc.(2)(3)
     42,100       1,351,410  
Diamondback Energy, Inc.(2)(3)
     10,400       710,216  
EOG Resources, Inc.(2)
     53,700       4,205,247  
EP Energy Corporation(2)(3)
     41,200       292,108  
Gulfport Energy Corporation(2)(3)
     17,800       637,774  
Hess Corporation(2)
     12,400       737,180  
Laredo Petroleum, Inc.(2)(3)
     61,400       625,666  
Marathon Oil Corporation(2)
     56,400       975,156  
Newfield Exploration Company(2)(3)
     40,400       1,345,724  
Noble Energy, Inc.(2)
     44,400       1,483,404  
Occidental Petroleum Corporation(2)
     30,100       2,197,601  
Pioneer Natural Resources Company(2)
     27,700       3,408,762  
Range Resources Corporation(2)
     40,500       1,564,110  
RSP Permian, Inc.(2)(3)
     26,200       627,228  
Whiting Petroleum Corporation(2)(3)
     28,300       547,039  
                31,821,317  
                   
Total Common Stock (Cost $245,409,651)
             241,541,752  
                   
Master Limited Partnerships and Related Companies - 40.1%(1)
                
Crude/Refined Product Pipelines - 23.0%(1)
                
United States - 23.0%(1)
                
Buckeye Partners, L.P.
     96,137       6,769,968  
Enbridge Energy Management, L.L.C.(4)
     577,993       16,270,493  
Genesis Energy L.P.
     18,700       816,442  
Magellan Midstream Partners, L.P.
     105,144       7,420,012  
MPLX LP
     85,918       4,263,251  
Phillips 66 Partners LP
     59,100       3,687,840  
Plains All American Pipeline, L.P.
     194,400       7,010,064  
Shell Midstream Partners, L.P.
     55,452       2,194,236  
Sunoco Logistics Partners L.P.
     148,800       5,033,904  
Tesoro Logistics LP
     65,487       3,458,368  
Valero Energy Partners LP
     23,059       1,195,148  
 
               58,119,726  
Natural Gas/Natural Gas Liquids Pipelines - 10.0%(1)
                
United States - 10.0%(1)
                
Columbia Pipeline Partners LP
     38,484       763,138  
Energy Transfer Partners, L.P.
     229,793       11,292,028  
Enterprise Products Partners L.P.
     291,728       8,200,474  
EQT GP Holdings, LP
     9,156       297,753  
EQT Midstream Partners, LP
     39,613       3,081,891  
ONEOK Partners, L.P.
     48,900       1,581,915  
                25,217,199  
Natural Gas Gathering/Processing - 7.1%(1)
                
United States - 7.1%(1)
                
Antero Midstream Partners LP
     40,013       926,701  
DCP Midstream Partners, LP
     87,593       2,470,123  
EnLink Midstream Partners, LP
     55,955       986,487  
MarkWest Energy Partners, L.P.
     87,300       4,921,101  
Targa Resources Partners LP
     70,000       2,113,300  
Western Gas Equity Partners, LP
     46,500       2,469,150  
Western Gas Partners, LP
     66,387       3,905,547  
                17,792,409  
                   
Total Master Limited Partnerships and Related Companies (Cost $86,051,875)
             101,129,334  
                   
Preferred Convertible - 0.7%(1)
                
Oil and Gas Production - 0.7%(1)
                
United States - 0.7%(1)
                
Anadarko Petroleum Corporation, 7.500%, 06/07/2018 (Cost $1,946,307)
     39,500       1,803,175  
Short-Term Investment - 0.0%(1)
                
United States Investment Company - 0.0%(1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.13%(5) (Cost $53,698)
     53,698       53,698  
                   
Total Investments - 136.6%(1) (Cost $333,461,531)
             344,527,959  
Credit Facility Borrowings - (8.5)%(1)
             (21,500,000 )
Senior Notes - (21.4)%(1)
             (54,000,000 )
Mandatory Redeemable Preferred Stock at Liquidation Value - (6.4)%(1)
             (16,000,000 )
Total Value of Options Written (Premiums received $465,160) - (0.2)%(1)
             (554,537 )
Other Assets and Liabilities - (0.1)%(1)
             (291,521 )
Total Net Assets Applicable to Common Stockholders - 100.0%(1)
           $ 252,181,901  
                   
                   
(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, 2015.
                

 
 
 


Tortoise Pipeline & Energy Fund, Inc.
                    
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
                  
August 31, 2015
    
 
              
                     
Call Options Written
Expiration Date
  
Strike Price
    
Contracts
    
Fair Value
  
Anadarko Petroleum Corporation
September 2015
   $ 77.50       314     $ (32,028 )
Antero Resources Corporation
September 2015
     30.00       241       (7,230 )
Cabot Oil & Gas Corporation
September 2015
     28.50       1,159       (11,541 )
Carrizo Oil & Gas, Inc.
September 2015
     40.00       146       (10,220 )
Cimarex Energy Co.
September 2015
     120.00       195       (23,400 )
Concho Resources Inc.
September 2015
     115.00       260       (54,600 )
Continental Resources, Inc.
September 2015
     37.00       421       (14,735 )
Diamondback Energy, Inc.
September 2015
     77.50       104       (5,980 )
EOG Resources, Inc.
September 2015
     87.50       537       (23,091 )
EP Energy Corporation
September 2015
     7.50       412       (24,720 )
Gulfport Energy Corporation
September 2015
     37.50       178       (15,575 )
Hess Corporation
September 2015
     62.50       124       (11,904 )
Laredo Petroleum, Inc.
September 2015
     11.00       614       (42,980 )
Marathon Oil Corporation
September 2015
     17.00       564       (69,936 )
Newfield Exploration Company
September 2015
     39.00       404       (9,090 )
Noble Energy, Inc.
September 2015
     37.50       444       (15,540 )
Occidental Petroleum Corporation
September 2015
     77.50       301       (15,652 )
Pioneer Natural Resources Company
September 2015
     135.00       277       (42,935 )
Range Resources Corporation
September 2015
     40.00       405       (76,950 )
RSP Permian, Inc.
September 2015
     25.00       262       (20,960 )
Whiting Petroleum Corporation
September 2015
     22.00       283       (25,470 )
                           
Total Value of Call Options Written (Premiums received $465,160)
                   $ (554,537 )
                           

 
 
 

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 assets and liabilities by level within the fair value hierarchy as of August 31, 2015.  These assets and liabilities are measured on a recurring basis.

Description
  
Level 1
    
Level 2
    
Level 3
    
Total
  
Assets
                        
Investments:
                        
Common Stock(a)
   $ 241,541,752     $ -     $ -     $ 241,541,752  
Master Limited Partnerships and Related Companies(a)
     101,129,334       -       -       101,129,334  
Preferred Convertible(a)
     1,803,175       -       -       1,803,175  
Short-Term Investment(b)
     53,698       -       -       53,698  
Total Assets
   $ 344,527,959     $ -     $ -     $ 344,527,959  
Liabilities
                                
Written Call Options
   $ 554,537     $ -     $ -     $ 554,537  
 
(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 August 31, 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 August 31, 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 valuation 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 August 31, 2015, the aggregate cost of securities for federal income tax purposes was $318,526,487.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $60,999,223, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $34,997,751 and the net unrealized appreciation was $26,001,472.
 

 
 
 

Item 2. Controls and Procedures.
(a)
The registrant’s Chief Executive Officer and its Principal 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 23, 2015
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    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 23, 2015
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Executive Officer  
       
 
Tortoise Pipeline & Energy Fund, Inc.
  
       
Date: October 23, 2015
By:
/s/ Brent Behrens  
    Brent Behrens  
    Principal Financial Officer and Treasurer