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:  August 31, 2011

 
 
 
 
 
Item 1. Schedule of Investments.
 
Tortoise Power and Energy Infrastructure Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
August 31, 2011
  
Corporate Bonds - 69.5% (1)
     Principal Amount/Shares    
Fair Value
  
Natural Gas/Natural Gas Liquids Pipelines - 19.7% (1)
            
Canada - 3.5% (1)
            
TransCanada Pipelines Limited, 6.350%, 05/15/2067
   $ 6,000,000     $ 6,048,732  
United States - 16.2% (1)
                
El Paso Corp., 6.500%, 09/15/2020
     5,000,000       5,399,850  
Florida Gas Transmission Co., LLC, 5.450%, 07/15/2020 (2)
     1,500,000       1,688,098  
Midcontinent Express Pipeline LLC, 6.700%, 09/15/2019 (2)
     6,000,000       6,893,880  
NGPL PipeCo LLC, 7.119%, 12/15/2017 (2)
     4,000,000       4,316,644  
Southern Star Central Corp., 6.750%, 03/01/2016
     2,745,000       2,690,100  
Southern Star Central Gas Pipeline, Inc., 6.000%, 06/01/2016 (2)
     2,000,000       2,251,800  
Southern Union Co., 7.600%, 02/01/2024
     3,500,000       4,253,333  
                33,542,437  
                   
Natural Gas Gathering/Processing - 5.9% (1)
                
United States - 5.9% (1)
                
DCP Midstream LLC, 9.750%, 03/15/2019 (2)
     4,000,000       5,367,380  
Enogex LLC, 6.250%, 03/15/2020 (2)
     4,000,000       4,591,728  
                9,959,108  
Oil and Gas Exploration and Production - 5.4% (1)
                
United States - 5.4% (1)
                
Chesapeake Energy Corp., 7.250%, 12/15/2018
     2,000,000       2,150,000  
Encore Acquisition Co., 9.500%, 05/01/2016
     1,500,000       1,642,500  
Newfield Exploration Co., 7.125%, 05/15/2018
     1,000,000       1,040,000  
Pioneer Natural Resources Co., 6.875%, 05/01/2018
     1,000,000       1,083,169  
Plains Exploration & Production Co., 10.000%, 03/01/2016
     3,000,000       3,315,000  
                9,230,669  
Oilfield Services - 2.3% (1)
                
United States - 2.3% (1)
                
Pride International, Inc., 8.500%, 06/15/2019
     3,000,000       3,870,924  
                   
Power/Utility - 34.3% (1)
                
United States - 34.3% (1)
                
Ameren Illinois Power Co., 9.750%, 11/15/2018
     2,000,000       2,672,320  
CenterPoint Energy, Inc., 6.500%, 05/01/2018
     4,000,000       4,753,492  
CMS Energy Corp., 8.750%, 06/15/2019
     4,185,000       5,059,087  
Dominion Resources, Inc., 8.375%, 06/15/2064
     183,000       5,316,150  
FPL Group Capital, Inc., 6.650%, 06/15/2067
     1,029,000       995,558  
Integrys Energy Group, Inc., 6.110%, 12/01/2066
     3,750,000       3,581,250  
IPALCO Enterprises, Inc., 7.250%, 04/01/2016 (2)
     4,000,000       4,287,060  
NiSource Finance Corp., 6.400%, 03/15/2018
     3,500,000       4,118,170  
North American Energy Alliance LLC, 10.875%, 06/01/2016 (2)
     2,800,000       2,982,000  
NRG Energy, Inc., 8.500%, 06/15/2019
     6,000,000       6,120,000  
PPL Capital Funding, Inc., 6.700%, 03/30/2067
     6,000,000       5,790,000  
Sierra Pacific Resources, 6.750%, 08/15/2017
     3,000,000       3,101,094  
Source Gas, LLC, 5.900%, 04/01/2017 (2)
     5,770,000       6,020,124  
Wisconsin Energy Corp., 6.250%, 05/15/2067
     3,450,000       3,415,500  
 
               58,211,805  
Refining - 1.9% (1)
                
United States - 1.9% (1)
                
Holly Corp., 9.875%, 06/15/2017
     3,000,000       3,285,000  
                   
Total Corporate Bonds (Cost $107,805,944)
             118,099,943  
                   
Master Limited Partnerships and Related Companies - 48.8% (1)
                
                   
Crude/Refined Products Pipelines - 24.5% (1)
                
United States - 24.5% (1)
                
Buckeye Partners, L.P.
     25,300     $ 1,593,394  
Enbridge Energy Management, L.L.C. (3)
     569,444       15,682,486  
Holly Energy Partners, L.P.
     27,549       1,396,734  
Kinder Morgan Management, LLC (3) (4)
     275,481       16,666,573  
Magellan Midstream Partners, L.P.
     19,400       1,163,418  
NuStar Energy L.P.
     32,600       1,929,920  
Plains All American Pipeline, L.P.
     16,500       1,000,395  
Sunoco Logistics Partners L.P.
     26,481       2,270,746  
 
               41,703,666  
                   
Natural Gas/Natural Gas Liquids Pipelines - 13.0% (1)
                
United States - 13.0% (1)
                
Boardwalk Pipeline Partners, LP
     120,000       3,012,000  
Duncan Energy Partners L.P.
     101,700       4,324,284  
Energy Transfer Equity, L.P.
     27,809       1,063,416  
Energy Transfer Partners, L.P.
     107,700       4,852,962  
Enterprise Products Partners L.P.
     33,600       1,416,240  
Niska Gas Storage Partners LLC
     6,866       87,061  
ONEOK Partners, L.P.
     133,200       5,788,872  
Regency Energy Partners, L.P.
     10,600       253,128  
Williams Partners, L.P.
     23,932       1,296,636  
                22,094,599  
                   
Natural Gas Gathering/Processing - 8.0% (1)
                
United States - 8.0% (1)
                
Copano Energy, L.L.C.
     93,200       3,021,544  
DCP Midstream Partners, LP
     85,200       3,303,204  
MarkWest Energy Partners, L.P.
     56,700       2,724,435  
Targa Resources Partners L.P.
     132,417       4,541,903  
                13,591,086  
                   
Propane Distribution - 3.3% (1)
                
United States - 3.3% (1)
                
Inergy, L.P.
     197,500       5,601,100  
                   
Total Master Limited Partnerships and Related Companies (Cost $50,720,341)
             82,990,451  
                   
Short-Term Investment - 0.0% (1)
                
United States Investment Company - 0.0% (1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.11% (5) (Cost $51,888)
     51,888       51,888  
                   
Total Investments - 118.3% (1) (Cost $158,578,173)
             201,142,282  
Long-Term Debt Obligations - (11.8%) (1)
             (20,000,000 )
Interest Rate Swap Contracts - (0.6%) (1)
                
$27,000,000 notional - Unrealized Depreciation
            (1,095,788 )
Other Assets and Liabilities - (5.9%) (1)
             (10,069,581 )
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 169,976,913  
                   
                   
(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 $38,398,714, which represents 22.6% of net assets.
 
(3)
Security distributions are paid-in-kind.
                
(4)
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 August 31, 2011.
                

 
 
 
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, 2011.  These assets and liabilities are measured on a recurring basis.

 
Fair Value at
              
Description
August 31, 2011
  
Level 1
  
Level 2
  
Level 3
  
Assets
Debt Securities:
                
Corporate Bonds(a)
 $ 118,099,943   $ 5,316,150   $ 112,783,793   $ -  
Total Debt Securities
   118,099,943     5,316,150     112,783,793     -  
Equity Securities:
                        
Master Limited Partnerships and Related Companies(a)
   82,990,451     82,990,451     -     -  
Total Equity Securities
   82,990,451     82,990,451     -     -  
 Other:
                        
Short-Term Investment(b)
   51,888     51,888     -     -  
Total Other
   51,888     51,888     -     -  
Total Assets
 $ 201,142,282   $ 88,358,489   $ 112,783,793   $ -  
 
Liabilities
Interest Rate Swap Contracts
 $ 1,095,788   $ -   $ 1,095,788   $ -  
Total
 $ 200,046,494   $ 88,358,489   $ 111,688,005   $ -  

(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, 2011.

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 assets.

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.

The Company utilizes the beginning of reporting period method for determining transfers between levels.  There were no transfers between levels for the period from December 1, 2010 through August 31, 2011.

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 the percent of net assets which the securities comprise at August 31, 2011.

Investment Security
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
$  5,367,380
3.2%
Enogex LLC,
          
   6.250%, 03/15/2020
4,000,000
02/26/10-04/22/10
4,118,593
4,591,728
2.7
Florida Gas Transmission Co., LLC,
          
   5.450%, 07/15/2020
1,500,000
07/08/10-01/04/11
1,551,220
1,688,098
1.0
IPALCO Enterprises, Inc.,
          
   7.250%, 04/01/2016
4,000,000
11/03/09-01/04/11
4,165,000
4,287,060
2.5
Midcontinent Express Pipelines, LLC,
          
   6.700%, 09/15/2019
6,000,000
09/09/09-03/02/10
6,055,570
6,893,880
4.1
NGPL PipeCo LLC,
          
   7.119%, 12/15/2017
4,000,000
07/29/10-09/28/10
4,280,000
4,316,644
2.5
North American Energy Alliance LLC,
          
   10.875%, 06/01/2016
2,800,000
09/24/09-10/08/09
2,895,000
2,982,000
1.8
Source Gas, LLC,
          
   5.900%, 04/01/2017
5,770,000
04/21/10
5,544,521
6,020,124
3.5
Southern Star Central Gas Pipeline, Inc.,
          
   6.000%, 06/01/2016
2,000,000
08/24/09
1,970,000
2,251,800
1.3
 
    
$ 35,349,254
$ 38,398,714
22.6%

As of August 31, 2011, the aggregate cost of securities for federal income tax purposes was $153,655,068.  The aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $47,513,679, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $26,465 and the net unrealized appreciation was $47,487,214.

 
 
 


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 Power and Energy Infrastructure Fund, Inc.  
       
Date:  October 26, 2011
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 Power and Energy Infrastructure Fund, Inc.  
       
Date:  October 26, 2011
By:
  /s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
  Tortoise Power and Energy Infrastructure Fund, Inc.  
       
Date:  October 26, 2011
By:
 /s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer