UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 
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)
 

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: May 31, 2014

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Item 1. Reports to Stockholders.

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Distribution Policy — Tortoise Power and Energy Infrastructure Fund, Inc. (‘‘TPZ”), with approval of its Board of Directors (the “Board”), has adopted a distribution policy (the “Policy”) with the purpose of distributing over the course of each year, through periodic distributions as nearly equal as practicable and any required special distributions, an amount closely approximating the total taxable income of TPZ during such year and, if so determined by the Board, all or a portion of the return of capital paid by portfolio companies to TPZ during such year. In accordance with its Policy, TPZ distributes a fixed amount per common share, currently $0.125, each month to its common shareholders. This amount is subject to change from time to time in the discretion of the Board. Although the level of distributions is independent of TPZ’s performance, TPZ expects such distributions to correlate with its performance over time. Each monthly distribution to shareholders is expected to be at the fixed amount established by the Board, except for extraordinary distributions and potential increases or decreases in the final dividend periods for each year in light of TPZ’s performance for the entire calendar year and to enable TPZ to comply with the distribution requirements imposed by the Internal Revenue Code. The Board may amend, suspend or terminate the Policy without prior notice to shareholders if it deems such action to be in the best interests of TPZ and its shareholders. For example, the Board might take such action if the Policy had the effect of shrinking TPZ’s assets to a level that was determined to be detrimental to TPZ shareholders. The suspension or termination of the Policy could have the effect of creating a trading discount (if TPZ’s stock is trading at or above net asset value), widening an existing trading discount, or decreasing an existing premium.

You should not draw any conclusions about TPZ’s investment performance from the amount of the distribution or from the terms of TPZ’s distribution policy. TPZ estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in TPZ is paid back to you. A return of capital distribution does not necessarily reflect TPZ’s investment performance and should not be confused with “yield” or “income.” The amounts and sources of distributions reported are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon TPZ’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. TPZ will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

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June 23, 2014

Dear Fellow Stockholders,

The second fiscal quarter ending May 31, 2014 was positive for power and energy infrastructure companies, whose success continued to be driven by the robust North American crude oil and natural gas production that is creating the critical need for energy infrastructure build-out. A colder-than-expected winter also helped performance, as higher electrical and heating demand drove natural gas prices higher.

With respect to the broad market, equities demonstrated some volatility as the second fiscal quarter unfolded, although strength among blue chips and stronger-than-expected first-quarter earnings reports from nearly three-quarters of the companies in the S&P 500 helped maintain a generally upward trajectory. For the three and six months ending May 31, 2014 the S&P 500 Index^® returned 4.0 and 7.6 percent respectively, with energy, utilities, consumer staples and materials emerging as the best-performing sectors. The 10-year Treasury yield dropped slightly from 2.66 percent at the start of the quarter to 2.48 percent at its close, while the Barclays Aggregate Bond Index returned 1.8 and 3.3 percent for the same periods.

Power and Energy Infrastructure Sector Review and Outlook

Power and energy infrastructure companies enjoyed a solid quarter, with the TPZ Benchmark Composite* returning 5.5 and 8.8 percent for the three- and six-month periods ending May 31, 2014. The benchmark is comprised of a blend of 70 percent fixed income and 30 percent equity securities issued by companies in the power and energy infrastructure sectors.

The harsh weather that ravaged much of the United States throughout the winter months drove natural gas consumption to a record high this winter, up 8 percent over 2013 levels,¹ which pushed natural gas storage inventories to an 11-year low in March.² We continue to see the need for power infrastructure investment to improve America’s aging electrical grid, which requires extensive upgrades to meet our nation’s energy demands. Additionally, in June, the EPA unveiled new standards that call for a 30 percent reduction in carbon dioxide emissions from power plants by 2030, which will require significant capital investment to retrofit older power plants that do not meet the new standards. These are areas of strategic focus for the fund, which should stand to benefit from these developments.

Capital markets remained supportive, with power and energy infrastructure companies raising approximately $52.3 billion in total capital during the fiscal quarter. Mergers and acquisitions totaling more than $24.7 billion for such companies were announced during the same period. The largest example is Exelon Corp., the largest U.S. nuclear operator, which agreed to buy Pepco Holdings Inc. for $6.8 billion in cash to create the biggest electric and natural gas utility in the Mid-Atlantic region.

Fund Performance Review and Outlook

The fund’s total assets increased from $236.4 million on Feb. 28, 2014, to $247.2 million on May 31, 2014. This increase resulted primarily from net realized and unrealized gains on investments. Leverage (bank debt) as a percent of total assets decreased from 15.8 percent to 15.3 percent of total assets at the end of the period.

The fund paid monthly distributions of $0.125 per common share ($1.50 annualized) throughout the fiscal quarter. These distributions represented an annualized distribution rate of 5.5 percent based on the fund’s first quarter closing price of $27.44. Please refer to the inside front cover of this report for important information about the fund’s distribution policy.

For the fiscal quarter, the fund’s market-based total return was 9.5 percent and its NAV-based total return was 6.9 percent (14.4 and 9.7 for the six months, respectively) both including the reinvestment of distributions. The difference between the market value total return and the NAV total return reflected a narrowing in the discount of the fund’s stock price relative to its NAV during the quarter.

(Unaudited)

2014 2nd Quarter Report       1

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Key Quarterly Performance Drivers

• Strong performance among power and energy infrastructure companies, the focus of this fund, continued to support its asset performance during the fiscal quarter.
   
• While the fixed-income holdings component contributed slightly to positive results for the period, the equity component significantly enhanced performance.
   
• Positive returns were driven largely by the fund’s holdings in crude oil pipelines, which benefited from the continued volume production growth. The fund’s stake in natural gas pipelines helped as well.
   
• Higher natural gas demand boosted the performance of utility companies, a key area of focus for the fund.
   
• The fund’s exposure to gathering and processing pipelines restrained performance.

Additional information about the fund’s financial performance, distributions and leverage is available in the Key Financial Data and Management’s Discussion sections of this report.

Concluding Thoughts

We believe the prolific volumes of oil and natural gas being produced in the premier basins will continue to drive success for power and energy infrastructure companies, especially as our energy demands continue to grow. We look forward to serving you as your professional investment adviser as this compelling story continues.

In closing, we invite you to visit Tortoise’s new educational microsite, www.uncoverenergy.com, which provides articles covering 10 themes that trace North America’s energy past, present and future. We created this site as part of our commitment to promote education and knowledge about the energy sector. It is designed to be a resource for the investment community, educators and the general public. As always, we welcome your feedback and suggestions. Also, if you haven’t had a chance to view our May webcast of the annual stockholders meeting, we encourage you to do so.

Sincerely,
The Managing Directors
Tortoise Capital Advisors, L.L.C.
The adviser to Tortoise Power and Energy Infrastructure Fund, Inc.

*TPZ Benchmark Index includes the BofA Merrill Lynch US Energy Index (CIEN), the BofA Merrill Lynch US Electricity Index (CUEL) and the Tortoise MLP Index (TMLP).
¹ Bentek
² Energy Information Administration

(Unaudited)

2       Tortoise Power and Energy Infrastructure Fund, Inc.

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The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which we believe is meaningful to understanding our operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and we believe they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with our full financial statements.

		2013									2014
		Q2(1)			Q3(1)			Q4(1)			Q1(1)			Q2(1)
Total Income from Investments
Interest earned on corporate bonds		$	2,048		$	2,078		$	2,098		$	2,091		$	2,057
Dividends and distributions from equity securities			892			762			809			808			833
Dividends paid in stock			580			585			602			615			620
Total from investments			3,520			3,425			3,509			3,514			3,510
Operating Expenses Before Leverage Costs
Advisory fees, net of fees waived			499			496			487			507			545
Other operating expenses			120			121			131			132			136
			619			617			618			639			681
Distributable cash flow before leverage costs			2,901			2,808			2,891			2,875			2,829
Leverage costs(2)			189			189			188			187			191
Distributable Cash Flow(3)		$	2,712		$	2,619		$	2,703		$	2,688		$	2,638
Net realized gain on investments		$	870		$	7,039		$	1,952		$	1,524		$	13
As a percent of average total assets(4)
Total from investments			5.99	%		5.86	%		6.07	%		6.06	%		5.78	%
Operating expenses before leverage costs			1.05	%		1.06	%		1.07	%		1.10	%		1.12	%
Distributable cash flow before leverage costs			4.94	%		4.80	%		5.00	%		4.96	%		4.66	%
As a percent of average net assets(4)
Total from investments			7.08	%		6.95	%		7.29	%		7.27	%		6.87	%
Operating expenses before leverage costs			1.24	%		1.25	%		1.28	%		1.32	%		1.33	%
Leverage costs			0.38	%		0.38	%		0.39	%		0.39	%		0.37	%
Distributable cash flow			5.46	%		5.32	%		5.62	%		5.56	%		5.17	%
Selected Financial Information
Distributions paid on common stock		$	2,607		$	2,606		$	2,607		$	2,607		$	2,607
Distributions paid on common stock per share			0.375			0.375			0.375			0.375			0.375
Total assets, end of period		228,896			230,847			233,832			236,367			247,186
Average total assets during period(5)		233,060			231,916			231,996			235,168			241,067
Leverage(6)			31,500			37,200			37,400			37,400			37,900
Leverage as a percent of total assets			13.8	%		16.1	%		16.0	%		15.8	%		15.3	%
Net unrealized appreciation, end of period			67,999			60,227			61,970			63,884			75,935
Net assets, end of period		195,336			193,130			195,484			197,620			208,421
Average net assets during period(7)		197,344			195,547			193,161			195,964			202,603
Net asset value per common share			28.10			27.78			28.12			28.43			29.98
Market value per common share			26.65			25.52			24.74			25.47			27.44
Shares outstanding (000’s)			6,951			6,951			6,951			6,951			6,951

(1)	Q1 is the period from December through February. Q2 is the period from March through May. Q3 is the period from June through August. Q4 is the period from September through November.
(2)	Leverage costs include interest expense, interest rate swap expenses and other leverage expenses.
(3)	“Net investment income” on the Statement of Operations is adjusted as follows to reconcile to Distributable Cash Flow (DCF): increased by the return of capital on distributions, the value of paid-in-kind distributions, amortization of debt issuance costs and the change in methodology for calculating amortization of premiums or discounts; and decreased by realized and unrealized gains (losses) on interest rate swap settlements.
(4)	Annualized for periods less than one full year.
(5)	Computed by averaging month-end values within each period.
(6)	Leverage consists of short-term borrowings.
(7)	Computed by averaging daily net assets within each period.

2014 2nd Quarter Report       3

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The information contained in this section should be read in conjunction with our Financial Statements and the Notes thereto. In addition, this report contains certain forward-looking statements. These statements include the plans and objectives of management for future operations and financial objectives and can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” or “continue” or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results and conditions to differ materially from those projected in these forward-looking statements are set forth in the “Risk Factors” section of our public filings with the SEC.

Overview

Tortoise Power and Energy Infrastructure Fund, Inc.’s (“TPZ”) primary investment objective is to provide a high level of current income, with a secondary objective of capital appreciation. We seek to provide our stockholders a vehicle to invest in a portfolio consisting primarily of securities issued by power and energy infrastructure companies. Power infrastructure operations use asset systems to provide electric power generation (including renewable energy), transmission and distribution. Energy infrastructure operations use a network of pipeline assets to transport, store, gather and/or process crude oil, refined petroleum products (including biodiesel and ethanol), natural gas or natural gas liquids. We believe the power and energy infrastructure sectors provide stable and defensive characteristics throughout economic cycles. A majority of the investments are in fixed income securities with the remainder invested in equities which provide growth potential.

TPZ is a registered non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), and expects to qualify each year as a regulated investment company (“RIC”) under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). Tortoise Capital Advisors, L.L.C. (the “Adviser”) serves as investment adviser.

Company Update

Market values of our debt and equity investments increased during the 2nd quarter, contributing to an overall increase of $10.8 million in total assets during the quarter. Total income received from our investments was relatively unchanged while total operating and leverage expenses increased during the quarter, mainly due to increased average managed assets. We maintained our monthly distribution of $0.125 per share. Additional information on the results of our operations is discussed in more detail below.

Critical Accounting Policies

The financial statements are based on the selection and application of critical accounting policies, which require management to make significant estimates and assumptions. Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex, or subjective judgments. Our critical accounting policies are those applicable to the valuation of investments and certain revenue recognition matters as discussed in Note 2 in the Notes to Financial Statements.

Determining Distributions to Stockholders

We pay monthly distributions based primarily upon our current and estimated future distributable cash flow (“DCF”). In addition, and to the extent that the sum of our net investment company taxable income and net realized gains from investments exceed our monthly distributions, we intend to make an additional distribution to common stockholders in the last quarter of the calendar year in order to avoid being subject to U.S. federal income taxes. Our Board of Directors reviews the distribution rate quarterly and may adjust the monthly distributions throughout the year. Our distribution policy is described on the inside front cover of this report.

Determining DCF

DCF is income from investments less expenses. Income from investments includes the accrued interest from corporate bonds, cash distributions and paid-in-kind distributions from master limited partnerships (“MLPs”) and related companies and dividends earned from short-term investments. The total expenses include current or anticipated operating expenses and leverage costs.

The Key Financial Data table discloses the calculation of DCF and should be read in conjunction with this discussion. The difference between income from investments in the DCF calculation and total investment income as reported in the Statement of Operations, is reconciled as follows: (1) GAAP recognizes distribution income from MLPs and common stock on their ex-dates, whereas the DCF calculation may reflect distribution income on their pay dates; (2) GAAP recognizes that a significant portion of the cash distributions received from MLPs are characterized as a return of capital and therefore excluded from investment income, whereas the DCF calculation includes the return of capital; (3) income from investments in the DCF calculation includes the value of dividends paid-in-kind (additional stock or units), whereas such amounts are not included as income for GAAP purposes; and (4) amortization of premium or discount for all securities is calculated using the yield to worst methodology for GAAP purposes while yield to call is used in calculating amortization for long-dated hybrid securities in the DCF calculation. The treatment of expenses in the DCF calculation also differs from what is reported in the Statement of Operations. In addition to the total operating expenses, including fee waiver, as disclosed in the Statement of Operations, the DCF calculation reflects interest expense and realized and unrealized gains (losses) on interest rate swap settlements as leverage costs. A reconciliation of Net Investment Income to DCF is included below.

Income from Investments

We seek to achieve our investment objectives by investing in income-producing fixed income and equity securities of companies that we believe offer attractive distribution rates. We evaluate each holding based upon its contribution to our investment income and its risk relative to other potential investments.

(Unaudited)

4       Tortoise Power and Energy Infrastructure Fund, Inc.

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Management’s Discussion (Unaudited)
(Continued)

Total income from investments for the 2nd quarter 2014 was approximately $3.5 million, relatively unchanged as compared to 1st quarter 2014 and a decrease of 0.3 percent as compared to 2nd quarter 2013. These changes reflect increases in per share distribution rates on our MLP investments, the impact of trading activity wherein certain investments with higher current yields and lower expected future growth were sold and replaced with investments that had lower current yields and higher expected future growth, as well as fixed income investments that have been refinanced in a lower interest rate environment.

Expenses

We incur two types of expenses: (1) operating expenses, consisting primarily of the advisory fee, and (2) leverage costs. On a percentage basis, operating expenses before leverage costs were an annualized 1.12 percent of average total assets for 2nd quarter 2014 as compared to 1.10 percent for the 1st quarter 2014 and 1.05 percent for the 2nd quarter 2013. Advisory fees for 2nd quarter 2014 increased by approximately 7.5 percent as compared to 1st quarter 2014 due to an increase in average monthly managed assets during the quarter as well as the full impact of the reduced waiver that took effect during the 1st quarter 2014. While the contractual advisory fee is 0.95 percent of average monthly managed assets, the Adviser waived an amount equal to 0.10 percent of average monthly managed assets for calendar year 2013, and has agreed to waive 0.05 percent of average monthly managed assets for calendar year 2014. Other operating expenses increased slightly as compared to 1st quarter 2014.

Leverage costs consist of two major components: (1) the direct interest expense, which will vary from period to period as our margin borrowing facility has a variable interest rate, and (2) the realized and unrealized gain or loss on our interest rate swap settlements. Detailed information on our margin borrowing facility is included in the Liquidity and Capital Resources section below.

Total leverage costs for DCF purposes were approximately $191,000 for the 2nd quarter 2014, a slight increase as compared to 1st quarter 2014.

As indicated in Note 9 of our Notes to Financial Statements, at May 31, 2014, we had $26 million notional amount of interest rate swap contracts with Wells Fargo Bank in an attempt to reduce a portion of the interest rate risk arising from our leveraged capital structure. TPZ has agreed to pay Wells Fargo Bank a fixed rate while receiving a floating rate based upon the 3-month U.S. Dollar London Interbank Offered Rate (“LIBOR”). The spread between the fixed swap rate and LIBOR is reflected in our Statement of Operations as a realized or unrealized gain when LIBOR exceeds the fixed rate (Wells Fargo Bank pays TPZ the net difference) or a realized or unrealized loss when the fixed rate exceeds LIBOR (TPZ pays Wells Fargo Bank the net difference). The interest rate swap contracts have a weighted average fixed rate of 1.68 percent and weighted average remaining maturity of approximately 4.1 years. This swap arrangement effectively fixes the cost of approximately 69 percent of our outstanding leverage over the remaining swap period.

Interest accrues on the margin facility at a rate equal to 3-month LIBOR plus 0.75 percent and unused balances are subject to a fee of 0.25 percent. The annual rate of leverage may vary in future periods as a result of changes in LIBOR, the utilization of our margin facility and the spread charged on the facility, and maturity of our interest rate swap contracts. Additional information on our leverage is disclosed below in Liquidity and Capital Resources and in our Notes to Financial Statements.

Distributable Cash Flow and Capital Gains

For 2nd quarter 2014, our DCF was approximately $2.6 million, a decrease of 2.7 percent as compared to 2nd quarter 2013 and a decrease of 1.9 percent as compared to 1st quarter 2014. This difference is the net result of the change in income from investments and expenses as outlined above. In addition, we had net realized gains of approximately $13,000 from the sale of portfolio investments in the 2nd quarter 2014. On February 10, 2014, we declared monthly distributions for the 2014 2nd fiscal quarter of $0.125 per share. This is unchanged as compared to 1st quarter 2014.

Net Investment Income on the Statement of Operations is adjusted as follows to reconcile to DCF for 2014 YTD and 2nd quarter 2014 (in thousands):

		2014 YTD				2nd Qtr 2014
Net Investment Income		$	2,836			$	1,436
Adjustments to reconcile to DCF:
Dividends paid in stock			1,235				620
Distributions characterized as return of capital			1,327				619
Interest rate swap expenses			(189	)			(95	)
Change in amortization methodology			117				58
DCF		$	5,326			$	2,638

Liquidity and Capital Resources

We had total assets of $247.2 million at quarter-end. Our total assets reflect the value of our investments, which are itemized in the Schedule of Investments. It also reflects cash, interest and receivables and any expenses that may have been prepaid. During the 2nd quarter 2014, total assets increased by $10.8 million. This change was primarily the result of an $11.5 million increase in the value of our investments as reflected by the change in net realized and unrealized gains on investments (excluding return of capital on distributions) and a decrease in receivables of $0.5 million.

Total leverage outstanding at May 31, 2014 was $37.9 million, an increase of $500,000 as compared to February 28, 2014. Total leverage represented 15.3 percent of total assets at May 31, 2014, a decrease from 15.8 percent of total assets at February 28, 2014 and an increase from 13.8 percent of total assets at May 31, 2013. Our leverage as a percent of total assets remains below our long-term target level of 20 percent of total assets. This allows the opportunity to add leverage when compelling investment opportunities arise. Temporary increases to up to 25 percent of our total assets may be permitted, provided that such leverage is consistent with the limits set forth in the 1940 Act, and

2014 2nd Quarter Report       5

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Management’s Discussion (Unaudited)
(Continued)

that such leverage is expected to be reduced over time in an orderly fashion to reach our long-term target. Our leverage ratio is impacted by increases or decreases in investment values, issuance of equity and/or the sale of securities where proceeds are used to reduce leverage.

We have used leverage to acquire investments consistent with our investment philosophy. The terms of our leverage are governed by regulatory and contractual asset coverage requirements that arise from the use of leverage. Additional information on our leverage and asset coverage requirements is discussed in Note 10 in the Notes to Financial Statements. Our coverage ratio is updated each week on our Web site at www.tortoiseadvisors.com.

Taxation of our Distributions

We expect that distributions paid on common shares will generally consist of: (i) investment company taxable income (“ICTI”) which includes ordinary income net of deductions plus any short-term capital gains in excess of net long-term capital losses (under current law, distributions of ICTI may be designated as qualified dividend income (“QDI”) to the extent of any QDI received from our investment in common stocks); (ii) long-term capital gain (net gain from the sale of a capital asset held longer than 12 months over net short-term capital losses) and (iii) return of capital. The QDI and long-term capital gain tax rates are variable based on the taxpayer’s taxable income.

We have received exemptive relief from the SEC to distribute capital gains throughout the year and we may also distribute additional capital gains in the last calendar quarter if necessary to meet minimum distribution requirements and to avoid being subject to excise taxes. If, however, we elect to retain any capital gains, we will be subject to U.S. capital gains taxes. The payment of those taxes will flow-through to stockholders as a tax credit to apply against their U.S. income tax payable on the deemed distribution of the retained capital gain.

For tax purposes, distributions paid to common stockholders for the calendar year ended December 31, 2013 were approximately 4 percent QDI, 32 percent ordinary dividend income, and 64 percent long-term capital gain. This information is reported to stockholders on Form 1099-DIV and is available on our Web site at www.tortoiseadvisors.com. We currently estimate that 80 to 100 percent of 2014 distributions will be characterized as dividend income and capital gains, with the remaining percentage, if any, characterized as return of capital. A final determination of the characterization will be made in January 2015.

6       Tortoise Power and Energy Infrastructure Fund, Inc.

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Schedule of Investments  May 31, 2014

(Unaudited)

		Principal
		Amount/Shares			Fair Value
Corporate Bonds — 65.4%(1)
Crude/Refined Products Pipelines — 5.2%(1)
Canada — 2.4%(1)
Gibson Energy Inc.,
6.750%, 07/15/2021(2)		$	4,500,000		$	4,871,250
United States — 2.8%(1)
SemGroup LP,
7.500%, 06/15/2021			5,450,000			5,872,375
						10,743,625
Local Distribution Pipelines — 7.1%(1)
United States — 7.1%(1)
CenterPoint Energy, Inc.,
6.500%, 05/01/2018(3)			4,000,000			4,649,264
NiSource Finance Corp.,
6.400%, 03/15/2018(3)			3,500,000			4,045,846
Source Gas, LLC,
5.900%, 04/01/2017(2)(3)			5,770,000			6,096,582
						14,791,692
Natural Gas/Natural Gas Liquids Pipelines — 17.9%(1)
Canada — 3.0%(1)
TransCanada Pipelines Limited,
6.350%, 05/15/2067			6,000,000			6,240,000
United States — 14.9%(1)
El Paso Corp.,
6.500%, 09/15/2020(3)			6,000,000			6,647,166
EQT Corp.,
6.500%, 04/01/2018			2,000,000			2,252,828
EQT Corp.,
8.125%, 06/01/2019			2,000,000			2,458,630
Florida Gas Transmission Co., LLC,
5.450%, 07/15/2020(2)(3)			1,500,000			1,698,712
Midcontinent Express Pipeline LLC,
6.700%, 09/15/2019(2)			6,000,000			6,538,098
Ruby Pipeline, LLC,
6.000%, 04/01/2022(2)(3)			1,500,000			1,695,793
Southern Star Central Corp.,
6.750%, 03/01/2016			2,745,000			2,748,431
Southern Star Central Gas Pipeline, Inc.,
6.000%, 06/01/2016(2)(3)			2,000,000			2,158,782
Williams Companies, Inc.,
7.875%, 09/01/2021			4,000,000			4,857,144
						37,295,584
Natural Gas Gathering/Processing — 5.2%(1)
United States — 5.2%(1)
DCP Midstream LLC,
9.750%, 03/15/2019(2)(3)			5,000,000			6,438,770
Enogex LLC,
6.250%, 03/15/2020(2)(3)			4,000,000			4,432,408
						10,871,178
Oil and Gas Exploration and Production — 7.3%(1)
United States — 7.3%(1)
Carrizo Oil & Gas, Inc.,
7.500%, 09/15/2020			2,000,000			2,190,000
Chesapeake Energy Corp.,
7.250%, 12/15/2018(3)			3,500,000			4,138,750
Concho Resources, Inc.,
5.500%, 04/01/2023			2,000,000			2,140,000
Denbury Resources Inc.,
6.375%, 08/15/2021			1,000,000			1,075,000
EP Energy / EP Finance Inc.,
9.375%, 05/01/2020(3)			3,000,000			3,446,250
Plains Exploration & Production Co.,
6.500%, 11/15/2020			2,000,000			2,220,000
						15,210,000
Oilfield Services — 1.8%(1)
United States — 1.8%(1)
Pride International, Inc.,
8.500%, 06/15/2019			3,000,000			3,828,366
Power/Utility — 20.9%(1)
United States — 20.9%(1)
CMS Energy Corp.,
8.750%, 06/15/2019			5,185,000			6,725,749
Dominion Resources, Inc.,
8.375%, 06/15/2064(4)			183,000			4,697,610
Duquesne Light Holdings, Inc.,
6.400%, 09/15/2020(2)			3,000,000			3,550,116
Duquesne Light Holdings, Inc.,
5.900%, 12/01/2021(2)			2,000,000			2,305,772
FPL Group Capital, Inc.,
6.650%, 06/15/2067			1,029,000			1,037,232
Integrys Energy Group, Inc.,
6.110%, 12/01/2066(3)			3,750,000			3,782,813
IPALCO Enterprises, Inc.,
7.250%, 04/01/2016(2)			4,000,000			4,360,000
NRG Energy, Inc.,
6.250%, 07/15/2022(2)			6,000,000			6,360,000
NV Energy, Inc.,
6.250%, 11/15/2020(3)			1,000,000			1,188,742
PPL Capital Funding, Inc.,
6.700%, 03/30/2067(3)			6,000,000			6,037,500
Wisconsin Energy Corp.,
6.250%, 05/15/2067			3,450,000			3,570,750
						43,616,284
Total Corporate Bonds (Cost $123,829,426)						136,356,729

See accompanying Notes to Financial Statements.

2014 2nd Quarter Report       7

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Schedule of Investments (Continued) May 31, 2014

(Unaudited)

		Shares		Fair Value
Master Limited Partnerships and
Related Companies — 48.8%(1)
Crude/Refined Products Pipelines — 21.7%(1)
United States — 21.7%(1)
Buckeye Partners, L.P.(3)		54,000		$	4,236,840
Enbridge Energy Management, L.L.C.(3)(5)		552,390			16,477,808
Genesis Energy, L.P.		11,800			672,600
Holly Energy Partners, L.P.(3)		56,100			1,982,574
Magellan Midstream Partners, L.P.(3)		63,100			5,166,628
NuStar Energy L.P.(3)		31,200			1,810,224
Oiltanking Partners, L.P.		9,400			837,540
Phillips 66 Partners LP		15,500			938,525
Plains All American Pipeline, L.P.(3)		72,959			4,119,995
Sunoco Logistics Partners L.P.(3)		79,443			7,308,756
Tesoro Logistics LP		13,400			933,980
Valero Energy Partners LP		13,794			612,867
					45,098,337
Natural Gas/Natural Gas Liquids Pipelines — 20.0%(1)
United States — 20.0%(1)
Crestwood Midstream Partners LP(3)		42,210			920,178
Energy Transfer Equity, L.P.(3)		55,618			2,834,293
Energy Transfer Partners, L.P.(3)		101,200			5,699,584
Enterprise Products Partners L.P.(3)		111,000			8,305,020
Kinder Morgan Management, LLC(3)(5)(6)		240,311			17,319,220
ONEOK Partners, L.P.(3)		82,400			4,540,240
Regency Energy Partners, L.P.(3)		47,552			1,321,946
Williams Partners, L.P.		14,100			748,851
					41,689,332
Natural Gas Gathering/Processing — 7.1%(1)
United States — 7.1%(1)
Access Midstream Partners, L.P.		10,700			673,993
DCP Midstream Partners, LP(3)		76,805			4,125,197
EnLink Midstream Partners, L.P.		22,400			682,528
MarkWest Energy Partners, L.P.(3)		56,700			3,512,565
Targa Resources Partners L.P.(3)		86,500			5,878,540
					14,872,823
Total Master Limited Partnerships
and Related Companies (Cost $40,680,756)					101,660,492
Common Stock — 3.3%(1)
Natural Gas/Natural Gas Liquids Pipelines — 0.3%(1)
United States — 0.3%(1)
Spectra Energy Corp.		15,300			620,874
Power/Utility — 3.0%(1)
United States — 3.0%(1)
NRG Yield, Inc.		132,000			6,192,120
Total Common Stock (Cost $4,020,028)					6,812,994
Short-Term Investment — 0.0%(1)
United States Investment Company — 0.0%(1)
Fidelity Institutional Money Market Portfolio —
Class I, 0.05%(7) (Cost $61,857)		61,857			61,857
Total Investments — 117.5%(1)
(Cost $168,592,067)					244,892,072
Interest Rate Swap Contracts — (0.2%)(1)
$26,000,000 notional — unrealized depreciation(8)					(364,677	)
Other Assets and Liabilities — (17.3%)(1)					(36,106,586	)
Total Net Assets Applicable to
Common Stockholders — 100.0%(1)				$	208,420,809

(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 $50,506,283, which represents 24.2% of net assets. See Note 7 to the financial statements for further disclosure.
(3)	All or a portion of the security is segregated as collateral for the margin borrowing facility. See Note 10 to the financial statements for further disclosure.
(4)	Security has characteristics that are similar to corporate bonds although it trades in a manner similar to an equity investment. The security has a quoted price in an active market and is classified as a Level 1 investment within the fair value hierarchy.
(5)	Security distributions are paid-in-kind.
(6)	A portion of the security is segregated as collateral for the unrealized depreciation of interest rate swap contracts of $364,677.
(7)	Rate indicated is the current yield as of May 31, 2014.
(8)	See Note 9 to the financial statements for further disclosure.

See accompanying Notes to Financial Statements.

8       Tortoise Power and Energy Infrastructure Fund, Inc.

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Statement of Assets & Liabilities  May 31, 2014

(Unaudited)

Assets
Investments at fair value (cost $168,592,067)		$	244,892,072
Receivable for Adviser fee waiver			20,251
Interest and dividend receivable			2,199,358
Prepaid expenses and other assets			73,944
Total assets			247,185,625
Liabilities
Payable to Adviser			384,782
Accrued expenses and other liabilities			115,357
Unrealized depreciation of interest rate swap contracts			364,677
Short-term borrowings			37,900,000
Total liabilities			38,764,816
Net assets applicable to common stockholders		$	208,420,809
Net Assets Applicable to Common Stockholders Consist of:
Capital stock, $0.001 par value; 6,951,333 shares issued
and outstanding (100,000,000 shares authorized)		$	6,951
Additional paid-in capital			129,482,470
Undistributed net investment income			1,647,506
Undistributed net realized gain			1,348,494
Net unrealized appreciation of investments and
interest rate swap contracts			75,935,388
Net assets applicable to common stockholders		$	208,420,809
Net Asset Value per common share outstanding
(net assets applicable to common stock,
divided by common shares outstanding)		$	29.98

Statement of Operations  Period from December 1, 2013 through May 31, 2014

(Unaudited)

Investment Income
Distributions from master limited partnerships	$	1,546,496
Dividends from common stock		94,885
Less return of capital on distributions		(1,326,690	)
Net distributions and dividends from equity securities		314,691
Interest from corporate bonds		4,030,339
Dividends from money market mutual funds		49
Total Investment Income		4,345,079
Operating Expenses
Advisory fees		1,120,318
Professional fees		77,808
Stockholder communication expenses		61,370
Administrator fees		48,112
Directors’ fees		29,842
Fund accounting fees		12,423
Registration fees		12,320
Stock transfer agent fees		7,313
Custodian fees and expenses		5,913
Other operating expenses		13,411
Total Operating Expenses		1,388,830
Leverage Expenses
Interest expense		188,608
Total Expenses		1,577,438
Less fees waived by Adviser		(68,749	)
Net Expenses		1,508,689
Net Investment Income		2,836,390
Realized and Unrealized Gain on
Investments and Interest Rate Swaps
Net realized gain on investments		1,536,729
Net realized loss on interest rate swap settlements		(188,235	)
Net realized gain on investments and interest rate swaps		1,348,494
Net unrealized appreciation of investments		13,957,513
Net unrealized appreciation of interest rate swap contracts		7,988
Net unrealized appreciation of investments and
interest rate swap contracts		13,965,501
Net Realized and Unrealized Gain on Investments
and Interest Rate Swaps		15,313,995
Net Increase in Net Assets Applicable to
Common Stockholders Resulting from Operations	$	18,150,385

See accompanying Notes to Financial Statements.

2014 2nd Quarter Report       9

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Statement of Changes in Net Assets

		Period from
		December 1, 2013
		through						Year Ended
		May 31, 2014						November 30, 2013
		(Unaudited)
Operations
Net investment income			$	2,836,390					$	5,297,832
Net realized gain on investments and interest rate swaps				1,348,494						9,849,038
Net unrealized appreciation of investments and interest rate swap contracts				13,965,501						4,730,553
Net increase in net assets applicable to common                stockholders resulting from operations				18,150,385						19,877,423
Distributions to Common Stockholders
Net investment income				(5,213,500	)					(3,457,532	)
Net realized gain				—						(6,969,468	)
Return of capital				—						—
Total distributions to common stockholders				(5,213,500	)					(10,427,000	)
Total increase in net assets applicable to common stockholders				12,936,885						9,450,423
Net Assets
Beginning of period				195,483,924						186,033,501
End of period			$	208,420,809					$	195,483,924
Undistributed net investment income, end of period			$	1,647,506					$	4,024,616

See accompanying Notes to Financial Statements.

10       Tortoise Power and Energy Infrastructure Fund, Inc.

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Statement of Cash Flows Period from December 1, 2013 through May 31, 2014

(Unaudited)

Cash Flows From Operating Activities
Distributions received from master limited partnerships		$	1,546,496
Interest and dividend income received			4,439,555
Purchases of long-term investments			(8,293,925	)
Proceeds from sales of long-term investments			8,572,755
Proceeds from sales of short-term investments, net			88,945
Payments on interest rate swaps, net			(188,235	)
Interest received on securities sold, net			60,208
Interest expense paid			(188,613	)
Operating expenses paid			(1,323,686	)
Net cash provided by operating activities			4,713,500
Cash Flows From Financing Activities
Advances from margin loan facility			12,200,000
Repayments on margin loan facility			(11,700,000	)
Distributions paid to common stockholders			(5,213,500	)
Net cash used in financing activities			(4,713,500	)
Net change in cash			—
Cash — beginning of period			—
Cash — end of period		$	—
Reconciliation of net increase in net assets applicable
to common stockholders resulting from operations
to net cash provided by operating activities
Net increase in net assets applicable to common
stockholders resulting from operations		$	18,150,385
Adjustments to reconcile net increase in net assets
applicable to common stockholders resulting from
operations to net cash provided by operating activities:
Purchases of long-term investments			(8,213,147	)
Proceeds from sales of long-term investments			8,491,155
Proceeds from sales of short-term investments, net			88,945
Return of capital on distributions received			1,326,690
Net unrealized appreciation of investments and
interest rate swap contracts			(13,965,501	)
Net realized gain on investments			(1,536,729	)
Amortization of market premium, net			273,975
Changes in operating assets and liabilities:
Decrease in interest and dividend receivable			100,515
Increase in prepaid expenses and other assets			(26,975	)
Decrease in receivable for investments sold			81,600
Decrease in payable for investments purchased			(80,778	)
Increase in payable to Adviser, net of fees waived			36,733
Decrease in accrued expenses and other liabilities			(13,368	)
Total adjustments			(13,436,885	)
Net cash provided by operating activities		$	4,713,500

See accompanying Notes to Financial Statements.

2014 2nd Quarter Report       11

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Financial Highlights

	Period from December 1, 2013 through May 31, 2014						Year Ended November 30, 2013						Year Ended November 30, 2012						Year Ended November 30, 2011						Year Ended November 30, 2010						Period from July 31, 2009(1) through November 30, 2009
	(Unaudited)
Per Common Share Data(2)
Net Asset Value, beginning of period		$	28.12					$	26.76					$	25.37					$	24.47					$	20.55					$	—
Public offering price			—						—						—						—						—						20.00
Income from Investment Operations
Net investment income(3)			0.41						0.76						0.72						0.72						0.73						0.17
Net realized and unrealized gains on investments
and interest rate swap contracts(3)			2.20						2.10						2.17						1.68						4.69						1.70
Total income from investment operations			2.61						2.86						2.89						2.40						5.42						1.87
Distributions to Common Stockholders
Net investment income			(0.75	)					(0.50	)					(0.88	)					(0.79	)					(0.63	)					(0.16	)
Net realized gain			—						(1.00	)					(0.62	)					(0.57	)					(0.77	)					—
Return of capital			—						—						—						(0.14	)					(0.10	)					(0.22	)
Total distributions to common stockholders			(0.75	)					(1.50	)					(1.50	)					(1.50	)					(1.50	)					(0.38	)
Underwriting discounts and offering costs on issuance
of common stock			—						—						—						—						—						(0.94	)
Net Asset Value, end of period		$	29.98					$	28.12					$	26.76					$	25.37					$	24.47					$	20.55
Per common share market value, end of period		$	27.44					$	24.74					$	25.26					$	24.18					$	23.06					$	19.18
Total Investment Return Based on Market Value(4)(5)			14.37	%					3.80	%					10.83	%					11.49	%					28.83	%					(2.17	)%
Total Investment Return Based on Net Asset Value(4)(6)			9.74	%					11.36	%					11.90	%					10.24	%					27.60	%					4.82	%
Supplemental Data and Ratios
Net assets applicable to common stockholders,
end of period (000’s)		$	208,421					$	195,484					$	186,034					$	176,329					$	169,874					$	141,789
Average net assets (000’s)		$	199,320					$	193,670					$	182,224					$	173,458					$	156,685					$	134,521
Ratio of Expenses to Average Net Assets(7)
Advisory fees			1.13	%					1.13	%					1.13	%					1.13	%					1.15	%					1.06	%
Other operating expenses			0.27						0.26						0.27						0.28						0.30						0.47
Total operating expenses, before fee waiver			1.40						1.39						1.40						1.41						1.45						1.53
Fee waiver			(0.07	)					(0.12	)					(0.12	)					(0.18	)					(0.18	)					(0.17	)
Total operating expenses			1.33						1.27						1.28						1.23						1.27						1.36
Leverage expenses			0.19						0.25						0.44						0.42						0.52						0.43
Current foreign tax expense(8)			—						—						—						0.00						0.00						—
Total expenses			1.52	%					1.52	%					1.72	%					1.65	%					1.79	%					1.79	%

See accompanying Notes to Financial Statements.

12       Tortoise Power and Energy Infrastructure Fund, Inc.

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Financial Highlights (Continued)

		Period from December 1, 2013 through May 31, 2014						Year Ended November 30, 2013						Year Ended November 30, 2012						Year Ended November 30, 2011						Year Ended November 30, 2010						Period from July 31, 2009(1) through November 30, 2009
		(Unaudited)
Ratio of net investment income to average net assets
before fee waiver(7)				2.78	%					2.62	%					2.64	%					2.70	%					3.05	%					2.38	%
Ratio of net investment income to average net assets
after fee waiver(7)				2.85	%					2.74	%					2.76	%					2.88	%					3.23	%					2.55	%
Portfolio turnover rate(4)				3.48	%					12.21	%					13.67	%					8.78	%					21.93	%					2.97	%
Short-term borrowings, end of period (000’s)			$	37,900					$	37,400					$	16,400					$	13,000					$	12,700					$	11,300
Long-term debt obligations, end of period (000’s)				—						—					$	20,000					$	20,000					$	20,000					$	20,000
Per common share amount of long-term debt obligations
outstanding, end of period				—						—					$	2.88					$	2.88					$	2.88					$	2.90
Per common share amount of net assets, excluding
long-term debt obligations, end of period			$	29.98					$	28.12					$	29.64					$	28.25					$	27.35					$	23.45
Asset coverage, per $1,000 of principal amount of
long-term debt obligations and short-term borrowings(9)			$	6,499					$	6,227					$	6,111					$	6,343					$	6,195					$	5,530
Asset coverage ratio of long-term debt obligations
and short-term borrowings(9)				650	%					623	%					611	%					634	%					619	%					553	%

(1)	Commencement of Operations.
(2)	Information presented relates to a share of common stock outstanding for the entire period.
(3)	The per common share data for the years ended November 30, 2013, 2012, 2011 and 2010 and the period from July 31, 2009 through November 30, 2009 do not reflect the change in estimate of investment income and return of capital, for the respective period. See Note 2C to the financial statements for further disclosure.
(4)	Not annualized for periods less than one full year.
(5)	Total investment return is calculated assuming a purchase of common stock at the beginning of the period (or initial public offering price) and a sale at the closing price on the last day of the period reported (excluding brokerage commissions). The calculation also assumes reinvestment of distributions at actual prices pursuant to the Company’s dividend reinvestment plan.
(6)	Total investment return is calculated assuming a purchase of common stock at the beginning of period (or initial public offering price) and a sale at net asset value on the last day of the period. The calculation also assumes reinvestment of distributions at actual prices pursuant to the Company’s dividend reinvestment plan.
(7)	Annualized for periods less than one full year.
(8)	The Company accrued $0, $0, $0, $4,530, $1,660 and $0 for the period from December 1, 2013 through May 31, 2014, the years ended November 30, 2013, 2012, 2011 and 2010, and the period from July 31, 2009 through November 30, 2009, respectively, for current foreign tax expense. Ratio is less than 0.01% for the years ended November 30, 2011 and 2010.
(9)	Represents value of total assets less all liabilities and indebtedness not represented by long-term debt obligations and short-term borrowings at the end of the period divided by long-term debt obligations and short-term borrowings outstanding at the end of the period.

See accompanying Notes to Financial Statements.

2014 2nd Quarter Report       13

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Notes to Financial Statements (Unaudited) May 31, 2014

1. Organization

Tortoise Power and Energy Infrastructure Fund, Inc. (the “Company”) was organized as a Maryland corporation on July 5, 2007, and is a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company’s primary investment objective is to provide a high level of current income, with a secondary objective of capital appreciation. The Company seeks to provide its stockholders with a vehicle to invest in a portfolio consisting primarily of securities issued by power and energy infrastructure companies. The Company commenced operations on July 31, 2009. The Company’s stock is listed on the New York Stock Exchange under the symbol “TPZ.”

2. Significant Accounting Policies

A. Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, recognition of distribution income and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

B. Investment Valuation

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 will be 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 will be valued at the mean between the last bid price and last ask price on such day.

The Company may invest up to 15 percent of its total assets in restricted securities that are ineligible for resale under Rule 144A under the Securities Act of 1933. 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 the Company’s ability to dispose of them. Investments in private placement securities and other securities for which market quotations are not readily available will be valued in good faith by using fair value procedures approved by the Board of Directors. 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 will generally be priced using fair value procedures.

An equity security of a publicly traded company acquired in a direct placement transaction may be subject to restrictions on resale that can affect the security’s liquidity and fair value. Such securities that are convertible or otherwise will become freely tradable will be valued based on the market value of the freely tradable security less an applicable discount. Generally, the discount will initially be equal to the discount at which the Company purchased the securities. 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.

The Company generally values debt securities at prices based on market quotations for such securities, except those securities purchased with 60 days or less to maturity are valued on the basis of amortized cost, which approximates market value.

The Company generally values its interest rate swap contracts using industry-accepted models which discount the estimated future cash flows based on 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.

C. Security Transactions and Investment Income

Security transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains and losses are reported on an identified cost basis. Interest income is recognized on the accrual basis, including amortization of premiums and accretion of discounts. Dividend income and distributions are recorded on the ex-dividend date. Distributions received from investments generally are comprised of ordinary income and return of capital. The Company allocates distributions between investment income and return of capital based on estimates made at the time such distributions are received. Such estimates are based on information provided by each portfolio company and other industry sources. These estimates may subsequently be revised based on actual allocations received from the portfolio companies after their tax reporting periods are concluded, as the actual character of these distributions is not known until after the fiscal year end of the Company.

For the period from December 1, 2012 through November 30, 2013, the Company estimated the allocation of investment income and return of capital for distributions received from investments within the Statement of Operations. For this period, the Company had estimated approximately 6 percent of total distributions as investment income and approximately 94 percent as return of capital.

Subsequent to November 30, 2013, the Company reallocated the amount of investment income and return of capital it recognized for the period from December 1, 2012 through November 30, 2013 based on the 2013 tax reporting information received from the individual MLPs. This reclassification amounted to an increase in net investment income of approximately $112,000 or $0.016 per share, a decrease in unrealized appreciation of investments of approximately $129,000 or $0.019 per share, and an increase in realized gains of approximately $17,000 or $0.003 per share for the period from December 1, 2013 through May 31, 2014.

Subsequent to the period ended February 28, 2014, the Company reallocated the amount of investment income and return of capital it recognized in the current fiscal year based on its revised 2014 estimates, after considering the final allocations for 2013. This reclassification amounted to a decrease in net investment income of approximately $3,000 or less than $0.001 per share, an increase in unrealized appreciation of investments of approximately $6,000 or $0.001 per share, and a decrease in realized gains of approximately $3,000 or less than $0.001 per share.

D. Distributions to Stockholders

Distributions to common stockholders are recorded on the ex-dividend date. The Company intends to make monthly cash distributions of its investment company taxable income to common stockholders. In addition, on an annual basis, the Company may distribute additional capital gains in the last calendar quarter if necessary to meet minimum distribution requirements and thus avoid being subject to excise taxes. The amount of any distributions will be determined by the Board of

14       Tortoise Power and Energy Infrastructure Fund, Inc.

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Notes to Financial Statements (Unaudited) (Continued)

Directors. The character of distributions to common stockholders made during the year may differ from their ultimate characterization for federal income tax purposes. Distributions paid to stockholders in excess of investment company taxable income and net realized gains will be treated as return of capital to stockholders. For the year ended November 30, 2013, the Company’s distributions for tax purposes were comprised of 36 percent dividend income and 64 percent long-term capital gain. The tax character of distributions paid to common stockholders for the current year will be determined subsequent to November 30, 2014.

E. Federal Income Taxation

The Company qualifies as a regulated investment company (“RIC”) under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). As a result, the Company generally will not be subject to U.S. federal income tax on income and gains that it distributes each taxable year to stockholders if it meets certain minimum distribution requirements. The Company is required to distribute substantially all of its income, in addition to other asset diversification requirements. The Company is subject to a 4 percent non-deductible U.S. federal excise tax on certain undistributed income unless the Company makes sufficient distributions to satisfy the excise tax avoidance requirement. The Company invests in MLPs, which generally are treated as partnerships for federal income tax purposes. As a limited partner in the MLPs, the Company reports its allocable share of the MLP’s taxable income in computing its own taxable income.

The Company recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. The Company’s policy is to record interest and penalties on uncertain tax positions as part of tax expense. The Company has reviewed all open tax years and major jurisdictions and concluded that there is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on a tax return. All tax years since inception remain open to examination by federal and state tax authorities.

F. Offering and Debt Issuance Costs

Offering costs related to the issuance of common stock are charged to additional paid-in capital when the stock is issued. Debt issuance costs related to long-term debt obligations are capitalized and amortized over the period the debt is outstanding.

G. Derivative Financial Instruments

The Company uses derivative financial instruments (principally interest rate swap contracts) to manage interest rate risk. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. The Company does not hold or issue derivative financial instruments for speculative purposes. All derivative financial instruments are recorded at fair value with changes in fair value during the reporting period, and amounts accrued under the agreements, included as unrealized gains or losses in the Statement of Operations. The fair value of derivative financial instruments in a loss position are offset against the fair value of derivative financial instruments in a gain position, with the net fair value appropriately reflected as an asset or liability within the accompanying Statement of Assets & Liabilities. Cash settlements under the terms of the interest rate swap agreements and termination of such agreements are recorded as realized gains or losses in the Statement of Operations.

H. Indemnifications

Under the Company’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Company. In addition, in the normal course of business, the Company may enter into contracts that provide general indemnification to other parties. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred, and may not occur. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

3. Concentration Risk

Under normal circumstances, the Company intends to invest at least 80 percent of total assets (including assets obtained through potential leverage) in securities of companies that derive more than 50 percent of their revenue from power or energy operations and no more than 25 percent of the total assets in equity securities of MLPs as of the date of purchase. The Company will invest a minimum of 60 percent of total assets in fixed income securities, which may include up to 25 percent of its assets in non-investment grade rated fixed income securities. In determining application of these policies, the term “total assets” includes assets obtained through leverage. Companies that primarily invest in a particular sector may experience greater volatility than companies investing in a broad range of industry sectors. The Company may, for defensive purposes, temporarily invest all or a significant portion of its assets in investment grade securities, short-term debt securities and cash or cash equivalents. To the extent the Company uses this strategy, it may not achieve its investment objective.

4. Agreements

The Company has entered into an Investment Advisory Agreement with Tortoise Capital Advisors, L.L.C. (the “Adviser”). Under the terms of the agreement, the Company pays the Adviser a fee equal to an annual rate of 0.95 percent of the Company’s average monthly total assets (including any assets attributable to leverage) minus accrued liabilities (other than debt entered into for purposes of leverage and the aggregate liquidation preference of outstanding preferred stock, if any) (“Managed Assets”), in exchange for the investment advisory services provided. The Adviser waived an amount equal to 0.10 percent of average monthly Managed Assets for the period from January 1, 2013 through December 31, 2013, and has contractually agreed to a fee waiver of 0.05 percent of average monthly Managed Assets for the period from January 1, 2014 through December 31, 2014. The waived fees are not subject to recapture by the Adviser.

U.S. Bancorp Fund Services, LLC serves as the Company’s administrator. The Company pays the administrator a monthly fee computed at an annual rate of 0.04 percent of the first $1,000,000,000 of the Company’s Managed Assets, 0.03 percent on the next $1,000,000,000 of Managed Assets and 0.02 percent on the balance of the Company’s Managed Assets.

Computershare Trust Company, N.A. serves as the Company’s transfer agent and registrar and Computershare Inc. serves as the Company’s dividend paying agent and agent for the automatic dividend reinvestment plan.

U.S. Bank, N.A. serves as the Company’s custodian. The Company pays the custodian a monthly fee computed at an annual rate of 0.004 percent of the average daily market value of the Company’s portfolio assets, subject to a minimum annual fee of $4,800, plus portfolio transaction fees.

2014 2nd Quarter Report       15

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Notes to Financial Statements (Unaudited) (Continued)

5. Income Taxes

It is the Company’s intention to continue to qualify as a regulated investment company under Subchapter M of the Code and distribute all of its taxable income. Accordingly, no provision for federal income taxes is required in the financial statements.

The amount and character of income and capital gain distributions to be paid, if any, are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These differences are primarily due to differences in the timing of recognition of gains or losses on investments. Permanent book and tax basis differences, if any, may result in reclassifications to undistributed net investment income (loss), undistributed net realized gain (loss) and additional paid-in capital.

As of November 30, 2013, the components of accumulated earnings on a tax basis were as follows:

Unrealized appreciation		$	66,013,445
Undistributed ordinary income			6,717
Other temporary differences			(25,659	)
Accumulated earnings		$	65,994,503

As of May 31, 2014, the aggregate cost of securities for federal income tax purposes was $160,503,370. The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $84,591,958, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $203,256 and the net unrealized appreciation was $84,388,702.

6. Fair Value of Financial Instruments

Various inputs are used in determining the fair value of the Company’s 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 by level within the fair value hierarchy as of May 31, 2014. These assets are measured on a recurring basis.

		Fair Value at
Description		May 31, 2014			Level 1			Level 2			Level 3
Assets
Debt Securities:
Corporate Bonds(a)		$	136,356,729		$	4,697,610		$	131,659,119		$	—
Equity Securities:
Common Stock(a)			6,812,994			6,812,994			—			—
Master Limited Partnerships
and Related Companies(a)			101,660,492			101,660,492			—			—
Other:
Short-Term Investment(b)			61,857			61,857			—			—
Total Assets		$	244,892,072		$	113,232,953		$	131,659,119		$	—
Liabilities
Interest Rate Swap Contracts		$	364,677		$	—		$	364,677		$	—

(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 May 31, 2014.

The Company did not hold any Level 3 securities during the period from December 1, 2013 through May 31, 2014. 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, 2013 through May 31, 2014.

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.

16       Tortoise Power and Energy Infrastructure Fund, Inc.

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Notes to Financial Statements (Unaudited) (Continued)

7. Restricted Securities

Certain of the Company’s investments are restricted and are valued as determined in accordance with procedures established by the Board of Directors, as more fully described in Note 2. 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 May 31, 2014. Each of the securities in the table below are eligible for resale under Rule 144A under the Securities Act of 1933.

													Fair
													Value as
		Principal			Acquisition		Acquisition			Fair			Percent of
Investment Security		Amount			Date(s)		Cost			Value			Net Assets
DCP Midstream LLC,					08/07/09-
9.750%, 03/15/2019		$	5,000,000		08/17/12		$	6,052,370		$	6,438,770			3.1	%
Duquesne Light Holdings, Inc.,
6.400%, 09/15/2020			3,000,000		11/30/11			3,180,330			3,550,116			1.7
Duquesne Light Holdings, Inc.,					11/18/11-
5.900%, 12/01/2021			2,000,000		12/05/11			2,074,420			2,305,772			1.1
Enogex LLC,					02/26/10-
6.250%, 03/15/2020			4,000,000		04/22/10			4,118,593			4,432,408			2.1
Florida Gas Transmission Co., LLC,					07/08/10-
5.450%, 07/15/2020			1,500,000		01/04/11			1,551,220			1,698,712			0.8
Gibson Energy Inc.,					06/26/13-
6.750%, 07/15/2021			4,500,000		07/01/13			4,459,760			4,871,250			2.3
IPALCO Enterprises, Inc.,					11/03/09-
7.250%, 04/01/2016			4,000,000		01/04/11			4,165,000			4,360,000			2.1
Midcontinent Express Pipelines, LLC,					09/09/09-
6.700%, 09/15/2019			6,000,000		03/02/10			6,055,570			6,538,098			3.2
NRG Energy, Inc.,
6.250%, 07/15/2022			6,000,000		2/11/14			6,135,000			6,360,000			3.1
Ruby Pipeline, LLC,
6.000%, 04/01/2022			1,500,000		09/17/12			1,616,250			1,695,793			0.8
Source Gas, LLC,
5.900%, 04/01/2017			5,770,000		04/21/10			5,544,521			6,096,582			2.9
Southern Star Central Gas Pipeline, Inc.,
6.000%, 06/01/2016			2,000,000		08/24/09			1,970,000			2,158,782			1.0
							$	46,923,034		$	50,506,283			24.2	%

8. Investment Transactions

For the period from December 1, 2013 through May 31, 2014, the Company purchased (at cost) and sold securities (proceeds received) in the amount of $8,213,147 and $8,491,155 (excluding short-term debt securities), respectively.

9. Interest Rate Swap Contracts

The Company has entered into interest rate swap contracts in an attempt to protect itself from increasing interest expense on its leverage resulting from increasing short-term interest rates. A decline in interest rates may result in a decline in the value of the swap contracts, which may result in a decline in the net assets of the Company. At the time the interest rate swap contracts reach their scheduled termination, there is a risk that the Company would not be able to obtain a replacement transaction, or that the terms of the replacement would not be as favorable as on the expiring transaction. In addition, if the Company is required to terminate any swap contract early due to the net assets of the Company falling below $60,000,000 or the Company failing to maintain a required 300 percent asset coverage of the liquidation value of the outstanding debt, then the Company could be required to make a payment to the extent of any net unrealized depreciation of the terminated swaps, in addition to redeeming all or some of its outstanding debt. The Company segregates a portion of its assets as collateral for the amount of any net liability of its interest rate swap contracts. Details of the interest rate swap contracts outstanding as of May 31, 2014, are as follows:

							Fixed Rate			Floating Rate		Unrealized
		Maturity		Notional			Paid by the			Received by		Appreciation
Counterparty		Date		Amount			Company			the Company		(Depreciation)
Wells Fargo Bank, N.A.		01/05/2016		$	2,500,000		1.09	%		3-month U.S. Dollar LIBOR		$	(32,299	)
Wells Fargo Bank, N.A.		01/05/2017			2,500,000		1.34	%		3-month U.S. Dollar LIBOR			(44,955	)
Wells Fargo Bank, N.A.		08/07/2017			6,000,000		1.89	%		3-month U.S. Dollar LIBOR			(187,976	)
Wells Fargo Bank, N.A.		08/06/2018			6,000,000		1.95	%		3-month U.S. Dollar LIBOR			(166,132	)
Wells Fargo Bank, N.A.		11/19/2019			6,000,000		1.33	%		3-month U.S. Dollar LIBOR			124,340
Wells Fargo Bank, N.A.		08/06/2020			3,000,000		2.18	%		3-month U.S. Dollar LIBOR			(57,655	)
				$	26,000,000							$	(364,677	)

The Company is exposed to credit risk on the interest rate swap contracts if the counterparty should fail to perform under the terms of the interest rate swap contracts. The amount of credit risk is limited to the net appreciation of the interest rate swap contracts, if any, as no collateral is pledged by the counterparty. In addition, if the counterparty to the interest rate swap contracts defaults, the Company would incur a loss in the amount of the receivable and would not receive amounts due from the counterparty to offset the interest payments on the Company’s leverage.

The unrealized appreciation of interest rate swap contracts in the amount of $7,988 for the period ended May 31, 2014 is included in the Statement of Operations. Cash settlement payments under the terms of the interest rate swap contracts in the amount of $188,235 are recorded as realized losses for the period ended May 31, 2014. The total notional amount of all open swap agreements at May 31, 2014 is indicative of the volume of this derivative type for the period ended May 31, 2014.

2014 2nd Quarter Report       17

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Notes to Financial Statements (Unaudited) (Continued)

The following table presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s interest rate swap contracts at May 31, 2014.

Net Amounts

Gross Amounts

of Assets

Gross Amounts Not Offset

Gross

Offset in the

Presented in

in the Statement of Assets

Amounts of

Statement

the Statement

& Liabilities

Recognized

of Assets &

of Assets &

Financial

Cash Collateral

Net

Description

Assets

Liabilities

Liabilities

Instruments

Received

Amount

Interest Rate Swap

Contracts

$124,340

$(124,340)

$          —

$    —

$    —

$         —

Net Amounts

Gross Amounts

of Liabilities

Gross Amounts Not Offset

Gross

Offset in the

Presented in

in the Statement of Assets

Amounts of

Statement

the Statement

& Liabilities

Recognized

of Assets &

of Assets &

Financial

Cash Collateral

Net

Description

Liabilities

Liabilities

Liabilities

Instruments

Received

Amount

Interest Rate Swap

Contracts

$489,017

$(124,340)

$364,677

$    —

$    —

$364,677

10. Credit Facility

As of May 31, 2014, the Company has a 270-day rolling evergreen margin loan facility with Bank of America, N.A. The terms of the agreement provide for a $40,000,000 facility that is secured by certain of the Company’s assets. Outstanding balances generally will accrue interest at a variable rate equal to three-month LIBOR plus 0.75 percent and unused portions of the facility will accrue a fee equal to an annual rate of 0.25 percent.

The average principal balance and interest rate for the period during which the margin loan facility was utilized during the period ended May 31, 2014 was approximately $37,200,000 and 0.98 percent, respectively. At May 31, 2014, the principal balance outstanding was $37,900,000 at an interest rate of 0.98 percent.

Under the terms of the margin loan facility, the Company must maintain asset coverage required under the 1940 Act. If the Company fails to maintain the required coverage, it may be required to repay a portion of an outstanding balance until the coverage requirement has been met. At May 31, 2014, the Company was in compliance with the terms of the margin loan facility.

11. Common Stock

The Company has 100,000,000 shares of capital stock authorized and 6,951,333 shares outstanding at May 31, 2014 and November 30, 2013.

12. Subsequent Events

On June 30, 2014, the Company paid a distribution in the amount of $0.125 per common share, for a total of $868,917. Of this total, the dividend reinvestment amounted to $54,351.

The Company has performed an evaluation of subsequent events through the date the financial statements were issued and has determined that no additional items require recognition or disclosure.

18       Tortoise Power and Energy Infrastructure Fund, Inc.

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Additional Information (Unaudited)

Stockholder Proxy Voting Results

The annual meeting of stockholders was held on May 28, 2014. The matters considered at the meeting, together with the actual vote tabulations relating to such matters are as follows:

1.	To elect two directors of the Company, to hold office for a term of three years and until their successors are duly elected and qualified.

	Each of Charles E. Heath and Rand C. Berney continued as a director with a term expiring on the date of the 2015 annual meeting of stockholders. H. Kevin Birzer continued as a director with a term expiring on the date of the 2016 annual meeting of stockholders.
2.	To approve a proposal to authorize flexibility to the Company to sell its common shares for less than net asset value, subject to certain conditions.

3.	To ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending November 30, 2014.

Based upon votes required for approval, each of these matters passed.

2014 2nd Quarter Report       19

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Additional Information (Unaudited) (Continued)

Director and Officer Compensation

The Company does not compensate any of its directors who are “interested persons,” as defined in Section 2(a)(19) of the 1940 Act, nor any of its officers. For the period ended May 31, 2014, the aggregate compensation paid by the Company to the independent directors was $33,000. The Company did not pay any special compensation to any of its directors or officers.

Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Several factors that could materially affect the Company’s actual results are the performance of the portfolio of investments held by it, the conditions in the U.S. and international financial, petroleum and other markets, the price at which shares of the Company will trade in the public markets and other factors discussed in filings with the SEC.

Proxy Voting Policies

A description of the policies and procedures that the Company uses to determine how to vote proxies relating to portfolio securities owned by the Company and information regarding how the Company voted proxies relating to the portfolio of securities during the 12-month period ended June 30, 2013 are available to stockholders (i) without charge, upon request by calling the Company at (913) 981-1020 or toll-free at (866) 362-9331 and on the Company’s Web site at www.tortoiseadvisors.com; and (ii) on the SEC’s Web site at www.sec.gov.

Form N-Q

The Company files its complete schedule of portfolio holdings for the first and third quarters of each fiscal year with the SEC on Form N-Q. The Company’s Form N-Q is available without charge upon request by calling the Company at (866) 362-9331 or by visiting the SEC’s Web site at www.sec.gov. In addition, you may review and copy the Company’s Form N-Q at the SEC’s Public Reference Room in Washington D.C. You may obtain information on the operation of the Public Reference Room by calling (800) SEC-0330.

The Company’s Form N-Qs are also available on the Company’s Web site at www.tortoiseadvisors.com.

Statement of Additional Information

The Statement of Additional Information (“SAI”) includes additional information about the Company’s directors and is available upon request without charge by calling the Company at (866) 362-9331 or by visiting the SEC’s Web site at www.sec.gov.

Certifications

The Company’s Chief Executive Officer has submitted to the New York Stock Exchange the annual certification as required by Section 303A.12(a) of the NYSE Listed Company Manual.

The Company has filed with the SEC, as an exhibit to its most recently filed Form N-CSR, the certification of its Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act.

Privacy Policy

In order to conduct its business, the Company collects and maintains certain nonpublic personal information about its stockholders of record with respect to their transactions in shares of the Company’s securities. This information includes the stockholder’s address, tax identification or Social Security number, share balances, and distribution elections. We do not collect or maintain personal information about stockholders whose share balances of our securities are held in “street name” by a financial institution such as a bank or broker.

We do not disclose any nonpublic personal information about you, the Company’s other stockholders or the Company’s former stockholders to third parties unless necessary to process a transaction, service an account, or as otherwise permitted by law.

To protect your personal information internally, we restrict access to nonpublic personal information about the Company’s stockholders to those employees who need to know that information to provide services to our stockholders. We also maintain certain other safeguards to protect your nonpublic personal information.

20       Tortoise Power and Energy Infrastructure Fund, Inc.

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Office of the Company and of the Investment Adviser Tortoise Capital Advisors, L.L.C. 11550 Ash Street, Suite 300 Leawood, Kan. 66211 (913) 981-1020 (913) 981-1021 (fax) www.tortoiseadvisors.com Board of Directors of Tortoise Power and Energy Infrastructure Fund, Inc. H. Kevin Birzer, Chairman Tortoise Capital Advisors, L.L.C. Terry Matlack Tortoise Capital Advisors, L.L.C. Rand C. Berney Independent Conrad S. Ciccotello Independent Charles E. Heath Independent

ADMINISTRATOR U.S. Bancorp Fund Services, LLC 615 East Michigan St. Milwaukee, Wis. 53202 CUSTODIAN U.S. Bank, N.A. 1555 North Rivercenter Drive, Suite 302 Milwaukee, Wis. 53212 TRANSFER, DIVIDEND DISBURSING AND DIVIDEND REINVESTMENT PLAN AGENT Computershare Trust Company, N.A. / Computershare Inc. P.O. Box 30170 College Station, Tex. 77842-3170 (800) 426-5523 www.computershare.com LEGAL COUNSEL Husch Blackwell LLP 4801 Main St. Kansas City, Mo. 64112 INVESTOR RELATIONS (866) 362-9331 info@tortoiseadvisors.com STOCK SYMBOL Listed NYSE Symbol: TPZ This report is for stockholder information. This is not a prospectus intended for use in the purchase or sale of fund shares. Past performance is no guarantee of future results and your investment may be worth more or less at the time you sell.

Tortoise Capital Advisors’ Closed-end Funds

(1) As of 6/30/14

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Item 2. Code of Ethics.

Not applicable for semi-annual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semi-annual reports.

Item 4. Principal Accountant Fees and Services.

Not applicable for semi-annual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semi-annual reports.

Item 6. Investments.

Schedule of Investments is included as part of the report to shareholders filed under Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable for semi-annual reports.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

There have been no changes in the portfolio managers identified in response to this Item in the Registrant’s most recent annual report on Form N-CSR.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Month #1 12/1/13-12/31/13	0	0	0	0
Month #2 1/1/14-1/31/14	0	0	0	0
Month #3 2/1/14-2/28/14	0	0	0	0
Month #4 3/1/14-3/31/14	0	0	0	0
Month #5 4/1/14-4/30/14	0	0	0	0
Month #6 5/1/14-5/31/14	0	0	0	0
Total	0	0	0	0

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Item 10. Submission of Matters to a Vote of Security Holders.

None.

Item 11. 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 Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b) There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the Registrant intends to satisfy the Item 2 requirements through filing of an exhibit. Not applicable.

(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the Registrant to 10 or more persons. None.

(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

(c) Notices to the Registrant’s common shareholders in accordance with the order under Section 6(c) of the 1940 Act granting an exemption from Section 19(b) of the 1940 Act and Rule 19b-1 under the 1940 Act, dated September 12, 2011¹

____________________

¹ The Registrant has received exemptive relief from the Securities and Exchange Commission permitting it to make periodic distributions of long-term capital gains with respect to its outstanding common shares as frequently as twelve times each year. This relief is conditioned, in part, on an undertaking by the Registrant to make the disclosures to the holders of the Registrant’s common shares, in addition to the information required by Section 19(a) of the 1940 Act and Rule 19a-1 thereunder. The Registrant is likewise obligated to file with the Commission the information contained in any such notice to shareholders and, in that regard, has attached hereto copies of each such notice made during the period.

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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.

(Registrant)	Tortoise Power and Energy Infrastructure Fund, Inc.
By (Signature and Title)	/s/ Terry Matlack
	Terry Matlack, Chief Executive Officer
Date     July 22, 2014

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.

By (Signature and Title)	/s/ Terry Matlack
	Terry Matlack, Chief Executive Officer
Date     July 22, 2014
By (Signature and Title)	/s/ P. Bradley Adams
	P. Bradley Adams, Chief Financial Officer
Date     July 22, 2014

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