ndpnq.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 811-22690



Tortoise Energy Independence 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
Michelle Kelly
11550 Ash Street, Suite 300, Leawood, KS 66211

(Name and address of agent for service)



913-981-1020
Registrant's telephone number, including area code



Date of fiscal year end: November 30


Date of reporting period: August 31, 2012

 
 
 
Item 1. Schedule of Investments.
 
Tortoise Energy Independence Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
August 31, 2012
  
 
  
Shares
    
Fair Value
  
Common Stock - 59.8% (1)            
Natural Gas Pipelines - 2.7% (1)(2)
            
United States - 2.7% (1)
            
EQT Corporation
     47,300     $ 2,552,308  
National Fuel Gas Company
     113,800       5,678,620  
                8,230,928  
Oil and Gas Production - 57.1% (1)
                
Canada - 14.9% (1)
                
ARC Resources Ltd.
     323,300       7,645,065  
Baytex Energy Corp.
     85,500       3,892,815  
Canadian Natural Resources Limited
     201,700       6,131,680  
Crescent Point Energy Corp.
     276,400       11,493,417  
Encana Corporation
     140,200       3,112,440  
Enerplus Corporation
     267,100       4,212,167  
Penn West Petroleum Ltd.
     162,300       2,304,660  
Suncor Energy Inc.
     239,300       7,485,304  
The Netherlands - 2.4% (1)
                
Royal Dutch Shell plc (ADR)
     105,400       7,374,838  
United Kingdom - 2.4% (1)
                
BP p.l.c. (ADR)
     179,400       7,545,564  
United States - 37.4% (1)
                
Anadarko Petroleum Corporation (2)
     181,600       12,579,432  
Apache Corporation (2)
     99,300       8,514,975  
Cabot Oil & Gas Corporation (2)
     60,300       2,497,023  
Chesapeake Energy Corporation (2)
     133,100       2,575,485  
Chevron Corporation
     65,000       7,290,400  
Concho Resources Inc. (2)(3)
     29,700       2,665,278  
ConocoPhillips
     58,900       3,344,931  
Continental Resources, Inc. (2)(3)
     62,887       4,657,412  
Denbury Resources Inc. (2)(3)
     254,000       3,934,460  
Devon Energy Corporation (2)
     153,700       8,888,471  
EOG Resources, Inc. (2)
     50,400       5,458,320  
Hess Corporation (2)
     45,900       2,319,327  
Marathon Oil Corporation (2)
     262,900       7,313,878  
Newfield Exploration Company (2)(3)
     59,500       1,941,485  
Occidental Petroleum Corporation (2)
     173,900       14,783,239  
Pioneer Natural Resources Company (2)
     89,300       8,694,248  
QEP Resources, Inc. (2)
     125,500       3,600,595  
Range Resources Corporation (2)
     132,500       8,637,675  
Southwestern Energy Company (2)(3)
     90,800       2,826,604  
Whiting Petroleum Corporation (2)(3)
     84,500       3,761,940  
                177,483,128  
Total Common Stock (Cost $186,303,958)
             185,714,056  
                   
Master Limited Partnerships and Related Companies - 14.5% (1)
                
Crude/Refined Products Pipelines - 4.1% (1)
                
United States - 4.1% (1)
                
Enbridge Energy Management, L.L.C. (4)
     123,726       3,851,590  
Kinder Morgan Management, LLC (4)
     55,100       4,084,012  
Magellan Midstream Partners, L.P.
     37,000       3,069,890  
Plains All American Pipeline, L.P.
     22,100       1,912,313  
 
               12,917,805  
Natural Gas/Natural Gas Liquids Pipelines - 3.8% (1)
                
United States - 3.8% (1)
                
Energy Transfer Partners, L.P.
     86,958       3,714,846  
Enterprise Products Partners L.P.
     38,200       2,039,880  
Regency Energy Partners LP
     126,040       2,916,565  
Williams Partners L.P.
     63,900       3,295,962  
                11,967,253  
Natural Gas Gathering/Processing - 1.1% (1)
                
United States - 1.1% (1)
                
DCP Midstream Partners, LP
     44,100       1,902,474  
Targa Resources Partners LP
     34,200       1,385,784  
                3,288,258  
Oil and Gas Production — 5.5%(1)
                
United States — 5.5%(1)
                
BreitBurn Energy Partners L.P.
     191,100       3,739,827  
EV Energy Partners, L.P.
     59,144       3,712,469  
Legacy Reserves, L.P.
     98,300       2,741,587  
Linn Energy, L.L.C.
     89,700       3,566,472  
Pioneer Southwest Energy Partners L.P.
     106,200       2,718,720  
Vanguard Natural Resources, LLC
     17,800       509,436  
                16,988,511  
                   
Total Master Limited Partnerships and Related Companies (Cost $44,452,971)
             45,161,827  
                   
Short-Term Investments - 28.0% (1)
                
United States Investment Companies - 28.0% (1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.16% (5)
     83,220,166       83,220,166  
Invesco Liquid Assets Institutional Portfolio - Institutional Class, 0.17% (5)
     3,891,255       3,891,255  
Total Short-Term Investments (Cost $87,111,421)
             87,111,421  
                   
Total Investments - 102.3% (1) (Cost $317,868,350)
             317,987,304  
Total Value of Options Written (Premiums received $1,254,248) - (0.2%) (1)
             (503,742 )
Other Assets and Liabilities - (2.1%) (1)
             (6,624,802 )
Total Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 310,858,760  
                   
(1)
Calculated as a percentage of net assets applicable to common stockholders.
                
(2)
All or a portion of the security represents cover for outstanding call option contracts written.
          
(3)
Non-income producing security.
                
(4)
Security distributions are paid-in-kind.
                
(5)
Rate indicated is the current yield as of August 31, 2012.
                
                   
Key to abbreviation
                
ADR = American Depository Receipts
                
 
 
 
 
 
Tortoise Energy Independence Fund, Inc.
        
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
        
August 31, 2012
              
               
Call Options Written
Expiration Date
Strike Price
Contracts
  
 Fair Value
Anadarko Petroleum Corporation
September 2012
 $          75.00
  
                706
  
 $                                 (16,238)
Anadarko Petroleum Corporation
September 2012
             77.50
  
             1,110
  
            (8,880)
Apache Corporation
September 2012
             95.00
  
                993
  
            (4,965)
Cabot Oil & Gas Corporation
September 2012
             46.00
  
                314
  
            (9,420)
Cabot Oil & Gas Corporation
September 2012
             47.00
  
                252
  
            (3,780)
Cabot Oil & Gas Corporation
September 2012
             48.00
  
                  37
  
               (185)
Chesapeake Energy Corporation
September 2012
             21.00
  
                584
  
          (11,680)
Chesapeake Energy Corporation
September 2012
             22.00
  
                747
  
            (5,976)
Concho Resources Inc.
September 2012
           100.00
  
                169
  
            (4,225)
Concho Resources Inc.
September 2012
           105.00
  
                128
  
            (1,280)
Continental Resources, Inc.
September 2012
             75.00
  
                173
  
          (42,385)
Continental Resources, Inc.
September 2012
             80.00
  
                455
  
          (31,850)
Denbury Resources Inc.
September 2012
             17.00
  
             1,452
  
          (21,780)
Denbury Resources Inc.
September 2012
             18.00
  
                865
  
            (3,460)
Devon Energy Corporation
September 2012
             65.00
  
             1,537
  
            (9,222)
EOG Resources, Inc.
September 2012
           120.00
  
                504
  
          (21,672)
EQT Corporation
September 2012
             60.00
  
                473
  
            (7,095)
Hess Corporation
September 2012
             52.50
  
                252
  
          (16,128)
Hess Corporation
September 2012
             55.00
  
                207
  
            (4,347)
Marathon Oil Corporation
September 2012
             29.00
  
             2,050
  
          (47,150)
Marathon Oil Corporation
September 2012
             30.00
  
                579
  
            (3,474)
National Fuel Gas Company
September 2012
             55.00
  
                240
  
            (5,040)
Newfield Exploration Company
September 2012
             35.00
  
                595
  
          (12,495)
Occidental Petroleum Corporation
September 2012
             95.00
  
                161
  
               (805)
Occidental Petroleum Corporation
September 2012
             97.50
  
             1,578
  
            (1,578)
Pioneer Natural Resources Company
September 2012
           105.00
  
                303
  
          (25,755)
Pioneer Natural Resources Company
September 2012
           110.00
  
                590
  
          (20,060)
QEP Resources, Inc.
September 2012
             30.00
  
             1,255
  
          (65,260)
Range Resources Corporation
September 2012
             70.00
  
                503
  
          (39,737)
Range Resources Corporation
September 2012
             72.50
  
                714
  
          (24,990)
Range Resources Corporation
September 2012
             75.00
  
                108
  
            (2,160)
Southwestern Energy Company
September 2012
             34.00
  
                226
  
            (5,198)
Southwestern Energy Company
September 2012
             35.00
  
                640
  
            (8,320)
Southwestern Energy Company
September 2012
             36.00
  
                  42
  
               (252)
Whiting Petroleum Corporation
September 2012
             49.00
  
                845
  
          (16,900)
               
Total Value of Call Options Written (Premiums received $1,254,248)
      
 $                               (503,742)
               

 
 
 

Various inputs are used in determining the value of the Company’s investments.  These inputs are summarized in the three broad levels listed below:
 
    Level 1 – quoted prices in active markets for identical investments
    Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.)
    Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following table provides the fair value measurements of applicable Company assets and liabilities by level within the fair value hierarchy as of August 31, 2012.  These assets and liabilities are measured on a recurring basis.

Description
Fair Value at
August 31, 2012
  
Level 1
  
Level 2
  
Level 3
  
Assets
                
Equity Securities:
                
Common Stock(a)
 $ 185,714,056   $ 185,714,056   $ -   $ -  
Master Limited Partnerships and Related Companies(a)
   45,161,827     45,161,827     -     -  
Total Equity Securities
   230,875,883     230,875,883     -     -  
Other:
                        
Short-Term Investments(b)
   87,111,421     87,111,421     -     -  
Total Assets
 $ 317,987,304   $ 317,987,304   $ -   $ -  
Liabilities
                        
Written Call Options
 $ 503,742   $ 503,742   $ -   $ -  

(a)  
All other industry classifications are identified in the Schedule of Investments.
(b)  
Short-term investments are sweep investments for cash balances in the Company at August 31, 2012.

The Company did not hold any Level 3 securities during the period ended August 31, 2012.

Valuation Techniques
In general, and where applicable, the Company uses readily available market quotations based upon the last updated sales price from the principal market to determine fair value.  This pricing methodology applies to the Company’s Level 1 investments and liabilities. 

An equity security of a publicly traded company acquired in a private placement transaction without registration under the Securities Act of 1933, as amended (the “1933 Act”), is subject to restrictions on resale that can affect the security's fair value.  If such a security is convertible into publicly-traded common shares, the security generally will be valued at the common share market price adjusted by a percentage discount due to the restrictions and categorized as Level 2 in the fair value hierarchy.  If the security has characteristics that are dissimilar to the class of security that trades on the open market, the security will generally be valued and categorized as Level 3 in the fair value hierarchy.

The Company utilizes the beginning of reporting period method for determining transfers between levels.  There were no transfers between levels for the period ended August 31, 2012.
 
As of August 31, 2012, the aggregate cost of securities for federal income tax purposes was $317,816,370.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $2,474,569, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $2,303,635 and the net unrealized appreciation was $170,934.

 
 
 
 

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 Energy Independence Fund, Inc.  
       
Date: October 29, 2012
By:
/s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       



Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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