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
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: February 28, 2015
 
 
 
Item 1. Schedule of Investments.
Tortoise Energy Independence Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
        February 28, 2015  
        Shares
Fair Value
  
Common Stock - 89.4%(1)
  
 
    
 
  
Crude/Refined Products Pipelines - 0.8%(1)
            
United States - 0.8%(1)
            
Plains GP Holdings, L.P.
     91,716     $ 2,626,746  
                   
Natural Gas/Natural Gas Liquids Pipelines - 0.0%(1)
                
United States - 0.0%(1)
                
Kinder Morgan, Inc.
     2       82  
                   
Oil and Gas Production - 88.6%(1)
                
Canada - 8.1%(1)
                
ARC Resources LTD.
     334,600       6,463,955  
Cenovus Energy Inc.
     153,200       2,648,828  
Enerplus Corporation
     275,800       2,791,096  
Penn West Petroleum Ltd.
     6,400       12,928  
Suncor Energy Inc.(2)(3)
     465,600       14,014,560  
The Netherlands - 2.3%(1)
                
Royal Dutch Shell plc (ADR)
     114,500       7,484,865  
United Kingdom - 1.3%(1)
                
BP p.l.c. (ADR)
     96,400       3,994,816  
United States - 76.9%(1)
                
Anadarko Petroleum Corporation(2)(3)
     330,900       27,871,707  
Antero Resources Corporation(2)(3)(4)
     150,610       5,941,564  
Cabot Oil & Gas Corporation(2)(3)
     151,700       4,399,300  
Carrizo Oil & Gas, Inc.(2)(3)(4)
     198,000       9,422,820  
Chesapeake Energy Corporation(2)(3)
     436,900       7,287,492  
Cimarex Energy Co.(2)(3)
     89,173       9,780,495  
Concho Resources Inc.(2)(3)(4)
     116,143       12,650,296  
Continental Resources, Inc.(2)(3)(4)
     135,900       6,046,191  
Devon Energy Corporation(2)(3)
     120,800       7,440,072  
Energen Corporation(2)(3)
     76,700       4,957,888  
EOG Resources, Inc.(2)(3)
     363,300       32,595,276  
EP Energy Corporation (4)
     142,700       1,605,375  
EQT Corporation(2)(3)
     238,006       18,995,259  
Hess Corporation(2)(3)
     33,793       2,537,178  
Laredo Petroleum, Inc.(4)
     194,540       2,320,862  
Marathon Oil Corporation(2)(3)
     459,100       12,790,526  
Newfield Exploration Company(2)(3)(4)
     276,088       9,119,187  
Noble Energy, Inc.(2)(3)
     205,000       9,682,150  
Occidental Petroleum Corporation(2)(3)
     192,100       14,960,748  
Pioneer Natural Resources Company(2)(3)
     186,215       28,401,512  
Range Resources Corporation(2)(3)
     224,200       11,106,868  
RSP Permian, Inc.(4)
     110,556       3,002,701  
Whiting Petroleum Corporation(2)(3)(4)
     115,227       3,898,129  
                284,224,644  
                   
Total Common Stock (Cost $321,074,540)
             286,851,472  
                   
Master Limited Partnerships and Related Companies - 30.0%(1)
                
Crude/Refined Products Pipelines - 18.8%(1)
                
United States - 18.8%(1)
                
Buckeye Partners, L.P.
     49,673       3,861,579  
Enbridge Energy Management, L.L.C.(5)
     455,116       16,966,719  
Magellan Midstream Partners, L.P.
     92,000       7,562,400  
MPLX LP
     117,232       9,636,470  
Phillips 66 Partners LP
     65,900       4,691,421  
Plains All American Pipeline, L.P.
     179,229       8,941,735  
Rose Rock Midstream, L.P.
     32,489       1,506,840  
Shell Midstream Partners, L.P.
     30,756       1,201,329  
Tesoro Logistics LP
     77,377       4,442,987  
Valero Energy Partners LP
     26,106       1,391,189  
 
               60,202,669  
Natural Gas/Natural Gas Liquids Pipelines - 4.1%(1)
                
United States - 4.1%(1)
                
Columbia Pipeline Partners LP
     35,719       989,059  
Energy Transfer Partners, L.P.
     77,700       4,621,596  
Enterprise Products Partners L.P.
     229,988       7,667,800  
                13,278,455  
Natural Gas Gathering/Processing - 7.1%(1)
                
United States - 7.1%(1)
                
Antero Midstream Partners LP
     38,218       993,668  
DCP Midstream Partners, LP
     94,524       3,762,055  
EnLink Midstream Partners, LP
     86,700       2,328,762  
Regency Energy Partners LP
     182,456       4,450,102  
Targa Resources Partners LP
     95,800       4,197,956  
Western Gas Partners, LP
     34,300       2,386,594  
Williams Partners L.P.
     93,954       4,804,808  
                22,923,945  
                   
                   
Total Master Limited Partnerships and Related Companies (Cost $71,441,065)
             96,405,069  
                   
Short-Term Investment - 0.0%(1)
                
United States Investment Company - 0.0%(1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.08%(6) (Cost $88,734)
     88,734       88,734  
                   
Total Investments - 119.4%(1) (Cost $392,604,339)
             383,345,275  
Total Value of Options Written (Premiums received $1,838,013) - (0.2%)(1)
             (704,515 )
Other Assets and Liabilities - (19.2%)(1)
             (61,611,748 )
Total Net Assets Applicable to Common Stockholders - 100.0%(1)
           $ 321,029,012  
                   
                   
(1)
Calculated as a percentage of net assets applicable to common stockholders.
                
(2)
All or a portion of the security is segregated as collateral for the margin borrowing facility. 
          
(3)
All or a portion of the security represents cover for outstanding call option contracts written.
                
(4)
Non-income producing security.
                
(5)
Security distributions are paid-in-kind.
                
(6)
Rate indicated is the current yield as of February 28, 2015.
                
                   
ADR = American Depository Receipts
                

 
 
 


Tortoise Energy Independence Fund, Inc.
                  
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
                  
February 28, 2015
                    
                     
Call Options Written
Expiration
Date
  
Strike Price
    
Contracts
    
Fair Value
  
Anadarko Petroleum Corporation
March 2015
   $ 95.00       3,309     $ (28,126 )
Antero Resources Corporation
March 2015
     45.00       1,506       (30,120 )
Cabot Oil & Gas Corporation
March 2015
     30.00       1,517       (75,850 )
Carrizo Oil & Gas, Inc.
March 2015
     55.00       1,980       (59,400 )
Chesapeake Energy Corporation
March 2015
     23.00       4,369       (8,738 )
Cimarex Energy Co.
March 2015
     130.00       891       (24,503 )
Concho Resources Inc.
March 2015
     130.00       1,161       (14,513 )
Continental Resources, Inc.
March 2015
     55.00       1,359       (13,590 )
Devon Energy Corporation
March 2015
     70.00       1,208       (7,248 )
Energen Corporation
March 2015
     75.00       767       (23,010 )
EOG Resources, Inc.
March 2015
     100.00       3,633       (50,862 )
EQT Corporation
March 2015
     90.00       2,380       (28,560 )
Hess Corporation
March 2015
     82.50       337       (6,234 )
Marathon Oil Corporation
March 2015
     31.00       4,591       (32,137 )
Newfield Exploration Company
March 2015
     36.00       2,760       (96,600 )
Noble Energy, Inc.
March 2015
     52.50       2,050       (61,500 )
Occidental Petroleum Corporation
March 2015
     85.00       1,921       (21,131 )
Pioneer Natural Resources Company
March 2015
     180.00       1,862       (51,205 )
Range Resources Corporation
March 2015
     60.00       2,242       (22,420 )
Suncor Energy Inc.
March 2015
     33.00       4,656       (37,248 )
Whiting Petroleum Corporation
March 2015
     45.00       1,152       (11,520 )
                           
Total Value of Call Options Written (Premiums received $1,838,013)
                   $ (704,515 )
                           

 
 
 


 
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 and liabilities by level within the fair value hierarchy as of February 28, 2015.  These assets and liabilities are measured on a recurring basis.
 

Description
Level 1
  
Level 2
  
Level 3
    
Total
  
Assets
                  
Investments:
                  
Common Stock(a)
 $ 286,851,472   $ -   $ -     $ 286,851,472  
Master Limited Partnerships and Related Companies(a)
   96,405,069     -     -       96,405,069  
Short-Term Investment(b)
   88,734     -     -       88,734  
Total Assets
 $ 383,345,275   $ -   $ -     $ 383,345,275  
Liabilities
                          
Written Call Options
 $ 704,515   $ -   $ -     $ 704,515  
 

(a)  
All other industry classifications are identified in the Schedule of Investments.
(b)  
Short-term investment is a sweep investment for cash balances.

The Company did not hold any Level 3 securities during the period ended February 28, 2015.  The Company utilizes the beginning of reporting period method for determining transfers between levels.  There were no transfers between levels for the Company during the period ended February 28, 2015.


Valuation Techniques

In general, and where applicable, the Company uses readily available market quotations based upon the last updated sales price from the principal market to determine fair value.  The Company primarily owns securities that are listed on a securities exchange or over-the-counter market. The Company values those securities at their last sale price on that exchange or over-the-counter market on the valuation date.  If the security is listed on more than one exchange, the Company uses the price from the exchange that it considers to be the principal exchange on which the security is traded. Securities listed on the NASDAQ are valued at the NASDAQ Official Closing Price, which may not necessarily represent the last sale price.  If there has been no sale on such exchange or over-the-counter market on such day, the security is valued at the mean between the last bid price and last ask price on such day. These securities are categorized as Level 1 in the fair value hierarchy as further described below.
 
Restricted securities are subject to statutory or contractual restrictions on their public resale, which may make it more difficult to obtain a valuation and may limit a fund’s ability to dispose of them. Investments in private placement securities and other securities for which market quotations are not readily available are valued in good faith by using certain fair value procedures. Such fair value procedures consider factors such as discounts to publicly traded issues, time until conversion date, securities with similar yields, quality, type of issue, coupon, duration and rating. If events occur that affect the value of the Company’s portfolio securities before the net asset value has been calculated (a “significant event”), the portfolio securities so affected are generally priced using fair value procedures.

An equity security of a publicly traded company acquired in a private placement transaction without registration under the Securities Act of 1933, as amended (the “1933 Act”), is subject to restrictions on resale that can affect the security's liquidity and fair value.  If such a security is convertible into publicly-traded common shares, the security generally will be valued at the common share market price adjusted by a percentage discount due to the restrictions and categorized as Level 2 in the fair value hierarchy.  To the extent that such securities are convertible or otherwise become freely tradable within a time frame that may be reasonably determined, an amortization schedule may be used to determine the discount.  If the security has characteristics that are dissimilar to the class of security that trades on the open market, the security will generally be valued and categorized as Level 3 in the fair value hierarchy.

Exchange-traded options are valued at the last reported sale price on any exchange on which they trade.  If no sales are reported on any exchange on the measurement date, exchange-traded options are valued at the mean between the highest bid and last lowest asked prices obtained as of the closing of the exchanges on which the option is traded.  The value of Flexible Exchange Options (FLEX Options) are determined (i) by an evaluated price as determined by a third-party valuation service; or (ii) by using a quotation provided by a broker-dealer.

The Company generally values debt securities at evaluated bid prices obtained from an independent third-party pricing service that utilizes a pricing matrix based upon yield data for securities with similar characteristics, or based on a direct written broker-dealer quotation from a dealer who has made a market in the security.  Debt securities with 60 days or less to maturity are valued on the basis of amortized cost, which approximates market value.
 
As of February 28, 2015, the aggregate cost of securities for federal income tax purposes was $386,141,334.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $43,429,680, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $46,225,739 and the net unrealized depreciation was $2,796,059.

 
 
 



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: April 29, 2015
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: April 29, 2015
By:
/s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
  Tortoise Energy Independence Fund, Inc.  
       
Date: April 29, 2015
By:
/s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer