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 29,  2016
 
 
 
Item 1. Schedule of Investments.
Tortoise Energy Independence Fund, Inc.
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
               
     
February 29, 2016
  
    Shares     Fair Value  
Common Stock - 106.2%(1)
            
Natural Gas Gathering/Processing - 1.1%(1)
            
United States - 1.1%(1)
            
Targa Resources Corp.
     70,315     $ 1,890,067  
                   
Oil and Gas Production - 105.1%(1)
                
Canada - 8.9%(1)
                
ARC Resources LTD.
     334,600       4,439,076  
Cenovus Energy Inc.
     153,200       1,749,544  
Suncor Energy Inc.(2)(3)
     347,800       8,514,144  
The Netherlands - 3.2%(1)
                
Royal Dutch Shell plc (ADR)
     114,500       5,207,460  
United Kingdom - 1.7%(1)
                
BP p.l.c. (ADR)
     96,400       2,804,276  
United States - 91.3%(1)
                
Anadarko Petroleum Corporation(2)(3)
     325,300       12,345,135  
Antero Resources Corporation(2)(3)(4)
     146,610       3,350,039  
Cabot Oil & Gas Corporation(2)(3)
     205,100       4,128,663  
California Resources Corporation(4)
     16,995       9,553  
Carrizo Oil & Gas, Inc.(2)(3)(4)
     188,500       4,052,750  
Cimarex Energy Co.(2)(3)
     80,673       6,778,952  
Concho Resources Inc.(2)(3)(4)
     101,943       9,199,336  
Continental Resources, Inc.(2)(3)(4)
     53,300       1,235,494  
Devon Energy Corporation(2)(3)
     291,734       5,741,325  
Diamondback Energy, Inc.(2)(3)(4)
     61,800       4,403,250  
EOG Resources, Inc.(2)(3)
     363,300       23,520,042  
EQT Corporation(2)
     282,685       15,756,862  
Hess Corporation(2)(3)
     31,993       1,394,895  
Laredo Petroleum, Inc.(2)(3)(4)
     175,940       899,054  
Newfield Exploration Company(2)(3)(4)
     246,788       6,720,037  
Noble Energy, Inc.(2)(3)
     292,456       8,627,452  
Occidental Petroleum Corporation(2)(3)
     180,800       12,442,656  
PDC Energy, Inc.(3)(4)
     7,356       368,609  
Pioneer Natural Resources Company(2)(3)
     181,315       21,853,897  
Range Resources Corporation(2)(3)
     197,400       4,684,302  
RSP Permian, Inc.(2)(3)(4)
     102,056       2,440,159  
Whiting Petroleum Corporation(2)(3)(4)
     113,627       455,644  
                173,122,606  
                   
Total Common Stock (Cost $282,548,678)
             175,012,673  
                   
Master Limited Partnerships and Related Companies - 31.6%(1)
                
Crude Oil Pipelines - 10.6%(1)
                
United States - 10.6%(1)
                
Enbridge Energy Management, L.L.C.(5)
     476,236       7,948,371  
Plains All American Pipeline, L.P.
     204,532       4,381,076  
Rose Rock Midstream, L.P.
     32,489       324,565  
Shell Midstream Partners, L.P.
     51,895       1,844,867  
Tesoro Logistics LP
     70,281       2,932,123  
 
               17,431,002  
Natural Gas/Natural Gas Liquids Pipelines - 7.3%(1)
                
United States - 7.3%(1)
                
Columbia Pipeline Partners LP
     35,719       631,869  
Energy Transfer Partners, L.P.
     152,945       4,079,043  
Enterprise Products Partners L.P.
     229,988       5,374,820  
EQT GP Holdings, LP
     8,439       201,439  
EQT Midstream Partners, LP
     24,303       1,740,824  
                12,027,995  
Natural Gas Gathering/Processing - 5.3%(1)
                
United States - 5.3%(1)
                
Antero Midstream Partners LP
     75,672       1,681,432  
DCP Midstream Partners, LP
     155,345       3,015,247  
EnLink Midstream Partners, LP
     86,700       795,906  
MPLX LP
     99,026       2,568,734  
Rice Midstream Partners LP
     40,357       534,730  
Western Gas Partners, LP
     6,100       239,181  
                8,835,230  
Refined Product Pipelines - 8.4%(1)
                
United States - 8.4%(1)
                
Buckeye Partners, L.P.
     49,673       3,196,954  
Magellan Midstream Partners, L.P.
     92,000       6,217,360  
Phillips 66 Partners LP
     53,277       3,211,005  
Valero Energy Partners LP
     26,106       1,216,018  
                13,841,337  
                   
Total Master Limited Partnerships and Related Companies (Cost $62,269,098)
             52,135,564  
                   
Preferred Stock - 0.7%(1)
                
Oil and Gas Production - 0.7%(1)
                
United States - 0.7%(1)
                
Anadarko Petroleum Corporation, 7.500%, 06/07/2018 (Cost $1,751,787)
     36,900       1,104,417  
                   
Short-Term Investment - 0.1%(1)
                
United States Investment Company - 0.1%(1)
                
Fidelity Institutional Money Market Portfolio - Class I, 0.35%(6) (Cost $95,895)
     95,895       95,895  
                   
Total Investments - 138.6%(1) (Cost $346,665,458)
             228,348,549  
Total Value of Options Written (Premiums received $2,031,596) - (0.9)%(1)
             (1,548,698 )
Credit Facility Borrowings - (37.5)%(1)
             (61,800,000 )
Other Assets and Liabilities - (0.2)%(1)
             (264,894 )
Total Net Assets Applicable to Common Stockholders - 100.0%(1)
           $ 164,734,957  
                   
                   
(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 29, 2016.
                
                   

 
 
 


Tortoise Energy Independence Fund, Inc.
              
SCHEDULE OF OPTIONS WRITTEN (Unaudited)
              
February 29, 2016
                    
                     
Call Options Written
Expiration Date
  
Strike Price
    
Contracts
    
Fair Value
  
Anadarko Petroleum Corporation
March 2016
   $ 42.50       3,253     $ (289,517 )
Antero Resources Corporation
March 2016
     27.50       1,466       (30,436 )
Cabot Oil & Gas Corporation
March 2016
     24.00       2,051       (25,638 )
Carrizo Oil & Gas, Inc.
March 2016
     30.00       1,885       (49,010 )
Cimarex Energy Co.
March 2016
     95.00       806       (88,660 )
Concho Resources Inc.
March 2016
     105.00       1,019       (35,665 )
Continental Resources, Inc.
March 2016
     25.00       533       (62,894 )
Devon Energy Corporation
March 2016
     25.00       2,917       (26,253 )
Diamondback Energy, Inc.
March 2016
     80.00       618       (30,900 )
EOG Resources, Inc.
March 2016
     80.00       3,633       (25,431 )
Hess Corporation
March 2016
     47.50       319       (12,760 )
Laredo Petroleum, Inc.
March 2016
     6.00       1,759       (43,975 )
Newfield Exploration Company
March 2016
     29.00       2,467       (185,025 )
Noble Energy, Inc.
March 2016
     32.50       2,924       (102,340 )
Occidental Petroleum Corporation
March 2016
     75.00       1,808       (45,200 )
PDC Energy, Inc.
March 2016
     55.00       73       (7,847 )
Pioneer Natural Resources Company
March 2016
     140.00       1,813       (77,053 )
Range Resources Corporation
March 2016
     30.00       1,974       (29,610 )
RSP Permian, Inc.
March 2016
     22.50       1,020       (260,100 )
Suncor Energy Inc.
March 2016
     25.00       3,478       (111,296 )
Whiting Petroleum Corporation
March 2016
     6.00       1,136       (9,088 )
                           
Total Value of Call Options Written (Premiums received $2,031,596)
             $ (1,548,698 )
                           

 
 
 

Various inputs are used in determining the fair value of the Company’s investments and financial instruments.  These inputs are summarized in the three broad levels listed below:

Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.)
Level 3 – significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments)
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
The following table provides the fair value measurements of applicable assets and liabilities by level within the fair value hierarchy as of February 29, 2016.  These assets and liabilities are measured on a recurring basis.
 

Description
  
Level 1
    
Level 2
    
Level 3
    
Total
  
Assets
                        
Investments:
                        
Common Stock(a)
   $ 175,012,673     $ -     $ -     $ 175,012,673  
Master Limited Partnerships and Related Companies(a)
     52,135,564       -       -       52,135,564  
Preferred Stock(a)
     1,104,417       -       -       1,104,417  
Short-Term Investment(b)
     95,895       -       -       95,895  
Total Assets
   $ 228,348,549     $ -     $ -     $ 228,348,549  
Liabilities
                                
Written Call Options
   $ 1,518,262     $ 30,436     $ -     $ 1,548,698  
 
(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 29, 2016.  The Company utilizes the beginning of reporting period method for determining transfers between levels.  During the period ended February 29, 2016, Rice Midstream Partners LP common units held by the Company in the amount of $527,870 were transferred from Level 2 to Level 1 when they converted into registered and unrestricted common units of Rice Midstream Partners LP.  There were no other transfers between levels for the Company during the period ended February 29, 2016.
 
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 are traded in the 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.
 
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 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 last highest bid and last lowest asked prices obtained as of the closing of the exchanges on which the option is traded.  The value of Flexible Exchange Options (FLEX Options) are determined (i) by an evaluated price as determined by a third-party valuation service; or (ii) by using a quotation provided by a broker-dealer.

The Company generally values debt securities at evaluated bid prices obtained from an independent third-party valuation service that utilizes a pricing matrix based upon yield data for securities with similar characteristics, or based on a direct written broker-dealer quotation from a dealer who has made a market in the security.  Debt securities with 60 days or less to maturity at time of purchase are valued on the basis of amortized cost, which approximates market value.

As of February 29, 2016, the aggregate cost of securities for federal income tax purposes was $338,778,261. The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $7,652,974, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $118,082,686 and the net unrealized depreciation was $110,429,712.


 
 
 
 



Item 2. Controls and Procedures.
(a)  
The registrant’s Chief Executive Officer and its Principal Financial Officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)  
There was no change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 3. Exhibits.
Separate certifications for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) are filed herewith.

 
 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


  Tortoise Energy Independence Fund, Inc.  
       
Date: April 21, 2016
By:
/s/  P. Bradley Adams  
     P. Bradley Adams  
    Chief Executive Officer  
       



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

  Tortoise Energy Independence Fund, Inc.  
       
Date: April 21, 2016
By:
/s/  P. Bradley Adams  
     P. Bradley Adams  
    Chief Executive Officer  
       
  Tortoise Energy Independence Fund, Inc.  
       
Date: April 21, 2016
By:
/s/ Brent Behrens  
    Brent Behrens  
    Principal Financial Officer and Treasurer