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 811-21700



Tortoise North American Energy Corporation
(Exact name of registrant as specified in charter)



11550 Ash Street, Suite 300, Leawood, KS 66211
(Address of principal executive offices) (Zip code)



David J. Schulte
11550 Ash Street, Suite 300, Leawood, KS 66211
 (Name and address of agent for service)



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



Date of fiscal year end: November 30


Date of reporting period:   August 31, 2011


 
 
 
Item 1. Schedule of Investments.
 
Tortoise North American Energy Corporation
           
SCHEDULE OF INVESTMENTS (Unaudited)
           
 
           
   
August 31, 2011
 
   
Shares
   
Fair Value
 
Master Limited Partnerships and Related Companies — 124.1% (1)
           
Crude/Refined Products Pipelines — 38.7% (1)
           
United States — 38.7% (1)
           
Buckeye Partners, L.P. (2)
    162,100     $ 10,209,058  
Enbridge Energy Management, L.L.C. (2)(3)
    173,800       4,786,462  
Enbridge Energy Partners, L.P. (2)
    158,600       4,520,100  
Holly Energy Partners, L.P. (2)
    73,300       3,716,310  
Kinder Morgan Management, LLC (2)(3)
    180,295       10,907,850  
Magellan Midstream Partners, L.P. (2)
    144,300       8,653,671  
NuStar Energy L.P. (2)
    96,400       5,706,880  
Oiltanking Partners, L.P.
    17,415       417,786  
Plains All American Pipeline, L.P. (2)
    107,600       6,523,788  
Sunoco Logistics Partners L.P. (2)
    37,900       3,249,925  
Tesoro Logistics LP (2)
    19,350       452,983  
              59,144,813  
                 
Natural Gas/Natural Gas Liquids Pipelines — 45.7% (1)
               
United States — 45.7% (1)
               
Boardwalk Pipeline Partners, LP (2)
    291,200       7,309,120  
Duncan Energy Partners L.P.
    9,351       397,605  
El Paso Pipeline Partners, L.P. (2)
    190,700       7,015,853  
Energy Transfer Equity, L.P. (2)
    140,100       5,357,424  
Energy Transfer Partners, L.P. (2)
    204,200       9,201,252  
Enterprise Products Partners L.P. (2)(4)
    296,100       12,480,615  
Niska Gas Storage Partners LLC
    67,100       850,828  
ONEOK Partners, L.P. (2)
    133,000       5,780,180  
PAA Natural Gas Storage, L.P.
    69,218       1,252,154  
Regency Energy Partners LP (2)
    412,000       9,838,560  
Spectra Energy Partners, LP (2)
    128,000       3,718,400  
TC PipeLines, LP (2)
    74,400       3,243,840  
Williams Partners L.P. (2)
    61,700       3,342,906  
              69,788,737  
Natural Gas Gathering/Processing — 15.0% (1)
               
United States — 15.0% (1)
               
Chesapeake Midstream Partners, L.P. (2)
    48,600       1,354,482  
Copano Energy, L.L.C. (2)
    207,900       6,740,118  
Crestwood Midstream Partners LP
    1,000       25,560  
Crestwood Midstream Partners LP (3)(5)
    84,191       2,084,569  
DCP Midstream Partners, LP (2)
    51,500       1,996,655  
MarkWest Energy Partners, L.P. (2)
    114,900       5,520,945  
Targa Resources Partners LP (2)
    151,200       5,186,160  
Western Gas Partners LP
    1,000       36,320  
              22,944,809  
                 
Oil and Gas Exploitation and Production — 20.6% (1)
               
United States — 20.6% (1)
               
Breitburn Energy Partners L.P. (2)
    136,400       2,522,036  
Encore Energy Partners LP (2)
    132,100       2,620,864  
EV Energy Partners, L.P. (2)
    124,700       8,589,336  
Legacy Reserves, LP (2)
    120,600       3,323,736  
Linn Energy, LLC (2)
    264,900       10,026,465  
Pioneer Southwest Energy Partners L.P. (2)
    150,900       4,318,758  
              31,401,195  
Propane Distribution — 2.9% (1)
               
United States — 2.9% (1)
               
Inergy, L.P. (2)
    158,100       4,483,716  
                 
Shipping — 1.2% (1)
               
Republic of the Marshall Islands — 1.2% (1)
               
Teekay LNG Partners L.P. (2)
    53,500       1,803,485  
                 
Total Master Limited Partnerships and
               
   Related Companies ( Cost $124,831,144)
            189,566,755  
                 
Common Stock — 6.0% (1)
               
Shipping — 6.0% (1)
               
Republic of the Marshall Islands — 6.0% (1)
               
Golar LNG Partners LP
    37,000       951,270  
Navios Maritime Partners L.P.
    228,748       3,625,656  
Teekay Offshore Partners L.P. (2)
    170,400       4,580,352  
                 
Total Common Stock (Cost $7,483,342)
            9,157,278  
Short-Term Investment — 0.2% (1)
               
United States Investment Company — 0.2% (1)
               
Fidelity Institutional Money Market Portfolio - Class I, 0.11% (6) (Cost $210,742)
    210,742       210,742  
                 
Total Investments — 130.3% (1) (Cost $132,525,228)
            198,934,775  
Interest Rate Swap Contracts - (0.1%) (1)
               
$25,000,000 notional - Unrealized Depreciation
            (101,322 )
Other Assets and Liabilities — (30.2%) (1)
            (46,112,855 )
Total Net Assets Applicable to Common
               
  Stockholders — 100.0% (1)
          $ 152,720,598  
                 
                 
(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) Security distributions are paid-in-kind.
               
(4) All or a portion of the security is segregated as collateral for the unrealized depreciation of interest rate swap contracts.
 
(5) Restricted securities have been fair valued in accordance with procedures approved by the Board of Directors and have
 
a total fair value of $2,084,569, which represents 1.4% of net assets.
         
(6) Rate reported is the current yield as of August 31, 2011.
               

 
 
 

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

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

The following table provides the fair value measurements of applicable Company assets by level within the fair value hierarchy as of August 31, 2011. These assets are measured on a recurring basis.

 
Fair Value at
             
Description
August 31, 2011
 
Level 1
 
Level 2
 
Level 3
 
Assets
Equity Securities:
               
Common Stock (a)
$ 9,157,278   $ 9,157,278   $ -   $ -  
Master Limited Partnerships and Related Companies (a)
  189,566,755     187,482,186     2,084,569     -  
Total Equity Securities
  198,724,033     196,639,464     2,084,569     -  
 Other:
                       
Short-Term Investment (b)
  210,742     210,742     -     -  
Total Other
  210,742     210,742     -     -  
Total Assets
$ 198,934,775   $ 196,850,206   $ 2,084,569   $ -  
Liabilities
Interest Rate Swap Contracts
$ 101,322   $ -   $ 101,322   $ -  
Total
$ 198,833,453   $ 196,850,206   $ 1,983,247   $ -  

(a)  
All other industry classifications are identified in the Schedule of Investments.
(b)   
Short-term investment is a sweep investment for cash balances in the Company at August 31, 2011.

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

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.

Interest rate swap contracts are valued by using industry-accepted models which discount the estimated future cash flows based on a forward rate curve and the stated terms of the interest rate swap agreement by using interest rates currently available in the market, or based on dealer quotations, if available, which applies to the Company’s Level 2 liabilities.

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

Certain of the Company’s investments are restricted and are valued as determined in accordance with procedures established by the Board of Directors.  The table below shows the shares, acquisition date, acquisition cost, fair value, fair value per share and percent of net assets which the security comprises at August 31, 2011.

Investment Security
Number of Shares
Acquisition Date
Acquisition Cost
Fair Value
Fair Value Per Share
Fair Value as Percent of Net Assets
Crestwood Midstream Partners LP
Unregistered Class C Units
84,191
04/01/11
$2,000,009
$2,084,569
$24.76
1.4%

The carrying value per unit of unrestricted common units of Crestwood Midstream Partners LP was $30.37 on February 18, 2011, the date of the purchase agreement and the date an enforceable right to acquire the restricted Crestwood Midstream Partners LP units was obtained by the Company.
 
As of August 31, 2011, the aggregate cost of securities for federal income tax purposes was $121,320,108.  The aggregate gross unrealized appreciation for all securities in which there was an excess of fair value over tax cost was $78,203,416, the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over fair value was $588,749 and the net unrealized appreciation was $77,614,667.

 
 
 

 
(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 North American Energy Corporation  
       
Date:  October 26, 2011
By:
  /s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       



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

  Tortoise North American Energy Corporation  
       
Date:  October 26, 2011
By:
  /s/ Terry Matlack  
    Terry Matlack  
    Chief Executive Officer  
       
  Tortoise North American Energy Corporation  
       
Date:  October 26, 2011
By:
 /s/ P. Bradley Adams  
    P. Bradley Adams  
    Chief Financial Officer   
       

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