Eaton Vance Enhanced Equity Income Fund

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

811-21614

Investment Company Act File Number

Eaton Vance Enhanced Equity Income Fund

(Exact Name of Registrant as Specified in Charter)

Two International Place, Boston, Massachusetts 02110

(Address of Principal Executive Offices)

Maureen A. Gemma

Two International Place, Boston, Massachusetts 02110

(Name and Address of Agent for Services)

(617) 482-8260

(Registrant’s Telephone Number, Including Area Code)

September 30

Date of Fiscal Year End

June 30, 2015

Date of Reporting Period

 

 

 

Item 1. Schedule of Investments

Eaton Vance

Enhanced Equity Income Fund

June 30, 2015

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 99.7%(1)

 

                                                 
Security    Shares      Value  

Aerospace & Defense — 1.9%

      

United Technologies Corp.

      96,714       $ 10,728,484   
     

 

 

  
      $ 10,728,484   
     

 

 

  

Banks — 5.2%

      

Bank of America Corp.

      311,928       $ 5,309,014   

JPMorgan Chase & Co.

      251,175         17,019,618   

PNC Financial Services Group, Inc. (The)

      77,884         7,449,605   
     

 

 

  
      $ 29,778,237   
     

 

 

  

Beverages — 1.6%

      

Constellation Brands, Inc., Class A

      76,988       $ 8,932,148   
     

 

 

  
      $ 8,932,148   
     

 

 

  

Biotechnology — 3.2%

      

Celgene Corp.(2)

      86,133       $ 9,968,603   

Gilead Sciences, Inc.

      70,174         8,215,972   
     

 

 

  
      $ 18,184,575   
     

 

 

  

Capital Markets — 1.8%

      

Credit Suisse Group AG

      370,350       $ 10,217,020   
     

 

 

  
      $ 10,217,020   
     

 

 

  

Chemicals — 2.0%

      

Monsanto Co.

      72,063       $ 7,681,195   

Praxair, Inc.

      33,474         4,001,817   
     

 

 

  
      $ 11,683,012   
     

 

 

  

Communications Equipment — 1.9%

      

QUALCOMM, Inc.

      175,234       $ 10,974,905   
     

 

 

  
      $ 10,974,905   
     

 

 

  

Consumer Finance — 1.7%

      

American Express Co.

      122,698       $ 9,536,089   
     

 

 

  
      $ 9,536,089   
     

 

 

  

Diversified Telecommunication Services — 1.0%

      

Verizon Communications, Inc.

      58,422       $ 2,723,049   

Zayo Group Holdings, Inc.(2)

      109,300         2,811,196   
     

 

 

  
      $ 5,534,245   
     

 

 

  

Electric Utilities — 1.4%

      

NextEra Energy, Inc.

      81,908       $ 8,029,441   
     

 

 

  
      $ 8,029,441   
     

 

 

  

Electrical Equipment — 0.5%

      

Generac Holdings, Inc.(2)

      70,700       $ 2,810,325   
     

 

 

  
      $ 2,810,325   
     

 

 

  

Electronic Equipment, Instruments & Components — 2.6%

      

Corning, Inc.

      747,534       $ 14,748,846   
     

 

 

  
      $ 14,748,846   
     

 

 

  

Food & Staples Retailing — 2.7%

      

CVS Health Corp.

      149,700       $ 15,700,536   
     

 

 

  
      $ 15,700,536   
     

 

 

  

Food Products — 4.2%

      

General Mills, Inc.

      174,051       $ 9,698,122   

Mondelez International, Inc., Class A

      230,454         9,480,878   

Unilever NV

      124,914         5,222,544   
     

 

 

  
      $ 24,401,544   
     

 

 

  

 

1

 

 

                                                 
Security    Shares      Value  

Health Care Equipment & Supplies — 4.1%

      

Abbott Laboratories

      248,030       $ 12,173,313   

Medtronic PLC

      155,753         11,541,297   
     

 

 

  
      $ 23,714,610   
     

 

 

  

Health Care Technology — 1.5%

      

Cerner Corp.(2)

      120,971       $ 8,354,257   
     

 

 

  
      $ 8,354,257   
     

 

 

  

Industrial Conglomerates — 6.8%

      

Danaher Corp.

      117,359       $ 10,044,757   

General Electric Co.

      744,064         19,769,781   

Roper Technologies, Inc.

      54,614         9,418,730   
     

 

 

  
      $ 39,233,268   
     

 

 

  

Insurance — 2.8%

      

Aflac, Inc.

      139,958       $ 8,705,387   

XL Group PLC

      204,528         7,608,442   
     

 

 

  
      $ 16,313,829   
     

 

 

  

Internet & Catalog Retail — 2.6%

      

Amazon.com, Inc.(2)

      34,507       $ 14,979,144   
     

 

 

  
      $ 14,979,144   
     

 

 

  

Internet Software & Services — 5.8%

      

Facebook, Inc., Class A(2)

      65,135       $ 5,586,303   

Google, Inc., Class C(2)

      42,238         21,985,301   

Twitter, Inc.(2)

      150,866         5,464,367   
     

 

 

  
      $ 33,035,971   
     

 

 

  

IT Services — 2.7%

      

Visa, Inc., Class A

      230,385       $ 15,470,353   
     

 

 

  
      $ 15,470,353   
     

 

 

  

Machinery — 1.6%

      

Deere & Co.

      96,924       $ 9,406,474   
     

 

 

  
      $ 9,406,474   
     

 

 

  

Media — 5.6%

      

Comcast Corp., Class A

      180,061       $ 10,828,868   

Live Nation Entertainment, Inc.(2)

      262,273         7,209,885   

Walt Disney Co. (The)

      121,872         13,910,470   
     

 

 

  
      $ 31,949,223   
     

 

 

  

Multi-Utilities — 1.3%

      

Sempra Energy

      77,585       $ 7,676,260   
     

 

 

  
      $ 7,676,260   
     

 

 

  

Multiline Retail — 2.2%

      

Dollar General Corp.

      165,982       $ 12,903,441   
     

 

 

  
      $ 12,903,441   
     

 

 

  

Oil, Gas & Consumable Fuels — 6.8%

      

Anadarko Petroleum Corp.

      68,744       $ 5,366,156   

Devon Energy Corp.

      147,945         8,801,248   

Exxon Mobil Corp.

      167,015         13,895,648   

Occidental Petroleum Corp.

      137,649         10,704,963   
     

 

 

  
      $ 38,768,015   
     

 

 

  

Pharmaceuticals — 6.8%

      

Bristol-Myers Squibb Co.

      87,668       $ 5,833,429   

Eli Lilly & Co.

      99,723         8,325,873   

Merck & Co., Inc.

      182,779         10,405,608   

Perrigo Co. PLC

      56,238         10,394,470   

Teva Pharmaceutical Industries, Ltd. ADR

      71,430         4,221,513   
     

 

 

  
      $ 39,180,893   
     

 

 

  

Real Estate Investment Trusts (REITs) — 2.2%

      

Simon Property Group, Inc.

      72,246       $ 12,500,003   
     

 

 

  
      $ 12,500,003   
     

 

 

  

 

2

 

 

                                                 
Security    Shares      Value  

Semiconductors & Semiconductor Equipment — 1.5%

      

NXP Semiconductors NV(2)

      85,457       $ 8,391,877   
     

 

 

  
      $ 8,391,877   
     

 

 

  

Software — 4.7%

      

Microsoft Corp.

      214,746       $ 9,481,036   

Oracle Corp.

      428,557         17,270,847   
     

 

 

  
      $ 26,751,883   
     

 

 

  

Technology Hardware, Storage & Peripherals — 3.7%

      

Apple, Inc.

      168,600       $ 21,146,655   
     

 

 

  
      $ 21,146,655   
     

 

 

  

Textiles, Apparel & Luxury Goods — 1.9%

      

NIKE, Inc., Class B

      103,230       $ 11,150,905   
     

 

 

  
      $ 11,150,905   
     

 

 

  

Tobacco — 2.0%

      

Altria Group, Inc.

      230,474       $ 11,272,483   
     

 

 

  
      $ 11,272,483   
     

 

 

  

Wireless Telecommunication Services — 1.4%

      

Vodafone Group PLC

      2,223,220       $ 8,110,067   
     

 

 

  
      $ 8,110,067   
     

 

 

  

Total Common Stocks
(identified cost $503,291,623)

       $ 571,569,018   
     

 

 

  

Short-Term Investments — 0.4%

      
Description    Interest
(000’s omitted)		      Value  

Eaton Vance Cash Reserves Fund, LLC, 0.18%(3)

    $ 1,874       $ 1,873,827   
     

 

 

  

Total Short-Term Investments
(identified cost $1,873,827)

   

    $ 1,873,827   
     

 

 

  

Total Investments — 100.1%
(identified cost $505,165,450)

   

    $ 573,442,845   
     

 

 

  

 

                                                                                                   

Covered Call Options Written — (0.2)%

            
Security    Number of
Contracts		     

Strike

Price

     

Expiration

Date

      Value  

Abbott Laboratories

      1,240       $ 50.00         7/17/15       $ (65,720 ) 

Aflac, Inc.

      700         65.00         8/21/15         (32,550 ) 

Altria Group, Inc.

      1,155         52.50         7/2/15         (6,930 ) 

Amazon.com, Inc.

      170         447.50         7/2/15         (4,420 ) 

Anadarko Petroleum Corp.

      345         90.00         7/2/15         (690 ) 

Apple, Inc.

      845         135.00         7/2/15         (422 ) 

Bank of America Corp.

      1,565         17.50         7/2/15         (2,347 ) 

Bristol-Myers Squibb Co.

      440         68.00         7/10/15         (12,320 ) 

Celgene Corp.

      430         126.00         7/31/15         (28,165 ) 

Cerner Corp.

      605         75.00         8/21/15         (45,375 ) 

Comcast Corp., Class A

      900         63.00         7/31/15         (36,000 ) 

Constellation Brands, Inc., Class A

      385         125.00         7/17/15         (14,438 ) 

Corning, Inc.

      2,825         22.00         7/17/15         (7,063 ) 

CVS Health Corp.

      750         108.00         7/24/15         (41,250 ) 

Danaher Corp.

      585         90.00         8/21/15         (48,263 ) 

Deere & Co.

      480         99.50         7/31/15         (69,600 ) 

Devon Energy Corp.

      740         66.00         7/10/15         (4,070 ) 

Dollar General Corp.

      830         78.50         7/10/15         (53,950 ) 

Eli Lilly & Co.

      500         87.50         7/17/15         (26,500 ) 

 

3

 

 

                                                                                                   
Security    Number of
Contracts		     

Strike

Price

     

Expiration

Date

      Value  

Exxon Mobil Corp.

      835       $ 86.50         7/10/15       $ (5,427 ) 

Facebook, Inc., Class A

      325         95.00         7/31/15         (18,850 ) 

Generac Holdings, Inc.

      350         42.50         7/17/15         (6,125 ) 

General Electric Co.

      3,730         28.50         7/24/15         (20,515 ) 

Gilead Sciences, Inc.

      350         126.00         7/24/15         (27,475 ) 

Google, Inc., Class C

      210         555.00         7/24/15         (64,050 ) 

JPMorgan Chase & Co.

      1,260         70.50         7/24/15         (39,060 ) 

Medtronic PLC

      780         79.00         7/10/15         (1,950 ) 

Merck & Co., Inc.

      915         60.50         7/10/15         (2,287 ) 

Microsoft Corp.

      750         48.00         7/10/15         (1,125 ) 

Mondelez International, Inc., Class A

      1,155         44.00         8/21/15         (43,313 ) 

Monsanto Co.

      360         122.00         7/2/15         (5,220 ) 

NextEra Energy, Inc.

      410         105.00         8/21/15         (20,500 ) 

NIKE, Inc., Class B

      515         113.00         7/31/15         (25,750 ) 

NXP Semiconductors NV

      425         115.00         8/21/15         (36,125 ) 

Occidental Petroleum Corp.

      690         81.00         7/24/15         (35,190 ) 

Oracle Corp.

      2,150         43.00         7/24/15         (13,975 ) 

PNC Financial Services Group, Inc. (The)

      390         100.00         7/17/15         (7,605 ) 

Praxair, Inc.

      165         130.00         8/21/15         (7,012 ) 

QUALCOMM, Inc.

      875         70.50         7/24/15         (12,688 ) 

Roper Technologies, Inc.

      270         185.00         8/21/15         (27,000 ) 

Sempra Energy

      385         110.00         8/21/15         (9,625 ) 

Simon Property Group, Inc.

      360         190.00         8/21/15         (14,940 ) 

Teva Pharmaceutical Industries, Ltd. ADR

      230         63.50         7/10/15         (3,220 ) 

Twitter, Inc.

      755         40.00         7/17/15         (31,710 ) 

United Technologies Corp.

      485         119.00         7/24/15         (10,670 ) 

Verizon Communications, Inc.

      290         50.50         7/2/15         (1,015 ) 

Visa, Inc., Class A

      1,155         71.50         7/24/15         (26,565 ) 

Walt Disney Co. (The)

      605         117.00         7/31/15         (55,055 ) 

XL Group PLC

      1,025         40.00         8/21/15         (23,063 ) 

Zayo Group Holdings, Inc.

      545         30.00         8/21/15         (6,812 ) 
           

 

 

  

Total Covered Call Options Written
(premiums received $2,231,686)

             $ (1,103,990 ) 
           

 

 

  

Other Assets, Less Liabilities — 0.1%

             $ 811,376   
           

 

 

  

Net Assets — 100.0%

             $ 573,150,231   
           

 

 

  

The percentage shown for each investment category in the Portfolio of Investments is based on net assets.

 

ADR

   -   American Depositary Receipt

 

(1) A portion of each applicable common stock for which a written call option is outstanding at June 30, 2015 has been pledged as collateral for such written option.

 

(2) Non-income producing security.

 

(3) Affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of June 30, 2015. Net income allocated from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended June 30, 2015 was $4,320.

 

4

 

 

Written options activity for the fiscal year to date ended June 30, 2015 was as follows:

 

     Number of
Contracts		      Premiums
Received		  
Outstanding, beginning of period      33,675       $ 2,526,708   
Options written      291,031         19,522,284   
Options terminated in closing purchase transactions      (129,876 )       (8,880,930 ) 
Options exercised      (4 )       (41 ) 
Options expired      (156,591 )       (10,936,335 ) 
  

 

 

     

 

 

  
Outstanding, end of period      38,235       $     2,231,686   
  

 

 

     

 

 

  

At June 30, 2015, the Fund had sufficient cash and/or securities to cover commitments under these contracts.

The Fund is subject to equity price risk in the normal course of pursuing its investment objectives. The Fund writes covered call options on individual stocks above the current value of the stock to generate premium income. In writing call options on individual stocks, the Fund in effect, sells potential appreciation in the value of the applicable stock above the exercise price in exchange for the option premium received. The Fund retains the risk of loss, minus the premium received, should the price of the underlying stock decline.

At June 30, 2015, the aggregate fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in a liability position and whose primary underlying risk exposure is equity price risk was $1,103,990.

The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2015, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

    $  505,323,925   
  

 

 

  

Gross unrealized appreciation

    $ 82,736,027   

Gross unrealized depreciation

      (14,617,107 ) 
  

 

 

  

Net unrealized appreciation

    $     68,118,920   
  

 

 

  

Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is 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, interest rates, prepayment speeds, credit risk, etc.)

 

•  

Level 3 — significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments)

In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

 

5

 

 

At June 30, 2015, the hierarchy of inputs used in valuing the Fund’s investments and open derivative instruments, which are carried at value, were as follows:

 

Asset Description    Level 1      Level 2      Level 3      Total  
Common Stocks            

Consumer Discretionary

    $ 70,982,713       $ —       $ —       $ 70,982,713   

Consumer Staples

      55,084,167         5,222,544         —         60,306,711   

Energy

      38,768,015         —         —         38,768,015   

Financials

      68,128,158         10,217,020         —         78,345,178   

Health Care

      89,434,335         —         —         89,434,335   

Industrials

      62,178,551         —         —         62,178,551   

Information Technology

      130,520,490         —         —         130,520,490   

Materials

      11,683,012         —         —         11,683,012   

Telecommunication Services

      5,534,245         8,110,067         —         13,644,312   

Utilities

      15,705,701         —         —         15,705,701   

Total Common Stocks

    $     548,019,387       $     23,549,631 *     $ —       $     571,569,018   

Short-Term Investments

    $ —       $ 1,873,827       $ —       $ 1,873,827   

Total Investments

    $ 548,019,387       $ 25,423,458       $ —       $ 573,442,845   
Liability Description                                

Covered Call Options Written

    $ (1,103,990 )     $ —       $ —       $ (1,103,990 ) 

Total

    $ (1,103,990 )     $ —       $ —       $ (1,103,990 ) 

 

* Includes foreign equity securities whose values were adjusted to reflect market trading of comparable securities or other correlated instruments that occurred after the close of trading in their applicable foreign markets.

The Fund held no investments or other financial instruments as of September 30, 2014 whose fair value was determined using Level 3 inputs. At June 30, 2015, there were no investments transferred between Level 1 and Level 2 during the fiscal year to date then ended.

For information on the Fund’s policy regarding the valuation of investments and other significant accounting policies, please refer to the Fund’s most recent financial statements included in its semiannual or annual report to shareholders.

 

6

 

 

Item 2. Controls and Procedures

(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant on this Form N-Q has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant on this Form N-Q has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

(b) There have been no changes in the registrant’s internal controls over financial reporting during the fiscal quarter for which the report is being filed that have materially affected, or are reasonably likely to materially affect the registrant’s internal control over financial reporting.

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.

Eaton Vance Enhanced Equity Income Fund

 

By:   /s/ Michael A. Allison
  Michael A. Allison
  President
Date:   August 24, 2015

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:   /s/ Michael A. Allison
  Michael A. Allison
  President
Date:   August 24, 2015

 

By:   /s/ James F. Kirchner
  James F. Kirchner
  Treasurer
Date:   August 24, 2015