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

December 31, 2015

Date of Reporting Period

 

 

 

Item 1. Schedule of Investments

Eaton Vance

Enhanced Equity Income Fund

December 31, 2015

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 100.0%(1)

 

                                                 
Security    Shares      Value  

Aerospace & Defense — 2.0%

      

United Technologies Corp.

      112,107       $ 10,770,119   
     

 

 

  
      $ 10,770,119   
     

 

 

  

Banks — 3.9%

      

JPMorgan Chase & Co.

      217,415       $ 14,355,913   

PNC Financial Services Group, Inc. (The)

      73,285         6,984,793   
     

 

 

  
      $ 21,340,706   
     

 

 

  

Beverages — 1.9%

      

Constellation Brands, Inc., Class A

      74,738       $ 10,645,681   
     

 

 

  
      $ 10,645,681   
     

 

 

  

Biotechnology — 1.8%

      

Celgene Corp.(2)

      83,617       $ 10,013,972   
     

 

 

  
      $ 10,013,972   
     

 

 

  

Capital Markets — 3.5%

      

Credit Suisse Group AG

      413,161       $ 8,900,299   

Credit Suisse Group AG(3)

      130,907         2,819,994   

Goldman Sachs Group, Inc. (The)

      42,631         7,683,385   
     

 

 

  
      $ 19,403,678   
     

 

 

  

Chemicals — 0.6%

      

PPG Industries, Inc.

      35,506       $ 3,508,703   
     

 

 

  
      $ 3,508,703   
     

 

 

  

Consumer Finance — 1.7%

      

Synchrony Financial(2)

      301,723       $ 9,175,396   
     

 

 

  
      $ 9,175,396   
     

 

 

  

Diversified Telecommunication Services — 3.3%

      

CenturyLink, Inc.

      215,640       $ 5,425,503   

Verizon Communications, Inc.

      154,497         7,140,851   

Zayo Group Holdings, Inc.(2)

      196,039         5,212,677   
     

 

 

  
      $ 17,779,031   
     

 

 

  

Electric Utilities — 1.8%

      

NextEra Energy, Inc.

      92,050       $ 9,563,075   
     

 

 

  
      $ 9,563,075   
     

 

 

  

Electronic Equipment, Instruments & Components — 2.4%

      

Corning, Inc.

      725,698       $ 13,265,759   
     

 

 

  
      $ 13,265,759   
     

 

 

  

Energy Equipment & Services — 1.0%

      

Schlumberger, Ltd.

      75,150       $ 5,241,713   
     

 

 

  
      $ 5,241,713   
     

 

 

  

Food & Staples Retailing — 1.9%

      

Kroger Co. (The)

      252,477       $ 10,561,113   
     

 

 

  
      $ 10,561,113   
     

 

 

  

 

1

 

 

                                                 
Security    Shares      Value  

Food Products — 3.9%

      

General Mills, Inc.

      191,707       $ 11,053,826   

Mondelez International, Inc., Class A

      223,723         10,031,739   
     

 

 

  
      $ 21,085,565   
     

 

 

  

Health Care Equipment & Supplies — 1.7%

      

Medtronic PLC

      117,981       $ 9,075,099   
     

 

 

  
      $ 9,075,099   
     

 

 

  

Household Durables — 1.1%

      

Newell Rubbermaid, Inc.

      137,301       $ 6,052,228   
     

 

 

  
      $ 6,052,228   
     

 

 

  

Industrial Conglomerates — 6.0%

      

Danaher Corp.

      152,845       $ 14,196,244   

General Electric Co.

      590,924         18,407,282   
     

 

 

  
      $ 32,603,526   
     

 

 

  

Insurance — 3.7%

      

Aflac, Inc.

      135,871       $ 8,138,673   

American Financial Group, Inc.

      58,388         4,208,607   

XL Group PLC

      203,548         7,975,011   
     

 

 

  
      $ 20,322,291   
     

 

 

  

Internet & Catalog Retail — 3.2%

      

Amazon.com, Inc.(2)

      25,954       $ 17,542,049   
     

 

 

  
      $ 17,542,049   
     

 

 

  

Internet Software & Services — 6.4%

      

Alphabet, Inc., Class C(2)

      31,221       $ 23,692,992   

Facebook, Inc., Class A(2)

      108,533         11,359,064   
     

 

 

  
      $ 35,052,056   
     

 

 

  

IT Services — 3.2%

      

Visa, Inc., Class A

      223,656       $ 17,344,523   
     

 

 

  
      $ 17,344,523   
     

 

 

  

Media — 4.1%

      

Live Nation Entertainment, Inc.(2)

      264,176       $ 6,490,804   

Walt Disney Co. (The)

      153,067         16,084,281   
     

 

 

  
      $ 22,575,085   
     

 

 

  

Multi-Utilities — 1.6%

      

Sempra Energy

      95,888       $ 9,014,431   
     

 

 

  
      $ 9,014,431   
     

 

 

  

Multiline Retail — 3.3%

      

Dollar General Corp.

      174,869       $ 12,567,835   

Target Corp.

      72,382         5,255,657   
     

 

 

  
      $ 17,823,492   
     

 

 

  

Oil, Gas & Consumable Fuels — 5.3%

      

Chevron Corp.

      88,941       $ 8,001,132   

Devon Energy Corp.

      154,318         4,938,176   

EOG Resources, Inc.

      50,857         3,600,167   

Occidental Petroleum Corp.

      104,903         7,092,492   

Royal Dutch Shell PLC, Class B

      234,605         5,346,864   
     

 

 

  
      $ 28,978,831   
     

 

 

  

 

2

 

 

                                                 
Security    Shares      Value  

Pharmaceuticals — 11.2%

      

Allergan PLC(2)

      34,594       $ 10,810,625   

Bristol-Myers Squibb Co.

      114,615         7,884,366   

Eli Lilly & Co.

      95,833         8,074,888   

Johnson & Johnson

      151,791         15,591,971   

Perrigo Co. PLC

      74,834         10,828,480   

Teva Pharmaceutical Industries, Ltd. ADR

      127,801         8,388,858   
     

 

 

  
      $ 61,579,188   
     

 

 

  

Real Estate Investment Trusts (REITs) — 2.8%

      

Equity Residential

      101,008       $ 8,241,243   

Federal Realty Investment Trust

      48,596         7,099,875   
     

 

 

  
      $ 15,341,118   
     

 

 

  

Semiconductors & Semiconductor Equipment — 4.0%

      

Intel Corp.

      338,172       $ 11,650,025   

NXP Semiconductors NV(2)

      123,734         10,424,590   
     

 

 

  
      $ 22,074,615   
     

 

 

  

Software — 4.6%

      

Microsoft Corp.

      134,854       $ 7,481,700   

Oracle Corp.

      324,423         11,851,172   

Tableau Software, Inc., Class A(2)

      64,460         6,073,421   
     

 

 

  
      $ 25,406,293   
     

 

 

  

Technology Hardware, Storage & Peripherals — 4.1%

      

Apple, Inc.

      213,982       $ 22,523,745   
     

 

 

  
      $ 22,523,745   
     

 

 

  

Textiles, Apparel & Luxury Goods — 2.3%

      

NIKE, Inc., Class B

      200,428       $ 12,526,750   
     

 

 

  
      $ 12,526,750   
     

 

 

  

Tobacco — 1.7%

      

Altria Group, Inc.

      159,570       $ 9,288,570   
     

 

 

  
      $ 9,288,570   
     

 

 

  

Total Common Stocks
(identified cost $478,521,777)

       $ 547,478,401   
     

 

 

  

Short-Term Investments — 0.3%

      
Description    Interest
(000’s omitted)		      Value  

Eaton Vance Cash Reserves Fund, LLC, 0.37%(4)

    $ 1,654       $ 1,654,298   
     

 

 

  

Total Short-Term Investments
(identified cost $1,654,298)

       $ 1,654,298   
     

 

 

  

Total Investments — 100.3%
(identified cost $480,176,075)

       $ 549,132,699   
     

 

 

  

 

3

 

 

                                                 

Covered Call Options Written — (0.3)%

      

 

                                                                                                   
Security    Number of
Contracts		      Strike
Price		      Expiration
Date		      Value  

Aflac, Inc.

      680       $ 67.50         1/15/16       $ (2,040 ) 

Allergan PLC

      170         322.50         1/29/16         (59,500 ) 

Alphabet, Inc., Class C

      155         800.00         1/29/16         (200,725 ) 

Altria Group, Inc.

      795         60.00         1/8/16         (4,770 ) 

Amazon.com, Inc.

      125         692.50         1/22/16         (123,750 ) 

Apple, Inc.

      1,065         123.00         1/8/16         (1,597 ) 

Bristol-Myers Squibb Co.

      570         71.50         1/8/16         (4,845 ) 

Celgene Corp.

      415         118.00         1/29/16         (230,325 ) 

CenturyLink, Inc.

      1,075         30.00         1/15/16         (2,687 ) 

Chevron Corp.

      440         95.00         1/22/16         (29,920 ) 

Constellation Brands, Inc., Class A

      370         150.00         1/15/16         (24,050 ) 

Corning, Inc.

      3,625         19.00         1/15/16         (48,938 ) 

Danaher Corp.

      760         97.50         2/19/16         (55,100 ) 

Devon Energy Corp.

      770         35.00         1/29/16         (59,290 ) 

Dollar General Corp.

      870         71.50         1/8/16         (95,700 ) 

Eli Lilly & Co.

      475         88.00         1/8/16         (15,437 ) 

EOG Resources, Inc.

      250         77.50         1/22/16         (10,375 ) 

Equity Residential

      505         85.00         2/19/16         (47,975 ) 

Facebook, Inc., Class A

      540         111.00         1/8/16         (2,430 ) 

General Electric Co.

      2,950         31.00         1/8/16         (119,475 ) 

General Mills, Inc.

      955         60.00         1/15/16         (8,595 ) 

Goldman Sachs Group, Inc. (The)

      210         187.50         1/22/16         (30,135 ) 

JPMorgan Chase & Co.

      1,215         67.50         1/15/16         (54,068 ) 

Kroger Co. (The)

      1,260         42.50         1/15/16         (50,400 ) 

Medtronic PLC

      585         79.00         1/29/16         (32,760 ) 

Microsoft Corp.

      670         57.50         1/8/16         (3,685 ) 

Mondelez International, Inc., Class A

      1,115         47.00         1/15/16         (18,398 ) 

NextEra Energy, Inc.

      460         105.00         1/15/16         (40,250 ) 

NIKE, Inc., Class B

      1,000         69.50         1/29/16         (8,500 ) 

NXP Semiconductors NV

      615         100.00         1/8/16         (15,375 ) 

Occidental Petroleum Corp.

      520         73.00         1/29/16         (29,120 ) 

Oracle Corp.

      1,215         41.00         1/8/16         (3,037 ) 

Perrigo Co. PLC

      370         160.00         1/22/16         (46,250 ) 

PNC Financial Services Group, Inc. (The)

      615         100.00         2/19/16         (54,428 ) 

PPG Industries, Inc.

      175         105.00         2/19/16         (15,750 ) 

Schlumberger, Ltd.

      375         74.00         1/29/16         (27,375 ) 

Sempra Energy

      475         100.00         2/19/16         (24,938 ) 

Synchrony Financial

      1,215         33.00         1/8/16         (15,187 ) 

Tableau Software, Inc., Class A

      320         98.00         1/22/16         (53,600 ) 

Teva Pharmaceutical Industries, Ltd. ADR

      635         69.00         1/22/16         (12,700 ) 

Verizon Communications, Inc.

      770         48.00         1/29/16         (8,085 ) 

Walt Disney Co. (The)

      765         112.00         1/29/16         (34,808 ) 

XL Group PLC

      1,015         42.00         2/19/16         (21,315 ) 
           

 

 

  

Total Covered Call Options Written
(premiums received $2,463,216)

             $ (1,747,688 ) 
           

 

 

  

Other Assets, Less Liabilities — 0.0%(5)

             $ 298,221   
           

 

 

  

Net Assets — 100.0%

  

    $ 547,683,232   
           

 

 

  

 

4

 

 

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

 

(1) A portion of each applicable common stock for which a written call option is outstanding at December 31, 2015 has been pledged as collateral for such written option.

 

(2) Non-income producing security.

 

(3) Security was acquired in a private offering and may be resold on a designated offshore securities market pursuant to Regulation S under the Securities Act of 1933.

 

(4) 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 December 31, 2015. Net income allocated from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended December 31, 2015 was $1,616.

 

(5) Amount is less than 0.05%.

Abbreviations:

 

ADR

   -   American Depositary Receipt

Written options activity for the fiscal year to date ended December 31, 2015 was as follows:

 

     Number of
Contracts		      Premiums
Received		  
Outstanding, beginning of period      39,470       $ 3,382,526   
Options written      116,480         8,536,177   
Options terminated in closing purchase transactions      (68,100 )       (5,204,951 ) 
Options expired      (54,695 )       (4,250,536 ) 
  

 

 

     

 

 

  
Outstanding, end of period      33,155       $     2,463,216   
  

 

 

     

 

 

  

At December 31, 2015, the Fund had sufficient cash and/or securities to cover commitments under open derivative 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 December 31, 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 $1,747,688.

The cost and unrealized appreciation (depreciation) of investments of the Fund at December 31, 2015, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

    $     480,436,553   
  

 

 

  

Gross unrealized appreciation

    $ 85,754,616   

Gross unrealized depreciation

      (17,058,470 ) 
  

 

 

  

Net unrealized appreciation

    $ 68,696,146   
  

 

 

  

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 December 31, 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

    $ 76,519,604       $ —       $ —       $ 76,519,604   

Consumer Staples

      51,580,929         —         —         51,580,929   

Energy

      28,873,680         5,346,864         —         34,220,544   

Financials

      73,862,896         11,720,293         —         85,583,189   

Health Care

      80,668,259         —         —         80,668,259   

Industrials

      43,373,645         —         —         43,373,645   

Information Technology

      135,666,991         —         —         135,666,991   

Materials

      3,508,703         —         —         3,508,703   

Telecommunication Services

      17,779,031         —         —         17,779,031   

Utilities

      18,577,506         —         —         18,577,506   

Total Common Stocks

    $ 530,411,244       $ 17,067,157 *     $ —       $ 547,478,401   

Short-Term Investments

    $ —       $ 1,654,298       $ —       $ 1,654,298   

Total Investments

    $     530,411,244       $     18,721,455       $     —       $     549,132,699   
Liability Description                                

Covered Call Options Written

    $ (1,747,688 )     $ —       $ —       $ (1,747,688 ) 

Total

    $ (1,747,688 )     $ —       $ —       $ (1,747,688 ) 

 

* 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, 2015 whose fair value was determined using Level 3 inputs. At December 31, 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:   February 22, 2016

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:   February 22, 2016

 

By:   /s/ James F. Kirchner
  James F. Kirchner
  Treasurer
Date:   February 22, 2016