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, 2018

Date of Reporting Period

 

 

 

Item 1. Schedule of Investments

 

Eaton Vance

Enhanced Equity Income Fund

June 30, 2018

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 99.1%(1)

 

                                                 
Security    Shares      Value  

Air Freight & Logistics — 2.0%

 

FedEx Corp.

      52,749      $ 11,977,188  
     

 

 

  
   $ 11,977,188  
     

 

 

  

Auto Components — 2.1%

 

Aptiv PLC

      133,348      $ 12,218,677  
     

 

 

  
   $ 12,218,677  
     

 

 

  

Banks — 7.5%

 

Bank of America Corp.

      582,214      $ 16,412,613  

First Republic Bank

      69,219        6,699,707  

JPMorgan Chase & Co.

      197,816        20,612,427  
     

 

 

  
   $ 43,724,747  
     

 

 

  

Beverages — 3.3%

 

Constellation Brands, Inc., Class A

      42,353      $ 9,269,801  

PepsiCo, Inc.

      92,562        10,077,225  
     

 

 

  
   $ 19,347,026  
     

 

 

  

Biotechnology — 2.4%

 

Gilead Sciences, Inc.

      116,535      $ 8,255,340  

Vertex Pharmaceuticals, Inc.(2)

      34,649        5,888,944  
     

 

 

  
   $ 14,144,284  
     

 

 

  

Capital Markets — 1.9%

 

Charles Schwab Corp. (The)

      222,577      $ 11,373,685  
     

 

 

  
   $ 11,373,685  
     

 

 

  

Chemicals — 1.2%

 

DowDuPont, Inc.

      103,768      $ 6,840,387  
     

 

 

  
   $ 6,840,387  
     

 

 

  

Containers & Packaging — 1.1%

 

Ball Corp.

      187,289      $ 6,658,124  
     

 

 

  
   $ 6,658,124  
     

 

 

  

Diversified Telecommunication Services — 4.1%

 

Verizon Communications, Inc.

      291,006      $ 14,640,512  

Zayo Group Holdings, Inc.(2)

      258,561        9,432,305  
     

 

 

  
   $ 24,072,817  
     

 

 

  

Electric Utilities — 1.6%

 

NextEra Energy, Inc.

      55,512      $ 9,272,169  
     

 

 

  
   $ 9,272,169  
     

 

 

  

Electronic Equipment, Instruments & Components — 1.8%

 

Corning, Inc.

      389,844      $ 10,724,608  
     

 

 

  
   $ 10,724,608  
     

 

 

  

Equity Real Estate Investment Trusts (REITs) — 3.0%

 

American Tower Corp.

      83,518      $ 12,040,790  

 

1

 

 

                                                 
Security    Shares      Value  

AvalonBay Communities, Inc.

      30,594      $ 5,258,803  
     

 

 

  
   $ 17,299,593  
     

 

 

  

Food Products — 1.5%

 

Mondelez International, Inc., Class A

      216,632      $ 8,881,912  
     

 

 

  
   $ 8,881,912  
     

 

 

  

Health Care Equipment & Supplies — 3.9%

 

Abbott Laboratories

      141,328      $ 8,619,595  

Danaher Corp.

      145,219        14,330,211  
     

 

 

  
   $ 22,949,806  
     

 

 

  

Health Care Providers & Services — 1.2%

 

Aetna, Inc.

      39,592      $ 7,265,132  
     

 

 

  
   $ 7,265,132  
     

 

 

  

Insurance — 2.7%

 

American Financial Group, Inc.

      80,977      $ 8,691,261  

American International Group, Inc.

      130,384        6,912,960  
     

 

 

  
   $ 15,604,221  
     

 

 

  

Internet & Direct Marketing Retail — 3.3%

 

Amazon.com, Inc.(2)

      11,443      $ 19,450,811  
     

 

 

  
   $ 19,450,811  
     

 

 

  

Internet Software & Services — 6.8%

 

Akamai Technologies, Inc.(2)

      122,089      $ 8,940,577  

Alphabet, Inc., Class C(2)

      17,041        19,011,792  

Facebook, Inc., Class A(2)

      14,632        2,843,290  

GoDaddy, Inc., Class A(2)

      123,860        8,744,516  
     

 

 

  
   $ 39,540,175  
     

 

 

  

IT Services — 3.2%

 

Visa, Inc., Class A

      140,092      $ 18,555,185  
     

 

 

  
   $ 18,555,185  
     

 

 

  

Machinery — 5.3%

 

Atlas Copco AB, Class A

      136,243      $ 3,945,669  

Caterpillar, Inc.

      94,021        12,755,829  

Epiroc AB, Class A(2)

      136,242        1,429,691  

Fortive Corp.

      164,035        12,648,739  
     

 

 

  
   $ 30,779,928  
     

 

 

  

Media — 3.8%

 

Live Nation Entertainment, Inc.(2)

      196,361      $ 9,537,254  

Walt Disney Co. (The)

      123,293        12,922,339  
     

 

 

  
   $ 22,459,593  
     

 

 

  

Multi-Utilities — 1.4%

 

Sempra Energy

      67,894      $ 7,883,172  
     

 

 

  
   $ 7,883,172  
     

 

 

  

Oil, Gas & Consumable Fuels — 6.6%

 

ConocoPhillips

      124,277      $ 8,652,165  

EOG Resources, Inc.

      69,343        8,628,350  

Exxon Mobil Corp.

      182,589        15,105,588  

Phillips 66

      54,101        6,076,083  
     

 

 

  
   $ 38,462,186  
     

 

 

  

 

2

 

 

                                                 
Security    Shares      Value  

Personal Products — 1.6%

 

Estee Lauder Cos., Inc. (The), Class A

      64,560      $ 9,212,066  
     

 

 

  
   $ 9,212,066  
     

 

 

  

Pharmaceuticals — 4.8%

 

Johnson & Johnson

      150,421      $ 18,252,084  

Zoetis, Inc.

      115,375        9,828,796  
     

 

 

  
   $ 28,080,880  
     

 

 

  

Road & Rail — 2.3%

 

CSX Corp.

      214,977      $ 13,711,233  
     

 

 

  
   $ 13,711,233  
     

 

 

  

Semiconductors & Semiconductor Equipment — 1.8%

 

QUALCOMM, Inc.

      185,548      $ 10,412,954  
     

 

 

  
   $ 10,412,954  
     

 

 

  

Software — 6.8%

 

Microsoft Corp.

      314,636      $ 31,026,256  

salesforce.com, Inc.(2)

      65,034        8,870,638  
     

 

 

  
   $ 39,896,894  
     

 

 

  

Specialty Retail — 3.1%

 

Home Depot, Inc. (The)

      92,202      $ 17,988,610  
     

 

 

  
   $ 17,988,610  
     

 

 

  

Technology Hardware, Storage & Peripherals — 5.5%

 

Apple, Inc.

      117,232      $ 21,700,816  

Xerox Corp.

      439,938        10,558,512  
     

 

 

  
   $ 32,259,328  
     

 

 

  

Textiles, Apparel & Luxury Goods — 1.5%

 

NIKE, Inc., Class B

      112,878      $ 8,994,120  
     

 

 

  
   $ 8,994,120  
     

 

 

  

Total Common Stocks
(identified cost $420,945,761)

 

    $ 580,041,511  
     

 

 

  

Short-Term Investments — 1.3%

 

Description    Units      Value  

Eaton Vance Cash Reserves Fund, LLC, 2.09%(3)

      7,386,508      $ 7,386,508  
     

 

 

  

Total Short-Term Investments
(identified cost $7,386,557)

 

    $ 7,386,508  
     

 

 

  

Total Investments — 100.4%
(identified cost $428,332,318)

 

    $ 587,428,019  
     

 

 

  

Total Written Covered Call Options — (0.4)%
(premiums received $3,620,661)

 

    $ (2,035,170 ) 
     

 

 

  

Other Assets, Less Liabilities — (0.0)%(4)

 

    $ (152,382 ) 
     

 

 

  

Net Assets — 100.0%

 

    $ 585,240,467  
     

 

 

  

 

3

 

 

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

 

(1)

All or a portion of each applicable common stock for which a written call option is outstanding at June 30, 2018 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, 2018. Net income from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended June 30, 2018 was $77,457.

 

(4)

Amount is less than (0.05)%.

Written Covered Call Options — (0.4)%

Exchange-Traded Options — (0.4)%

 

Description    Number of
Contracts		      Notional
Amount		      Exercise
Price		      Expiration
Date		      Value  

Abbott Laboratories

      705      $ 4,299,795      $ 64        8/10/18      $ (41,948 ) 

Akamai Technologies, Inc.

      620        4,540,260        83        7/20/18        (7,440 ) 

Alphabet, Inc., Class C

      85        9,483,025            1,170        7/20/18        (43,775 ) 

Amazon.com, Inc.

      55        9,348,900        1,760        7/20/18        (93,088 ) 

American Financial Group, Inc.

      410        4,400,530        115        7/20/18        (19,475 ) 

American International Group, Inc.

      395        2,094,290        58        7/20/18        (1,382 ) 

American Tower Corp.

      420        6,055,140        145        8/17/18        (147,000 ) 

Apple, Inc.

      590            10,921,490        195        7/20/18        (23,895 ) 

Aptiv PLC

      675        6,185,025        105        7/20/18        (3,375 ) 

AvalonBay Communities, Inc.

      150        2,578,350        170        7/20/18        (60,750 ) 

Ball Corp.

      950        3,377,250        40        7/20/18        (2,375 ) 

Bank of America Corp.

      2,910        8,203,290        31        8/10/18        (62,565 ) 

Caterpillar, Inc.

      470        6,376,490        155        7/20/18        (3,995 ) 

Charles Schwab Corp. (The)

      1,130        5,774,300        59        7/27/18        (5,650 ) 

ConocoPhillips

      620        4,316,440        75        8/17/18        (51,460 ) 

Constellation Brands, Inc., Class A

      215        4,705,705        235        7/20/18        (6,987 ) 

Corning, Inc.

      1,200        3,301,200        30        7/20/18        (3,600 ) 

CSX Corp.

      1,090        6,952,020        68        7/27/18        (55,590 ) 

Danaher Corp.

      730        7,203,640        105        7/20/18        (16,425 ) 

DowDuPont, Inc.

      515        3,394,880        70        8/3/18        (31,930 ) 

EOG Resources, Inc.

      350        4,355,050        135        7/20/18        (11,025 ) 

Estee Lauder Cos., Inc. (The), Class A

      325        4,637,425        165        8/17/18        (5,687 ) 

Exxon Mobil Corp.

      920        7,611,160        84        7/27/18            (106,720 ) 

Facebook, Inc., Class A

      75        1,457,400        200        7/20/18        (17,400 ) 

FedEx Corp.

      265        6,017,090        260        7/20/18        (3,842 ) 

First Republic Bank

      350        3,387,650        105        7/20/18        (12,250 ) 

Fortive Corp.

      830        6,400,130        80        7/20/18        (45,650 ) 

Gilead Sciences, Inc.

      550        3,896,200        75        7/20/18        (20,900 ) 

GoDaddy, Inc., Class A

      620        4,377,200        75        7/20/18        (18,600 ) 

Home Depot, Inc. (The)

      465        9,072,150        200        7/20/18        (65,333 ) 

Johnson & Johnson

      755        9,161,170        125        7/20/18        (64,175 ) 

JPMorgan Chase & Co.

      990        10,315,800        111        7/27/18        (51,975 ) 

Live Nation Entertainment, Inc.

      985        4,784,145        48        7/20/18        (157,600 ) 

Microsoft Corp.

      1,585        15,629,685        105        7/13/18        (14,265 ) 

Mondelez International, Inc., Class A

      1,100        4,510,000        41        7/20/18        (78,650 ) 

NextEra Energy, Inc.

      280        4,676,840        170        8/17/18        (70,700 ) 

 

4

 

 

Description    Number of
Contracts		      Notional
Amount		      Exercise
Price		      Expiration
Date		      Value  

NIKE, Inc., Class B

      565      $     4,501,920      $ 85        8/17/18      $ (40,963 ) 

PepsiCo, Inc.

      395        4,300,365        110        7/20/18        (58,460 ) 

Phillips 66

      270        3,032,370        125        8/17/18        (13,500 ) 

QUALCOMM, Inc.

      850        4,770,200        60        7/20/18        (39,950 ) 

salesforce.com, inc.

      330        4,501,200        145        8/17/18        (75,075 ) 

Sempra Energy

      330        3,831,630        120        7/20/18        (24,750 ) 

Verizon Communications, Inc.

      1,295        6,515,145        50        7/20/18        (103,600 ) 

Vertex Pharmaceuticals, Inc.

      170        2,889,320            170        7/20/18        (94,350 ) 

Visa, Inc., Class A

      705        9,337,725        140        7/20/18        (19,388 ) 

Walt Disney Co. (The)

      615        6,445,815        108        8/3/18        (91,020 ) 

Zayo Group Holdings, Inc.

      1,300        4,742,400        38        7/20/18        (42,250 ) 

Zoetis, Inc.

      585        4,983,615        93        7/20/18        (4,387 ) 
              

 

 

  

Total

 

    $     (2,035,170 ) 
              

 

 

  

At June 30, 2018, 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 June 30, 2018, 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 $2,035,170.

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.

At June 30, 2018, 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

    $ 81,111,811      $ —      $     —      $ 81,111,811  

Consumer Staples

      37,441,004        —        —        37,441,004  

Energy

      38,462,186        —        —        38,462,186  

Financials

      70,702,653        —        —        70,702,653  

Health Care

      72,440,102        —        —        72,440,102  

Industrials

      52,522,680            3,945,669        —        56,468,349  

Information Technology

          151,389,144        —        —            151,389,144  

 

5

 

 

Asset Description    Level 1      Level 2      Level 3      Total  

Materials

    $ 13,498,511      $ —      $ —      $ 13,498,511  

Real Estate

      17,299,593        —        —        17,299,593  

Telecommunication Services

      24,072,817        —        —        24,072,817  

Utilities

      17,155,341        —        —        17,155,341  

Total Common Stocks

    $ 576,095,842      $ 3,945,669 *     $ —      $ 580,041,511  

Short-Term Investments

    $ —      $ 7,386,508      $ —      $ 7,386,508  

Total Investments

    $     576,095,842      $     11,332,177      $ —      $     587,428,019  
Liability Description                                

Written Covered Call Options

    $ (2,035,170 )     $ —      $ —      $ (2,035,170 ) 

Total

    $ (2,035,170 )     $ —      $     —      $ (2,035,170 ) 

 

*

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.

At June 30, 2018, 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.

Item 3. Exhibits

A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act is attached hereto.

 

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/ Edward J. Perkin
  Edward J. Perkin
  President
Date:   August 21, 2018

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/ Edward J. Perkin
  Edward J. Perkin
  President
Date:   August 21, 2018

 

By:   /s/ James F. Kirchner
  James F. Kirchner
  Treasurer
Date:   August 21, 2018