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, 2014

Date of Reporting Period

 

 

 

Item 1. Schedule of Investments

Eaton Vance

Enhanced Equity Income Fund

December 31, 2014

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 99.7%(1)

 

                                                 
Security    Shares      Value  

Aerospace & Defense — 1.4%

      

United Technologies Corp.

      70,011       $ 8,051,265   
     

 

 

  
      $ 8,051,265   
     

 

 

  

Air Freight & Logistics — 1.6%

      

C.H. Robinson Worldwide, Inc.

      125,756       $ 9,417,867   
     

 

 

  
      $ 9,417,867   
     

 

 

  

Banks — 5.7%

      

Bank of America Corp.

      689,296       $ 12,331,505   

JPMorgan Chase & Co.

      208,887         13,072,149   

PNC Financial Services Group, Inc. (The)

      80,499         7,343,924   
     

 

 

  
      $ 32,747,578   
     

 

 

  

Beverages — 2.2%

      

Constellation Brands, Inc., Class A(2)

      130,999       $ 12,860,172   
     

 

 

  
      $ 12,860,172   
     

 

 

  

Biotechnology — 3.4%

      

Celgene Corp.(2)

      88,160       $ 9,861,577   

Gilead Sciences, Inc.(2)

      106,318         10,021,535   
     

 

 

  
      $ 19,883,112   
     

 

 

  

Chemicals — 2.2%

      

LyondellBasell Industries NV, Class A

      50,341       $ 3,996,572   

Monsanto Co.

      74,377         8,885,820   
     

 

 

  
      $ 12,882,392   
     

 

 

  

Communications Equipment — 2.4%

      

QUALCOMM, Inc.

      185,840       $ 13,813,487   
     

 

 

  
      $ 13,813,487   
     

 

 

  

Consumer Finance — 3.6%

      

American Express Co.

      126,768       $ 11,794,495   

Discover Financial Services

      133,636         8,751,821   
     

 

 

  
      $ 20,546,316   
     

 

 

  

Diversified Telecommunication Services — 2.2%

      

Verizon Communications, Inc.

      276,159       $ 12,918,718   
     

 

 

  
      $ 12,918,718   
     

 

 

  

Electric Utilities — 1.6%

      

NextEra Energy, Inc.

      86,364       $ 9,179,630   
     

 

 

  
      $ 9,179,630   
     

 

 

  

Electrical Equipment — 1.4%

      

Emerson Electric Co.

      129,490       $ 7,993,418   
     

 

 

  
      $ 7,993,418   
     

 

 

  

Electronic Equipment, Instruments & Components — 2.0%

      

Corning, Inc.

      495,668       $ 11,365,667   
     

 

 

  
      $ 11,365,667   
     

 

 

  

Energy Equipment & Services — 0.8%

      

FMC Technologies, Inc.(2)

      95,343       $ 4,465,866   
     

 

 

  
      $ 4,465,866   
     

 

 

  

 

1

 

 

                                                 
Security    Shares      Value  

Food & Staples Retailing — 3.5%

      

Costco Wholesale Corp.

      94,873       $ 13,448,248   

CVS Health Corp.

      70,120         6,753,257   
     

 

 

  
      $ 20,201,505   
     

 

 

  

Food Products — 2.6%

      

Hershey Co. (The)

      62,485       $ 6,494,066   

Mondelez International, Inc., Class A

      238,144         8,650,581   
     

 

 

  
      $ 15,144,647   
     

 

 

  

Health Care Equipment & Supplies — 3.6%

      

Abbott Laboratories

      198,189       $ 8,922,469   

Covidien PLC

      65,175         6,666,099   

Medtronic, Inc.

      68,521         4,947,216   
     

 

 

  
      $ 20,535,784   
     

 

 

  

Health Care Technology — 1.4%

      

Cerner Corp.(2)

      125,013       $ 8,083,341   
     

 

 

  
      $ 8,083,341   
     

 

 

  

Household Durables — 1.1%

      

Mohawk Industries, Inc.(2)

      39,107       $ 6,075,664   
     

 

 

  
      $ 6,075,664   
     

 

 

  

Industrial Conglomerates — 3.4%

      

Danaher Corp.

      133,958       $ 11,481,540   

Roper Industries, Inc.

      50,437         7,885,825   
     

 

 

  
      $ 19,367,365   
     

 

 

  

Insurance — 4.4%

      

ACE, Ltd.

      80,499       $ 9,247,725   

Aflac, Inc.

      144,518         8,828,605   

MetLife, Inc.

      133,629         7,227,992   
     

 

 

  
      $ 25,304,322   
     

 

 

  

Internet & Catalog Retail — 2.8%

      

Amazon.com, Inc.(2)

      51,885       $ 16,102,510   
     

 

 

  
      $ 16,102,510   
     

 

 

  

Internet Software & Services — 5.1%

      

Facebook, Inc., Class A(2)

      91,902       $ 7,170,194   

Google, Inc., Class C(2)

      42,550         22,398,320   
     

 

 

  
      $ 29,568,514   
     

 

 

  

IT Services — 2.1%

      

Visa, Inc., Class A

      45,884       $ 12,030,785   
     

 

 

  
      $ 12,030,785   
     

 

 

  

Machinery — 1.7%

      

Caterpillar, Inc.

      62,255       $ 5,698,200   

Deere & Co.

      48,660         4,304,950   
     

 

 

  
      $ 10,003,150   
     

 

 

  

Media — 5.2%

      

Comcast Corp., Class A

      190,936       $ 11,076,197   

Live Nation Entertainment, Inc.(2)

      264,173         6,897,557   

Walt Disney Co. (The)

      128,873         12,138,548   
     

 

 

  
      $ 30,112,302   
     

 

 

  

Multi-Utilities — 1.6%

      

Sempra Energy

      84,096       $ 9,364,931   
     

 

 

  
      $ 9,364,931   
     

 

 

  

Oil, Gas & Consumable Fuels — 6.9%

      

Anadarko Petroleum Corp.

      103,120       $ 8,507,400   

Devon Energy Corp.

      145,870         8,928,703   

 

2

 

 

                                                 
Security    Shares      Value  

Exxon Mobil Corp.

      105,761       $ 9,777,604   

Occidental Petroleum Corp.

      97,792         7,883,013   

Range Resources Corp.

      85,217         4,554,849   
     

 

 

  
      $ 39,651,569   
     

 

 

  

Pharmaceuticals — 6.0%

      

Johnson & Johnson

      53,401       $ 5,584,143   

Merck & Co., Inc.

      240,685         13,668,501   

Perrigo Co. PLC

      58,503         9,779,361   

Roche Holding AG PC

      19,803         5,365,468   
     

 

 

  
      $ 34,397,473   
     

 

 

  

Real Estate Investment Trusts (REITs) — 2.4%

      

Simon Property Group, Inc.

      74,952       $ 13,649,509   
     

 

 

  
      $ 13,649,509   
     

 

 

  

Semiconductors & Semiconductor Equipment — 1.4%

      

NXP Semiconductors NV(2)

      106,441       $ 8,132,092   
     

 

 

  
      $ 8,132,092   
     

 

 

  

Software — 4.1%

      

Microsoft Corp.

      303,258       $ 14,086,334   

Oracle Corp.

      215,706         9,700,299   
     

 

 

  
      $ 23,786,633   
     

 

 

  

Specialty Retail — 1.4%

      

TJX Cos., Inc. (The)

      120,025       $ 8,231,315   
     

 

 

  
      $ 8,231,315   
     

 

 

  

Technology Hardware, Storage & Peripherals — 4.2%

      

Apple, Inc.

      217,380       $ 23,994,404   
     

 

 

  
      $ 23,994,404   
     

 

 

  

Textiles, Apparel & Luxury Goods — 1.8%

      

NIKE, Inc., Class B

      110,319       $ 10,607,172   
     

 

 

  
      $ 10,607,172   
     

 

 

  

Tobacco — 1.9%

      

Altria Group, Inc.

      227,196       $ 11,193,947   
     

 

 

  
      $ 11,193,947   
     

 

 

  

Wireless Telecommunication Services — 0.6%

      

T-Mobile US, Inc.(2)

      136,909       $ 3,688,328   
     

 

 

  
      $ 3,688,328   
     

 

 

  

Total Common Stocks
(identified cost $500,340,789)

       $ 575,352,750   
     

 

 

  

Short-Term Investments — 0.6%

      
Description    Interest
(000’s omitted)		      Value  

Eaton Vance Cash Reserves Fund, LLC, 0.14%(3)

    $ 3,399       $ 3,398,513   
     

 

 

  

Total Short-Term Investments
(identified cost $3,398,513)

       $ 3,398,513   
     

 

 

  

Total Investments — 100.3%
(identified cost $503,739,302)

       $ 578,751,263   
     

 

 

  

 

3

 

 

Covered Call Options Written — (0.3)%

 

                                                                                                   
Security    Number of
Contracts		      Strike
Price		      Expiration
Date		      Value  

Abbott Laboratories

      995       $ 46.00         1/17/15       $ (27,860 ) 

ACE, Ltd.

      405         120.00         1/17/15         (3,037 ) 

Altria Group, Inc.

      1,140         51.00         1/23/15         (24,510 ) 

Amazon.com, Inc.

      255         337.50         1/30/15         (144,713 ) 

American Express Co.

      480         95.00         1/9/15         (15,600 ) 

Anadarko Petroleum Corp.

      515         95.00         2/20/15         (63,603 ) 

Apple, Inc.

      1,085         121.00         1/30/15         (98,193 ) 

Bank of America Corp.

      3,470         18.50         1/30/15         (72,870 ) 

C.H. Robinson Worldwide, Inc.

      630         85.00         2/20/15         (15,750 ) 

Caterpillar, Inc.

      310         98.00         1/30/15         (15,965 ) 

Celgene Corp.

      440         125.00         1/17/15         (13,420 ) 

Cerner Corp.

      625         67.50         1/17/15         (12,500 ) 

Comcast Corp., Class A

      960         59.50         1/23/15         (60,480 ) 

Constellation Brands, Inc., Class A

      660         100.00         2/20/15         (166,650 ) 

Corning, Inc.

      2,495         23.50         1/23/15         (58,633 ) 

Costco Wholesale Corp.

      475         147.00         1/2/15         (2,137 ) 

CVS Health Corp.

      350         97.50         1/17/15         (28,525 ) 

Danaher Corp.

      670         87.50         1/17/15         (31,825 ) 

Deere & Co.

      245         92.00         1/23/15         (7,472 ) 

Devon Energy Corp.

      730         71.50         1/2/15         (1,460 ) 

Discover Financial Services

      670         70.00         2/20/15         (33,500 ) 

Emerson Electric Co.

      650         67.50         1/17/15         (1,625 ) 

Exxon Mobil Corp.

      530         96.00         1/23/15         (29,680 ) 

Facebook, Inc., Class A

      460         80.00         1/9/15         (20,240 ) 

FMC Technologies, Inc.

      480         60.00         1/17/15         (6,000 ) 

Gilead Sciences, Inc.

      535         112.00         1/9/15         (2,407 ) 

Google, Inc., Class C

      210         552.50         1/2/15         (525 ) 

Hershey Co. (The)

      315         105.00         2/20/15         (70,718 ) 

Johnson & Johnson

      265         111.00         1/9/15         (927 ) 

JPMorgan Chase & Co.

      1,050         64.00         1/9/15         (14,175 ) 

LyondellBasell Industries NV, Class A

      250         90.00         2/20/15         (20,625 ) 

Medtronic, Inc.

      345         76.00         1/23/15         (12,247 ) 

Merck & Co., Inc.

      1,220         62.50         1/17/15         (5,490 ) 

MetLife, Inc.

      670         58.50         1/9/15         (2,345 ) 

Microsoft Corp.

      1,515         49.50         1/30/15         (43,178 ) 

Mohawk Industries, Inc.

      195         160.00         1/17/15         (32,662 ) 

Mondelez International, Inc., Class A

      1,205         40.00         1/17/15         (4,217 ) 

Monsanto Co.

      370         125.00         1/30/15         (29,230 ) 

NextEra Energy, Inc.

      435         110.00         2/20/15         (70,688 ) 

NIKE, Inc., Class B

      555         99.00         1/30/15         (45,788 ) 

NXP Semiconductors NV

      535         85.00         2/20/15         (70,888 ) 

Occidental Petroleum Corp.

      490         87.50         2/20/15         (46,550 ) 

Oracle Corp.

      1,085         47.00         1/23/15         (15,190 ) 

PNC Financial Services Group, Inc. (The)

      405         97.50         2/20/15         (13,365 ) 

QUALCOMM, Inc.

      935         75.00         1/17/15         (82,280 ) 

Roper Industries, Inc.

      250         165.00         2/20/15         (43,750 ) 

Sempra Energy

      420         115.00         2/20/15         (72,450 ) 

Simon Property Group, Inc.

      375         195.00         2/20/15         (16,875 ) 

TJX Cos., Inc. (The)

      600         72.50         2/20/15         (43,500 ) 

United Technologies Corp.

      350         121.00         1/30/15         (21,525 ) 

Verizon Communications, Inc.

      855         47.50         1/23/15         (26,077 ) 

 

4

 

 

                                                                                                   
Security    Number of
Contracts		      Strike
Price		      Expiration
Date		      Value  

Visa, Inc., Class A

      230       $ 275.00         1/17/15       $ (8,970 ) 

Walt Disney Co. (The)

      645         95.00         1/17/15         (68,370 ) 
           

 

 

  

Total Covered Call Options Written
(premiums received $2,803,446)

             $ (1,841,260 ) 
           

 

 

  

Other Assets, Less Liabilities — 0.0%(4)

  

   $ 40,617   
           

 

 

  

Net Assets — 100.0%

  

    $ 576,950,620   
           

 

 

  

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

 

PC   -   Participation Certificate

 

(1) A portion of each applicable common stock for which a written call option is outstanding at December 31, 2014 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 December 31, 2014. Net income allocated from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended December 31, 2014 was $1,483.

 

(4) Amount is less than 0.05%.

Written options activity for the fiscal year to date ended December 31, 2014 was as follows:

 

     Number of
Contracts		      Premiums
Received		  
Outstanding, beginning of period      33,675       $ 2,526,708   
Options written      92,030         6,305,165   
Options terminated in closing purchase transactions      (50,425 )       (3,172,093 ) 
Options expired      (39,245 )       (2,856,334 ) 
  

 

 

     

 

 

  
Outstanding, end of period      36,035       $     2,803,446   
  

 

 

     

 

 

  

At December 31, 2014, 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 December 31, 2014, 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 $1,841,260.

The cost and unrealized appreciation (depreciation) of investments of the Fund at December 31, 2014, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

    $     503,897,777   
  

 

 

  

Gross unrealized appreciation

    $ 84,733,770   

Gross unrealized depreciation

      (9,880,284 ) 
  

 

 

  

Net unrealized appreciation

    $ 74,853,486   
  

 

 

  

 

5

 

 

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 December 31, 2014, 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

    $     71,128,963       $     —       $     —       $     71,128,963   

Consumer Staples

      59,400,271         —         —         59,400,271   

Energy

      44,117,435         —         —         44,117,435   

Financials

      92,247,725         —         —         92,247,725   

Health Care

      77,534,242         5,365,468         —         82,899,710   

Industrials

      54,833,065         —         —         54,833,065   

Information Technology

      122,691,582         —         —         122,691,582   

Materials

      12,882,392         —         —         12,882,392   

Telecommunication Services

      16,607,046         —         —         16,607,046   

Utilities

      18,544,561         —         —         18,544,561   

Total Common Stocks

    $ 569,987,282       $ 5,365,468 *     $ —       $ 575,352,750   

Short-Term Investments

    $ —       $ 3,398,513       $ —       $ 3,398,513   

Total Investments

    $     569,987,282       $     8,763,981       $     —       $     578,751,263   
Liability Description                                

Covered Call Options Written

    $ (1,841,260 )     $ —       $ —       $ (1,841,260 ) 

Total

    $     (1,841,260 )     $ —       $ —       $ (1,841,260 ) 

 

* 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 December 31, 2014, 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/ Walter A. Row, III

  Walter A. Row, III
  President
Date:   February 23, 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/ Walter A. Row, III

  Walter A. Row, III
  President
Date:   February 23, 2015

 

By:  

/s/ James F. Kirchner

  James F. Kirchner
  Treasurer
Date:   February 23, 2015