N-Q 1 d532172dnq.htm EATON VANCE ENHANCED EQUITY INCOME FUND 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, 2017

Date of Reporting Period

 

 

 

Item 1. Schedule of Investments

Eaton Vance

Enhanced Equity Income Fund

December 31, 2017

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 100.1%(1)

 

                                                 
Security    Shares      Value  

Air Freight & Logistics — 2.8%

      

FedEx Corp.

      65,456      $ 16,333,890  
     

 

 

  
      $ 16,333,890  
     

 

 

  

Auto Components — 2.6%

      

Aptiv PLC

      114,246      $ 9,691,488  

Delphi Technologies PLC(2)

      113,050        5,931,734  
     

 

 

  
      $ 15,623,222  
     

 

 

  

Banks — 7.8%

      

Bank of America Corp.

      609,804      $ 18,001,414  

First Republic Bank

      72,498        6,281,227  

JPMorgan Chase & Co.

      207,187        22,156,578  
     

 

 

  
      $ 46,439,219  
     

 

 

  

Beverages — 1.3%

      

Constellation Brands, Inc., Class A

      32,760      $ 7,487,953  
     

 

 

  
      $ 7,487,953  
     

 

 

  

Biotechnology — 3.5%

      

Celgene Corp.(2)

      105,669      $ 11,027,617  

Gilead Sciences, Inc.

      134,118        9,608,213  
     

 

 

  
      $ 20,635,830  
     

 

 

  

Capital Markets — 3.4%

      

Charles Schwab Corp. (The)

      233,123      $ 11,975,528  

Credit Suisse Group AG

      464,441        8,283,635  
     

 

 

  
      $ 20,259,163  
     

 

 

  

Containers & Packaging — 2.9%

      

International Paper Co.

      183,212      $ 10,615,303  

Sealed Air Corp.

      127,712        6,296,202  
     

 

 

  
      $ 16,911,505  
     

 

 

  

Diversified Telecommunication Services — 3.3%

      

AT&T, Inc.

      304,820      $ 11,851,401  

Zayo Group Holdings, Inc.(2)

      213,766        7,866,589  
     

 

 

  
      $ 19,717,990  
     

 

 

  

Electric Utilities — 1.6%

      

NextEra Energy, Inc.

      61,149      $ 9,550,862  
     

 

 

  
      $ 9,550,862  
     

 

 

  

Equity Real Estate Investment Trusts (REITs) — 2.2%

      

Equity Residential

      91,208      $ 5,816,334  

Simon Property Group, Inc.

      42,002        7,213,424  
     

 

 

  
      $ 13,029,758  
     

 

 

  

 

1

 

 

                                                 
Security    Shares      Value  

Food Products — 1.3%

      

Mondelez International, Inc., Class A

      178,270      $ 7,629,956  
     

 

 

  
      $ 7,629,956  
     

 

 

  

Health Care Equipment & Supplies — 2.4%

      

Danaher Corp.

      152,098      $ 14,117,736  
     

 

 

  
      $ 14,117,736  
     

 

 

  

Health Care Providers & Services — 1.3%

      

Aetna, Inc.

      41,145      $ 7,422,147  
     

 

 

  
      $ 7,422,147  
     

 

 

  

Household Products — 1.3%

      

Colgate-Palmolive Co.

      103,868      $ 7,836,841  
     

 

 

  
      $ 7,836,841  
     

 

 

  

Industrial Conglomerates — 0.9%

      

General Electric Co.

      302,742      $ 5,282,848  
     

 

 

  
      $ 5,282,848  
     

 

 

  

Insurance — 3.3%

      

American Financial Group, Inc.

      84,815      $ 9,205,820  

Chubb, Ltd.

      70,870        10,356,233  
     

 

 

  
      $ 19,562,053  
     

 

 

  

Internet & Direct Marketing Retail — 2.8%

      

Amazon.com, Inc.(2)

      13,963      $ 16,329,310  
     

 

 

  
      $ 16,329,310  
     

 

 

  

Internet Software & Services — 7.1%

      

Akamai Technologies, Inc.(2)

      111,260      $ 7,236,351  

Alphabet, Inc., Class C(2)

      22,925        23,988,720  

Facebook, Inc., Class A(2)

      26,933        4,752,597  

GoDaddy, Inc., Class A(2)

      120,307        6,049,036  
     

 

 

  
      $ 42,026,704  
     

 

 

  

IT Services — 3.3%

      

Visa, Inc., Class A

      171,668      $ 19,573,585  
     

 

 

  
      $ 19,573,585  
     

 

 

  

Machinery — 5.3%

      

Caterpillar, Inc.

      105,944      $ 16,694,656  

Fortive Corp.

      203,881        14,750,790  
     

 

 

  
      $ 31,445,446  
     

 

 

  

Media — 1.7%

      

Walt Disney Co. (The)

      95,569      $ 10,274,623  
     

 

 

  
      $ 10,274,623  
     

 

 

  

Multi-Utilities — 1.2%

      

Sempra Energy

      68,234      $ 7,295,579  
     

 

 

  
      $ 7,295,579  
     

 

 

  

Oil, Gas & Consumable Fuels — 5.8%

      

Chevron Corp.

      101,020      $ 12,646,694  

ConocoPhillips

      146,916        8,064,219  

 

2

 

 

                                                 
Security    Shares      Value  

EOG Resources, Inc.

      72,628      $ 7,837,287  

Phillips 66

      56,664        5,731,564  
     

 

 

  
      $ 34,279,764  
     

 

 

  

Personal Products — 1.1%

      

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

      52,435      $ 6,671,829  
     

 

 

  
      $ 6,671,829  
     

 

 

  

Pharmaceuticals — 6.1%

      

Johnson & Johnson

      157,547      $ 22,012,467  

Zoetis, Inc.

      193,436        13,935,129  
     

 

 

  
      $ 35,947,596  
     

 

 

  

Road & Rail — 2.3%

      

CSX Corp.

      243,481      $ 13,393,890  
     

 

 

  
      $ 13,393,890  
     

 

 

  

Semiconductors & Semiconductor Equipment — 3.8%

      

Intel Corp.

      317,367      $ 14,649,661  

QUALCOMM, Inc.

      123,552        7,909,799  
     

 

 

  
      $ 22,559,460  
     

 

 

  

Software — 4.7%

      

Microsoft Corp.

      324,819      $ 27,785,017  
     

 

 

  
      $ 27,785,017  
     

 

 

  

Specialty Retail — 3.3%

      

Home Depot, Inc. (The)

      103,958      $ 19,703,160  
     

 

 

  
      $ 19,703,160  
     

 

 

  

Technology Hardware, Storage & Peripherals — 5.2%

      

Apple, Inc.

      154,389      $ 26,127,251  

Xerox Corp.

      154,561        4,505,453  
     

 

 

  
      $ 30,632,704  
     

 

 

  

Textiles, Apparel & Luxury Goods — 1.7%

      

NIKE, Inc., Class B

      163,385      $ 10,219,732  
     

 

 

  
      $ 10,219,732  
     

 

 

  

Tobacco — 2.8%

      

Altria Group, Inc.

      229,111      $ 16,360,816  
     

 

 

  
      $ 16,360,816  
     

 

 

  

Total Common Stocks
(identified cost $422,257,220)

       $ 592,340,188  
     

 

 

  

Short-Term Investments — 0.3%

      
Description    Units      Value  

Eaton Vance Cash Reserves Fund, LLC, 1.50%(3)

      1,463,871      $ 1,463,725  
     

 

 

  

Total Short-Term Investments
(identified cost $1,463,857)

       $ 1,463,725  
     

 

 

  

 

3

 

 

                                                 
              Value  

Total Investments — 100.4%
(identified cost $423,721,077)

       $ 593,803,913  
     

 

 

  

Total Covered Call Options Written — (0.4)%
(premiums received $3,544,435)

       $ (2,250,968 ) 
     

 

 

  

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

       $ (16,445 ) 
     

 

 

  

Net Assets — 100.0%

       $ 591,536,500  
     

 

 

  

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 December 31, 2017 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, 2017. Net income allocated from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended December 31, 2017 was $18,538

 

(4) Amount is less than (0.05)%.

 

                                                                                                                            

Covered Call Options Written — (0.4)%

               

Exchange-Traded Options — (0.4)%

               
                                                                                                                            
Description    Number of
Contracts		      Notional
Amount		      Exercise
Price		      Expiration
Date		      Value  

Akamai Technologies, Inc.

      555      $ 3,609,720      $ 70        2/16/18      $ (73,538 ) 

Alphabet, Inc., Class C

      115        12,033,600        1,080        1/26/18        (49,450 ) 

Altria Group, Inc.

      1,150        8,212,150        74        1/19/18        (43,700 ) 

Amazon.com, Inc.

      70        8,186,290        1,240        1/19/18        (15,680 ) 

American Financial Group, Inc.

      425        4,612,950        110        2/16/18        (76,500 ) 

Apple, Inc.

      775        13,115,325        180        1/26/18        (35,650 ) 

Aptiv PLC

      575        4,877,725        105        1/19/18        (103,500 ) 

AT&T, Inc.

      1,520        5,909,760        40        2/2/18        (66,880 ) 

Bank of America Corp.

      3,065        9,047,880        30        1/19/18        (127,198 ) 

Caterpillar, Inc.

      530        8,351,740        155        1/26/18        (314,025 ) 

Celgene Corp.

      530        5,531,080        115        1/19/18        (9,805 ) 

Charles Schwab Corp. (The)

      1,165        5,984,605        55        1/19/18        (23,300 ) 

Chevron Corp.

      505        6,322,095        130        2/16/18        (54,288 ) 

Chubb, Ltd.

      355        5,187,615        160        2/16/18        (6,212 ) 

Colgate-Palmolive Co.

      515        3,885,675        78        2/2/18        (39,655 ) 

ConocoPhillips

      740        4,061,860        55        1/19/18        (76,220 ) 

Constellation Brands, Inc., Class A

      165        3,771,405        230        1/19/18        (90,750 ) 

CSX Corp.

      1,225        6,738,725        63        2/16/18        (23,275 ) 

Danaher Corp.

      765        7,100,730        95        1/19/18        (24,863 ) 

EOG Resources, Inc.

      360        3,884,760        110        2/2/18        (66,600 ) 

Equity Residential

      465        2,965,305        73        1/19/18        (1,162 ) 

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

      230        2,926,520        130        1/19/18        (20,700 ) 

Facebook, Inc., Class A

      135        2,382,210        185        1/19/18        (7,290 ) 

FedEx Corp.

      325        8,110,050        260        2/16/18        (85,150 ) 

 

4

 

 

                                                                                                                            
Description    Number of
Contracts		      Notional
Amount		     Exercise
Price		     Expiration
Date		      Value  

First Republic Bank

      365      $ 3,162,360     $ 100       1/19/18      $ (6,387 ) 

Fortive Corp.

      1,030        7,452,050       75       1/19/18        (20,600 ) 

General Electric Co.

      1,510        2,634,950       19       2/2/18        (33,975 ) 

Gilead Sciences, Inc.

      660        4,728,240       78       1/19/18        (11,220 ) 

GoDaddy, Inc., Class A

      610        3,067,080       55       2/16/18        (36,600 ) 

Home Depot, Inc. (The)

      520        9,855,560       190       1/19/18        (129,220 ) 

Intel Corp.

      1,620        7,477,920       47       1/19/18        (76,950 ) 

International Paper Co.

      925        5,359,450       58       1/19/18        (108,225 ) 

Johnson & Johnson

      785        10,968,020       150       1/19/18        (6,280 ) 

JPMorgan Chase & Co.

      1,035        11,068,290       110       1/5/18        (10,350 ) 

Microsoft Corp.

      1,630        13,943,020       88       1/19/18        (72,535 ) 

Mondelez International, Inc., Class A

      805        3,445,400       44       1/19/18        (14,087 ) 

NextEra Energy, Inc.

      305        4,763,795       165       1/19/18        (3,812 ) 

NIKE, Inc., Class B

      820        5,129,100       68       2/16/18        (25,010 ) 

Phillips 66

      280        2,832,200       105       2/2/18        (15,400 ) 

Sealed Air Corp.

      640        3,155,200       53       2/16/18        (30,400 ) 

Sempra Energy

      350        3,742,200       120       1/19/18        (875 ) 

Simon Property Group, Inc.

      210        3,606,540       175       1/19/18        (30,345 ) 

Visa, Inc., Class A

      865        9,862,730       116       1/12/18        (45,413 ) 

Walt Disney Co. (The)

      415        4,461,665       110       1/19/18        (34,653 ) 

Xerox Corp.

      530        1,544,950       31       1/19/18        (2,915 ) 

Zayo Group Holdings, Inc.

      1,075        3,956,000       40       3/16/18        (86,000 ) 

Zoetis, Inc.

      955        6,879,820       75       1/19/18        (14,325 ) 
            

 

 

  

Total

 

    $     (2,250,968 ) 
            

 

 

  

At December 31, 2017, 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, 2017, 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 $2,250,968.

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, 2017, 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

    $ 72,150,047      $ —      $ —      $ 72,150,047  

Consumer Staples

      45,987,395        —        —        45,987,395  

Energy

      34,279,764        —        —        34,279,764  

Financials

      77,976,800        8,283,635        —        86,260,435  

Health Care

      78,123,309        —        —        78,123,309  

Industrials

      66,456,074        —        —        66,456,074  

Information Technology

      142,577,470        —        —        142,577,470  

Materials

      16,911,505        —        —        16,911,505  

Real Estate

      13,029,758        —        —        13,029,758  

Telecommunication Services

      19,717,990        —        —        19,717,990  

Utilities

      16,846,441        —        —        16,846,441  

Total Common Stocks

    $     584,056,553      $     8,283,635 *     $ —      $     592,340,188  

Short-Term Investments

    $ —      $ 1,463,725      $ —      $ 1,463,725  

Total Investments

    $ 584,056,553      $ 9,747,360      $ —      $ 593,803,913  
Liability Description                                

Covered Call Options Written

    $ (2,250,968 )     $ —      $ —      $ (2,250,968 ) 

Total

    $ (2,250,968 )     $ —      $ —      $ (2,250,968 ) 

 

* 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, 2017 whose fair value was determined using Level 3 inputs. At December 31, 2017, 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:   February 22, 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:   February 22, 2018

 

By:   /s/ James F. Kirchner
  James F. Kirchner
  Treasurer
Date:   February 22, 2018