N-Q 1 d336841dnq.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, 2016

Date of Reporting Period

 

 

 

Item 1. Schedule of Investments

Eaton Vance

Enhanced Equity Income Fund

December 31, 2016

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 99.2%(1)

 

                                                 
Security    Shares      Value  

Air Freight & Logistics — 1.8%

      

C.H. Robinson Worldwide, Inc.

      128,780      $ 9,434,423  
     

 

 

  
      $ 9,434,423  
     

 

 

  

Auto Components — 1.0%

      

Goodyear Tire & Rubber Co. (The)

      175,501      $ 5,417,716  
     

 

 

  
      $ 5,417,716  
     

 

 

  

Banks — 6.0%

      

JPMorgan Chase & Co.

      217,414      $ 18,760,654  

PNC Financial Services Group, Inc. (The)

      87,926        10,283,825  

Wells Fargo & Co.

      52,719        2,905,344  
     

 

 

  
      $ 31,949,823  
     

 

 

  

Beverages — 2.4%

      

Constellation Brands, Inc., Class A

      40,037      $ 6,138,072  

PepsiCo, Inc.

      64,939        6,794,568  
     

 

 

  
      $ 12,932,640  
     

 

 

  

Biotechnology — 2.3%

      

Celgene Corp.(2)

      107,835      $ 12,481,901  
     

 

 

  
      $ 12,481,901  
     

 

 

  

Capital Markets — 4.5%

      

Charles Schwab Corp. (The)

      315,388      $ 12,448,364  

Goldman Sachs Group, Inc. (The)

      47,618        11,402,130  
     

 

 

  
      $ 23,850,494  
     

 

 

  

Chemicals — 1.2%

      

PPG Industries, Inc.

      69,648      $ 6,599,845  
     

 

 

  
      $ 6,599,845  
     

 

 

  

Communications Equipment — 1.8%

      

Cisco Systems, Inc.

      315,363      $ 9,530,270  
     

 

 

  
      $ 9,530,270  
     

 

 

  

Containers & Packaging — 1.4%

      

International Paper Co.

      137,571      $ 7,299,517  
     

 

 

  
      $ 7,299,517  
     

 

 

  

Distributors — 1.4%

      

LKQ Corp.(2)

      241,629      $ 7,405,929  
     

 

 

  
      $ 7,405,929  
     

 

 

  

Diversified Telecommunication Services — 2.6%

      

Verizon Communications, Inc.

      189,431      $ 10,111,827  

Zayo Group Holdings, Inc.(2)

      120,468        3,958,578  
     

 

 

  
      $ 14,070,405  
     

 

 

  

Electric Utilities — 1.6%

      

NextEra Energy, Inc.

      70,192      $ 8,385,136  
     

 

 

  
      $ 8,385,136  
     

 

 

  

 

1

 

 

                                                 
Security    Shares      Value  

Energy Equipment & Services — 2.3%

      

Oceaneering International, Inc.

      156,988      $ 4,428,632  

Schlumberger, Ltd.

      90,177        7,570,359  
     

 

 

  
      $ 11,998,991  
     

 

 

  

Equity Real Estate Investment Trusts (REITs) — 2.5%

      

Equity Residential

      76,767      $ 4,940,724  

Federal Realty Investment Trust

      59,420        8,444,176  
     

 

 

  
      $ 13,384,900  
     

 

 

  

Food Products — 1.4%

      

General Mills, Inc.

      123,040      $ 7,600,181  
     

 

 

  
      $ 7,600,181  
     

 

 

  

Health Care Equipment & Supplies — 3.5%

      

Danaher Corp.

      149,218      $ 11,615,129  

Zimmer Biomet Holdings, Inc.

      69,602        7,182,927  
     

 

 

  
      $ 18,798,056  
     

 

 

  

Household Durables — 1.7%

      

Newell Brands, Inc.

      69,261      $ 3,092,504  

Whirlpool Corp.

      33,746        6,134,010  
     

 

 

  
      $ 9,226,514  
     

 

 

  

Industrial Conglomerates — 3.3%

      

General Electric Co.

      548,979      $ 17,347,736  
     

 

 

  
      $ 17,347,736  
     

 

 

  

Insurance — 3.3%

      

American Financial Group, Inc.

      83,273      $ 7,338,017  

Chubb, Ltd.

      75,598        9,988,008  
     

 

 

  
      $ 17,326,025  
     

 

 

  

Internet & Direct Marketing Retail — 3.4%

      

Amazon.com, Inc.(2)

      24,364      $ 18,269,833  
     

 

 

  
      $ 18,269,833  
     

 

 

  

Internet Software & Services — 5.9%

      

Alphabet, Inc., Class C(2)

      30,351      $ 23,425,509  

Facebook, Inc., Class A(2)

      19,413        2,233,465  

GoDaddy, Inc., Class A(2)

      161,006        5,627,160  
     

 

 

  
      $ 31,286,134  
     

 

 

  

IT Services — 2.8%

      

Visa, Inc., Class A

      191,144      $ 14,913,055  
     

 

 

  
      $ 14,913,055  
     

 

 

  

Machinery — 3.6%

      

Caterpillar, Inc.

      80,375      $ 7,453,977  

Fortive Corp.

      221,771        11,893,579  
     

 

 

  
      $ 19,347,556  
     

 

 

  

Multi-Utilities — 1.6%

      

Sempra Energy

      86,236      $ 8,678,791  
     

 

 

  
      $ 8,678,791  
     

 

 

  

Oil, Gas & Consumable Fuels — 5.7%

      

Chevron Corp.

      99,986      $ 11,768,352  

EOG Resources, Inc.

      91,613        9,262,074  

Occidental Petroleum Corp.

      131,617        9,375,079  
     

 

 

  
      $ 30,405,505  
     

 

 

  

 

2

 

 

                                                 
Security    Shares      Value  

Personal Products — 1.6%

      

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

      107,559      $ 8,227,188  
     

 

 

  
      $ 8,227,188  
     

 

 

  

Pharmaceuticals — 8.3%

      

Eli Lilly & Co.

      105,235      $ 7,740,034  

Johnson & Johnson

      156,918        18,078,523  

Pfizer, Inc.

      369,061        11,987,101  

Zoetis, Inc.

      119,919        6,419,264  
     

 

 

  
      $ 44,224,922  
     

 

 

  

Road & Rail — 1.5%

      

Union Pacific Corp.

      75,247      $ 7,801,609  
     

 

 

  
      $ 7,801,609  
     

 

 

  

Semiconductors & Semiconductor Equipment — 3.4%

      

Intel Corp.

      345,595      $ 12,534,730  

NXP Semiconductors NV(2)

      54,971        5,387,708  
     

 

 

  
      $ 17,922,438  
     

 

 

  

Software — 3.9%

      

Microsoft Corp.

      331,763      $ 20,615,753  
     

 

 

  
      $ 20,615,753  
     

 

 

  

Specialty Retail — 2.7%

      

Home Depot, Inc. (The)

      108,206      $ 14,508,261  
     

 

 

  
      $ 14,508,261  
     

 

 

  

Technology Hardware, Storage & Peripherals — 4.3%

      

Apple, Inc.

      198,273      $ 22,963,979  
     

 

 

  
      $ 22,963,979  
     

 

 

  

Textiles, Apparel & Luxury Goods — 1.4%

      

NIKE, Inc., Class B

      149,575      $ 7,602,897  
     

 

 

  
      $ 7,602,897  
     

 

 

  

Tobacco — 3.1%

      

Altria Group, Inc.

      244,895      $ 16,559,800  
     

 

 

  
      $ 16,559,800  
     

 

 

  

Total Common Stocks
(identified cost $433,049,206)

       $ 528,368,223  
     

 

 

  

Short-Term Investments — 1.0%

      
Description    Units      Value  

Eaton Vance Cash Reserves Fund, LLC, 0.81%(3)

      5,420,869      $ 5,421,411  
     

 

 

  

Total Short-Term Investments
(identified cost $5,421,421)

       $ 5,421,411  
     

 

 

  

Total Investments — 100.2%
(identified cost $438,470,627)

       $ 533,789,634  
     

 

 

  

Covered Call Options Written — (0.3)%

      

Exchange-Traded Options — (0.3)%

      

 

3

 

 

                                                                                                   
Security   

Number of

Contracts

     

Strike

Price

     

Expiration

Date

      Value  

Alphabet, Inc., Class C

      150      $ 830.00        1/27/17      $ (81,000 ) 

Altria Group, Inc

      1,235        69.00        1/27/17        (98,183 ) 

Amazon.com, Inc.

      120        797.50        1/13/17        (16,860 ) 

Apple, Inc.

      1,000        120.00        1/20/17        (44,000 ) 

C.H. Robinson Worldwide, Inc.

      650        80.00        1/20/17        (3,250 ) 

Caterpillar, Inc.

      405        97.50        1/20/17        (17,212 ) 

Celgene Corp.

      540        125.00        1/20/17        (27,540 ) 

Charles Schwab Corp. (The)

      1,575        41.50        2/3/17        (81,898 ) 

Chevron Corp.

      500        122.00        1/27/17        (35,500 ) 

Chubb, Ltd.

      380        140.00        2/17/17        (18,050 ) 

Cisco Systems, Inc.

      1,575        31.00        2/3/17        (33,075 ) 

Constellation Brands, Inc., Class A

      200        165.00        1/20/17        (16,500 ) 

Danaher Corp.

      750        82.50        2/17/17        (35,625 ) 

Eli Lilly & Co.

      530        77.00        1/20/17        (17,490 ) 

EOG Resources, Inc.

      560        113.00        1/6/17        (1,120 ) 

Equity Residential

      385        65.00        1/20/17        (34,650 ) 

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

      540        80.00        1/20/17        (18,900 ) 

Federal Realty Investment Trust

      300        145.00        1/20/17        (30,750 ) 

General Electric Co.

      2,770        32.00        1/13/17        (54,015 ) 

General Mills, Inc.

      620        67.50        1/20/17        (3,100 ) 

GoDaddy, Inc., Class A

      805        39.00        1/20/17        (10,062 ) 

Goldman Sachs Group, Inc. (The)

      240        260.00        1/20/17        (25,560 ) 

Home Depot, Inc. (The)

      545        136.00        1/13/17        (63,765 ) 

Intel Corp.

      1,735        38.00        1/20/17        (19,953 ) 

International Paper Co.

      780        53.50        1/13/17        (47,190 ) 

Johnson & Johnson

      780        119.00        2/3/17        (63,180 ) 

JPMorgan Chase & Co.

      1,095        88.50        1/13/17        (61,868 ) 

LKQ Corp.

      1,210        35.00        1/20/17        (6,050 ) 

Microsoft Corp.

      1,675        66.50        1/27/17        (62,813 ) 

Newell Brands, Inc.

      345        48.00        1/20/17        (6,037 ) 

NextEra Energy, Inc.

      350        125.00        2/17/17        (39,375 ) 

NIKE, Inc., Class B

      755        53.50        1/13/17        (7,172 ) 

Occidental Petroleum Corp.

      660        75.50        1/20/17        (12,870 ) 

PepsiCo, Inc.

      325        109.00        1/27/17        (7,312 ) 

Pfizer, Inc.

      1,860        34.00        1/20/17        (15,810 ) 

PNC Financial Services Group, Inc. (The)

      435        125.00        2/17/17        (39,803 ) 

PPG Industries, Inc.

      345        100.00        1/20/17        (18,112 ) 

Schlumberger, Ltd.

      450        89.00        1/6/17        (900 ) 

Sempra Energy

      435        105.00        1/20/17        (18,487 ) 

Union Pacific Corp.

      375        110.00        1/27/17        (30,563 ) 

Verizon Communications, Inc.

      955        54.50        1/27/17        (43,453 ) 

Visa, Inc., Class A

      955        81.50        2/3/17        (83,563 ) 

Wells Fargo & Co.

      265        59.00        1/13/17        (3,047 ) 

Whirlpool Corp.

      165        180.00        1/13/17        (66,000 ) 

Zayo Group Holdings, Inc.

      605        35.00        1/20/17        (15,125 ) 

Zimmer Biomet Holdings, Inc.

      345        105.00        1/20/17        (43,988 ) 

Zoetis, Inc.

      451        55.00        1/20/17        (19,167 ) 
           

 

 

  

Total Covered Call Options Written
(premiums received $2,593,793)

             $ (1,499,943 ) 
           

 

 

  

Other Assets, Less Liabilities — 0.1%

             $ 311,152  
           

 

 

  

Net Assets — 100.0%

             $ 532,600,843  
           

 

 

  

 

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, 2016 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, 2016. Net income from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended December 31, 2016 was $10,510.

Written options activity for the fiscal year to date ended December 31, 2016 was as follows:

 

     Number of
Contracts		      Premiums
Received		  
Outstanding, beginning of period      30,711      $ 2,334,250  
Options written      99,085        7,648,973  
Options terminated in closing purchase transactions      (54,851 )       (4,229,675 ) 
Options expired      (41,219 )           (3,159,755 ) 
  

 

 

     

 

 

  

Outstanding, end of period

      33,726      $ 2,593,793  
  

 

 

     

 

 

  

At December 31, 2016, 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, 2016, 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 $1,499,943.

The cost and unrealized appreciation (depreciation) of investments of the Fund at December 31, 2016, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

    $ 439,772,415  
  

 

 

  

Gross unrealized appreciation

    $ 98,631,414  

Gross unrealized depreciation

      (4,614,195 ) 
  

 

 

  

Net unrealized appreciation

    $     94,017,219  
  

 

 

  

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, 2016, 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

    $ 528,368,223 *     $ —      $ —      $ 528,368,223  

Short-Term Investments

      —        5,421,411        —        5,421,411  

Total Investments

    $     528,368,223      $     5,421,411      $ —      $     533,789,634  
Liability Description                                

Covered Call Options Written

    $ (1,499,943 )     $ —      $ —      $ (1,499,943 ) 

Total

    $ (1,499,943 )     $ —      $     —      $ (1,499,943 ) 

 

* The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments.

The Fund held no investments or other financial instruments as of September 30, 2016 whose fair value was determined using Level 3 inputs. At December 31, 2016, there were no investments transferred between Level 1 and Level 2 during the fiscal year to date then ended.

Affiliated Fund. The Fund may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management. While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service. Prior to Cash Reserves Fund’s issuance of units in October 2016, the value of the Fund’s investment in Cash Reserves Fund reflected the Fund’s proportionate interest in its net assets and the Fund recorded its pro-rata share of Cash Reserves Fund’s income, expenses and realized gain or loss.

For additional 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/ Edward J. Perkin
  Edward J. Perkin
  President
Date:   February 27, 2017

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 27, 2017

 

By:   /s/ James F. Kirchner
  James F. Kirchner
  Treasurer
Date:   February 27, 2017