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, 2018

Date of Reporting Period

 

 

 

Item 1. Schedule of Investments

Eaton Vance

Enhanced Equity Income Fund

December 31, 2018

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 99.2%(1)

 

                                                 
Security    Shares      Value  

Aerospace & Defense — 1.4%

      

Raytheon Co.

      48,553      $ 7,445,603  
     

 

 

  
      $ 7,445,603  
     

 

 

  

Air Freight & Logistics — 1.6%

      

FedEx Corp.

      51,253      $ 8,268,646  
     

 

 

  
      $ 8,268,646  
     

 

 

  

Auto Components — 1.7%

      

Aptiv PLC

      148,035      $ 9,114,515  
     

 

 

  
      $ 9,114,515  
     

 

 

  

Banks — 6.5%

      

Bank of America Corp.

      619,656      $ 15,268,324  

JPMorgan Chase & Co.

      195,273        19,062,550  
     

 

 

  
      $ 34,330,874  
     

 

 

  

Beverages — 3.5%

      

Constellation Brands, Inc., Class A

      33,693      $ 5,418,508  

PepsiCo, Inc.

      116,639        12,886,277  
     

 

 

  
      $ 18,304,785  
     

 

 

  

Biotechnology — 3.1%

      

Gilead Sciences, Inc.

      129,176      $ 8,079,959  

Vertex Pharmaceuticals, Inc.(2)

      49,503        8,203,142  
     

 

 

  
      $ 16,283,101  
     

 

 

  

Capital Markets — 1.7%

      

Charles Schwab Corp. (The)

      216,260      $ 8,981,278  
     

 

 

  
      $ 8,981,278  
     

 

 

  

Chemicals — 1.0%

      

DowDuPont, Inc.

      103,608      $ 5,540,956  
     

 

 

  
      $ 5,540,956  
     

 

 

  

Consumer Finance — 1.9%

      

American Express Co.

      103,433      $ 9,859,234  
     

 

 

  
      $ 9,859,234  
     

 

 

  

Containers & Packaging — 1.6%

      

Ball Corp.

      181,974      $ 8,367,164  
     

 

 

  
      $ 8,367,164  
     

 

 

  

Diversified Telecommunication Services — 3.5%

      

Verizon Communications, Inc.

      333,622      $ 18,756,229  
     

 

 

  
      $ 18,756,229  
     

 

 

  

Electric Utilities — 1.8%

      

NextEra Energy, Inc.

      53,936      $ 9,375,155  
     

 

 

  
      $ 9,375,155  
     

 

 

  

 

1

 

 

                                                 
Security    Shares      Value  

Electronic Equipment, Instruments & Components — 2.2%

      

Corning, Inc.

      378,717      $ 11,441,041  
     

 

 

  
      $ 11,441,041  
     

 

 

  

Entertainment — 4.5%

      

Live Nation Entertainment, Inc.(2)

      212,266      $ 10,454,100  

Walt Disney Co. (The)

      119,795        13,135,522  
     

 

 

  
      $ 23,589,622  
     

 

 

  

Equity Real Estate Investment Trusts (REITs) — 2.5%

      

American Tower Corp.

      52,308      $ 8,274,603  

AvalonBay Communities, Inc.

      29,726        5,173,810  
     

 

 

  
      $ 13,448,413  
     

 

 

  

Food Products — 3.5%

      

Mondelez International, Inc., Class A

      249,110      $ 9,971,873  

Nestle SA

      102,258        8,299,540  
     

 

 

  
      $ 18,271,413  
     

 

 

  

Health Care Equipment & Supplies — 5.1%

      

Abbott Laboratories

      170,842      $ 12,357,002  

Danaher Corp.

      141,099        14,550,129  
     

 

 

  
      $ 26,907,131  
     

 

 

  

Health Care Providers & Services — 1.8%

      

Anthem, Inc.

      36,796      $ 9,663,733  
     

 

 

  
      $ 9,663,733  
     

 

 

  

Insurance — 2.7%

      

American Financial Group, Inc.

      29,869      $ 2,704,040  

American International Group, Inc.

      140,290        5,528,829  

Progressive Corp. (The)

      103,363        6,235,890  
     

 

 

  
      $ 14,468,759  
     

 

 

  

Interactive Media & Services — 1.9%

      

Alphabet, Inc., Class C(2)

      9,720      $ 10,066,129  
     

 

 

  
      $ 10,066,129  
     

 

 

  

Internet & Direct Marketing Retail — 3.7%

      

Amazon.com, Inc.(2)

      12,923      $ 19,409,958  
     

 

 

  
      $ 19,409,958  
     

 

 

  

IT Services — 5.7%

      

Akamai Technologies, Inc.(2)

      109,256      $ 6,673,356  

GoDaddy, Inc., Class A(2)

      120,346        7,897,105  

Visa, Inc., Class A

      119,361        15,748,490  
     

 

 

  
      $ 30,318,951  
     

 

 

  

Machinery — 4.0%

      

Caterpillar, Inc.

      88,122      $ 11,197,663  

Fortive Corp.

      147,594        9,986,210  
     

 

 

  
      $ 21,183,873  
     

 

 

  

Multi-Utilities — 1.4%

      

Sempra Energy

      66,431      $ 7,187,170  
     

 

 

  
      $ 7,187,170  
     

 

 

  

Multiline Retail — 1.4%

      

Dollar Tree, Inc.(2)

      84,844      $ 7,663,110  
     

 

 

  
      $ 7,663,110  
     

 

 

  

 

2

 

 

                                                 
Security    Shares      Value  

Oil, Gas & Consumable Fuels — 5.9%

      

ConocoPhillips

      120,749      $ 7,528,700  

EOG Resources, Inc.

      67,375        5,875,774  

Exxon Mobil Corp.

      177,410        12,097,588  

Phillips 66

      66,922        5,765,330  
     

 

 

  
      $ 31,267,392  
     

 

 

  

Pharmaceuticals — 5.4%

      

Johnson & Johnson

      146,153      $ 18,861,045  

Zoetis, Inc.

      112,102        9,589,205  
     

 

 

  
      $ 28,450,250  
     

 

 

  

Road & Rail — 1.5%

      

CSX Corp.

      124,662      $ 7,745,250  
     

 

 

  
      $ 7,745,250  
     

 

 

  

Semiconductors & Semiconductor Equipment — 2.2%

      

QUALCOMM, Inc.

      200,924      $ 11,434,585  
     

 

 

  
      $ 11,434,585  
     

 

 

  

Software — 6.5%

      

Intuit, Inc.

      40,580      $ 7,988,173  

Microsoft Corp.

      257,858        26,190,637  
     

 

 

  
      $ 34,178,810  
     

 

 

  

Specialty Retail — 2.8%

      

Home Depot, Inc. (The)

      85,804      $ 14,742,843  
     

 

 

  
      $ 14,742,843  
     

 

 

  

Technology Hardware, Storage & Peripherals — 3.7%

      

Apple, Inc.

      123,439      $ 19,471,268  
     

 

 

  
      $ 19,471,268  
     

 

 

  

Textiles, Apparel & Luxury Goods — 1.5%

      

NIKE, Inc., Class B

      109,677      $ 8,131,453  
     

 

 

  
      $ 8,131,453  
     

 

 

  

Total Common Stocks
(identified cost $419,328,444)

       $ 523,668,694  
     

 

 

  

Short-Term Investments — 1.3%

      
Description    Units      Value  

Eaton Vance Cash Reserves Fund, LLC, 2.46%(3)

      7,006,233      $ 7,005,533  
     

 

 

  

Total Short-Term Investments
(identified cost $7,005,023)

       $ 7,005,533  
     

 

 

  

Total Investments — 100.5%
(identified cost $426,333,467)

       $ 530,674,227  
     

 

 

  

Total Written Covered Call Options — (0.5)%
(premiums received $3,793,549)

       $ (2,382,367 ) 
     

 

 

  

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

       $ (46,922 ) 
     

 

 

  

Net Assets — 100.0%

       $ 528,244,938  
     

 

 

  

 

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 December 31, 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 December 31, 2018. Net income from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended December 31, 2018 was $40,640.

 

(4)

Amount is less than (0.05)%.

 

                                                                                                                            

Written Covered Call Options — (0.5)%

 

            

Exchange-Traded Options — (0.5)%

 

            
Description    Number of
Contracts		      Notional
Amount		      Exercise
Price		      Expiration
Date		      Value  

Abbott Laboratories

      850      $ 6,148,050      $ 73        2/15/19      $ (226,100 ) 

Alphabet, Inc., Class C

      45        4,660,245        1,125        1/18/19        (15,975 ) 

Amazon.com, Inc.

      60        9,011,820        1,630        2/1/19        (228,150 ) 

American Express Co.

      515        4,908,980        112        1/4/19        (10,557 ) 

American International Group, Inc.

      700        2,758,700        43        2/15/19        (44,800 ) 

American Tower Corp.

      260        4,112,940        165        1/18/19        (22,750 ) 

Apple, Inc.

      570        8,991,180        183        1/4/19        (285 ) 

Aptiv PLC

      740        4,556,180        73        1/18/19        (9,250 ) 

AvalonBay Communities, Inc.

      145        2,523,725        195        1/18/19        (1,450 ) 

Ball Corp.

      905        4,161,190        50        2/15/19        (49,775 ) 

Bank of America Corp.

      3,095        7,626,080        26        1/25/19        (102,135 ) 

Caterpillar, Inc.

      440        5,591,080        136        1/4/19        (4,840 ) 

Charles Schwab Corp. (The)

      1,080        4,485,240        43        2/15/19        (143,100 ) 

ConocoPhillips

      600        3,741,000        70        1/25/19        (9,900 ) 

Corning, Inc.

      1,900        5,739,900        35        1/18/19        (6,650 ) 

CSX Corp.

      620        3,852,060        74        1/4/19        (9,920 ) 

Danaher Corp.

      705        7,269,960        105        2/15/19        (199,163 ) 

Dollar Tree, Inc.

      285        2,574,120        90        1/4/19        (37,050 ) 

DowDuPont, Inc.

      515        2,754,220        58        1/18/19        (16,995 ) 

EOG Resources, Inc.

      335        2,921,535        115        1/18/19        (1,340 ) 

Exxon Mobil Corp.

      885        6,034,815        80        1/18/19        (442 ) 

FedEx Corp.

      255        4,113,915        175        2/15/19        (61,073 ) 

Gilead Sciences, Inc.

      645        4,034,475        74        1/4/19        (1,612 ) 

GoDaddy, Inc., Class A

      600        3,937,200        68        2/15/19        (177,000 ) 

Home Depot, Inc. (The)

      425        7,302,350        175        1/25/19        (157,250 ) 

Intuit, Inc.

      165        3,248,025        220        1/18/19        (4,537 ) 

Johnson & Johnson

      730        9,420,650        140        2/15/19        (68,255 ) 

JPMorgan Chase & Co.

      975        9,517,950        105        1/18/19        (35,100 ) 

Microsoft Corp.

      1,285        13,051,745        110        2/15/19        (258,928 ) 

NextEra Energy, Inc.

      265        4,606,230        190        3/15/19        (27,825 ) 

NIKE, Inc., Class B

      545        4,040,630        80        1/18/19        (18,257 ) 

PepsiCo, Inc.

      580        6,407,840        120        1/18/19        (6,670 ) 

Phillips 66

      330        2,842,950        95        1/18/19        (5,775 ) 

Progressive Corp. (The)

      400        2,413,200        65        1/18/19        (8,000 ) 

QUALCOMM, Inc.

      1,000        5,691,000        60        1/18/19        (63,000 ) 

 

4

 

 

                                                                                                                            
Description    Number of
Contracts		      Notional
Amount		      Exercise
Price		      Expiration
Date		      Value  

Raytheon Co.

      240      $ 3,680,400      $ 180        1/18/19      $ (1,080 ) 

Sempra Energy

      330        3,570,270        115        2/15/19        (38,775 ) 

Verizon Communications, Inc.

      1,665        9,360,630        61        1/4/19        (4,995 ) 

Vertex Pharmaceuticals, Inc.

      245        4,059,895        175        1/25/19        (91,875 ) 

Visa, Inc., Class A

      595        7,850,430        144        1/25/19        (33,618 ) 

Walt Disney Co. (The)

      595        6,524,175        113        2/1/19        (105,315 ) 

Zoetis, Inc.

      560        4,790,240        90        2/8/19        (72,800 ) 
              

 

 

  

Total

                $ (2,382,367 ) 
              

 

 

  

At December 31, 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 December 31, 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 $2,382,367.

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, 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

            

Communication Services

    $ 52,411,980      $ —      $ —      $ 52,411,980  

Consumer Discretionary

      59,061,879        —        —        59,061,879  

Consumer Staples

      28,276,658        8,299,540        —        36,576,198  

Energy

      31,267,392        —        —        31,267,392  

Financials

      67,640,145        —        —        67,640,145  

Health Care

      81,304,215        —        —        81,304,215  

Industrials

      44,643,372        —        —        44,643,372  

Information Technology

      106,844,655        —        —        106,844,655  

Materials

      13,908,120        —        —        13,908,120  

Real Estate

      13,448,413        —        —        13,448,413  

Utilities

      16,562,325        —        —        16,562,325  

Total Common Stocks

    $ 515,369,154      $ 8,299,540 *     $ —      $ 523,668,694  

Short-Term Investments

    $ —      $ 7,005,533      $ —      $ 7,005,533  

Total Investments

    $     515,369,154      $     15,305,073      $     —      $     530,674,227  
Liability Description                                

Written Covered Call Options

    $ (2,382,367 )     $ —      $ —      $ (2,382,367 ) 

Total

    $ (2,382,367 )     $ —      $ —      $ (2,382,367 ) 

 

*

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.

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 25, 2019

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 25, 2019
By:   /s/ James F. Kirchner
  James F. Kirchner
  Treasurer
Date:   February 25, 2019