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, 2013

Date of Reporting Period

 

 

 


Item 1. Schedule of Investments


Eaton Vance

Enhanced Equity Income Fund

June 30, 2013

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 99.1%(1)

 

                                                 
Security    Shares      Value  

Aerospace & Defense — 3.2%

     

Boeing Co. (The)

     100,424       $ 10,287,434   

United Technologies Corp.

     62,084         5,770,087   
     

 

 

 
      $ 16,057,521   
     

 

 

 

Automobiles — 0.7%

     

Honda Motor Co., Ltd.

     89,607       $ 3,328,849   
     

 

 

 
      $ 3,328,849   
     

 

 

 

Beverages — 3.2%

     

Beam, Inc.

     46,337       $ 2,924,328   

Coca-Cola Co. (The)

     203,434         8,159,738   

PepsiCo, Inc.

     64,319         5,260,651   
     

 

 

 
      $ 16,344,717   
     

 

 

 

Biotechnology — 5.0%

     

Celgene Corp.(2)

     91,976       $ 10,752,914   

Gilead Sciences, Inc.(2)

     288,306         14,764,150   
     

 

 

 
      $ 25,517,064   
     

 

 

 

Capital Markets — 1.5%

     

Charles Schwab Corp. (The)

     123,373       $ 2,619,209   

Goldman Sachs Group, Inc. (The)

     32,134         4,860,267   
     

 

 

 
      $ 7,479,476   
     

 

 

 

Chemicals — 3.0%

     

LyondellBasell Industries NV, Class A

     81,847       $ 5,423,182   

Monsanto Co.

     87,547         8,649,644   

PPG Industries, Inc.

     7,983         1,168,791   
     

 

 

 
      $ 15,241,617   
     

 

 

 

Commercial Banks — 4.7%

     

PNC Financial Services Group, Inc. (The)

     84,296       $ 6,146,864   

Regions Financial Corp.

     615,516         5,865,868   

Wells Fargo & Co.

     287,752         11,875,525   
     

 

 

 
      $ 23,888,257   
     

 

 

 

Communications Equipment — 0.9%

     

QUALCOMM, Inc.

     76,600       $ 4,678,728   
     

 

 

 
      $ 4,678,728   
     

 

 

 

Computers & Peripherals — 2.2%

     

Apple, Inc.

     27,844       $ 11,028,451   
     

 

 

 
      $ 11,028,451   
     

 

 

 

Consumer Finance — 1.8%

     

American Express Co.

     121,117       $ 9,054,707   
     

 

 

 
      $ 9,054,707   
     

 

 

 

Diversified Financial Services — 5.5%

     

Bank of America Corp.

     633,670       $ 8,148,996   

Citigroup, Inc.

     198,157         9,505,592   

JPMorgan Chase & Co.

     199,214         10,516,507   
     

 

 

 
      $ 28,171,095   
     

 

 

 

 

1

 

 


                                                 
Security    Shares      Value  

Diversified Telecommunication Services — 2.0%

     

AT&T, Inc.

     70,438       $ 2,493,505   

Verizon Communications, Inc.

     149,751         7,538,466   
     

 

 

 
      $ 10,031,971   
     

 

 

 

Electric Utilities — 2.5%

     

American Electric Power Co., Inc.

     28,420       $ 1,272,648   

Duke Energy Corp.

     40,651         2,743,943   

Edison International

     61,046         2,939,975   

PPL Corp.

     105,792         3,201,266   

Southern Co. (The)

     58,119         2,564,791   
     

 

 

 
      $ 12,722,623   
     

 

 

 

Electrical Equipment — 1.5%

     

Emerson Electric Co.

     142,698       $ 7,782,749   
     

 

 

 
      $ 7,782,749   
     

 

 

 

Electronic Equipment, Instruments & Components — 0.4%

     

Corning, Inc.

     142,383       $ 2,026,110   
     

 

 

 
      $ 2,026,110   
     

 

 

 

Energy Equipment & Services — 1.7%

     

Cameron International Corp.(2)

     23,787       $ 1,454,813   

Halliburton Co.

     177,957         7,424,366   
     

 

 

 
      $ 8,879,179   
     

 

 

 

Food & Staples Retailing — 1.6%

     

Costco Wholesale Corp.

     75,410       $ 8,338,084   
     

 

 

 
      $ 8,338,084   
     

 

 

 

Food Products — 1.9%

     

Hershey Co. (The)

     51,174       $ 4,568,815   

Mondelez International, Inc., Class A

     185,517         5,292,800   
     

 

 

 
      $ 9,861,615   
     

 

 

 

Health Care Equipment & Supplies — 1.8%

     

Abbott Laboratories

     102,372       $ 3,570,735   

Covidien PLC

     87,021         5,468,400   
     

 

 

 
      $ 9,039,135   
     

 

 

 

Health Care Providers & Services — 0.9%

     

Express Scripts Holding Co.(2)

     77,827       $ 4,801,148   
     

 

 

 
      $ 4,801,148   
     

 

 

 

Hotels, Restaurants & Leisure — 1.0%

     

McDonald’s Corp.

     52,500       $ 5,197,500   
     

 

 

 
      $ 5,197,500   
     

 

 

 

Household Products — 1.5%

     

Procter & Gamble Co.

     100,547       $ 7,741,113   
     

 

 

 
      $ 7,741,113   
     

 

 

 

Industrial Conglomerates — 3.5%

     

Danaher Corp.

     125,817       $ 7,964,216   

General Electric Co.

     428,588         9,938,956   
     

 

 

 
      $ 17,903,172   
     

 

 

 

Insurance — 2.3%

     

ACE, Ltd.

     61,371       $ 5,491,477   

Aflac, Inc.

     104,416         6,068,658   
     

 

 

 
      $ 11,560,135   
     

 

 

 

 

2

 

 


                                                 
Security    Shares      Value  

Internet & Catalog Retail — 2.6%

     

Amazon.com, Inc.(2)

     39,376       $ 10,934,322   

Netflix, Inc.(2)

     10,327         2,179,926   
     

 

 

 
      $ 13,114,248   
     

 

 

 

Internet Software & Services — 4.8%

     

eBay, Inc.(2)

     162,569       $ 8,408,069   

Google, Inc., Class A(2)

     17,965         15,815,847   
     

 

 

 
      $ 24,223,916   
     

 

 

 

IT Services — 4.9%

     

Accenture PLC, Class A

     108,357       $ 7,797,370   

International Business Machines Corp.

     67,277         12,857,307   

Visa, Inc., Class A

     23,522         4,298,646   
     

 

 

 
      $ 24,953,323   
     

 

 

 

Machinery — 1.0%

     

Deere & Co.

     64,524       $ 5,242,575   
     

 

 

 
      $ 5,242,575   
     

 

 

 

Media — 3.7%

     

Comcast Corp., Class A

     222,705       $ 9,326,886   

Walt Disney Co. (The)

     149,562         9,444,840   
     

 

 

 
      $ 18,771,726   
     

 

 

 

Metals & Mining — 0.2%

     

Freeport-McMoRan Copper & Gold, Inc.

     39,423       $ 1,088,469   
     

 

 

 
      $ 1,088,469   
     

 

 

 

Multi-Utilities — 0.7%

     

Sempra Energy

     44,598       $ 3,646,332   
     

 

 

 
      $ 3,646,332   
     

 

 

 

Multiline Retail — 2.3%

     

Dollar General Corp.(2)

     153,439       $ 7,737,929   

Macy’s, Inc.

     79,293         3,806,064   
     

 

 

 
      $ 11,543,993   
     

 

 

 

Oil, Gas & Consumable Fuels — 9.1%

     

Alpha Natural Resources, Inc.(2)

     351,089       $ 1,839,706   

Anadarko Petroleum Corp.

     54,915         4,718,846   

Chevron Corp.

     59,799         7,076,614   

ConocoPhillips

     89,802         5,433,021   

EOG Resources, Inc.

     28,831         3,796,466   

Exxon Mobil Corp.

     52,111         4,708,229   

HollyFrontier Corp.

     36,871         1,577,341   

Marathon Oil Corp.

     96,028         3,320,648   

Occidental Petroleum Corp.

     82,563         7,367,097   

Phillips 66

     106,835         6,293,650   
     

 

 

 
      $ 46,131,618   
     

 

 

 

Personal Products — 1.0%

     

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

     74,862       $ 4,923,674   
     

 

 

 
      $ 4,923,674   
     

 

 

 

Pharmaceuticals — 5.1%

     

AbbVie, Inc.

     102,372       $ 4,232,058   

Johnson & Johnson

     89,921         7,720,617   

Pfizer, Inc.

     399,553         11,191,480   

Roche Holding AG PC

     10,888         2,702,370   
     

 

 

 
      $ 25,846,525   
     

 

 

 

 

3

 

 


                                                 
Security    Shares      Value  

Real Estate Investment Trusts (REITs) — 1.6%

     

AvalonBay Communities, Inc.

     26,090       $ 3,519,802   

Boston Properties, Inc.

     44,795         4,724,529   
     

 

 

 
      $ 8,244,331   
     

 

 

 

Road & Rail — 1.7%

     

Union Pacific Corp.

     56,830       $ 8,767,732   
     

 

 

 
      $ 8,767,732   
     

 

 

 

Software — 3.3%

     

Microsoft Corp.

     279,695       $ 9,657,868   

Oracle Corp.

     229,111         7,038,290   
     

 

 

 
      $ 16,696,158   
     

 

 

 

Specialty Retail — 0.8%

     

Home Depot, Inc. (The)

     52,211       $ 4,044,786   
     

 

 

 
      $ 4,044,786   
     

 

 

 

Textiles, Apparel & Luxury Goods — 1.0%

     

NIKE, Inc., Class B

     84,008       $ 5,349,629   
     

 

 

 
      $ 5,349,629   
     

 

 

 

Tobacco — 1.0%

     

Philip Morris International, Inc.

     56,433       $ 4,888,226   
     

 

 

 
      $ 4,888,226   
     

 

 

 

Total Common Stocks
(identified cost $363,496,137)

   

   $ 504,152,277   
     

 

 

 

Short-Term Investments — 1.8%

     
Description   

Interest

(000’s omitted)

     Value  

Eaton Vance Cash Reserves Fund, LLC, 0.11%(3)

   $ 9,272       $ 9,271,726   
     

 

 

 

Total Short-Term Investments
(identified cost $9,271,726)

   

   $ 9,271,726   
     

 

 

 

Total Investments — 100.9%
(identified cost $372,767,863)

   

   $ 513,424,003   
     

 

 

 

Covered Call Options Written — (0.4)%

     

 

                                                                                                   
Security    Number of
Contracts
    

Strike

Price

    

Expiration

Date

     Value  

Abbott Laboratories

     515       $ 39.00         7/20/13       $ (772

AbbVie, Inc.

     515         45.00         8/17/13         (20,600

ACE, Ltd.

     310         90.00         8/17/13         (54,250

Aflac, Inc.

     525         60.00         7/20/13         (17,325

Amazon.com, Inc.

     200         295.00         7/20/13         (18,900

American Electric Power Co., Inc.

     145         48.00         8/17/13         (1,450

American Express Co.

     610         77.50         7/20/13         (27,755

Anadarko Petroleum Corp.

     275         90.00         8/17/13         (66,413

AvalonBay Communities, Inc.

     130         145.00         7/20/13         (2,600

Bank of America Corp.

     3,170         15.00         7/20/13         (1,585

Beam, Inc.

     235         67.50         8/17/13         (12,925

Boeing Co. (The)

     505         110.00         8/17/13         (42,925

Boston Properties, Inc.

     225         115.00         7/20/13         (2,250

Cameron International Corp.

     120         65.00         8/17/13         (15,000

Celgene Corp.

     460         130.00         7/20/13         (24,610

Charles Schwab Corp. (The)

     620         21.00         7/20/13         (44,950

 

4

 

 


                                                                                                   
Security   

Number of

Contracts

    

Strike

Price

    

Expiration

Date

    

Value

 

Chevron Corp.

     300       $ 125.00         7/20/13       $ (4,350

Citigroup, Inc.

     995         55.00         7/20/13         (3,482

Coca-Cola Co. (The)

     1,020         41.00         8/17/13         (65,280

Comcast Corp., Class A

     1,115         45.00         7/20/13         (5,017

ConocoPhillips

     450         62.50         8/17/13         (24,300

Corning, Inc.

     715         16.00         7/20/13         (1,072

Costco Wholesale Corp.

     380         113.00         7/20/13         (27,170

Danaher Corp.

     630         65.00         8/17/13         (80,325

Deere & Co.

     325         85.00         8/17/13         (36,725

Dollar General Corp.

     770         57.50         7/20/13         (3,850

Duke Energy Corp.

     205         75.00         7/20/13         (512

eBay, Inc.

     815         55.00         8/17/13         (76,610

Edison International

     305         50.00         8/17/13         (16,525

Emerson Electric Co.

     715         57.50         8/17/13         (35,750

EOG Resources, Inc.

     145         140.00         8/17/13         (39,730

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

     375         70.00         7/20/13         (7,500

Express Scripts Holding Co.

     390         65.00         8/17/13         (35,880

Exxon Mobil Corp.

     265         95.00         7/20/13         (1,987

Freeport-McMoRan Copper & Gold, Inc.

     200         32.00         7/20/13         (700

General Electric Co.

     2,145         25.00         8/17/13         (22,523

Gilead Sciences, Inc.

     1,445         55.00         8/17/13         (142,333

Goldman Sachs Group, Inc. (The)

     165         165.00         7/20/13         (7,178

Google, Inc., Class A

     90         920.00         8/17/13         (132,750

Halliburton Co.

     890         44.00         8/17/13         (73,425

Hershey Co. (The)

     260         90.00         8/17/13         (51,350

HollyFrontier Corp.

     185         47.00         8/17/13         (13,875

Home Depot, Inc. (The)

     265         77.50         8/17/13         (55,518

International Business Machines Corp.

     340         215.00         7/20/13         (2,720

Johnson & Johnson

     450         87.50         7/20/13         (28,125

JPMorgan Chase & Co.

     1,000         57.50         7/20/13         (7,500

LyondellBasell Industries NV, Class A

     410         72.50         8/17/13         (37,925

Macy’s, Inc.

     400         52.50         7/20/13         (1,200

Marathon Oil Corp.

     480         36.00         7/20/13         (15,600

McDonald’s Corp.

     265         100.00         8/17/13         (45,448

Microsoft Corp.

     1,400         37.00         8/17/13         (30,800

Mondelez International, Inc., Class A

     930         30.00         8/17/13         (45,570

Monsanto Co.

     440         115.00         7/20/13         (880

NIKE, Inc., Class B

     425         70.00         7/20/13         (1,487

Occidental Petroleum Corp.

     415         95.00         8/17/13         (47,725

Oracle Corp.

     1,150         32.00         8/17/13         (44,850

PepsiCo, Inc.

     325         82.50         7/20/13         (26,000

Pfizer, Inc.

     2,000         29.00         8/17/13         (72,000

Philip Morris International, Inc.

     285         92.50         9/21/13         (23,228

Phillips 66

     535         70.00         7/20/13         (1,337

PNC Financial Services Group, Inc. (The)

     425         75.00         7/20/13         (22,100

PPG Industries, Inc.

     40         165.00         7/20/13         (300

PPL Corp.

     530         31.00         8/17/13         (18,169

Procter & Gamble Co.

     505         80.00         8/17/13         (41,410

QUALCOMM, Inc.

     385         65.00         8/17/13         (23,485

Regions Financial Corp.

     3,080         10.00         8/17/13         (67,760

Sempra Energy

     225         82.50         8/17/13         (41,063

Southern Co. (The)

     295         45.00         8/17/13         (13,423

Union Pacific Corp.

     285         165.00         7/20/13         (8,835

United Technologies Corp.

     310         95.00         8/17/13         (46,810

Verizon Communications, Inc.

     750         52.50         8/17/13         (30,375

Visa, Inc., Class A

     120         190.00         7/20/13         (9,900

Walt Disney Co. (The)

     750         70.00         7/20/13         (2,625

 

5

 

 


                                                                                                   
Security   

Number of

Contracts

    

Strike

Price

    

Expiration

Date

     Value  

Wells Fargo & Co.

     1,440       $ 42.00         7/20/13       $ (76,320
           

 

 

 

Total Covered Call Options Written
(premiums received $3,433,863)

            $ (2,154,997
           

 

 

 

Other Assets, Less Liabilities — (0.5)%

            $ (2,471,572
           

 

 

 

Net Assets — 100.0%

            $ 508,797,434   
           

 

 

 

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 June 30, 2013 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, 2013. Net income allocated from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended June 30, 2013 was $3,748.

The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2013, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

   $ 373,592,967   
  

 

 

 

Gross unrealized appreciation

   $ 142,560,359   

Gross unrealized depreciation

     (2,729,323
  

 

 

 

Net unrealized appreciation

   $     139,831,036   
  

 

 

 

A summary of open financial instruments at June 30, 2013 is as follows:

Forward Foreign Currency Exchange Contracts

Sales

 

Settlement
Date
    

Deliver

  

In Exchange For

   Counterparty    Net  Unrealized
Appreciation
 
7/31/13      Japanese Yen
311,322,000
   United States Dollar
3,194,766
   Credit Suisse International    $ 55,469   
             

 

 

 

Written call options activity for the fiscal year to date ended June 30, 2013 was as follows:

 

     Number of
Contracts
    Premiums
Received
 
Outstanding, beginning of period      56,565      $ 7,419,707   
Options written      287,927        24,490,930   
Options terminated in closing purchase transactions      (201,117     (18,267,303
Options exercised      (1,185     (150,852
Options expired      (97,680         (10,058,619
  

 

 

   

 

 

 
Outstanding, end of period      44,510      $ 3,433,863   
  

 

 

   

 

 

 

At June 30, 2013, the Fund had sufficient cash and/or securities to cover commitments under these contracts.

In the normal course of pursuing its investment objectives, the Fund is subject to the following risks:

Equity Price Risk: 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.

 

6

 

 


Foreign Exchange Risk: Because the Fund holds foreign currency denominated investments, the value of these investments and related receivables and payables may change due to future changes in foreign currency exchange rates. To hedge against this risk, the Fund enters into forward foreign currency exchange contracts.

The fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) by risk exposure at June 30, 2013 was as follows:

 

          Fair Value  

Risk

  

Derivative

   Asset
Derivative
     Liability
Derivative
 
Equity Price    Written options    $       $ (2,154,997
Foreign Exchange    Forward foreign currency exchange contracts      55,469           
     

 

 

    

 

 

 

Total

      $     55,469       $     (2,154,997
     

 

 

    

 

 

 

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.

 

7

 

 


At June 30, 2013, 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

   $ 58,021,882      $ 3,328,849      $       $ 61,350,731   

Consumer Staples

     52,097,429                       52,097,429   

Energy

     55,010,797                       55,010,797   

Financials

     88,398,001                       88,398,001   

Health Care

     62,501,502        2,702,370                65,203,872   

Industrials

     55,753,749                       55,753,749   

Information Technology

     83,606,686                       83,606,686   

Materials

     16,330,086                       16,330,086   

Telecommunication Services

     10,031,971                       10,031,971   

Utilities

     16,368,955                       16,368,955   

Total Common Stocks

   $ 498,121,058      $ 6,031,219   $       $ 504,152,277   

Short-Term Investments

   $      $ 9,271,726      $       $ 9,271,726   

Total Investments

   $     498,121,058      $     15,302,945      $     —       $     513,424,003   

Forward Foreign Currency Exchange Contracts

   $      $ 55,469      $       $ 55,469   

Total

   $ 498,121,058      $ 15,358,414      $       $ 513,479,472   
Liability Description                              

Covered Call Options Written

   $ (2,154,997   $      $       $ (2,154,997

Total

   $ (2,154,997   $      $       $ (2,154,997

 

* 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, 2012 whose fair value was determined using Level 3 inputs. At June 30, 2013, 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.

 

8

 

 


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:   August 26, 2013

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:   August 26, 2013

 

By:   /s/ James F. Kirchner
  James F. Kirchner
  Treasurer
Date:   August 26, 2013