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, 2012

Date of Reporting Period

 

 

 


Item 1. Schedule of Investments


Eaton Vance

Enhanced Equity Income Fund

December 31, 2012

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 100.9%(1)

 

                                                 
Security    Shares      Value  

Aerospace & Defense — 2.6%

     

Boeing Co. (The)

     100,424       $ 7,567,952   

United Technologies Corp.

     62,084         5,091,509   
     

 

 

 
      $ 12,659,461   
     

 

 

 

Automobiles — 0.7%

     

Bayerische Motoren Werke AG

     33,647       $ 3,274,222   
     

 

 

 
      $ 3,274,222   
     

 

 

 

Beverages — 2.1%

     

Beam, Inc.

     46,337       $ 2,830,727   

Coca-Cola Co. (The)

     203,434         7,374,483   
     

 

 

 
      $ 10,205,210   
     

 

 

 

Biotechnology — 3.7%

     

Celgene Corp.(2)

     91,976       $ 7,240,351   

Gilead Sciences, Inc.(2)

     144,153         10,588,038   
     

 

 

 
      $ 17,828,389   
     

 

 

 

Capital Markets — 0.8%

     

Goldman Sachs Group, Inc. (The)

     32,134       $ 4,099,013   
     

 

 

 
      $ 4,099,013   
     

 

 

 

Chemicals — 3.3%

     

LyondellBasell Industries NV, Class A

     81,847       $ 4,672,645   

Monsanto Co.

     110,206         10,430,998   

PPG Industries, Inc.

     7,983         1,080,499   
     

 

 

 
      $ 16,184,142   
     

 

 

 

Commercial Banks — 4.4%

     

PNC Financial Services Group, Inc.

     85,996       $ 5,014,427   

Regions Financial Corp.

     558,835         3,978,905   

Wells Fargo & Co.

     368,604         12,598,885   
     

 

 

 
      $ 21,592,217   
     

 

 

 

Communications Equipment — 0.8%

     

QUALCOMM, Inc.

     59,830       $ 3,710,657   
     

 

 

 
      $ 3,710,657   
     

 

 

 

Computers & Peripherals — 4.5%

     

Apple, Inc.

     33,812       $ 18,022,810   

EMC Corp.(2)

     148,849         3,765,880   
     

 

 

 
      $ 21,788,690   
     

 

 

 

Consumer Finance — 1.0%

     

American Express Co.

     84,975       $ 4,884,363   
     

 

 

 
      $ 4,884,363   
     

 

 

 

Diversified Financial Services — 5.3%

     

Bank of America Corp.

     774,630       $ 8,985,708   

Citigroup, Inc.

     198,157         7,839,091   

JPMorgan Chase & Co.

     199,214         8,759,440   
     

 

 

 
      $ 25,584,239   
     

 

 

 

Diversified Telecommunication Services — 2.3%

     

AT&T, Inc.

     218,784       $ 7,375,209   

CenturyLink, Inc.

     95,477         3,735,060   
     

 

 

 
      $ 11,110,269   
     

 

 

 

 

1

 

 


                                                 
Security    Shares      Value  

Electric Utilities — 2.9%

     

American Electric Power Co., Inc.

     75,093       $ 3,204,969   

Duke Energy Corp.

     40,651         2,593,534   

Edison International

     61,046         2,758,669   

PPL Corp.

     105,792         3,028,825   

Southern Co. (The)

     58,119         2,488,074   
     

 

 

 
      $ 14,074,071   
     

 

 

 

Electrical Equipment — 1.6%

     

Emerson Electric Co.

     142,798       $ 7,562,582   
     

 

 

 
      $ 7,562,582   
     

 

 

 

Energy Equipment & Services — 2.1%

     

Halliburton Co.

     177,957       $ 6,173,328   

National Oilwell Varco, Inc.

     60,533         4,137,431   
     

 

 

 
      $ 10,310,759   
     

 

 

 

Food & Staples Retailing — 2.0%

     

Costco Wholesale Corp.

     98,308       $ 9,709,881   
     

 

 

 
      $ 9,709,881   
     

 

 

 

Food Products — 2.3%

     

Hershey Co. (The)

     51,174       $ 3,695,786   

Kraft Foods Group, Inc.

     81,461         3,704,032   

Mondelez International, Inc., Class A

     146,579         3,733,367   
     

 

 

 
      $ 11,133,185   
     

 

 

 

Health Care Equipment & Supplies — 2.4%

     

Abbott Laboratories

     102,372       $ 6,705,366   

Covidien PLC

     87,021         5,024,593   
     

 

 

 
      $ 11,729,959   
     

 

 

 

Health Care Providers & Services — 0.9%

     

Express Scripts Holding Co.(2)

     77,827       $ 4,202,658   
     

 

 

 
      $ 4,202,658   
     

 

 

 

Hotels, Restaurants & Leisure — 1.5%

     

McDonald’s Corp.

     85,076       $ 7,504,554   
     

 

 

 
      $ 7,504,554   
     

 

 

 

Household Products — 3.1%

     

Colgate-Palmolive Co.

     68,757       $ 7,187,857   

Procter & Gamble Co.

     119,787         8,132,339   
     

 

 

 
      $ 15,320,196   
     

 

 

 

Industrial Conglomerates — 3.6%

     

Danaher Corp.

     157,075       $ 8,780,493   

General Electric Co.

     428,588         8,996,062   
     

 

 

 
      $ 17,776,555   
     

 

 

 

Insurance — 1.8%

     

ACE, Ltd.

     55,291       $ 4,412,222   

Aflac, Inc.

     79,368         4,216,028   
     

 

 

 
      $ 8,628,250   
     

 

 

 

Internet & Catalog Retail — 2.2%

     

Amazon.com, Inc.(2)

     43,392       $ 10,897,467   
     

 

 

 
      $ 10,897,467   
     

 

 

 

Internet Software & Services — 4.5%

     

eBay, Inc.(2)

     181,817       $ 9,276,303   

Google, Inc., Class A(2)

     17,965         12,743,832   
     

 

 

 
      $ 22,020,135   
     

 

 

 

 

2

 

 


                                                 
Security    Shares      Value  

IT Services — 6.5%

     

Accenture PLC, Class A

     144,170       $ 9,587,305   

International Business Machines Corp.

     67,277         12,886,909   

Teradata Corp.(2)

     28,214         1,746,165   

Visa, Inc., Class A

     50,265         7,619,169   
     

 

 

 
      $ 31,839,548   
     

 

 

 

Machinery — 1.1%

     

Deere & Co.

     64,524       $ 5,576,164   
     

 

 

 
      $ 5,576,164   
     

 

 

 

Media — 3.9%

     

Comcast Corp., Class A

     233,836       $ 8,740,790   

Virgin Media, Inc.

     36,322         1,334,833   

Walt Disney Co. (The)

     175,911         8,758,609   
     

 

 

 
      $ 18,834,232   
     

 

 

 

Metals & Mining — 0.3%

     

Freeport-McMoRan Copper & Gold, Inc.

     39,423       $ 1,348,267   
     

 

 

 
      $ 1,348,267   
     

 

 

 

Multi-Utilities — 0.6%

     

Sempra Energy

     44,598       $ 3,163,782   
     

 

 

 
      $ 3,163,782   
     

 

 

 

Multiline Retail — 1.8%

     

Dollar General Corp.(2)

     132,738       $ 5,852,418   

Macy’s, Inc.

     79,293         3,094,013   
     

 

 

 
      $ 8,946,431   
     

 

 

 

Oil, Gas & Consumable Fuels — 9.4%

     

Anadarko Petroleum Corp.

     76,106       $ 5,655,437   

Apache Corp.

     61,589         4,834,736   

Chevron Corp.

     23,671         2,559,782   

ConocoPhillips

     144,937         8,404,897   

Exxon Mobil Corp.

     181,249         15,687,101   

Occidental Petroleum Corp.

     62,446         4,783,988   

Phillips 66

     72,468         3,848,051   
     

 

 

 
      $ 45,773,992   
     

 

 

 

Pharmaceuticals — 4.7%

     

Allergan, Inc.

     69,485       $ 6,373,859   

Johnson & Johnson

     89,921         6,303,462   

Pfizer, Inc.

     399,553         10,020,789   
     

 

 

 
      $ 22,698,110   
     

 

 

 

Real Estate Investment Trusts (REITs) — 1.5%

     

AvalonBay Communities, Inc.

     26,090       $ 3,537,543   

Boston Properties, Inc.

     34,888         3,691,499   
     

 

 

 
      $ 7,229,042   
     

 

 

 

Road & Rail — 1.6%

     

Union Pacific Corp.

     61,209       $ 7,695,195   
     

 

 

 
      $ 7,695,195   
     

 

 

 

Semiconductors & Semiconductor Equipment — 0.3%

     

Broadcom Corp., Class A

     37,754       $ 1,253,810   
     

 

 

 
      $ 1,253,810   
     

 

 

 

Software — 3.4%

     

Microsoft Corp.

     328,590       $ 8,783,211   

Oracle Corp.

     229,111         7,633,978   
     

 

 

 
      $ 16,417,189   
     

 

 

 

 

3

 

 


                                                 
Security    Shares      Value  

Specialty Retail — 0.8%

     

Home Depot, Inc. (The)

     65,099       $ 4,026,373   
     

 

 

 
      $ 4,026,373   
     

 

 

 

Textiles, Apparel & Luxury Goods — 1.1%

     

NIKE, Inc., Class B

     101,274       $ 5,225,738   
     

 

 

 
      $ 5,225,738   
     

 

 

 

Tobacco — 1.0%

     

Philip Morris International, Inc.

     58,444       $ 4,888,256   
     

 

 

 
      $ 4,888,256   
     

 

 

 

Wireless Telecommunication Services — 0.5%

     

Rogers Communications, Inc., Class B

     55,834       $ 2,541,564   
     

 

 

 
      $ 2,541,564   
     

 

 

 

Total Common Stocks
(identified cost $392,751,533)

      $ 491,248,817   
     

 

 

 

Short-Term Investments — 0.7%

     
Description    Interest
(000’s omitted)
     Value  

Eaton Vance Cash Reserves Fund, LLC, 0.12%(3)

   $ 3,631       $ 3,630,596   
     

 

 

 

Total Short-Term Investments
(identified cost $3,630,596)

      $ 3,630,596   
     

 

 

 

Total Investments — 101.6%
(identified cost $396,382,129)

      $ 494,879,413   
     

 

 

 

Covered Call Options Written — (1.5)%

  

 

                                                                                                   
Security    Number of
Contracts
     Strike
Price
     Expiration
Date
     Value  

Accenture PLC, Class A

     865       $ 72.50         1/19/13       $ (4,325

ACE, Ltd.

     335         82.50         2/16/13         (35,175

Aflac, Inc.

     400         52.50         1/19/13         (61,400

Allergan, Inc.

     420         95.00         1/19/13         (12,600

Amazon.com, Inc.

     130         255.00         1/19/13         (59,150

Amazon.com, Inc.

     130         260.00         1/19/13         (34,970

American Electric Power Co., Inc.

     600         42.00         1/19/13         (60,000

American Express Co.

     425         57.50         1/19/13         (50,150

Anadarko Petroleum Corp.

     460         75.00         1/19/13         (78,200

Apache Corp.

     370         82.50         2/16/13         (51,615

Apple, Inc.

     205         530.00         2/16/13         (632,938

Apple, Inc.

     100         550.00         2/16/13         (218,750

AT&T, Inc.

     555         35.00         1/19/13         (3,052

AT&T, Inc.

     1,415         35.00         2/16/13         (31,837

Bank of America Corp.

     1,550         10.00         1/19/13         (254,975

Bank of America Corp.

     5,425         12.00         2/16/13         (254,975

Boeing Co. (The)

     215         75.00         1/19/13         (35,368

Boeing Co. (The)

     390         77.50         2/16/13         (50,700

Boston Properties, Inc.

     175         110.00         1/19/13         (3,500

Broadcom Corp., Class A

     230         34.00         2/16/13         (29,670

Celgene Corp.

     735         80.00         1/19/13         (88,200

CenturyLink, Inc.

     954         39.00         1/19/13         (57,240

Citigroup, Inc.

     1,190         41.00         2/16/13         (156,485

Coca-Cola Co. (The)

     2,034         37.50         1/19/13         (31,527

Colgate-Palmolive Co.

     445         110.00         1/19/13         (3,560

Comcast Corp., Class A

     800         38.00         1/19/13         (32,400

Comcast Corp., Class A

     1,305       $ 38.00         2/16/13       $ (119,408

ConocoPhillips

     1,160         57.50         1/19/13         (149,640

Costco Wholesale Corp.

     590         100.00         2/16/13         (121,835

Covidien PLC

     390         57.50         1/19/13         (40,950

 

4

 

 


                                                                                                   
Security    Number of
Contracts
     Strike
Price
     Expiration
Date
     Value  

Danaher Corp.

     1,570       $ 55.00         1/19/13       $ (239,425

Deere & Co.

     390         87.50         1/19/13         (44,265

Dollar General Corp.

     400         50.00         2/16/13         (7,000

Duke Energy Corp.

     205         65.00         1/19/13         (6,662

eBay, Inc.

     1,095         52.50         1/19/13         (122,640

eBay, Inc.

     545         55.00         2/16/13         (48,505

Edison International

     490         45.00         1/19/13         (36,750

EMC Corp.

     895         26.00         2/16/13         (60,860

Emerson Electric Co.

     860         55.00         2/16/13         (66,650

Express Scripts Holding Co.

     310         52.50         1/19/13         (65,410

Exxon Mobil Corp.

     360         90.00         1/19/13         (9,360

Exxon Mobil Corp.

     1,090         95.00         1/19/13         (2,180

Freeport-McMoRan Copper & Gold, Inc.

     315         39.00         1/19/13         (1,102

General Electric Co.

     3,430         21.00         1/19/13         (164,640

Gilead Sciences, Inc.

     1,155         77.50         1/19/13         (54,863

Goldman Sachs Group, Inc. (The)

     195         130.00         2/16/13         (86,288

Google, Inc., Class A

     100         675.00         1/19/13         (410,500

Halliburton Co.

     535         32.00         1/19/13         (157,825

Halliburton Co.

     1,070         36.00         2/16/13         (99,510

Hershey Co. (The)

     255         75.00         2/16/13         (16,320

Home Depot, Inc. (The)

     390         62.50         1/19/13         (37,635

Home Depot, Inc. (The)

     130         65.00         1/19/13         (3,250

International Business Machines Corp.

     540         195.00         1/19/13         (83,700

Johnson & Johnson

     540         72.50         1/19/13         (2,970

JPMorgan Chase & Co.

     1,595         45.00         2/16/13         (183,425

LyondellBasell Industries NV, Class A

     330         49.75         1/19/13         (247,500

LyondellBasell Industries NV, Class A

     165         57.50         2/16/13         (36,713

Macy’s, Inc.

     475         42.00         1/19/13         (9,262

McDonald’s Corp.

     510         90.00         2/16/13         (65,280

Microsoft Corp.

     1,385         29.00         1/19/13         (6,232

Microsoft Corp.

     825         28.00         2/16/13         (31,762

Monsanto Co.

     330         95.00         1/19/13         (64,020

Monsanto Co.

     665         97.50         2/16/13         (117,040

National Oilwell Varco, Inc.

     305         75.00         1/19/13         (4,117

NIKE, Inc., Class B

     610         47.50         1/19/13         (265,350

NIKE, Inc., Class B

     400         48.75         1/19/13         (128,000

Occidental Petroleum Corp.

     315         85.00         1/19/13         (2,047

Oracle Corp.

     1,055         31.00         1/19/13         (257,948

Oracle Corp.

     1,010         35.00         2/16/13         (36,360

Pfizer, Inc.

     2,400         26.00         2/16/13         (45,600

Philip Morris International, Inc.

     350         85.00         2/16/13         (58,975

Phillips 66

     215         50.00         1/19/13         (77,400

Phillips 66

     220         55.00         1/19/13         (19,250

PNC Financial Services Group, Inc.

     430         60.00         1/19/13         (26,875

PPL Corp.

     530         30.00         1/19/13         (1,325

Procter & Gamble Co.

     960         70.00         1/19/13         (18,720

QUALCOMM, Inc.

     598         65.00         1/19/13         (23,023

Regions Financial Corp.

     3,355         7.00         2/16/13         (132,523

Sempra Energy

     270         72.50         2/16/13         (20,925

Southern Co. (The)

     350         47.00         1/19/13         (350

Union Pacific Corp.

     370         125.00         1/19/13         (103,600

United Technologies Corp.

     500         77.50         1/19/13         (247,500

Visa, Inc., Class A

     305         155.00         2/16/13         (100,650

Walt Disney Co. (The)

     1,055         50.00         2/16/13         (162,998

 

5

 

 


                                                                                                   
Security    Number of
Contracts
     Strike
Price
     Expiration
Date
     Value  

Wells Fargo & Co.

     1,105       $ 33.00         1/19/13       $ (179,563

Wells Fargo & Co.

     2,215         35.00         2/16/13         (168,340
           

 

 

 

Total Covered Call Options Written
(premiums received $6,995,095)

            $ (7,435,578
           

 

 

 

Other Assets, Less Liabilities — (0.1)%

            $ (526,501
           

 

 

 

Net Assets — 100.0%

            $ 486,917,334   
           

 

 

 

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, 2012 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, 2012. Net income allocated from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended December 31, 2012 was $2,480.

The cost and unrealized appreciation (depreciation) of investments of the Fund at December 31, 2012, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

   $     397,207,233   
  

 

 

 

Gross unrealized appreciation

   $ 102,690,324   

Gross unrealized depreciation

     (5,018,144
  

 

 

 

Net unrealized appreciation

   $ 97,672,180   
  

 

 

 

Written call options activity for the fiscal year to date ended December 31, 2012 was as follows:

 

     Number of
Contracts
    Premiums
Received
 
Outstanding, beginning of period      56,565      $ 7,419,707   
Options written      106,355        11,048,289   
Options terminated in closing purchase transactions      (53,925     (6,723,823
Options exercised      (442     (67,928
Options expired      (42,487     (4,681,150
  

 

 

   

 

 

 
Outstanding, end of period      66,066      $     6,995,095   
  

 

 

   

 

 

 

At December 31, 2012, 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, 2012, 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 $7,435,578.

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

 

6

 

 


   

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, 2012, 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

   $ 55,434,795      $ 3,274,222      $       $ 58,709,017   

Consumer Staples

     51,256,728                       51,256,728   

Energy

     56,084,751                       56,084,751   

Financials

     72,017,124                       72,017,124   

Health Care

     56,459,116                       56,459,116   

Industrials

     51,269,957                       51,269,957   

Information Technology

     97,030,029                       97,030,029   

Materials

     17,532,409                       17,532,409   

Telecommunication Services

     13,651,833                       13,651,833   

Utilities

     17,237,853                       17,237,853   

Total Common Stocks

   $ 487,974,595      $ 3,274,222   $       $ 491,248,817   

Short-Term Investments

   $      $ 3,630,596      $       $ 3,630,596   

Total Investments

   $     487,974,595      $     6,904,818      $       $     494,879,413   
Liability Description                              

Covered Call Options Written

   $ (7,435,578   $      $       $ (7,435,578

Total

   $     (7,435,578   $      $       $ (7,435,578

 

* 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 December 31, 2012, 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.

 

7

 

 


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 22, 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:   February 22, 2013
By:   /s/ Barbara E. Campbell
  Barbara E. Campbell
  Treasurer
Date:   February 22, 2013