Regulatory Filings • May 26, 2011
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Download Source FileN-CSRS 1 b86639a1nvcsrs.htm EATON VANCE ENHANCED EQUITY INCOME FUND Eaton Vance Enhanced Equity Income Fund PAGEBREAK
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21614
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
(Registrants Telephone Number)
September 30
Date of Fiscal Year End
March 31, 2011
Date of Reporting Period
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Item 1. Reports to Stockholders
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Eaton Vance Enhanced Equity Income Fund Semiannual Report March 31, 2011
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Managed Distribution Plan. On March 10, 2009, the Fund received authorization from the Securities and Exchange Commission to distribute long-term capital gains to shareholders more frequently than once per year. In this connection, the Board of Trustees formally approved the implementation of a Managed Distribution Plan (MDP) to make monthly cash distributions to common shareholders, stated in terms of a fixed amount per common share.
The Fund intends to pay monthly cash distributions equal to $0.0919 per share. You should not drawany conclusions about the Funds investment performance from the amount of these distributions or from the terms of the MDP. The MDP will be subject to regular periodic review by the Funds Board of Trustees.
With each distribution, the Fund will issue a notice to shareholders and an accompanying press release which will provide detailed information required by the Funds exemptive order. The Funds Board of Trustees may amend or terminate the MDP at any time without prior notice to Fund shareholders. However, at this time there are no reasonably foreseeable circumstances that might cause the termination of the MDP.
Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.
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Semiannual Report March 31, 2011
Eaton Vance Enhanced Equity Income Fund
Table of Contents
| Performance | 2 |
|---|---|
| Fund Profile | 3 |
| Endnotes and Additional Disclosures | 4 |
| Financial Statements | 5 |
| Officers and Trustees | 17 |
| Important Notices | 18 |
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Eaton Vance Enhanced Equity Income Fund March 31, 2011
Performance 1
Portfolio Managers Walter A. Row, CFA; Michael A. Allison, CFA
| New York Stock Exchange (NYSE) Symbol | EOI |
|---|---|
| Inception Date (10/29/04) | |
| % Average Annual Total Returns at net asset value (NAV) | |
| Six Months | 11.01 |
| One Year | 7.52 |
| Five Years | 2.53 |
| Since Inception | 4.61 |
| % Average Annual Total Returns at market price, NYSE | |
| Six Months | -0.42 |
| One Year | -2.86 |
| Five Years | 1.16 |
| Since Inception | 3.00 |
| % Premium/(Discount) to NAV (3/31/11) | -9.46 |
| Distributions | |
| Total Distributions per share (9/30/10 3/31/11) | $ 0.600 |
| Distribution Rate at NAV 2 | 8.09 % |
| Distribution Rate at market price 2 | 8.94 % |
| Comparative Performance (9/30/10 3/31/11) 3 — S&P 500 Index | 17.31 | * |
|---|---|---|
| CBOE S&P 500 BuyWrite Index | 7.28 | * |
| Lipper Options Arbitrage/Options Strategies Funds Average at NAV | 10.58 | * |
See Endnotes and Additional Disclosures on page 4.
Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value or market price (as applicable) with all distributions reinvested. Fund performance at market price will differ from its results at NAV due to factors such as changing perceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distributions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.
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Eaton Vance Enhanced Equity Income Fund March 31, 2011
Fund Profile
Sector Weightings 4 (% of total investments)
Top 10 Holdings 4 (% of total investments)
| Apple, Inc. | 3.9 |
|---|---|
| Exxon Mobil Corp. | 3.6 |
| JPMorgan Chase & Co. | 2.6 |
| General Electric Co. | 2.5 |
| Oracle Corp. | 2.4 |
| Google, Inc., Class A | 2.4 |
| Hess Corp. | 2.3 |
| Danaher Corp. | 2.3 |
| Wells Fargo & Co. | 2.1 |
| Fluor Corp. | 2.1 |
| Total % of total investments | 26.2 |
See Endnotes and Additional Disclosures on page 4.
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Eaton Vance Enhanced Equity Income Fund March 31, 2011
Endnotes and Additional Disclosures
| 1. | Six-month returns are cumulative.
All other returns are presented on an average
annual basis. |
| --- | --- |
| 2. | Distribution Rate is the last regular
distribution per share in the period (annualized)
divided by the Fund NAV or market price at the
end of the period. The Funds distributions may
be comprised of ordinary income, net realized
capital gains and return of capital. |
| 3. | It is not possible to invest directly in
an Index or a Lipper Classification. Total
returns shown for an Index do not reflect
commissions or expenses that would have been
incurred if an investor individually purchased or
sold the securities represented in an Index. The
Standard & Poors (S&P) 500 Index is an unmanaged
index of large-cap stocks commonly used as a
measure of U.S. stock market performance. The
CBOE S&P 500 BuyWrite Index measures the
performance of a hypothetical buy-write strategy
on the S&P 500 Index. The Lipper total return is
the average total return, at NAV, of the funds
that are in the Funds Lipper Classification. |
| 4. | Sector Weightings and Top 10 Holdings
are shown as a percentage of the Funds total
investments as of 3/31/11. Weightings do not
reflect the Funds written option positions as of
3/31/11. |
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Portfolio of Investments (Unaudited)
| Common Stocks
100.1% (1) — Security | Shares | Value |
| --- | --- | --- |
| Aerospace &
Defense 1.0% | | |
| United Technologies Corp. | 66,029 | $ 5,589,355 |
| | | $ 5,589,355 |
| Air Freight &
Logistics 0.5% | | |
| Expeditors International of Washington, Inc. | 57,355 | $ 2,875,780 |
| | | $ 2,875,780 |
| Automobiles 1.3% | | |
| Ford Motor
Co. (2) | 458,707 | $ 6,839,321 |
| | | $ 6,839,321 |
| Beverages 3.6% | | |
| Coca-Cola Co. (The) | 172,146 | $ 11,421,887 |
| PepsiCo, Inc. | 130,241 | 8,388,823 |
| | | $ 19,810,710 |
| Biotechnology 0.8% | | |
| Celgene
Corp. (2) | 73,778 | $ 4,244,448 |
| | | $ 4,244,448 |
| Capital
Markets 2.3% | | |
| Goldman Sachs Group, Inc. (The) | 40,244 | $ 6,377,467 |
| State Street Corp. | 138,535 | 6,225,763 |
| | | $ 12,603,230 |
| Chemicals 1.8% | | |
| Monsanto Co. | 131,501 | $ 9,502,262 |
| | | $ 9,502,262 |
| Commercial
Banks 3.6% | | |
| KeyCorp | 504,487 | $ 4,479,844 |
| PNC Financial Services Group, Inc. | 56,634 | 3,567,376 |
| Wells Fargo & Co. | 368,604 | 11,684,747 |
| | | $ 19,731,967 |
| Communications
Equipment 2.2% | | |
| JDS Uniphase
Corp. (2) | 220,660 | $ 4,598,555 |
| QUALCOMM, Inc. | 138,122 | 7,573,229 |
| | | $ 12,171,784 |
| Computers &
Peripherals 4.0% | | |
| Apple,
Inc. (2) | 62,113 | $ 21,643,275 |
| | | $ 21,643,275 |
| Construction &
Engineering 2.1% | | |
| Fluor Corp. | 157,979 | $ 11,636,733 |
| | | $ 11,636,733 |
| Consumer
Finance 0.7% | | |
| American Express Co. | 84,975 | $ 3,840,870 |
| | | $ 3,840,870 |
| Diversified Financial
Services 4.1% | | |
| Citigroup,
Inc. (2) | 1,760,313 | $ 7,780,583 |
| JPMorgan Chase & Co. | 317,029 | 14,615,037 |
| | | $ 22,395,620 |
| Diversified Telecommunication
Services 2.2% | | |
| AT&T, Inc. | 145,089 | $ 4,439,724 |
| CenturyLink, Inc. | 103,720 | 4,309,566 |
| Verizon Communications, Inc. | 82,797 | 3,190,996 |
| | | $ 11,940,286 |
| Electric
Utilities 0.5% | | |
| American Electric Power Co., Inc. | 75,093 | $ 2,638,768 |
| | | $ 2,638,768 |
| Electrical
Equipment 2.1% | | |
| Emerson Electric Co. | 198,791 | $ 11,615,358 |
| | | $ 11,615,358 |
| Electronic Equipment, Instruments
& Components 1.4% | | |
| Corning, Inc. | 370,490 | $ 7,643,209 |
| | | $ 7,643,209 |
| Energy Equipment &
Services 2.9% | | |
| Halliburton Co. | 131,306 | $ 6,544,291 |
| Schlumberger, Ltd. | 98,319 | 9,169,230 |
| | | $ 15,713,521 |
| Food & Staples
Retailing 1.5% | | |
| Wal-Mart Stores, Inc. | 155,207 | $ 8,078,524 |
| | | $ 8,078,524 |
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Portfolio of Investments (Unaudited) continued
| Security | Value | |
|---|---|---|
| Health Care Equipment & | ||
| Supplies 2.9% | ||
| Covidien PLC | 68,492 | $ 3,557,475 |
| St. Jude Medical, Inc. | 151,312 | 7,756,253 |
| Varian Medical Systems, | ||
| Inc. (2) | 64,221 | 4,343,908 |
| $ 15,657,636 | ||
| Health Care Providers & | ||
| Services 5.0% | ||
| AmerisourceBergen Corp. | 190,098 | $ 7,520,277 |
| DaVita, | ||
| Inc. (2) | 33,678 | 2,879,805 |
| Fresenius Medical Care AG & Co. KGaA ADR | 74,090 | 5,002,557 |
| HCA Holdings, | ||
| Inc. (2) | 212,216 | 7,187,756 |
| UnitedHealth Group, Inc. | 107,914 | 4,877,713 |
| $ 27,468,108 | ||
| Hotels, Restaurants & | ||
| Leisure 1.6% | ||
| McDonalds Corp. | 113,550 | $ 8,640,020 |
| $ 8,640,020 | ||
| Household | ||
| Products 1.5% | ||
| Procter & Gamble Co. | 132,541 | $ 8,164,526 |
| $ 8,164,526 | ||
| Industrial | ||
| Conglomerates 2.5% | ||
| General Electric Co. | 679,146 | $ 13,616,877 |
| $ 13,616,877 | ||
| Insurance 3.2% | ||
| Aflac, Inc. | 58,053 | $ 3,064,037 |
| Lincoln National Corp. | 109,404 | 3,286,496 |
| MetLife, Inc. | 112,652 | 5,038,924 |
| Prudential Financial, Inc. | 99,620 | 6,134,600 |
| $ 17,524,057 | ||
| Internet & Catalog | ||
| Retail 1.5% | ||
| Amazon.com, | ||
| Inc. (2) | 45,233 | $ 8,147,820 |
| $ 8,147,820 | ||
| Internet Software & | ||
| Services 2.4% | ||
| Google, Inc., | ||
| Class A (2) | 22,220 | $ 13,025,586 |
| $ 13,025,586 | ||
| IT Services 3.8% | ||
| Accenture PLC, Class A | 176,988 | $ 9,729,030 |
| International Business Machines Corp. | 67,277 | 10,970,861 |
| $ 20,699,891 | ||
| Life Sciences Tools & | ||
| Services 1.0% | ||
| Thermo Fisher Scientific, | ||
| Inc. (2) | 98,593 | $ 5,476,841 |
| $ 5,476,841 | ||
| Machinery 2.3% | ||
| Danaher Corp. | 241,472 | $ 12,532,397 |
| $ 12,532,397 | ||
| Media 1.4% | ||
| Comcast Corp., Class A | 314,293 | $ 7,769,323 |
| $ 7,769,323 | ||
| Metals & | ||
| Mining 1.6% | ||
| Freeport-McMoRan Copper & Gold, Inc. | 55,832 | $ 3,101,467 |
| Goldcorp, Inc. | 56,726 | 2,824,955 |
| Silver Wheaton Corp. | 58,930 | 2,555,205 |
| $ 8,481,627 | ||
| Multi-Utilities 0.9% | ||
| PG&E Corp. | 114,874 | $ 5,075,133 |
| $ 5,075,133 | ||
| Multiline | ||
| Retail 1.1% | ||
| Target Corp. | 118,987 | $ 5,950,540 |
| $ 5,950,540 | ||
| Oil, Gas & Consumable | ||
| Fuels 14.0% | ||
| Apache Corp. | 70,919 | $ 9,284,716 |
| Brigham Exploration | ||
| Co. (2) | 45,887 | 1,706,079 |
| ConocoPhillips | 141,996 | 11,339,801 |
| Exxon Mobil Corp. | 235,469 | 19,810,007 |
| Hess Corp. | 151,478 | 12,907,440 |
| Occidental Petroleum Corp. | 68,127 | 7,118,590 |
| Peabody Energy Corp. | 109,738 | 7,896,746 |
| Southwestern Energy | ||
| Co. (2) | 141,592 | 6,084,208 |
| $ 76,147,587 |
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Portfolio of Investments (Unaudited) continued
| Security | Shares | Value |
|---|---|---|
| Personal | ||
| Products 1.1% | ||
| Estee Lauder Cos., Inc., Class A | 60,099 | $ 5,791,140 |
| $ 5,791,140 | ||
| Pharmaceuticals 2.0% | ||
| Johnson & Johnson | 41,838 | $ 2,478,901 |
| Pfizer, Inc. | 401,777 | 8,160,091 |
| $ 10,638,992 | ||
| Real Estate Investment Trusts | ||
| (REITs) 1.1% | ||
| AvalonBay Communities, Inc. | 32,090 | $ 3,853,367 |
| Boston Properties, Inc. | 24,157 | 2,291,292 |
| $ 6,144,659 | ||
| Software 5.5% | ||
| Microsoft Corp. | 421,861 | $ 10,698,395 |
| Oracle Corp. | 393,762 | 13,139,838 |
| salesforce.com, | ||
| inc. (2) | 46,577 | 6,221,756 |
| $ 30,059,989 | ||
| Specialty | ||
| Retail 1.5% | ||
| Home Depot, Inc. | 218,603 | $ 8,101,427 |
| $ 8,101,427 | ||
| Textiles, Apparel & Luxury | ||
| Goods 1.2% | ||
| NIKE, Inc., Class B | 87,176 | $ 6,599,223 |
| $ 6,599,223 | ||
| Tobacco 1.7% | ||
| Philip Morris International, Inc. | 141,826 | $ 9,308,040 |
| $ 9,308,040 | ||
| Wireless Telecommunication | ||
| Services 0.7% | ||
| American Tower Corp., | ||
| Class A (2) | 77,140 | $ 3,997,395 |
| $ 3,997,395 | ||
| Total Common Stocks | ||
| (identified cost $442,968,783) | $ 545,533,855 | |
| Short-Term Investments 1.4% | ||
| Interest | ||
| Description | (000s omitted) | Value |
| Eaton Vance Cash Reserves Fund, LLC, | ||
| 0.17% (3) | $ 7,854 | $ 7,854,101 |
| Total Short-Term Investments | ||
| (identified cost $7,854,101) | $ 7,854,101 | |
| Total Investments 101.5% | ||
| (identified cost $450,822,884) | $ 553,387,956 |
| Covered Call Options Written (1.5)% | Number of | Strike | Expiration | ||
|---|---|---|---|---|---|
| Security | Contracts | Price | Date | Value | |
| Accenture PLC, Class A | 880 | $ 52.50 | 5/21/11 | $ (264,000 | ) |
| Aflac, Inc. | 290 | 60.00 | 5/21/11 | (5,510 | ) |
| Amazon.com, Inc. | 225 | 175.00 | 5/21/11 | (277,875 | ) |
| American Electric Power Co., Inc. | 375 | 36.00 | 4/16/11 | (3,750 | ) |
| American Express Co. | 425 | 46.00 | 5/21/11 | (49,725 | ) |
| American Tower Corp., Class A | 385 | 50.00 | 5/21/11 | (109,725 | ) |
| AmerisourceBergen Corp. | 1,105 | 38.00 | 4/16/11 | (190,613 | ) |
| Apache Corp. | 345 | 135.00 | 4/16/11 | (39,157 | ) |
| Apple, Inc. | 315 | 355.00 | 5/21/11 | (390,600 | ) |
| AT&T, Inc. | 720 | 29.00 | 4/16/11 | (117,000 | ) |
| AvalonBay Communities, Inc. | 160 | 120.00 | 4/16/11 | (30,400 | ) |
| Boston Properties, Inc. | 120 | 100.00 | 4/16/11 | (600 | ) |
| Brigham Exploration Co. | 225 | 34.00 | 4/16/11 | (79,875 | ) |
| Celgene Corp. | 365 | 55.00 | 5/21/11 | (135,050 | ) |
| CenturyLink, Inc. | 515 | 42.00 | 5/21/11 | (46,350 | ) |
| Coca-Cola Co. (The) | 670 | 65.00 | 5/21/11 | (154,770 | ) |
| Comcast Corp., Class A | 1,845 | 25.00 | 4/16/11 | (53,505 | ) |
| ConocoPhillips | 410 | 80.00 | 4/16/11 | (61,910 | ) |
| ConocoPhillips | 685 | 75.00 | 5/21/11 | (417,850 | ) |
| Corning, Inc. | 1,485 | 23.00 | 5/21/11 | (26,730 | ) |
| Covidien PLC | 340 | 50.00 | 4/16/11 | (74,800 | ) |
| Danaher Corp. | 715 | 52.50 | 5/21/11 | (100,100 | ) |
| Danaher Corp. | 1,200 | 52.50 | 6/18/11 | (216,000 | ) |
| DaVita, Inc. | 170 | 75.00 | 4/16/11 | (182,750 | ) |
| Emerson Electric Co. | 985 | 60.00 | 5/21/11 | (108,350 | ) |
| Estee Lauder Cos., Inc., Class A | 155 | 95.00 | 5/21/11 | (77,500 | ) |
| Exxon Mobil Corp. | 1,065 | 80.00 | 4/16/11 | (473,925 | ) |
| Exxon Mobil Corp. | 805 | 85.00 | 5/21/11 | (153,353 | ) |
| Fluor Corp. | 715 | 75.00 | 4/16/11 | (78,650 | ) |
| Ford Motor Co. | 3,635 | 16.00 | 6/18/11 | (167,210 | ) |
| Freeport-McMoRan Copper & Gold, Inc. | 73 | 55.00 | 4/16/11 | (12,994 | ) |
| Freeport-McMoRan Copper & Gold, Inc. | 480 | 57.00 | 5/21/11 | (111,600 | ) |
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Portfolio of Investments (Unaudited) continued
| Security | Number of — Contracts | Strike — Price | Expiration — Date | Value | |
|---|---|---|---|---|---|
| Fresenius Medical Care AG & Co. KGaA ADR | 370 | $ 60.00 | 4/16/11 | $ (281,200 | ) |
| General Electric Co. | 3,365 | 21.00 | 6/18/11 | (164,885 | ) |
| Goldcorp, Inc. | 561 | 49.00 | 4/16/11 | (84,711 | ) |
| Goldman Sachs Group, Inc. (The) | 200 | 170.00 | 4/16/11 | (2,700 | ) |
| Google, Inc., Class A | 110 | 605.00 | 5/21/11 | (154,000 | ) |
| Halliburton Co. | 805 | 49.00 | 4/16/11 | (145,705 | ) |
| Hess Corp. | 380 | 90.00 | 4/16/11 | (15,960 | ) |
| Hess Corp. | 820 | 90.00 | 5/21/11 | (152,930 | ) |
| Home Depot, Inc. | 650 | 37.00 | 4/16/11 | (42,575 | ) |
| Home Depot, Inc. | 1,085 | 38.00 | 5/21/11 | (82,460 | ) |
| International Business Machines Corp. | 335 | 155.00 | 4/16/11 | (284,750 | ) |
| JDS Uniphase Corp. | 475 | 26.00 | 4/16/11 | (1,425 | ) |
| Johnson & Johnson | 225 | 62.50 | 4/16/11 | (562 | ) |
| JPMorgan Chase & Co. | 945 | 48.00 | 4/16/11 | (25,042 | ) |
| JPMorgan Chase & Co. | 1,570 | 47.00 | 5/21/11 | (169,560 | ) |
| Lincoln National Corp. | 325 | 32.00 | 4/16/11 | (2,762 | ) |
| Lincoln National Corp. | 545 | 33.00 | 4/16/11 | (1,362 | ) |
| McDonalds Corp. | 565 | 80.00 | 6/18/11 | (31,640 | ) |
| MetLife, Inc. | 560 | 47.00 | 5/21/11 | (44,240 | ) |
| Microsoft Corp. | 2,755 | 26.00 | 6/18/11 | (196,983 | ) |
| Monsanto Co. | 400 | 75.00 | 4/16/11 | (26,600 | ) |
| Monsanto Co. | 645 | 75.00 | 5/21/11 | (113,198 | ) |
| NIKE, Inc., Class B | 435 | 90.00 | 4/16/11 | (870 | ) |
| Occidental Petroleum Corp. | 390 | 110.00 | 4/16/11 | (14,235 | ) |
| Oracle Corp. | 1,955 | 33.00 | 5/21/11 | (265,880 | ) |
| Peabody Energy Corp. | 545 | 80.00 | 6/18/11 | (96,193 | ) |
| PepsiCo, Inc. | 645 | 65.00 | 4/16/11 | (25,800 | ) |
| Pfizer, Inc. | 3,190 | 19.00 | 4/16/11 | (427,460 | ) |
| PG&E Corp. | 570 | 45.00 | 6/18/11 | (58,425 | ) |
| Philip Morris International, Inc. | 705 | 65.00 | 5/21/11 | (141,000 | ) |
| PNC Financial Services Group, Inc. | 285 | 67.50 | 5/21/11 | (16,387 | ) |
| Procter & Gamble Co. | 845 | 67.50 | 4/16/11 | (845 | ) |
| Prudential Financial, Inc. | 495 | 62.50 | 4/16/11 | (34,155 | ) |
| QUALCOMM, Inc. | 475 | 57.50 | 5/21/11 | (64,600 | ) |
| salesforce.com, inc. | 140 | 145.00 | 4/16/11 | (11,690 | ) |
| Schlumberger, Ltd. | 285 | 100.00 | 4/16/11 | (7,267 | ) |
| Schlumberger, Ltd. | 495 | 95.00 | 5/21/11 | (163,350 | ) |
| Silver Wheaton Corp. | 295 | 46.00 | 5/21/11 | (64,605 | ) |
| Southwestern Energy Co. | 705 | 44.00 | 6/18/11 | (148,403 | ) |
| St. Jude Medical, Inc. | 750 | 55.00 | 5/21/11 | (60,000 | ) |
| State Street Corp. | 690 | 47.00 | 5/21/11 | (55,890 | ) |
| Target Corp. | 590 | 57.50 | 4/16/11 | (590 | ) |
| Thermo Fisher Scientific, Inc. | 490 | 55.00 | 6/18/11 | (118,825 | ) |
| United Technologies Corp. | 330 | 85.00 | 5/21/11 | (66,660 | ) |
| UnitedHealth Group, Inc. | 535 | 45.00 | 6/18/11 | (115,828 | ) |
| Varian Medical Systems, Inc. | 320 | 75.00 | 5/21/11 | (5,600 | ) |
| Verizon Communications, Inc. | 410 | 37.00 | 4/16/11 | (64,370 | ) |
| Wal-Mart Stores, Inc. | 770 | 55.00 | 6/18/11 | (23,870 | ) |
| Wells Fargo & Co. | 2,925 | 34.00 | 4/16/11 | (17,550 | ) |
| Total Covered Call Options Written | |||||
| (premiums received $7,142,153) | $ (8,307,825 | ) | |||
| Other Assets, Less | |||||
| Liabilities | |||||
| 0.0% (4) | $ (163,812 | ) | |||
| Net Assets 100.0% | $ 544,916,319 |
The percentage shown for each investment category in the Portfolio of Investments is based on net assets.
ADR - American Depositary Receipt
| (1) | A portion of each applicable common stock for which a written
call option is outstanding at March 31, 2011 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 March 31, 2011. |
| (4) | Amount is less than 0.05%. |
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Statement of Assets and Liabilities (Unaudited)
| Assets | March 31, 2011 | |
|---|---|---|
| Unaffiliated investments, at value (identified cost, | ||
| $442,968,783) | $ 545,533,855 | |
| Affiliated investment, at value (identified cost, $7,854,101) | 7,854,101 | |
| Dividends receivable | 575,144 | |
| Interest receivable from affiliated investment | 1,531 | |
| Receivable for investments sold | 267,014 | |
| Tax reclaims receivable | 133,445 | |
| Total assets | $ 554,365,090 | |
| Liabilities | ||
| Written options outstanding, at value (premiums received, | ||
| $7,142,153) | $ 8,307,825 | |
| Payable for investments purchased | 482,277 | |
| Payable to affiliate: | ||
| Investment adviser fee | 461,318 | |
| Accrued expenses | 197,351 | |
| Total liabilities | $ 9,448,771 | |
| Net assets | $ 544,916,319 | |
| Sources of Net Assets | ||
| Common shares, $0.01 par value, unlimited number of shares | ||
| authorized, 39,970,049 shares issued and outstanding | $ 399,700 | |
| Additional paid-in capital | 619,949,000 | |
| Accumulated net realized loss | (154,140,894 | ) |
| Accumulated net investment loss | (22,697,566 | ) |
| Net unrealized appreciation | 101,406,079 | |
| Net assets | $ 544,916,319 | |
| Net Asset Value | ||
| ($544,916,319 ¸ 39,970,049 common shares issued and outstanding) | $ 13.63 |
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Statement of Operations (Unaudited)
| Investment Income | Six Months Ended — March 31, 2011 | |
|---|---|---|
| Dividends (net of foreign taxes, $4,685) | $ 4,318,019 | |
| Interest income allocated from affiliated investment | 9,833 | |
| Expenses allocated from affiliated investment | (381 | ) |
| Total investment income | $ 4,327,471 | |
| Expenses | ||
| Investment adviser fee | $ 2,666,416 | |
| Trustees fees and expenses | 9,043 | |
| Custodian fee | 131,710 | |
| Transfer and dividend disbursing agent fees | 8,874 | |
| Legal and accounting services | 33,273 | |
| Printing and postage | 169,322 | |
| Miscellaneous | 30,263 | |
| Total expenses | $ 3,048,901 | |
| Deduct | ||
| Reduction of custodian fee | $ 25 | |
| Total expense reductions | $ 25 | |
| Net expenses | $ 3,048,876 | |
| Net investment income | $ 1,278,595 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) | ||
| Investment transactions | $ 12,350,324 | |
| Investment transactions allocated from affiliated investment | 204 | |
| Written options | (21,102,951 | ) |
| Foreign currency transactions | 21,182 | |
| Net realized loss | $ (8,731,241 | ) |
| Change in unrealized appreciation (depreciation) | ||
| Investments | $ 56,300,375 | |
| Written options | 5,708,093 | |
| Foreign currency | 3,321 | |
| Net change in unrealized appreciation (depreciation) | $ 62,011,789 | |
| Net realized and unrealized gain | $ 53,280,548 | |
| Net increase in net assets from operations | $ 54,559,143 |
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Statements of Changes in Net Assets
| Six Months Ended — March 31, 2011 | Year Ended | |||
|---|---|---|---|---|
| Increase (Decrease) | ||||
| in Net Assets | (Unaudited) | September 30, 2010 | ||
| From operations | ||||
| Net investment income | $ 1,278,595 | $ 3,664,253 | ||
| Net realized loss from investment transactions, written options | ||||
| and foreign currency transactions | (8,731,241 | ) | (6,138,583 | ) |
| Net change in unrealized appreciation (depreciation) from | ||||
| investments, written options and foreign currency | 62,011,789 | 37,430,716 | ||
| Net increase in net assets from operations | $ 54,559,143 | $ 34,956,386 | ||
| Distributions to shareholders | ||||
| From net investment income | $ (23,992,704 | )* | $ (3,679,239 | ) |
| Tax return of capital | | (54,445,644 | ) | |
| Total distributions | $ (23,992,704 | ) | $ (58,124,883 | ) |
| Capital share transactions | ||||
| Reinvestment of distributions | $ 396,783 | $ 2,173,771 | ||
| Net increase in net assets from capital share transactions | $ 396,783 | $ 2,173,771 | ||
| Net increase (decrease) in net assets | $ 30,963,222 | $ (20,994,726 | ) | |
| Net Assets | ||||
| At beginning of period | $ 513,953,097 | $ 534,947,823 | ||
| At end of period | $ 544,916,319 | $ 513,953,097 | ||
| Accumulated undistributed | ||||
| (distributions in excess of) net investment income included in net assets | ||||
| At end of period | $ (22,697,566 | ) | $ 16,543 |
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Financial Highlights
| Six Months Ended | Year Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2011 | ||||||||||||
| (Unaudited) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||
| Net asset value Beginning of period | $ 12.870 | $ 13.450 | $ 16.490 | $ 21.110 | $ 19.900 | $ 19.960 | ||||||
| Income (Loss) From Operations | ||||||||||||
| Net investment | ||||||||||||
| income (1) | $ 0.032 | $ 0.092 | $ 0.147 | $ 0.152 | $ 0.080 | $ 0.093 | ||||||
| Net realized and unrealized gain (loss) | 1.328 | 0.787 | (1.543 | ) | (3.013 | ) | 2.774 | 1.491 | ||||
| Total income (loss) from operations | $ 1.360 | $ 0.879 | $ (1.396 | ) | $ (2.861 | ) | $ 2.854 | $ 1.584 | ||||
| Less Distributions | ||||||||||||
| From net investment income | $ (0.600 | )* | $ (0.092 | ) | $ (0.176 | ) | $ (0.154 | ) | $ (0.038 | ) | $ (0.093 | ) |
| From net realized gain | | | | (0.891 | ) | (1.606 | ) | (1.551 | ) | |||
| Tax return of capital | | (1.367 | ) | (1.468 | ) | (0.714 | ) | | | |||
| Total distributions | $ (0.600 | ) | $ (1.459 | ) | $ (1.644 | ) | $ (1.759 | ) | $ (1.644 | ) | $ (1.644 | ) |
| Net asset value End of period | $ 13.630 | $ 12.870 | $ 13.450 | $ 16.490 | $ 21.110 | $ 19.900 | ||||||
| Market value End of period | $ 12.340 | $ 12.990 | $ 13.680 | $ 13.310 | $ 19.440 | $ 20.070 | ||||||
| Total Investment Return on Net Asset | ||||||||||||
| Value (2) | 11.01 | % (3) | 6.87 | % | (6.20 | )% | (13.54 | )% | 15.04 | % (4) | 8.46 | % (5) |
| Total Investment Return on Market | ||||||||||||
| Value (2) | (0.42 | )% (3) | 6.02 | % | 18.23 | % | (24.23 | )% | 5.04 | % | 9.77 | % |
| Ratios/Supplemental Data | ||||||||||||
| Net assets, end of period (000s omitted) | $ 544,916 | $ 513,953 | $ 534,948 | $ 654,528 | $ 837,584 | $ 786,478 | ||||||
| Ratios (as a percentage of average daily net assets): | ||||||||||||
| Expenses (6) | 1.14 | % (7) | 1.12 | % | 1.17 | % | 1.10 | % | 1.08 | % | 1.09 | % |
| Net investment income | 0.48 | % (7) | 0.69 | % | 1.17 | % | 0.79 | % | 0.39 | % | 0.47 | % |
| Portfolio Turnover | 44 | % (3) | 27 | % | 65 | % | 117 | % | 195 | % | 84 | % |
| (1) | Computed using average shares outstanding. |
|---|---|
| (2) | Returns are historical and are calculated by determining the |
| percentage change in net asset value or market value with all | |
| distributions reinvested. | |
| (3) | Not annualized. |
| (4) | During the year ended September 30, 2007, the Fund realized |
| a gain on the closing out of a written options position that did | |
| not meet investment guidelines. The gain was less than $0.01 per | |
| share and had no effect on total return for the year ended | |
| September 30, 2007. | |
| (5) | During the year ended September 30, 2006, the investment |
| adviser reimbursed the Fund for a net realized loss incurred | |
| from the closing out of a written options position that did not | |
| meet the Funds investment guidelines. The reimbursement | |
| was less than $0.01 per share and had no net effect on total | |
| return for the year ended September 30, 2006. | |
| (6) | Excludes the effect of custody fee credits, if any, of less than |
| 0.005%. | |
| (7) | Annualized. |
| * | A portion of the distributions may be deemed a tax return of |
| capital at year-end. See Note 2. |
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance Enhanced Equity Income Fund (the Fund) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, closed-end management investment company. The Funds primary investment objective is to provide current income, with a secondary objective of capital appreciation.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America.
A Investment Valuation Equity securities (including common shares of closed-end investment companies) listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by a third party pricing service that will use various techniques that consider factors including, but not limited to, prices or yields of securities with similar characteristics, benchmark yields, broker/dealer quotes, quotes of underlying common stock, issuer spreads, as well as industry and economic events. Exchange-traded options are valued at the mean between the bid and asked prices at valuation time as reported by the Options Price Reporting Authority for U.S. listed options or by the relevant exchange or board of trade for non-U.S. listed options. Over-the-counter options are valued by a third party pricing service using techniques that consider factors including the value of the underlying instrument, the volatility of the underlying instrument and the period of time until option expiration. Short-term debt securities purchased with a remaining maturity of sixty days or less are generally valued at amortized cost, which approximates market value. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The pricing service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. The daily valuation of exchange-traded foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. When valuing foreign equity securities that meet certain criteria, the Trustees have approved the use of a fair value service that values such securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities.
Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Fund in a manner that most fairly reflects the securitys value, or the amount that the Fund might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the securitys disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information obtained from broker-dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the companys or entitys financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
The Fund may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). Cash Reserves Fund generally values its investment securities utilizing the amortized cost valuation technique in accordance with Rule 2a-7 under the 1940 Act. This technique involves initially valuing a portfolio security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. If amortized cost is determined not to approximate fair value, Cash Reserves Fund may value its investment securities based on available market quotations provided by a third party pricing service.
B Investment Transactions Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Fund is informed of the ex-dividend date. Withholding taxes on foreign dividends and capital gains have been provided for in accordance with the Funds understanding of the applicable countries tax rules and rates. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.
D Federal Taxes The Funds policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
At September 30, 2010, the Fund, for federal income tax purposes, had a capital loss carryforward of $131,572,760 which will reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. Such capital loss carryforward will expire on September 30, 2017 ($9,096,930) and September 30, 2018 ($122,475,830).
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Notes to Financial Statements (Unaudited) continued
Additionally, at September 30, 2010, the Fund had a net capital loss of $11,809,034 attributable to security transactions incurred after October 31, 2009. This net capital loss is treated as arising on the first day of the Funds taxable year ending September 30, 2011.
As of March 31, 2011, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each of the Funds federal tax returns filed in the 3-year period ended September 30, 2010 remains subject to examination by the Internal Revenue Service.
E Expense Reduction State Street Bank and Trust Company (SSBT) serves as custodian of the Fund. Pursuant to the custodian agreement, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance the Fund maintains with SSBT. All credit balances, if any, used to reduce the Funds custodian fees are reported as a reduction of expenses in the Statement of Operations.
F Foreign Currency Translation Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions. Recognized gains or losses on investment transactions attributable to changes in foreign currency exchange rates are recorded for financial statement purposes as net realized gains and losses on investments. That portion of unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
G Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.
H Indemnifications Under the Funds organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Fund) could be deemed to have personal liability for the obligations of the Fund. However, the Funds Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Fund shall assume the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Funds maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
I Written Options Upon the writing of a call or a put option, the premium received by the Fund is included in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written, in accordance with the Funds policies on investment valuations discussed above. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. If a put option on a security is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as a writer of an option, may have no control over whether the underlying securities or other assets may be sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the securities or other assets underlying the written option. The Fund may also bear the risk of not being able to enter into a closing transaction if a liquid secondary market does not exist.
J Interim Financial Statements The interim financial statements relating to March 31, 2011 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Funds management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders
Subject to its Managed Distribution Plan, the Fund intends to make monthly distributions from its cash available for distribution, which consists of the Funds dividends and interest income after payment of Fund expenses, net option premiums and net realized and unrealized gains on stock investments. The Fund intends to distribute all or substantially all of its net realized capital gains (reduced by available capital loss carryforwards from prior years, if any). Distributions are recorded on the ex-dividend date. The Fund distinguishes between distributions on a tax basis and a financial reporting basis. Accounting principles generally accepted in the United States of America require that only distributions in excess of tax basis earnings and profits be reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income. Distributions in any year may include a substantial return of capital component. For the six months ended March 31, 2011, the amount of distributions estimated to be a tax return of capital was approximately $22,746,000. The final determination of tax characteristics of the Funds distributions will occur at the end of the year, at which time it will be reported to the shareholders.
3 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by EVM as compensation for management and investment advisory services rendered to the Fund. The fee is computed at an annual rate of 1.00% of the Funds average daily gross assets and is payable monthly. Gross assets as referred to herein represent net
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Notes to Financial Statements (Unaudited) continued
assets plus obligations attributable to investment leverage, if any. The Fund invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves Fund. For the six months ended March 31, 2011, the Funds investment adviser fee totaled $2,666,416. EVM also serves as administrator of the Fund, but receives no compensation.
Except for Trustees of the Fund who are not members of EVMs organization, officers and Trustees receive remuneration for their services to the Fund out of the investment adviser fee. Trustees of the Fund who are not affiliated with EVM may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended March 31, 2011, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of EVM.
4 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $238,418,128 and $289,932,311, respectively, for the six months ended March 31, 2011.
5 Common Shares of Beneficial Interest
Common shares issued pursuant to the Funds dividend reinvestment plan for the six months ended March 31, 2011 and the year ended September 30, 2010 were 30,532 and 164,524, respectively.
6 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of the Fund at March 31, 2011, as determined on a federal income tax basis, were as follows:
| Aggregate cost | $ | |
|---|---|---|
| Gross unrealized appreciation | $ 102,286,230 | |
| Gross unrealized depreciation | (1,732,474 | ) |
| Net unrealized appreciation | $ 100,553,756 |
7 Financial Instruments
The Fund may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities. These financial instruments may include written options and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Fund has in particular classes of financial instruments and do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. A summary of written call options at March 31, 2011 is included in the Portfolio of Investments.
Written call options activity for the six months ended March 31, 2011 was as follows:
| Contracts | Received | |||
|---|---|---|---|---|
| Outstanding, beginning of period | 89,697 | $ | 13,017,697 | |
| Options written | 165,940 | 22,649,888 | ||
| Options terminated in closing purchase transactions | (150,922 | ) | (21,371,245 | ) |
| Options exercised | (6,433 | ) | (1,600,916 | ) |
| Options expired | (38,443 | ) | (5,553,271 | ) |
| Outstanding, end of period | 59,839 | $ | 7,142,153 |
At March 31, 2011, 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.
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Notes to Financial Statements (Unaudited) continued
The Fund generally intends to write 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. The Fund is not subject to counterparty credit risk with respect to its written options as the Fund, not the counterparty, is obligated to perform under such derivatives.
The fair value of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) and whose primary underlying risk exposure is equity price risk at March 31, 2011 was as follows:
| | Fair Value — Asset Derivatives | Liability
Derivatives (1) | |
| --- | --- | --- | --- |
| Written options | $ | $ (8,307,825 | ) |
(1) Statement of Assets and Liabilities location: Written options outstanding, at value.
The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations and whose primary underlying risk exposure is equity price risk for the six months ended March 31, 2011 was as follows:
| Realized Gain (Loss) — on Derivatives Recognized | Change in Unrealized — Appreciation (Depreciation) on | ||
|---|---|---|---|
| in | |||
| Income (1) | Derivatives Recognized in | ||
| Income (2) | |||
| Written options | $ (21,102,951 | ) | $ 5,708,093 |
| (1) | Statement of Operations location: Net realized gain
(loss) Written options. |
| --- | --- |
| (2) | Statement of Operations location: Change in unrealized
appreciation (depreciation) Written options. |
8 Fair Value Measurements
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 funds 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 March 31, 2011, the hierarchy of inputs used in valuing the Funds investments, which are carried at value, were as follows:
| Asset Description | Level 1 | Level 2 | Level 3 | Total | ||
|---|---|---|---|---|---|---|
| Common Stocks* | $ 545,533,855 | $ | $ | $ 545,533,855 | ||
| Short-Term Investments | | 7,854,101 | | 7,854,101 | ||
| Total Investments | $ 545,533,855 | $ 7,854,101 | $ | $ 553,387,956 | ||
| Liability Description | ||||||
| Covered Call Options Written | $ (8,307,825 | ) | $ | $ | $ (8,307,825 | ) |
| Total | $ (8,307,825 | ) | $ | $ | $ (8,307,825 | ) |
The Fund held no investments or other financial instruments as of September 30, 2010 whose fair value was determined using Level 3 inputs. At March 31, 2011, the value of investments transferred between Level 1 and Level 2, if any, during the six months then ended was not significant.
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
Officers and Trustees
| Officers of Eaton Vance Enhanced
Equity Income Fund | |
| --- | --- |
| Walter A. Row, III President Duncan W. Richardson Vice President Barbara E. Campbell Treasurer | Maureen A. Gemma Vice President, Secretary and Chief Legal Officer Paul M. ONeil Chief Compliance Officer |
| Trustees of Eaton Vance Enhanced
Equity Income Fund | |
| --- | --- |
| Ralph F. Verni Chairman Benjamin C. Esty Thomas E. Faust Jr.* Allen R. Freedman | William H. Park Ronald A. Pearlman Helen Frame Peters Lynn A. Stout |
Number of Employees
The Fund is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as a closed-end management investment company and has no employees.
Number of Shareholders
As of March 31, 2011, Fund records indicate that there are 104 registered shareholders and approximately 31,731 shareholders owning the Fund shares in street name, such as through brokers, banks, and financial intermediaries.
If you are a street name shareholder and wish to receive Fund reports directly, which contain important information about the Fund, please write or call:
Eaton Vance Distributors, Inc.
Two International Place
Boston, MA 02110
1-800-262-1122
New York Stock Exchange symbol
The New York Stock Exchange symbol is EOI.
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Eaton Vance
Enhanced Equity Income Fund
March 31, 2011
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (Privacy Policy) with respect to nonpublic personal information about its customers:
| | Only such information received from you, through application
forms or otherwise, and information about your Eaton Vance fund
transactions will be collected. This may include information
such as name, address, social security number, tax status,
account balances and transactions. |
| --- | --- |
| | None of such information about you (or former customers) will be
disclosed to anyone, except as permitted by law (which includes
disclosure to employees necessary to service your account). In
the normal course of servicing a customers account, Eaton
Vance may share information with unaffiliated third parties that
perform various required services such as transfer agents,
custodians and broker/dealers. |
| | Policies and procedures (including physical, electronic and
procedural safeguards) are in place that are designed to protect
the confidentiality of such information. |
| | We reserve the right to change our Privacy Policy at any time
upon proper notification to you. Customers may want to review
our Privacy Policy periodically for changes by accessing the
link on our homepage: www.eatonvance.com. |
Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Boston Management and Research, and Eaton Vance Distributors, Inc. Our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customers account (i.e., fund shares) is held in the name of a third-party financial adviser/broker-dealer, it is likely that only such advisers privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vances Privacy Policy, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange Commission (the SEC) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called householding and it helps eliminate duplicate mailings to shareholders. Eaton Vance, or your financial adviser, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial adviser, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial adviser. Your instructions that householding not apply to delivery of your Eaton Vance documents will be effective within 30 days of receipt by Eaton Vance or your financial adviser.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SECs website at www.sec.gov. Form N-Q may also be reviewed and copied at the SECs public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).
Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds and Portfolios Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SECs website at www.sec.gov.
Additional Notice to Shareholders. The Fund may purchase shares of its common stock in the open market when they trade at a discount to net asset value or at other times if the Fund determines such purchases are advisable. There can be no assurance that the Fund will take such action or that such purchases would reduce the discount.
Closed-End Fund Information. The Eaton Vance closed-end funds make certain quarterly fund performance data and information about portfolio characteristics (such as top holdings and asset allocation) available on the Eaton Vance website after the end of each calendar quarter end. Certain month end fund performance data for the funds, including total returns, are posted to the website shortly after the end of each calendar month. Portfolio holdings for the most recent calendar quarter-end are also posted to the website approximately 30 days following the end of the quarter. This information is available at www.eatonvance.com on the fund information pages under Individual Investors Closed-End Funds.
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Investment Adviser and Administrator Eaton Vance Management
Two International Place
Boston, MA 02110
Custodian State Street Bank and Trust Company
200 Clarendon Street
Boston, MA 02116
Transfer Agent American Stock Transfer & Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
Fund Offices
Two International Place
Boston, MA 02110
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2285-5/11 CE-EEIFSRC
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Item 2. Code of Ethics
Not required in this filing.
Item 3. Audit Committee Financial Expert
The registrants Board has designated William H. Park, an independent trustee, as its audit committee financial expert. Mr. Park is a certified public accountant who is the Chief Financial Officer of Aveon Group, L.P. (an investment management firm). Previously, he served as the Vice Chairman of Commercial Industrial Finance Corp. (specialty finance company), as President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm), as Executive Vice President and Chief Financial Officer of United Asset Management Corporation (an institutional investment management firm) and as a Senior Manager at Price Waterhouse (now PricewaterhouseCoopers) (an independent registered public accounting firm).
Item 4. Principal Accountant Fees and Services
Not required in this filing.
Item 5. Audit Committee of Listed Registrants
Not required in this filing.
Item 6. Schedule of Investments
Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
The Board of Trustees of the Trust has adopted a proxy voting policy and procedure (the Fund Policy), pursuant to which the Trustees have delegated proxy voting responsibility to the Funds investment adviser and adopted the investment advisers proxy voting policies and procedures (the Policies) which are described below. The Trustees will review the Funds proxy voting records from time to time and will annually consider approving the Policies for the upcoming year. In the event that a conflict of interest arises between the Funds shareholders and the investment adviser, the administrator, or any of their affiliates or any affiliate of the Fund, the investment adviser will generally refrain from voting the proxies related to the companies giving rise to such conflict until it consults with the Boards Special Committee except as contemplated under the Fund Policy. The Boards Special Committee will instruct the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a companys management to its shareholders and to align the interests of management with those shareholders. An independent proxy voting service (Agent), currently Institutional Shareholder Services, Inc., has been retained to assist in the voting of proxies through the provision of vote analysis, implementation and recordkeeping and disclosure services. The investment adviser will generally vote proxies through the Agent. The Agent is required to vote all proxies and/or refer them back to the investment adviser pursuant to the Policies. It is generally the policy of the investment adviser to vote in accordance with the recommendation of the Agent. The Agent shall refer to the investment adviser proxies relating to mergers and restructurings, and the disposition of assets, termination, liquidation and mergers contained in mutual fund proxies. The investment adviser will normally vote against anti-takeover measures and other proposals designed to limit the ability of shareholders to act on possible transactions, except in the case of closed-end management investment companies. The investment adviser generally supports management on social and environmental proposals. The investment adviser may abstain from voting from time to time where it determines that the costs associated with voting a proxy outweighs the benefits derived from exercising the right to vote or the economic effect on shareholders interests or the value of the portfolio holding is indeterminable or insignificant.
In addition, the investment adviser will monitor situations that may result in a conflict of interest between the Funds shareholders and the investment adviser, the administrator, or any of their affiliates or any affiliate of the Fund by maintaining a list of significant existing and prospective corporate clients. The investment advisers personnel responsible for reviewing and voting proxies on behalf of the Fund will report any proxy received or expected to be received from a company included on that list to the personnel of the investment adviser identified in the Policies. If such personnel expects to instruct the Agent to vote such proxies in a manner inconsistent with the guidelines of the Policies or
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the recommendation of the Agent, the personnel will consult with members of senior management of the investment adviser to determine if a material conflict of interests exists. If it is determined that a material conflict does exist, the investment adviser will seek instruction on how to vote from the Special Committee.
Information on how the Fund voted proxies relating to portfolio securities during the most recent 12 month period ended June 30 is available (1) without charge, upon request, by calling 1-800-262-1122, and (2) on the Securities and Exchange Commissions website at http://www.sec.gov .
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not required in this filing.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
No such purchases this period.
Item 10. Submission of Matters to a Vote of Security Holders
No Material Changes.
Item 11. Controls and Procedures
(a) It is the conclusion of the registrants principal executive officer and principal financial officer that the effectiveness of the registrants 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 has been recorded, processed, summarized and reported within the time period specified in the Commissions rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrants principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.
(b) There have been no changes in the registrants internal controls over financial reporting during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
Item 12. Exhibits
(a)(1) Registrants Code of Ethics Not applicable (please see Item 2).
(a)(2)(i) Treasurers Section 302 certification.
(a)(2)(ii) Presidents Section 302 certification.
(b) Combined Section 906 certification.
(c) Registrants notices to shareholders pursuant to Registrants exemptive order granting an exemption from Section 19(b) of the 1940 Act and Rule 19b-1 thereunder regarding distributions paid pursuant to the Registrants Managed Distribution Plan.
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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: | May 9, 2011 |
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/ Barbara E. Campbell |
|---|---|
| Barbara E. Campbell | |
| Treasurer | |
| Date: | May 9, 2011 |
| By: | /s/ Walter A. Row, III |
| Walter A. Row, III | |
| President | |
| Date: | May 9, 2011 |
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