Eaton Vance Enhanced Equity Income Fund II

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

811-21670

Investment Company Act File Number

Eaton Vance Enhanced Equity Income Fund II

(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)

December 31

Date of Fiscal Year End

March 31, 2015

Date of Reporting Period

 

 

 

Item 1. Schedule of Investments

Eaton Vance

Enhanced Equity Income Fund II

March 31, 2015

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 99.6%(1)

 

                                                 
Security    Shares      Value  

Aerospace & Defense — 2.3%

      

Boeing Co. (The)

      46,385       $ 6,961,461   

Spirit AeroSystems Holdings, Inc., Class A(2)

      180,769         9,437,949   
     

 

 

  
      $ 16,399,410   
     

 

 

  

Banks — 2.2%

      

Citigroup, Inc.

      134,103       $ 6,908,986   

PNC Financial Services Group, Inc. (The)

      36,483         3,401,675   

Wells Fargo & Co.

      103,355         5,622,512   
     

 

 

  
      $ 15,933,173   
     

 

 

  

Beverages — 2.7%

      

Constellation Brands, Inc., Class A(2)

      85,053       $ 9,884,009   

PepsiCo, Inc.

      96,080         9,187,170   
     

 

 

  
      $ 19,071,179   
     

 

 

  

Biotechnology — 8.4%

      

Amgen, Inc.

      44,164       $ 7,059,615   

Biogen, Inc.(2)

      45,220         19,093,693   

Celgene Corp.(2)

      165,321         19,058,205   

Gilead Sciences, Inc.(2)

      70,909         6,958,300   

Incyte Corp.(2)

      39,439         3,614,979   

Vertex Pharmaceuticals, Inc.(2)

      33,821         3,989,863   
     

 

 

  
      $ 59,774,655   
     

 

 

  

Capital Markets — 2.0%

      

Charles Schwab Corp. (The)

      187,062       $ 5,694,167   

Invesco, Ltd.

      206,491         8,195,628   
     

 

 

  
      $ 13,889,795   
     

 

 

  

Chemicals — 1.6%

      

Monsanto Co.

      100,110       $ 11,266,379   
     

 

 

  
      $ 11,266,379   
     

 

 

  

Consumer Finance — 0.9%

      

Discover Financial Services

      106,850       $ 6,020,998   
     

 

 

  
      $ 6,020,998   
     

 

 

  

Electrical Equipment — 0.6%

      

Eaton Corp. PLC

      63,848       $ 4,337,833   
     

 

 

  
      $ 4,337,833   
     

 

 

  

Energy Equipment & Services — 1.6%

      

Halliburton Co.

      61,533       $ 2,700,068   

Schlumberger, Ltd.

      101,486         8,467,992   
     

 

 

  
      $ 11,168,060   
     

 

 

  

Food & Staples Retailing — 1.0%

      

Sprouts Farmers Market, Inc.(2)

      192,473       $ 6,780,824   
     

 

 

  
      $ 6,780,824   
     

 

 

  

Food Products — 6.1%

      

Hain Celestial Group, Inc. (The)(2)

      155,422       $ 9,954,779   

Hershey Co. (The)

      61,864         6,242,696   

Keurig Green Mountain, Inc.

      69,306         7,743,560   

Mondelez International, Inc., Class A

      195,000         7,037,550   

WhiteWave Foods Co. (The), Class A(2)

      277,920         12,322,973   
     

 

 

  
      $ 43,301,558   
     

 

 

  

 

1

 

 

                                                 
Security    Shares      Value  

Health Care Equipment & Supplies — 4.9%

      

Cooper Cos., Inc. (The)

      48,591       $ 9,106,925   

Medtronic PLC

      222,479         17,351,137   

Stryker Corp.

      91,419         8,433,403   
     

 

 

  
      $ 34,891,465   
     

 

 

  

Health Care Technology — 1.6%

      

Cerner Corp.(2)

      159,391       $ 11,676,985   
     

 

 

  
      $ 11,676,985   
     

 

 

  

Hotels, Restaurants & Leisure — 2.7%

      

Las Vegas Sands Corp.

      88,475       $ 4,869,664   

Starbucks Corp.

      152,455         14,437,489   
     

 

 

  
      $ 19,307,153   
     

 

 

  

Internet & Catalog Retail — 5.2%

      

Amazon.com, Inc.(2)

      57,337       $ 21,335,098   

Priceline Group, Inc. (The)(2)

      13,041         15,181,680   
     

 

 

  
      $ 36,516,778   
     

 

 

  

Internet Software & Services — 9.8%

      

Facebook, Inc., Class A(2)

      274,098       $ 22,534,967   

Google, Inc., Class C(2)

      68,390         37,477,720   

Twitter, Inc.(2)

      183,750         9,202,200   
     

 

 

  
      $ 69,214,887   
     

 

 

  

IT Services — 4.0%

      

Fiserv, Inc.(2)

      117,089       $ 9,296,867   

Visa, Inc., Class A

      296,228         19,376,273   
     

 

 

  
      $ 28,673,140   
     

 

 

  

Leisure Products — 0.7%

      

Brunswick Corp.

      91,808       $ 4,723,522   
     

 

 

  
      $ 4,723,522   
     

 

 

  

Life Sciences Tools & Services — 0.7%

      

Illumina, Inc.(2)

      27,044       $ 5,020,448   
     

 

 

  
      $ 5,020,448   
     

 

 

  

Machinery — 0.9%

      

Donaldson Co., Inc.

      169,335       $ 6,385,623   
     

 

 

  
      $ 6,385,623   
     

 

 

  

Media — 4.2%

      

Comcast Corp., Class A

      254,258       $ 14,357,949   

Walt Disney Co. (The)

      143,683         15,070,910   
     

 

 

  
      $ 29,428,859   
     

 

 

  

Multiline Retail — 1.3%

      

Dollar General Corp.(2)

      120,945       $ 9,116,834   
     

 

 

  
      $ 9,116,834   
     

 

 

  

Oil, Gas & Consumable Fuels — 1.0%

      

EOG Resources, Inc.

      34,741       $ 3,185,402   

Range Resources Corp.

      71,023         3,696,037   
     

 

 

  
      $ 6,881,439   
     

 

 

  

Personal Products — 0.8%

      

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

      69,059       $ 5,742,946   
     

 

 

  
      $ 5,742,946   
     

 

 

  

 

2

 

 

                                                 
Security    Shares      Value  

Pharmaceuticals — 3.1%

      

Bristol-Myers Squibb Co.

      127,002       $ 8,191,629   

Perrigo Co. PLC

      83,833         13,878,553   
     

 

 

  
      $ 22,070,182   
     

 

 

  

Road & Rail — 2.7%

      

Genesee & Wyoming, Inc., Class A(2)

      72,386       $ 6,980,906   

Union Pacific Corp.

      114,224         12,371,601   
     

 

 

  
      $ 19,352,507   
     

 

 

  

Semiconductors & Semiconductor Equipment — 3.6%

      

Avago Technologies, Ltd.

      102,806       $ 13,054,306   

NXP Semiconductors NV(2)

      126,800         12,725,648   
     

 

 

  
      $ 25,779,954   
     

 

 

  

Software — 6.0%

      

Microsoft Corp.

      326,310       $ 13,266,133   

salesforce.com, inc.(2)

      185,366         12,384,303   

Tableau Software, Inc., Class A(2)

      116,820         10,808,186   

VMware, Inc., Class A(2)

      69,976         5,738,732   
     

 

 

  
      $ 42,197,354   
     

 

 

  

Specialty Retail — 6.4%

      

Home Depot, Inc. (The)

      112,586       $ 12,790,895   

Restoration Hardware Holding, Inc.(2)

      70,169         6,960,063   

Signet Jewelers, Ltd.

      83,213         11,549,132   

TJX Cos., Inc. (The)

      197,670         13,846,784   
     

 

 

  
      $ 45,146,874   
     

 

 

  

Technology Hardware, Storage & Peripherals — 8.2%

  

   

Apple, Inc.

      375,500       $ 46,723,465   

EMC Corp.

      456,424         11,666,197   
     

 

 

  
      $ 58,389,662   
     

 

 

  

Textiles, Apparel & Luxury Goods — 1.6%

      

NIKE, Inc., Class B

      115,696       $ 11,607,780   
     

 

 

  
      $ 11,607,780   
     

 

 

  

Trading Companies & Distributors — 0.8%

      

W.W. Grainger, Inc.

      24,606       $ 5,802,341   
     

 

 

  
      $ 5,802,341   
     

 

 

  

Total Common Stocks
(identified cost $574,816,981)

       $ 705,870,597   
     

 

 

  

Short-Term Investments — 0.8%

      
Description    Interest
(000’s omitted)		      Value  

Eaton Vance Cash Reserves Fund, LLC, 0.18%(3)

    $ 5,696       $ 5,696,415   
     

 

 

  

Total Short-Term Investments
(identified cost $5,696,415)

       $ 5,696,415   
     

 

 

  

Total Investments — 100.4%
(identified cost $580,513,396)

       $ 711,567,012   
     

 

 

  

 

 

3

 

 

                                                                                                   

Covered Call Options Written — (0.4)%

            
Security    Number of
Contracts		      Strike
Price		      Expiration
Date		      Value  

Amazon.com, Inc.

      285       $ 397.50         5/1/15       $ (206,625 ) 

Amgen, Inc.

      220         175.00         4/24/15         (12,980 ) 

Apple, Inc.

      1,875         132.00         5/1/15         (360,000 ) 

Avago Technologies, Ltd.

      510         135.00         4/17/15         (62,475 ) 

Biogen, Inc.

      225         510.00         4/24/15         (15,750 ) 

Boeing Co. (The)

      230         160.00         5/1/15         (15,870 ) 

Bristol-Myers Squibb Co.

      545         67.50         4/17/15         (11,445 ) 

Brunswick Corp.

      455         55.00         5/15/15         (30,713 ) 

Celgene Corp.

      825         135.00         4/24/15         (30,938 ) 

Cerner Corp.

      795         75.00         4/17/15         (47,700 ) 

Charles Schwab Corp. (The)

      485         32.00         4/17/15         (8,488 ) 

Citigroup, Inc.

      670         54.00         5/1/15         (27,805 ) 

Comcast Corp., Class A

      1,270         58.50         5/1/15         (74,295 ) 

Constellation Brands, Inc., Class A

      425         120.00         4/17/15         (63,750 ) 

Cooper Cos., Inc. (The)

      240         190.00         5/15/15         (86,400 ) 

Discover Financial Services

      530         59.50         5/1/15         (19,875 ) 

Dollar General Corp.

      600         76.50         4/24/15         (55,500 ) 

Donaldson Co., Inc.

      845         40.00         4/17/15         (10,563 ) 

Eaton Corp. PLC

      315         70.50         4/10/15         (3,938 ) 

EMC Corp.

      2,280         26.50         5/1/15         (85,500 ) 

EOG Resources, Inc.

      170         96.50         5/1/15         (16,830 ) 

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

      345         87.50         5/15/15         (33,638 ) 

Facebook, Inc., Class A

      1,370         90.00         5/1/15         (106,860 ) 

Genesee & Wyoming, Inc., Class A

      360         110.00         4/17/15         (9,000 ) 

Gilead Sciences, Inc.

      350         107.00         5/1/15         (41,125 ) 

Google, Inc., Class C

      340         580.00         4/2/15         (850 ) 

Hain Celestial Group, Inc. (The)

      775         67.50         5/15/15         (98,813 ) 

Halliburton Co.

      305         46.00         5/1/15         (17,385 ) 

Hershey Co. (The)

      305         105.00         5/15/15         (33,550 ) 

Home Depot, Inc. (The)

      560         121.00         4/24/15         (13,160 ) 

Illumina, Inc.

      70         202.50         4/10/15         (1,400 ) 

Invesco, Ltd.

      1,030         44.00         5/15/15         (10,300 ) 

Keurig Green Mountain, Inc.

      345         130.00         4/24/15         (8,280 ) 

Las Vegas Sands Corp.

      440         57.50         4/10/15         (11,440 ) 

Medtronic PLC

      1,110         80.00         4/24/15         (64,380 ) 

Microsoft Corp.

      1,630         43.00         5/1/15         (53,790 ) 

Mondelez International, Inc., Class A

      975         39.00         4/17/15         (9,750 ) 

Monsanto Co.

      500         117.00         5/1/15         (48,250 ) 

NIKE, Inc., Class B

      575         106.00         4/24/15         (11,788 ) 

NXP Semiconductors NV

      630         105.00         4/17/15         (92,925 ) 

PepsiCo, Inc.

      480         99.50         5/1/15         (37,680 ) 

Perrigo Co. PLC

      385         180.00         4/17/15         (14,438 ) 

PNC Financial Services Group, Inc. (The)

      180         95.00         4/17/15         (12,870 ) 

Priceline Group, Inc. (The)

      65         1,275.00         4/17/15         (6,013 ) 

Range Resources Corp.

      355         57.50         5/15/15         (40,825 ) 

Restoration Hardware Holding, Inc.

      350         105.00         5/15/15         (70,000 ) 

salesforce.com, inc.

      925         75.00         4/17/15         (4,163 ) 

Schlumberger, Ltd.

      505         87.50         5/1/15         (37,118 ) 

Signet Jewelers, Ltd.

      415         140.00         5/15/15         (131,763 ) 

Spirit AeroSystems Holdings, Inc., Class A

      900         55.00         5/15/15         (90,000 ) 

Sprouts Farmers Market, Inc.

      960         35.00         5/15/15         (146,400 ) 

Starbucks Corp.

      760         101.00         4/24/15         (38,760 ) 

Stryker Corp.

      450         97.50         5/15/15         (36,000 ) 

Tableau Software, Inc., Class A

      580         102.00         4/24/15         (42,050 ) 

 

4

 

 

                                                                                                   
Security    Number of
Contracts		      Strike
Price		      Expiration
Date		      Value  

TJX Cos., Inc. (The)

      985       $ 72.50         4/17/15       $ (22,163 ) 

Twitter, Inc.

      915         51.50         4/24/15         (133,133 ) 

Union Pacific Corp.

      570         121.00         4/10/15         (3,705 ) 

Vertex Pharmaceuticals, Inc.

      165         145.00         4/24/15         (18,563 ) 

Visa, Inc., Class A

      1,480         70.63         4/24/15         (20,720 ) 

VMware, Inc., Class A

      345         87.50         5/1/15         (50,025 ) 

W.W. Grainger, Inc.

      120         250.00         5/15/15         (18,000 ) 

Walt Disney Co. (The)

      715         110.00         4/17/15         (16,445 ) 

Wells Fargo & Co.

      515         56.50         5/1/15         (18,025 ) 

WhiteWave Foods Co. (The), Class A

      1,390         47.50         5/15/15         (156,375 ) 
           

 

 

  

Total Covered Call Options Written
(premiums received $4,325,752)

             $ (3,079,358 ) 
           

 

 

  

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

             $ (76,679 ) 
           

 

 

  

Net Assets — 100.0%

             $ 708,410,975   
           

 

 

  

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 March 31, 2015 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, 2015. Net income allocated from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended March 31, 2015 was $3,664.

 

(4) Amount is less than (0.05)%.

Written options activity for the fiscal year to date ended March 31, 2015 was as follows:

 

     Number of
Contracts		      Premiums
Received		  
Outstanding, beginning of period      40,542       $ 3,705,852   
Options written      102,114         11,229,497   
Options terminated in closing purchase transactions      (49,080 )       (5,258,322 ) 
Options expired      (53,256 )       (5,351,275 ) 
  

 

 

     

 

 

  
Outstanding, end of period      40,320       $     4,325,752   
  

 

 

     

 

 

  

At March 31, 2015, the Fund had sufficient cash and/or securities to cover commitments under these contracts.

 

5

 

 

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 March 31, 2015, 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 $3,079,358.

The cost and unrealized appreciation (depreciation) of investments of the Fund at March 31, 2015, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

    $     580,512,346   
  

 

 

  

Gross unrealized appreciation

    $ 140,878,145   

Gross unrealized depreciation

      (9,823,479 ) 
  

 

 

  

Net unrealized appreciation

    $ 131,054,666   
  

 

 

  

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.

At March 31, 2015, 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

    $ 705,870,597 *     $ —       $ —       $ 705,870,597   

Short-Term Investments

      —         5,696,415         —         5,696,415   

Total Investments

    $     705,870,597       $     5,696,415       $ —       $     711,567,012   
Liability Description                                

Covered Call Options Written

    $ (3,079,358 )     $ —       $ —       $ (3,079,358 ) 

Total

    $     (3,079,358 )     $ —       $ —       $ (3,079,358 ) 

 

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

The Fund held no investments or other financial instruments as of December 31, 2014 whose fair value was determined using Level 3 inputs. At March 31, 2015, 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.

 

6

 

 

Item 2. Controls and Procedures

(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant on this Form N-Q has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant on this Form N-Q has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

(b) There have been no changes in the registrant’s internal controls over financial reporting during the fiscal quarter for which the report is being filed that have materially affected, or are reasonably likely to materially affect the registrant’s internal control over financial reporting.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Eaton Vance Enhanced Equity Income Fund II

 

By:   /s/ Walter A. Row, III
  Walter A. Row, III
  President
Date:   May 22, 2015

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:   May 22, 2015

 

By:   /s/ James F. Kirchner
  James F. Kirchner
  Treasurer
Date:   May 22, 2015