Statement of Assets and Liabilities
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Assets
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September 30, 2020
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Unaffiliated investments, at value (identified cost, $384,086,101)
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$
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616,264,892
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Affiliated investment, at value (identified cost, $4,588,342)
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4,588,342
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Dividends receivable
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278,624
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Dividends receivable from affiliated investment
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428
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Total assets
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$
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621,132,286
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Liabilities
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Written options outstanding, at value (premiums received, $9,281,130)
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$
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3,888,458
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Payable to affiliates:
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Investment adviser fee
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505,517
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Accrued expenses
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212,696
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Total liabilities
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$
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4,606,671
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Net Assets
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$
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616,525,615
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Sources of Net Assets
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Common shares, $0.01 par value, unlimited number of shares authorized, 39,323,898 shares issued and outstanding
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$
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393,239
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Additional paid-in capital
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399,538,306
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Distributable earnings
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216,594,070
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Net Assets
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$
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616,525,615
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Net Asset Value
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($616,525,615 ÷ 39,323,898 common shares issued and outstanding)
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$
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15.68
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10
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See Notes to Financial Statements.
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Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Statement of Operations
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Investment Income
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Year Ended
September 30, 2020
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Dividends (net of foreign taxes, $54,220)
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$
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11,496,593
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Dividends from affiliated investment
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78,803
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Total investment income
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$
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11,575,396
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Expenses
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Investment adviser fee
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$
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5,918,662
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Trustees’ fees and expenses
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31,637
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Custodian fee
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196,002
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Transfer and dividend disbursing agent fees
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18,617
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Legal and accounting services
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95,196
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Printing and postage
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244,907
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Miscellaneous
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70,299
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Total expenses
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$
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6,575,320
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Net investment income
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$
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5,000,076
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Realized and Unrealized Gain (Loss)
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Net realized gain (loss) —
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Investment transactions
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$
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24,363,723
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Investment transactions — affiliated investment
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(1,366
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)
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Written options
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(33,466,181
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)
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Foreign currency transactions
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35,416
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Net realized loss
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$
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(9,068,408
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)
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Change in unrealized appreciation (depreciation) —
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Investments
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$
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66,063,714
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Investments — affiliated investment
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(58
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)
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Written options
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4,710,983
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Net change in unrealized appreciation (depreciation)
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$
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70,774,639
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Net realized and unrealized gain
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$
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61,706,231
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Net increase in net assets from operations
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$
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66,706,307
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11
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See Notes to Financial Statements.
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Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Statements of Changes in Net Assets
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Year Ended September 30,
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Increase (Decrease) in Net Assets
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2020
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2019
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From operations —
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Net investment income
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$
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5,000,076
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$
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3,990,933
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Net realized gain (loss)
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(9,068,408
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)
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37,076,068
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Net change in unrealized appreciation (depreciation)
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70,774,639
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(31,349,784
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)
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Net increase in net assets from operations
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$
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66,706,307
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$
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9,717,217
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Distributions to shareholders
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$
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(5,074,079
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)
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$
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(41,875,064
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)
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Tax return of capital to shareholders
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$
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(37,287,671
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)
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$
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—
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Capital share transactions —
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Proceeds from shelf offering, net of offering costs (see Note 5)
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$
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701,424
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$
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19,735
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Reinvestment of distributions
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466,794
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262,914
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Net increase in net assets from capital share transactions
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$
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1,168,218
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$
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282,649
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Net increase (decrease) in net assets
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$
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25,512,775
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$
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(31,875,198
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)
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Net Assets
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At beginning of year
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$
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591,012,840
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$
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622,888,038
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At end of year
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$
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616,525,615
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$
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591,012,840
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12
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See Notes to Financial Statements.
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Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Financial Highlights
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Year Ended September 30,
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2020
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2019
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2018
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2017
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2016
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Net asset value — Beginning of year
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$
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15.060
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$
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15.880
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$
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14.470
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$
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13.570
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$
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13.400
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Income (Loss) From Operations
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Net investment income(1)
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$
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0.127
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$
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0.102
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$
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0.091
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$
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0.113
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$
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0.136
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Net realized and unrealized gain
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1.571
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|
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0.145
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2.356
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1.824
|
|
|
|
1.071
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|
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Total income from operations
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$
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1.698
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|
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$
|
0.247
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$
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2.447
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$
|
1.937
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$
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1.207
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Less Distributions
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From net investment income
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$
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(0.129
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)
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|
$
|
(0.100
|
)
|
|
$
|
(0.089
|
)
|
|
$
|
(0.103
|
)
|
|
$
|
(0.111
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)
|
|
|
|
|
|
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From net realized gain
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|
—
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|
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(0.967
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)
|
|
|
(0.848
|
)
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|
|
(0.123
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Tax return of capital
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|
|
(0.949
|
)
|
|
|
—
|
|
|
|
(0.100
|
)
|
|
|
(0.811
|
)
|
|
|
(0.926
|
)
|
|
|
|
|
|
|
|
|
Total distributions
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|
$
|
(1.078
|
)
|
|
$
|
(1.067
|
)
|
|
$
|
(1.037
|
)
|
|
$
|
(1.037
|
)
|
|
$
|
(1.037
|
)
|
|
|
|
|
|
|
|
|
Premium from common shares sold through shelf offering (see Note 5)(1)
|
|
$
|
0.000
|
(2)
|
|
$
|
0.000
|
(2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Net asset value — End of year
|
|
$
|
15.680
|
|
|
$
|
15.060
|
|
|
$
|
15.880
|
|
|
$
|
14.470
|
|
|
$
|
13.570
|
|
|
|
|
|
|
|
|
|
Market value — End of year
|
|
$
|
14.640
|
|
|
$
|
15.140
|
|
|
$
|
16.010
|
|
|
$
|
14.020
|
|
|
$
|
12.650
|
|
|
|
|
|
|
|
|
|
Total Investment Return on Net Asset Value(3)
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|
|
12.08
|
%
|
|
|
2.11
|
%
|
|
|
17.69
|
%
|
|
|
15.36
|
%
|
|
|
9.74
|
%
|
|
|
|
|
|
|
|
|
Total Investment Return on Market Value(3)
|
|
|
4.09
|
%
|
|
|
1.81
|
%
|
|
|
22.46
|
%
|
|
|
19.89
|
%
|
|
|
15.29
|
%
|
|
|
|
|
|
|
|
|
Ratios/Supplemental Data
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|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of year (000’s omitted)
|
|
$
|
616,526
|
|
|
$
|
591,013
|
|
|
$
|
622,888
|
|
|
$
|
566,770
|
|
|
$
|
531,745
|
|
|
|
|
|
|
|
|
|
Ratios (as a percentage of average daily net assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
1.11
|
%
|
|
|
1.11
|
%
|
|
|
1.11
|
%
|
|
|
1.11
|
%
|
|
|
1.12
|
%
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.84
|
%
|
|
|
0.69
|
%
|
|
|
0.60
|
%
|
|
|
0.81
|
%
|
|
|
1.00
|
%
|
|
|
|
|
|
|
|
|
Portfolio Turnover
|
|
|
41
|
%
|
|
|
55
|
%
|
|
|
46
|
%
|
|
|
76
|
%
|
|
|
82
|
%
|
|
(1)
|
Computed using average shares outstanding.
|
|
(2)
|
Amount is less than $0.0005.
|
|
(3)
|
Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested.
Distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan.
|
|
|
|
|
|
|
|
|
|
13
|
|
See Notes to Financial Statements.
|
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Notes to Financial Statements
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 Fund’s 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 (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards
Codification Topic 946.
A Investment Valuation — The following
methodologies are used to determine the market value or fair value of investments.
Equity Securities. Equity securities 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 ask prices 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 ask prices.
Derivatives. U.S. exchange-traded options are valued at the mean between the bid and
ask prices at valuation time as reported by the Options Price Reporting Authority. Non U.S. exchange-traded options and 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.
Foreign Securities and
Currencies. 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 Fund’s 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.
Affiliated Fund. The Fund may invest in
Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment
activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities
based on available market quotations provided by a third party pricing service.
Fair Valuation. 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 security’s “fair
value”, which is 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 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 security’s 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 company’s or entity’s financial statements, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
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 Fund’s
understanding of the applicable countries’ tax rules and rates.
D Federal Taxes — The Fund’s 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.
As of September 30, 2020, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually
after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
E 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
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Notes to Financial Statements — continued
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.
F Use of Estimates — The preparation of the financial statements in conformity
with U.S. GAAP 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.
G Indemnifications — Under the Fund’s 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 Fund’s 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, upon request by the shareholder, 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 Fund’s
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.
H 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 Fund’s 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. When an index option is exercised, the Fund is required to deliver an amount of cash determined by the excess of the exercise price of the option over the value of the index (in the case of a put) or the excess of the
value of the index over the exercise price of the option (in the case of a call) at contract termination. 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.
2 Distributions to Shareholders and Income Tax Information
Subject to its Managed
Distribution Plan, the Fund makes monthly distributions from its cash available for distribution, which consists of the Fund’s 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. Distributions are recorded on the ex-dividend date. Distributions to shareholders are determined in accordance with income tax
regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are 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.
The tax character of distributions declared for the years ended September 30, 2020 and September 30, 2019 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
5,074,079
|
|
|
$
|
3,929,587
|
|
|
|
|
|
|
Long-term capital gains
|
|
$
|
—
|
|
|
$
|
37,945,477
|
|
|
|
|
|
|
Tax return of capital
|
|
$
|
37,287,671
|
|
|
$
|
—
|
|
As of September 30, 2020, the components of distributable earnings (accumulated loss) on a tax basis were as follows:
|
|
|
|
|
|
|
|
|
|
Deferred capital losses
|
|
$
|
(20,875,028
|
)
|
|
|
|
|
Net unrealized appreciation
|
|
$
|
237,469,098
|
|
At September 30, 2020, the Fund, for federal income tax purposes, had deferred capital losses of $20,875,028 which would 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 would 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. The deferred capital losses are treated as arising on the first day of the Fund’s next taxable year and retain the same short-term or long-term character as when originally
deferred. Of the deferred capital losses at September 30, 2020, $20,875,028 are short-term.
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Notes to Financial Statements — continued
The cost and unrealized appreciation (depreciation) of investments, including open derivative contracts, of the Fund at September 30, 2020, as determined on a federal income tax basis, were as follows:
|
|
|
|
|
|
|
|
|
|
Aggregate cost
|
|
$
|
379,495,678
|
|
|
|
|
|
Gross unrealized appreciation
|
|
$
|
248,107,488
|
|
|
|
|
|
Gross unrealized depreciation
|
|
|
(10,638,390
|
)
|
|
|
|
|
Net unrealized appreciation
|
|
$
|
237,469,098
|
|
3 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by EVM, a wholly-owned subsidiary of Eaton Vance Corp., 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 Fund’s average daily gross assets and is payable monthly. Gross assets as referred to herein represent net assets plus obligations attributable to investment leverage,
if any. For the year ended September 30, 2020, the Fund’s investment adviser fee amounted to $5,918,662. The Fund invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves
Fund. EVM also serves as administrator of the Fund, but receives no compensation.
Trustees and officers of the Fund who are members of EVM’s
organization 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 year ended September 30, 2020, 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 $243,994,951 and $302,942,686, respectively, for the year ended September 30,
2020.
5 Common Shares of Beneficial Interest and Shelf Offering
Common shares issued by the Fund pursuant to its dividend reinvestment plan for the years ended September 30, 2020 and September 30, 2019 were 29,982 and 17,525, respectively.
Pursuant to a registration statement filed with and declared effective on April 11, 2019 by the SEC, the Fund is authorized to issue up to an additional
2,942,268 common shares through an equity shelf offering program (the “shelf offering”). Under the shelf offering, the Fund, subject to market conditions, may raise additional capital from time to time and in varying amounts and offering
methods at a net price at or above the Fund’s net asset value per common share. During the years ended September 30, 2020 and September 30, 2019, the Fund sold 44,845 and 1,300 common shares, respectively, and received proceeds (net
of offering costs) of $701,424 and $19,735, respectively, through its shelf offering. The net proceeds in excess of the net asset value of the shares sold were $7,960 and $266 for the years ended September 30, 2020 and September 30, 2019,
respectively. Offering costs (other than the applicable sales commissions) incurred in connection with the shelf offering were borne directly by EVM. Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM, is the distributor of the Fund’s
shares and is entitled to receive a sales commission from the Fund of 1.00% of the gross sales price per share, a portion of which is re-allowed to sales agents. The Fund was informed that the sales commissions retained by EVD during the years ended
September 30, 2020 and September 30, 2019 were $1,417 and $40, respectively.
In August 2012, the Board of Trustees initially approved a share
repurchase program for the Fund. Pursuant to the reauthorization of the share repurchase program by the Board of Trustees in March 2019, the Fund is authorized to repurchase up to 10% of its common shares outstanding as of the last day of the prior
calendar year at market prices when shares are trading at a discount to net asset value. The share repurchase program does not obligate the Fund to purchase a specific amount of shares. There were no repurchases of common shares by the
Fund for the years ended September 30, 2020 and September 30, 2019, respectively.
6 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 obligations under these financial instruments at September 30, 2020 is included in the Portfolio of Investments. At September 30, 2020, the Fund had sufficient cash and/or securities to cover commitments under
these contracts.
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Notes to Financial Statements — continued
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.
The fair value of open derivative instruments (not considered to be
hedging instruments for accounting disclosure purposes) and whose primary underlying risk exposure is equity price risk at September 30, 2020 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Derivative
|
|
Asset Derivative
|
|
|
Liability Derivative(1)
|
|
|
|
|
|
|
Written options
|
|
$
|
—
|
|
|
$
|
(3,888,458
|
)
|
|
(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 year ended September 30, 2020 was as follows:
|
|
|
|
|
|
|
|
|
|
|
Derivative
|
|
Realized Gain (Loss)
on Derivatives Recognized
in Income(1)
|
|
|
Change in Unrealized
Appreciation (Depreciation) on
Derivatives Recognized in
Income(2)
|
|
|
|
|
|
|
Written options
|
|
$
|
(33,466,181
|
)
|
|
$
|
4,710,983
|
|
|
(1)
|
Statement of Operations location: Net realized gain (loss) – Written options.
|
|
(2)
|
Statement of Operations location: Change in unrealized appreciation (depreciation) – Written options.
|
The average number of written options contracts outstanding during the year ended September 30, 2020, which is indicative of the volume of this derivative
type, was 27,655 contracts.
7 Investments in Affiliated Funds
At September 30, 2020, the value of the Fund’s investment in affiliated funds was $4,588,342, which represents 0.7% of the Fund’s net assets. Transactions in affiliated funds by the Fund for the year
ended September 30, 2020 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of affiliated fund
|
|
Value,
beginning
of period
|
|
|
Purchases
|
|
|
Sales
proceeds
|
|
|
Net
realized
gain (loss)
|
|
|
Change in
unrealized
appreciation
(depreciation)
|
|
|
Value,
end of
period
|
|
|
Dividend
income
|
|
|
Units,
end of
period
|
|
|
|
|
Short-Term Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
Eaton Vance Cash Reserves Fund, LLC
|
|
$
|
8,446,224
|
|
|
$
|
161,535,473
|
|
|
$
|
(165,391,931
|
)
|
|
$
|
(1,366
|
)
|
|
$
|
(58
|
)
|
|
$
|
4,588,342
|
|
|
$
|
78,803
|
|
|
|
4,588,342
|
|
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 fund’s own assumptions in determining the fair value of investments)
|
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Notes to Financial Statements — continued
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 September 30, 2020, the hierarchy of inputs used in valuing the Fund’s investments and open derivative instruments, which are carried at value, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communication Services
|
|
$
|
58,682,602
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
58,682,602
|
|
|
|
|
|
|
|
|
Consumer Discretionary
|
|
|
84,745,537
|
|
|
|
—
|
|
|
|
—
|
|
|
|
84,745,537
|
|
|
|
|
|
|
|
|
Consumer Staples
|
|
|
49,463,079
|
|
|
|
—
|
|
|
|
—
|
|
|
|
49,463,079
|
|
|
|
|
|
|
|
|
Energy
|
|
|
12,320,588
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,320,588
|
|
|
|
|
|
|
|
|
Financials
|
|
|
62,720,728
|
|
|
|
—
|
|
|
|
—
|
|
|
|
62,720,728
|
|
|
|
|
|
|
|
|
Health Care
|
|
|
84,741,668
|
|
|
|
8,878,466
|
|
|
|
—
|
|
|
|
93,620,134
|
|
|
|
|
|
|
|
|
Industrials
|
|
|
44,683,945
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44,683,945
|
|
|
|
|
|
|
|
|
Information Technology
|
|
|
159,642,903
|
|
|
|
—
|
|
|
|
—
|
|
|
|
159,642,903
|
|
|
|
|
|
|
|
|
Materials
|
|
|
14,749,427
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,749,427
|
|
|
|
|
|
|
|
|
Real Estate
|
|
|
15,029,032
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,029,032
|
|
|
|
|
|
|
|
|
Utilities
|
|
|
20,606,917
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,606,917
|
|
|
|
|
|
|
|
|
Total Common Stocks
|
|
$
|
607,386,426
|
|
|
$
|
8,878,466
|
*
|
|
$
|
—
|
|
|
$
|
616,264,892
|
|
|
|
|
|
|
|
|
Short-Term Investments
|
|
$
|
—
|
|
|
$
|
4,588,342
|
|
|
$
|
—
|
|
|
$
|
4,588,342
|
|
|
|
|
|
|
|
|
Total Investments
|
|
$
|
607,386,426
|
|
|
$
|
13,466,808
|
|
|
$
|
—
|
|
|
$
|
620,853,234
|
|
|
|
|
|
|
|
|
Liability Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written Covered Call Options
|
|
$
|
(3,888,458
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,888,458
|
)
|
|
|
|
|
|
|
|
Total
|
|
$
|
(3,888,458
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,888,458
|
)
|
|
*
|
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.
|
9 Risks and Uncertainties
Pandemic Risk
An outbreak of respiratory disease
caused by a novel coronavirus was first detected in China in December 2019 and subsequently spread internationally. This coronavirus has resulted in closing borders, enhanced health screenings, changes to healthcare service preparation and delivery,
quarantines, cancellations, disruptions to supply chains and customer activity, as well as general concern and uncertainty. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and
economic risks and disrupt normal market conditions and operations. The impact of this outbreak has negatively affected the worldwide economy, the economies of individual countries, individual companies, and the market in general, and may continue
to do so in significant and unforeseen ways, as may other epidemics and pandemics that may arise in the future. Any such impact could adversely affect the Fund’s performance, or the performance of the securities in which the Fund invests.
10 Subsequent Event
On
October 8, 2020, Morgan Stanley and Eaton Vance Corp. (“Eaton Vance”) announced that they had entered into a definitive agreement under which Morgan Stanley would acquire Eaton Vance. Under the Investment Company Act of 1940, as
amended, consummation of this transaction may be deemed to result in the automatic termination of an Eaton Vance Fund’s investment advisory agreement, and, where applicable, any related sub-advisory agreement. On November 10, 2020, the
Fund’s Board approved a new investment advisory agreement. The new investment advisory agreement will be presented to Fund shareholders for approval, and, if approved, would take effect upon consummation of the transaction. Shareholders of
record of the Fund at the close of business on October 29, 2020 who have voting power with respect to such shares are entitled to be present and vote at a joint special meeting of shareholders to be held on January 7, 2021 and at any adjournments or
postponements thereof.
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Report of Independent Registered Public
Accounting Firm
To the Trustees and Shareholders of Eaton Vance Enhanced Equity Income Fund:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying
statement of assets and liabilities of Eaton Vance Enhanced Equity Income Fund (the “Fund”), including the portfolio of investments, as of September 30, 2020, the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights
present fairly, in all material respects, the financial position of the Fund as of September 30, 2020, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the
financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial
highlights. Our procedures included confirmation of securities owned as of September 30, 2020, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe
that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
November 19, 2020
We have served as the auditor of one or more Eaton Vance investment companies since 1959.
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Federal Tax Information (Unaudited)
The Form 1099-DIV you receive in February 2021 will show the tax status of all distributions paid to your account in calendar year 2020. Shareholders are advised to consult their own tax adviser with respect to the
tax consequences of their investment in the Fund. As required by the Internal Revenue Code and/or regulations, shareholders must be notified regarding the status of qualified dividend income for individuals and the dividends received deduction for
corporations.
Qualified Dividend Income. For the fiscal year ended September 30, 2020, the Fund designates approximately
$11,127,611, or up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code, as qualified dividend income eligible for the reduced tax rate of 15%.
Dividends Received Deduction. Corporate shareholders are generally entitled to take the dividends received deduction on the portion of the Fund’s dividend distribution that qualifies under
tax law. For the Fund’s fiscal 2020 ordinary income dividends, 100% qualifies for the corporate dividends received deduction.
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Annual Meeting of Shareholders (Unaudited)
The Fund held its Annual Meeting of Shareholders on July 16, 2020. The following action was taken by the shareholders:
Proposal 1: The election of Thomas E. Faust Jr., Cynthia E. Frost and Scott E. Wennerholm as Class I Trustees of the Fund for a three-year term expiring in 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Nominee for Trustee
|
|
For
|
|
|
Withheld
|
|
|
|
|
|
|
Thomas E. Faust Jr.
|
|
|
33,477,748
|
|
|
|
1,851,157
|
|
|
|
|
|
|
Cynthia E. Frost
|
|
|
33,393,011
|
|
|
|
1,935,894
|
|
|
|
|
|
|
Scott E. Wennerholm
|
|
|
33,463,428
|
|
|
|
1,865,477
|
|
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Dividend Reinvestment Plan
The Fund offers a dividend reinvestment plan (Plan) pursuant to which shareholders may elect to have distributions automatically reinvested in common shares (Shares) of the Fund. You may elect to participate in the
Plan by completing the Dividend Reinvestment Plan Application Form. If you do not participate, you will receive all distributions in cash paid by check mailed directly to you by American Stock Transfer & Trust Company, LLC (AST) as dividend
paying agent. On the distribution payment date, if the NAV per Share is equal to or less than the market price per Share plus estimated brokerage commissions, then new Shares will be issued. The number of Shares shall be determined by the greater of
the NAV per Share or 95% of the market price. Otherwise, Shares generally will be purchased on the open market by AST, the Plan agent (Agent). Distributions subject to income tax (if any) are taxable whether or not Shares are reinvested.
If your Shares are in the name of a brokerage firm, bank, or other nominee, you can ask the firm or nominee to participate in the Plan on your behalf. If the
nominee does not offer the Plan, you will need to request that the Fund’s transfer agent re-register your Shares in your name or you will not be able to participate.
The Agent’s service fee for handling distributions will be paid by the Fund. Plan participants will be charged their pro rata share of brokerage commissions on all open-market purchases.
Plan participants may withdraw from the Plan at any time by writing to the Agent at the address noted on the following page. If you withdraw, you will receive
Shares in your name for all Shares credited to your account under the Plan. If a participant elects by written notice to the Agent to sell part or all of his or her Shares and remit the proceeds, the Agent is authorized to deduct a $5.00 fee plus
brokerage commissions from the proceeds.
If you wish to participate in the Plan and your Shares are held in your own name, you may complete the form on
the following page and deliver it to the Agent. Any inquiries regarding the Plan can be directed to the Agent at 1-866-439-6787.
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Application for Participation in Dividend Reinvestment Plan
This form is for shareholders who hold their common shares in their own names. If your common shares are held in the
name of a brokerage firm, bank, or other nominee, you should contact your nominee to see if it will participate in the Plan on your behalf. If you wish to participate in the Plan, but your brokerage firm, bank, or nominee is unable to participate on
your behalf, you should request that your common shares be re-registered in your own name which will enable your participation in the Plan.
The following authorization and appointment is given with the understanding that I may terminate it at any time by terminating my participation in the Plan as provided in the terms and conditions of the Plan.
Please print exact name on account
Shareholder
signature
Date
Shareholder
signature
Date
Please sign exactly as your common shares are registered. All persons whose names appear on the share certificate must sign.
YOU SHOULD NOT RETURN THIS FORM IF YOU WISH TO RECEIVE YOUR DISTRIBUTIONS IN CASH. THIS IS NOT A PROXY.
This authorization form, when signed, should be mailed to the following address:
Eaton Vance Enhanced Equity Income Fund
c/o American Stock Transfer & Trust Company, LLC
P.O. Box 922
Wall Street Station
New York, NY
10269-0560
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Board of Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the
“1940 Act”), provides, in substance, that the investment advisory agreement between a fund and its investment adviser will continue in effect from year-to-year only if its continuation is approved on an annual basis by a vote of the
fund’s board of trustees, including a majority of the trustees who are not “interested persons” of the fund (“independent trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting held on April 22, 2020 (the “April 2020 Meeting”), the Boards of Trustees/Directors comprised of the same individuals
(collectively, the “Board”) that oversees a majority of the registered investment companies advised by Eaton Vance Management or its affiliate, Boston Management and Research (the “Eaton Vance Funds”), including a
majority of the independent trustees (the “Independent Trustees”), voted to approve the continuation of existing investment advisory agreements and sub-advisory
agreements(1) for each of the Eaton Vance Funds for an additional one-year period. The Board relied upon the affirmative recommendation of its Contract Review Committee,
which is a committee exclusively comprised of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by the adviser and sub-adviser to each of the Eaton Vance Funds (including
information specifically requested by the Board) for a series of formal meetings held between February and April 2020. Members of the Contract Review Committee also considered information received at prior meetings of the Board and its committees,
to the extent such information was relevant to the Contract Review Committee’s annual evaluation of the investment advisory agreements and sub-advisory agreements.
In connection with its evaluation of the investment advisory agreements and sub-advisory agreements, the Board considered various information relating to the Eaton Vance Funds. This included information applicable
to all or groups of Eaton Vance Funds, which is referenced immediately below, and information applicable to the particular Eaton Vance Fund covered by this report (additional fund-specific information is referenced below under “Results of the
Contract Review Process”). (For funds that invest through one or more underlying portfolios, references to “each fund” in this section may include information that was considered at the portfolio-level.)
Information about Fees, Performance and Expenses
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•
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A report from an independent data provider comparing advisory and other fees paid by each fund to such fees paid by comparable funds, as identified by the
independent data provider (“comparable funds”);
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•
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A report from an independent data provider comparing each fund’s total expense ratio (and its components) to those of comparable funds;
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•
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A report from an independent data provider comparing the investment performance of each fund (including, as relevant, total return data, income data, Sharpe
ratios and information ratios) to the investment performance of comparable funds and, as applicable, benchmark indices, over various time periods;
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•
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In certain instances, data regarding investment performance relative to customized groups of peer funds and blended indices identified by the adviser in
consultation with the Portfolio Management Committee of the Board;
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•
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Comparative information concerning the fees charged and services provided by the adviser and sub-adviser to each fund in managing other accounts (which may
include other mutual funds, collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund(s), if any;
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•
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Profitability analyses with respect to the adviser and sub-adviser to each of the funds;
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Information about Portfolio Management and Trading
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•
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Descriptions of the investment management services provided to each fund, as well as each of the funds’ investment strategies and policies;
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•
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The procedures and processes used to determine the fair value of fund assets, when necessary, and actions taken to monitor and test the effectiveness of such
procedures and processes;
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•
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Information about the policies and practices of each fund’s adviser and sub-adviser (in the context of a sub-adviser, only those with trading
responsibilities) with respect to trading, including their processes for seeking best execution of portfolio transactions;
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•
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Information about the allocation of brokerage transactions and the benefits, if any, received by the adviser and sub-adviser (in the context of a sub-adviser,
only those with trading responsibilities) to each fund as a result of brokerage allocation, including, as applicable, information concerning the acquisition of research through client commission arrangements and policies with respect to “soft
dollars”;
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•
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Data relating to the portfolio turnover rate of each fund;
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Information about each Adviser and Sub-adviser
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•
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Reports detailing the financial results and condition of the adviser and sub-adviser to each fund;
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•
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Information regarding the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and, for
portfolio managers and certain other investment professionals, information relating to their responsibilities with respect to managing other mutual funds and investment accounts, as applicable;
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(1)
|
Not all Eaton Vance Funds have entered into a sub-advisory agreement with a sub-adviser. Accordingly, references to “sub-adviser” or
“sub-advisory agreement” in this “Overview” section may not be applicable to the particular Eaton Vance Fund covered by this report.
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Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Board of Trustees’ Contract Approval — continued
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•
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The Code of Ethics of the adviser and its affiliates and the sub-adviser of each fund, together with information relating to compliance with, and the
administration of, such codes;
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•
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Policies and procedures relating to proxy voting and the handling of corporate actions and class actions;
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•
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Information concerning the resources devoted to compliance efforts undertaken by the adviser and its affiliates and the sub-adviser of each fund, if any,
including descriptions of their various compliance programs and their record of compliance;
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•
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Information concerning the business continuity and disaster recovery plans of the adviser and its affiliates and the sub-adviser of each fund, if any;
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•
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A description of Eaton Vance Management’s and Boston Management and Research’s oversight of sub-advisers, including with respect to regulatory and
compliance issues, investment management and other matters;
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Other Relevant Information
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•
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Information concerning the nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its
affiliates;
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•
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Information concerning oversight of the relationship with the custodian, subcustodians and fund accountants by the adviser and/or administrator to each of the
funds;
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•
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For an Eaton Vance Fund structured as an exchange-listed closed-end fund, information concerning the benefits of the closed-end fund structure, as well as, where
relevant, the closed-end fund’s market prices, trading volume data, distribution rates and other relevant matters; and
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•
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The terms of each investment advisory agreement and sub-advisory agreement.
|
During the various meetings of the Board and its committees throughout the twelve months ended April 2020, the Trustees received information from portfolio managers and other investment professionals of the
advisers and sub-advisers of the funds regarding investment and performance matters, and considered various investment and trading strategies used in pursuing the funds’ investment objectives. The Trustees also received information regarding
risk management techniques employed in connection with the management of the funds. The Board and its committees evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with
respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management, Boston Management and Research and fund sub-advisers, with respect to such matters. In addition to the formal meetings of the Board
and its committees, the Independent Trustees held regular teleconferences to discuss, among other topics, matters relating to the continuation of investment advisory agreements and sub-advisory agreements.
The Contract Review Committee was advised throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The
members of the Contract Review Committee, with the advice of such counsel, exercised their own business judgment in determining the material factors to be considered in evaluating each investment advisory agreement and sub-advisory agreement and the
weight to be given to each such factor. The conclusions reached with respect to each investment advisory agreement and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor.
Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory agreement and sub-advisory agreement. In evaluating each investment
advisory agreement and sub-advisory agreement, including the fee structures and other terms contained in such agreements, the members of the Contract Review Committee were also informed by multiple years of analysis and discussion with the adviser
and sub-adviser to each of the Eaton Vance Funds.
In voting its approval of the continuation of existing investment advisory agreements and
sub-advisory agreements at the April 2020 Meeting, the Board relied on an order issued by the Securities and Exchange Commission on March 25, 2020, which provided temporary relief from the in-person voting requirements under Section 15 of
the 1940 Act in response to the impacts of the COVID-19 pandemic.
Results of the Contract Review Process
Based on its consideration of the foregoing, and such other information it deemed relevant, including the factors and conclusions described below, the Contract
Review Committee concluded that the continuation of the investment advisory agreement between Eaton Vance Enhanced Equity Income Fund (the “Fund”) and Eaton Vance Management (the “Adviser”), including its fee structure, is in the
interests of shareholders and, therefore, recommended to the Board approval of the agreement. Based on the recommendation of the Contract Review Committee, the Board, including a majority of the Independent Trustees, voted to approve continuation of
the investment advisory agreement for the Fund.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement for the Fund, the Board evaluated the nature, extent and quality of services provided to the
Fund by the Adviser.
The Board considered the Adviser’s management capabilities and investment processes in light of the types of investments held
by the Fund, including the education, experience and number of investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Fund, including recent changes to such personnel. In
particular, the Board considered, where relevant, the abilities and experience of the Adviser’s investment professionals in analyzing special considerations relevant to investing in particular markets or industries and implementing the
Fund’s
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Board of Trustees’ Contract Approval — continued
options strategy. The Board considered that the Adviser has devoted extensive resources to in-house equity research and also draws upon independent research available from third-party sources. The Board also took
into account the resources dedicated to portfolio management and other services, the compensation methods of the Adviser and other factors, including the reputation and resources of the Adviser to recruit and retain highly qualified research,
advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Fund, by senior management, as well as the infrastructure, operational capabilities and
support staff in place to assist in the portfolio management and operations of the Fund, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be
subject in managing the Fund. The Board considered the deep experience of the Adviser and its affiliates with managing and operating funds organized as exchange-listed closed-end funds, such as the Fund. In this regard, the Board considered, among
other things, the Adviser’s and its affiliates’ experience monitoring and assessing trading price discounts and premiums and adhering to the requirements of securities exchanges.
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. The Board considered compliance and reporting matters regarding, among other things, personal trading by investment
professionals, disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to
requests in recent years from regulatory authorities, such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The Board considered other administrative services provided or overseen by Eaton Vance Management and its affiliates, including transfer agency and accounting
services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a
whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Fund’s investment performance to that of comparable funds identified by an independent data provider (the peer group),
as well as appropriate benchmark indices and a custom peer group of similarly managed funds. The Board’s review included comparative performance data with respect to the Fund for the one-, three-, five- and ten-year periods ended
September 30, 2019. In this regard, the Board noted that the performance of the Fund was higher than the median performance of the Fund’s peer group and custom peer group for the three-year period. The Board also noted that the performance
of the Fund was higher than its secondary benchmark index and lower than its primary benchmark index for the three-year period. The Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Fund for advisory and administrative services (referred to collectively as “management fees”).
As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one-year period ended September 30, 2019, as compared to those of comparable funds, before and after giving effect to any undertaking to
waive fees or reimburse expenses. The Board also considered factors that had an impact on the Fund’s total expense ratio relative to comparable funds.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related
services are reasonable.
Profitability and “Fall-Out” Benefits
The Board considered the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to
the Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the Adviser and its affiliates to third parties in respect of distribution or other
services.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized
by the Adviser and its affiliates are deemed not to be excessive.
The Board also considered direct or indirect fall-out benefits received by the Adviser
and its affiliates in connection with their respective relationships with the Fund, including the benefits of research services that may be available to the Adviser as a result of securities transactions effected for the Fund and other investment
advisory clients.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund, on the other hand, can expect to realize benefits from
economies of scale as the assets of the Fund increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The
Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Board of Trustees’ Contract Approval — continued
periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the
foregoing, the Board concluded that the Fund currently shares in the benefits from economies of scale, if any, when they are realized by the Adviser. The Board also considered the fact that the Fund is not continuously offered in the same manner as
an open-end fund and that, notwithstanding that the Fund is authorized to issue additional common shares through a shelf offering, the Fund’s assets are not expected to increase materially in the foreseeable future. Accordingly, the Board did
not find that the implementation of breakpoints in the advisory fee schedule is warranted at this time.
Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Management and Organization
Fund Management. The Trustees of Eaton Vance Enhanced Equity Income Fund (the Fund) are responsible for the overall management and supervision of the Fund’s affairs. The Trustees and officers
of the Fund are listed below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. The “Noninterested Trustees” consist of those Trustees who are not “interested
persons” of the Fund, as that term is defined under the 1940 Act. The business address of each Trustee and officer is Two International Place, Boston, Massachusetts 02110. As used below, “EVC” refers to Eaton Vance Corp.,
“EV” refers to Eaton Vance, Inc., “EVM” refers to Eaton Vance Management, “BMR” refers to Boston Management and Research and “EVD” refers to Eaton Vance Distributors, Inc. EVC and EV are the corporate
parent and trustee, respectively, of EVM and BMR. Each officer affiliated with Eaton Vance may hold a position with other Eaton Vance affiliates that is comparable to his or her position with EVM listed below. Each Trustee oversees 143 portfolios
(with the exception of Messrs. Faust and Wennerholm and Ms. Frost who oversee 142 portfolios) in the Eaton Vance Complex (including all master and feeder funds in a master feeder structure). Each officer serves as an officer of certain other
Eaton Vance funds. Each Trustee serves for a three-year term. Each officer serves until his or her successor is elected.
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Name and Year of Birth
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Position(s)
with the
Fund
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Term Expiring.
Trustee
Since(1)
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Principal Occupation(s) and Other Directorships
During Past Five Years and Other Relevant Experience
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Interested Trustee
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Thomas E. Faust Jr.
1958
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Class I
Trustee
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Until 2023.
Trustee since 2007.
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Chairman, Chief Executive Officer and President of EVC, Director and President of EV, Chief Executive Officer and President of EVM and BMR, and
Director of EVD. Trustee and/or officer of 142 registered investment companies. Mr. Faust is an interested person because of his positions with EVM, BMR, EVD, EVC and EV, which are affiliates of the Fund.
Other Directorships in the Last Five Years. Director of EVC and Hexavest Inc. (investment management firm).
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Noninterested Trustees
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Mark R. Fetting
1954
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Class III
Trustee
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Until 2022.
Trustee since 2016.
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Private investor. Formerly held various positions at Legg Mason, Inc. (investment management firm) (2000-2012), including President, Chief
Executive Officer, Director and Chairman (2008-2012), Senior Executive Vice President (2004-2008) and Executive Vice President (2001-2004). Formerly, President of Legg Mason family of funds (2001-2008). Formerly, Division President and Senior
Officer of Prudential Financial Group, Inc. and related companies (investment management firm) (1991-2000).
Other Directorships in the Last Five
Years. None.
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Cynthia E. Frost
1961
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Class I
Trustee
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Until 2023.
Trustee since 2014.
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Private investor. Formerly, Chief Investment Officer of Brown University (university endowment) (2000-2012). Formerly, Portfolio Strategist for
Duke Management Company (university endowment manager) (1995-2000). Formerly, Managing Director, Cambridge Associates (investment consulting company) (1989-1995). Formerly, Consultant, Bain and Company (management consulting firm) (1987-1989). Formerly, Senior Equity Analyst, BA Investment Management Company (1983-1985).
Other Directorships in
the Last Five Years. None.
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George J. Gorman
1952
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Class II
Trustee
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Until 2021.
Trustee since 2014.
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Principal at George J. Gorman LLC (consulting firm). Formerly, Senior Partner at Ernst & Young LLP (a registered public accounting firm)
(1974-2009).
Other Directorships in the Last Five Years. Formerly, Trustee of the BofA Funds Series Trust (11 funds) (2011-2014) and of the
Ashmore Funds (9 funds) (2010-2014).
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Valerie A. Mosley
1960
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Class III
Trustee
|
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Until 2022.
Trustee since
2014.
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Chairwoman and Chief Executive Officer of Valmo Ventures (a consulting and investment firm). Former Partner and Senior Vice President, Portfolio
Manager and Investment Strategist at Wellington Management Company, LLP (investment management firm) (1992-2012). Former Chief Investment Officer, PG Corbin Asset Management (1990-1992). Formerly worked in institutional corporate bond sales at
Kidder Peabody (1986-1990).
Other Directorships in the Last Five Years. Director of DraftKings, Inc. (digital sports entertainment and gaming
company) (since September 2020). Director of Groupon, Inc. (e-commerce provider) (since April 2020). Director of Envestnet, Inc. (provider of intelligent systems for wealth management and financial wellness) (since 2018). Director of Dynex Capital,
Inc. (mortgage REIT) (since 2013).
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Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Management and Organization — continued
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Name and Year of Birth
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Position(s)
with the
Fund
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Term Expiring.
Trustee
Since(1)
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Principal Occupation(s) and Other Directorships
During Past Five Years and Other Relevant Experience
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Noninterested Trustees (continued)
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William H. Park
1947
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Chairperson
of the Board
and Class II
Trustee
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Until 2021.
Chairperson of the Board since 2016 and Trustee since 2003.
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Private investor. Formerly, Consultant (management and transactional) (2012-2014). Formerly, Chief Financial Officer, Aveon Group L.P. (investment
management firm) (2010-2011). Formerly, Vice Chairman, Commercial Industrial Finance Corp. (specialty finance company) (2006-2010). Formerly, President and Chief Executive Officer, Prizm Capital Management, LLC (investment management firm) (2002-2005). Formerly, Executive Vice President and Chief Financial Officer, United Asset Management Corporation (investment management firm) (1982-2001). Formerly, Senior Manager, Price Waterhouse (now
PricewaterhouseCoopers) (a registered public accounting firm) (1972-1981).
Other Directorships in the Last Five Years.
None.
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Helen Frame Peters
1948
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Class III
Trustee
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Until 2022.
Trustee since 2008.
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Professor of Finance, Carroll School of Management, Boston College. Formerly, Dean, Carroll School of Management, Boston College (2000-2002).
Formerly, Chief Investment Officer, Fixed Income, Scudder Kemper Investments (investment management firm) (1998-1999). Formerly, Chief Investment Officer, Equity and Fixed Income, Colonial Management Associates (investment management firm)
(1991-1998).
Other Directorships in the Last Five Years. None.
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Keith Quinton
1958
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Class II
Trustee
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Until 2021.
Trustee since 2018.
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Private investor, researcher and lecturer. Independent Investment Committee Member at New Hampshire Retirement System (since 2017). Formerly,
Portfolio Manager and Senior Quantitative Analyst at Fidelity Investments (investment management firm) (2001-2014).
Other Directorships in the Last
Five Years. Director (since 2016) and
Chairman (since 2019) of New Hampshire Municipal Bond Bank.
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Marcus L. Smith
1966
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Class III
Trustee
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Until 2022.
Trustee since 2018.
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Private investor. Member of Posse Boston Advisory Board (foundation) (since 2015). Formerly, Portfolio Manager at MFS Investment Management
(investment management firm) (1994-2017).
Other Directorships in the Last Five Years. Director of MSCI Inc. (global provider of investment
decision support tools) (since 2017). Formerly, Director of DCT Industrial Trust Inc. (logistics real estate company) (2017-2018).
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Susan J. Sutherland
1957
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Class II
Trustee
|
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Until 2021.
Trustee since 2015.
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Private investor. Director of Ascot Group Limited and certain of its subsidiaries (insurance and reinsurance) (since 2018). Formerly, Director of
Hagerty Holding Corp. (insurance and reinsurance) (2015-2018). Formerly, Associate, Counsel and Partner at Skadden, Arps, Slate, Meagher & Flom LLP (law firm) (1982-2013).
Other Directorships in the Last Five Years. Formerly, Director of Montpelier Re Holdings Ltd. (global provider of customized insurance and reinsurance products) (2013-2015).
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Scott E. Wennerholm
1959
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Class I
Trustee
|
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Until 2023.
Trustee since 2016.
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Private Investor. Formerly, Trustee at Wheelock College (postsecondary institution) (2012-2018). Formerly, Consultant at GF Parish Group
(executive recruiting firm) (2016-2017). Formerly, Chief Operating Officer and Executive Vice President at BNY Mellon Asset Management (investment management firm) (2005-2011). Formerly, Chief Operating Officer and Chief Financial Officer at Natixis
Global Asset Management (investment management firm) (1997-2004). Formerly, Vice President at Fidelity Investments Institutional Services (investment management firm) (1994-1997).
Other Directorships in the Last Five Years. None.
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Name and Year of Birth
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|
Position(s)
with the
Fund
|
|
Officer
Since(2)
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Principal Occupation(s)
During Past Five Years
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Principal Officers who are not Trustees
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Edward J. Perkin
1972
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|
President
|
|
2014
|
|
Vice President and Chief Equity Investment Officer of EVM and BMR. Prior to joining EVM in 2014, Mr. Perkin was Chief Investment Officer, International and Emerging Markets Equity, and
Managing Director, Portfolio Manager, Europe, EAFE and Global, at Goldman Sachs Asset Management. Also Vice President of Calvert Research and Management (“CRM”) since
2016.
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Eaton Vance
Enhanced Equity Income Fund
September 30, 2020
Management and Organization — continued
|
|
|
|
|
|
|
|
|
Name and Year of Birth
|
|
Position(s)
with the
Fund
|
|
Officer
Since(2)
|
|
Principal Occupation(s)
During Past Five Years
|
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|
Principal Officers who are not Trustees (continued)
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Maureen A. Gemma
1960
|
|
Vice President, Secretary and Chief Legal Officer
|
|
2005
|
|
Vice President of EVM and BMR. Also Vice President of CRM.
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James F. Kirchner
1967
|
|
Treasurer
|
|
2007
|
|
Vice President of EVM and BMR. Also Vice President of CRM.
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Richard F. Froio
1968
|
|
Chief Compliance Officer
|
|
2017
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Vice President of EVM and BMR since 2017. Formerly Deputy Chief Compliance Officer (Adviser/Funds) and Chief Compliance Officer (Distribution) at PIMCO
(2012-2017) and Managing Director at BlackRock/Barclays Global Investors (2009-2012).
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(1)
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Year first appointed to serve as Trustee for a fund in the Eaton Vance family of funds. Each Trustee has served continuously since appointment unless indicated
otherwise.
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(2)
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Year first elected to serve as officer of a fund in the Eaton Vance family of funds when the officer has served continuously. Otherwise, year of most recent
election as an officer of a fund in the Eaton Vance family of funds. Titles may have changed since initial election.
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Eaton Vance Funds
IMPORTANT NOTICES
Privacy. The Eaton Vance organization is committed to ensuring your financial privacy. Each entity listed below has adopted a
privacy policy and procedures (“Privacy Program”) Eaton Vance believes is reasonably designed to protect your personal information and to govern when and with whom Eaton Vance may share your personal information.
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At the time of opening an account, Eaton Vance generally requires you to provide us with certain information such as name, address, social security number, tax
status, account numbers, and account balances. This information is necessary for us to both open an account for you and to allow us to satisfy legal requirements such as applicable anti-money laundering reviews and know-your-customer
requirements.
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On an ongoing basis, in the normal course of servicing your account, Eaton Vance may share your information with unaffiliated third parties that perform various
services for Eaton Vance and/or your account. These third parties include transfer agents, custodians, broker/dealers and our professional advisers, including auditors, accountants, and legal counsel. Eaton Vance may additionally share your
personal information with our affiliates.
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We believe our Privacy Program is reasonably designed to protect the confidentiality of your personal information and to prevent unauthorized access to that
information.
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We reserve the right to change our Privacy Program at any time upon proper notification to you. You may want to review our Privacy Program periodically for
changes by accessing the link on our homepage: www.eatonvance.com.
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Our pledge of protecting your personal information applies to the
following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company,
Eaton Vance Management (International) Limited, Eaton Vance Advisers International Ltd., Eaton Vance Global Advisors Limited, Eaton Vance Management’s Real Estate Investment Group, Boston Management and Research, Calvert
Research and Management, and Calvert Funds. This Privacy Notice supersedes all previously issued privacy disclosures. For more information about our Privacy Program or about how your personal information may be used, please call 1-800-262-1122.
Delivery of Shareholder Documents. The Securities and Exchange
Commission (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. American Stock Transfer & Trust Company, LLC (“AST”), the closed-end funds transfer agent, or your financial
intermediary, may household the mailing of your documents indefinitely unless you instruct AST, or your financial intermediary, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact AST or your
financial intermediary. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by AST or your financial intermediary.
Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio(s) (if
applicable) files a schedule of portfolio holdings on Part F to Form N-PORT with the SEC. Certain information filed on Form N-PORT may be viewed 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 SEC’s website at www.sec.gov.
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 SEC’s website at www.sec.gov.
Share Repurchase Program. The Fund’s Board of Trustees has approved a share repurchase program authorizing the Fund to
repurchase up to 10% of its common shares outstanding as of the last day of the prior calendar year in open-market transactions at a discount to net asset value. The repurchase program does not obligate the Fund to purchase a specific amount of
shares. The Fund’s repurchase activity, including the number of shares purchased, average price and average discount to net asset value, is disclosed in the Fund’s annual and semi-annual reports to shareholders.
Additional Notice to Shareholders. If applicable, a Fund may also redeem or
purchase its outstanding preferred shares in order to maintain compliance with regulatory requirements, borrowing or rating agency requirements or for other purposes as it deems appropriate or necessary.
Closed-End Fund Information. Eaton Vance closed-end funds make fund performance
data and certain information about portfolio characteristics available on the Eaton Vance website shortly after the end of each month. Other information about the funds is available on the website. The funds’ net asset value per share is
readily accessible on the Eaton Vance website. Portfolio holdings for the most recent month-end are also posted to the website approximately 30 days following the end of the month. 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
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Transfer Agent
American Stock
Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
200 Berkeley
Street
Boston, MA 02116-5022
Fund Offices
Two International Place
Boston, MA 02110
2285 9.30.20