Eaton Vance Enhanced Equity Income Fund II

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

811-21670

Investment Company Act File Number

Eaton Vance Enhanced Equity Income Fund II

(Exact Name of Registrant as Specified in Charter)

Two International Place, Boston, Massachusetts 02110

(Address of Principal Executive Offices)

Maureen A. Gemma

Two International Place, Boston, Massachusetts 02110

(Name and Address of Agent for Services)

(617) 482-8260

(Registrant’s Telephone Number, Including Area Code)

December 31

Date of Fiscal Year End

September 30, 2017

Date of Reporting Period

 

 

 

Item 1. Schedule of Investments

Eaton Vance

Enhanced Equity Income Fund II

September 30, 2017

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 100.4%(1)

 

                                                 
Security    Shares      Value  

Aerospace & Defense — 2.0%

      

Raytheon Co.

      79,298      $ 14,795,421  
     

 

 

  
      $ 14,795,421  
     

 

 

  

Air Freight & Logistics — 2.3%

      

FedEx Corp.

      74,279      $ 16,755,857  
     

 

 

  
      $ 16,755,857  
     

 

 

  

Auto Components — 1.5%

      

Delphi Automotive PLC

      113,234      $ 11,142,226  
     

 

 

  
      $ 11,142,226  
     

 

 

  

Banks — 2.1%

      

JPMorgan Chase & Co.

      81,071      $ 7,743,091  

KeyCorp

      386,662        7,276,979  
     

 

 

  
      $ 15,020,070  
     

 

 

  

Beverages — 2.0%

      

Constellation Brands, Inc., Class A

      45,345      $ 9,044,060  

PepsiCo, Inc.

      50,616        5,640,141  
     

 

 

  
      $ 14,684,201  
     

 

 

  

Biotechnology — 9.2%

      

Alexion Pharmaceuticals, Inc.(2)

      35,506      $ 4,981,137  

Biogen, Inc.(2)

      19,344        6,056,993  

Celgene Corp.(2)

      190,431        27,768,649  

Gilead Sciences, Inc.

      172,859        14,005,036  

Incyte Corp.(2)

      39,423        4,602,241  

Vertex Pharmaceuticals, Inc.(2)

      62,107        9,442,748  
     

 

 

  
      $ 66,856,804  
     

 

 

  

Capital Markets — 3.0%

      

CBOE Holdings, Inc.

      62,809      $ 6,760,133  

Charles Schwab Corp. (The)

      221,168        9,673,888  

S&P Global, Inc.

      32,209        5,034,589  
     

 

 

  
      $ 21,468,610  
     

 

 

  

Chemicals — 3.4%

      

Ecolab, Inc.

      109,640      $ 14,100,800  

Monsanto Co.

      46,086        5,522,025  

Olin Corp.

      149,661        5,125,889  
     

 

 

  
      $ 24,748,714  
     

 

 

  

 

1

 

 

                                                 
Security    Shares      Value  

Communications Equipment — 1.6%

 

Palo Alto Networks, Inc.(2)

      83,246      $ 11,995,749  
     

 

 

  
   $ 11,995,749  
     

 

 

  

Distributors — 1.9%

 

LKQ Corp.(2)

      376,508      $ 13,550,523  
     

 

 

  
   $ 13,550,523  
     

 

 

  

Energy Equipment & Services — 1.1%

 

Halliburton Co.

      172,562      $ 7,943,029  
     

 

 

  
   $ 7,943,029  
     

 

 

  

Food & Staples Retailing — 2.0%

 

Costco Wholesale Corp.

      43,116      $ 7,083,527  

US Foods Holding Corp.(2)

      269,441        7,194,075  
     

 

 

  
   $ 14,277,602  
     

 

 

  

Food Products — 2.3%

 

Mondelez International, Inc., Class A

      178,653      $ 7,264,031  

Pinnacle Foods, Inc.

      159,703        9,130,220  
     

 

 

  
   $ 16,394,251  
     

 

 

  

Health Care Equipment & Supplies — 1.4%

 

Align Technology, Inc.(2)

      16,876      $ 3,143,493  

Danaher Corp.

      81,195        6,964,907  
     

 

 

  
   $ 10,108,400  
     

 

 

  

Health Care Providers & Services — 1.1%

 

Aetna, Inc.

      50,084      $ 7,963,857  
     

 

 

  
   $ 7,963,857  
     

 

 

  

Hotels, Restaurants & Leisure — 0.9%

 

Starbucks Corp.

      120,393      $ 6,466,308  
     

 

 

  
   $ 6,466,308  
     

 

 

  

Household Durables — 1.0%

 

Newell Brands, Inc.

      175,650      $ 7,494,985  
     

 

 

  
   $ 7,494,985  
     

 

 

  

Industrial Conglomerates — 0.7%

 

3M Co.

      25,606      $ 5,374,699  
     

 

 

  
   $ 5,374,699  
     

 

 

  

Internet & Direct Marketing Retail — 6.5%

 

Amazon.com, Inc.(2)

      45,198      $ 43,451,097  

Priceline Group, Inc. (The)(2)

      2,122        3,885,000  
     

 

 

  
   $ 47,336,097  
     

 

 

  

 

2

 

 

                                                 
Security    Shares      Value  

Internet Software & Services — 16.4%

 

Alphabet, Inc., Class C(2)

      62,331      $ 59,782,285  

Facebook, Inc., Class A(2)

      271,725        46,429,651  

GoDaddy, Inc., Class A(2)

      290,857        12,655,188  
     

 

 

  
   $ 118,867,124  
     

 

 

  

IT Services — 4.3%

 

Visa, Inc., Class A

      294,628      $ 31,006,651  
     

 

 

  
   $ 31,006,651  
     

 

 

  

Leisure Products — 0.5%

 

Mattel, Inc.

      224,324      $ 3,472,536  
     

 

 

  
   $ 3,472,536  
     

 

 

  

Machinery — 2.2%

 

Dover Corp.

      172,996      $ 15,810,104  
     

 

 

  
   $ 15,810,104  
     

 

 

  

Media — 1.2%

 

Walt Disney Co. (The)

      90,321      $ 8,902,941  
     

 

 

  
   $ 8,902,941  
     

 

 

  

Oil, Gas & Consumable Fuels — 0.4%

 

EOG Resources, Inc.

      31,423      $ 3,039,861  
     

 

 

  
   $ 3,039,861  
     

 

 

  

Personal Products — 1.1%

 

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

      38,448      $ 4,146,232  

Unilever NV - NY Shares

      64,619        3,815,106  
     

 

 

  
   $ 7,961,338  
     

 

 

  

Pharmaceuticals — 5.0%

 

Allergan PLC

      60,893      $ 12,480,020  

Eli Lilly & Co.

      87,744        7,505,622  

Johnson & Johnson

      57,482        7,473,235  

Zoetis, Inc.

      144,265        9,198,336  
     

 

 

  
   $ 36,657,213  
     

 

 

  

Road & Rail — 4.1%

 

CSX Corp.

      303,542      $ 16,470,189  

J.B. Hunt Transport Services, Inc.

      119,990        13,328,489  
     

 

 

  
   $ 29,798,678  
     

 

 

  

Semiconductors & Semiconductor Equipment — 2.3%

 

Broadcom, Ltd.

      36,659      $ 8,891,274  

Texas Instruments, Inc.

      88,994        7,977,422  
     

 

 

  
   $ 16,868,696  
     

 

 

  

 

3

 

 

                                                 
Security    Shares      Value  

Software — 9.1%

 

Adobe Systems, Inc.(2)

      94,092      $ 14,036,644  

FireEye, Inc.(2)

      477,584        8,009,084  

Intuit, Inc.

      57,084        8,113,920  

Microsoft Corp.

      220,860        16,451,861  

salesforce.com, inc.(2)

      212,645        19,865,296  
     

 

 

  
   $ 66,476,805  
     

 

 

  

Specialty Retail — 3.0%

 

Advance Auto Parts, Inc.

      67,792      $ 6,724,967  

Burlington Stores, Inc.(2)

      48,837        4,661,980  

Home Depot, Inc. (The)

      62,027        10,145,136  
     

 

 

  
   $ 21,532,083  
     

 

 

  

Technology Hardware, Storage & Peripherals — 2.9%

 

Apple, Inc.

      138,568      $ 21,356,100  
     

 

 

  
   $ 21,356,100  
     

 

 

  

Textiles, Apparel & Luxury Goods — 1.9%

 

Lululemon Athletica, Inc.(2)

      105,381      $ 6,559,967  

NIKE, Inc., Class B

      137,611        7,135,131  
     

 

 

  
   $ 13,695,098  
     

 

 

  

Total Common Stocks — 100.4%
(identified cost $497,212,295)

 

    $ 729,822,631  
     

 

 

  

Total Covered Call Options Written — (0.5)%
(premiums received $4,348,123)

 

    $ (3,794,132 ) 
     

 

 

  

Other Assets, Less Liabilities — 0.1%

 

    $ 603,304  
     

 

 

  

Net Assets — 100.0%

 

    $ 726,631,803  
     

 

 

  

The percentage shown for each investment category in the Portfolio of Investments is based on net assets.

During the fiscal year to date ended September 30, 2017, the Fund held interests in Eaton Vance Cash Reserves Fund, LLC, an affiliated investment company, available to Eaton Vance portfolios and funds, which invests in high quality, U.S. dollar denominated money market instruments. Net income earned from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended September 30, 2017 was $43,141.

 

(1) A portion of each applicable common stock for which a written call option is outstanding at September 30, 2017 has been pledged as collateral for such written option.

 

(2) Non-income producing security.

 

4

 

 

Covered Call Options Written — (0.5)%

Exchange-Traded Options — (0.5)%

 

                                                                                                                            
Description    Number of
Contracts		      Notional
Amount		      Exercise
Price		      Expiration
Date		      Value  

3M Co.

      125      $ 2,623,750      $ 215        11/3/17      $ (24,187 ) 

Adobe Systems, Inc.

      470        7,011,460        155        11/3/17        (64,155 ) 

Advance Auto Parts, Inc.

      335        3,323,200        105        10/20/17        (31,825 ) 

Aetna, Inc.

      250        3,975,250        168        10/13/17        (3,500 ) 

Alexion Pharmaceuticals, Inc.

      175        2,455,075        150        11/17/17        (59,500 ) 

Align Technology, Inc.

      80        1,490,160        200        11/17/17        (35,600 ) 

Allergan PLC

      300        6,148,500        215        11/3/17        (84,000 ) 

Alphabet, Inc., Class C

      310        29,732,410        965        10/20/17        (365,800 ) 

Amazon.com, Inc.

      225        21,630,375        1,020        10/6/17        (9,787 ) 

Apple, Inc.

      690        10,634,280        165        10/27/17        (36,915 ) 

Biogen, Inc.

      95        2,974,640        335        10/20/17        (11,162 ) 

Broadcom, Ltd.

      180        4,365,720        258        10/27/17        (29,700 ) 

Burlington Stores, Inc.

      240        2,291,040        95        10/20/17        (60,000 ) 

CBOE Holdings, Inc.

      310        3,336,530        110        11/17/17        (50,321 ) 

Celgene Corp.

      950        13,852,900        145        10/20/17        (296,875 ) 

Charles Schwab Corp. (The)

      1,105        4,833,270        44        10/27/17        (102,213 ) 

Constellation Brands, Inc., Class A

      265        5,285,425        210        10/20/17        (59,625 ) 

Costco Wholesale Corp.

      215        3,532,235        168        10/20/17        (36,227 ) 

CSX Corp.

      1,425        7,732,050        55        10/20/17        (175,988 ) 

Danaher Corp.

      405        3,474,090        90        10/20/17        (7,087 ) 

Delphi Automotive PLC

      565        5,559,600        105        11/17/17        (63,562 ) 

Dover Corp.

      860        7,859,540        95        12/15/17        (129,000 ) 

Ecolab, Inc.

      545        7,009,245        135        10/20/17        (5,450 ) 

Eli Lilly & Co.

      435        3,720,990        85        10/20/17        (66,338 ) 

EOG Resources, Inc.

      155        1,499,470        98        11/17/17        (43,245 ) 

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

      190        2,048,960        110        11/17/17        (52,250 ) 

Facebook, Inc., Class A

      1,355        23,152,885        180        11/17/17        (377,368 ) 

FedEx Corp.

      370        8,346,460        225        10/13/17        (112,110 ) 

FireEye, Inc.

      2,385        3,999,645        17        10/20/17        (94,208 ) 

Gilead Sciences, Inc.

      245        1,984,990        90        11/17/17        (16,047 ) 

GoDaddy, Inc., Class A

      1,450        6,308,950        46        10/20/17        (29,000 ) 

Halliburton Co.

      860        3,958,580        48        11/17/17        (77,294 ) 

Home Depot, Inc. (The)

      310        5,070,360        163        10/13/17        (68,975 ) 

Incyte Corp.

      300        3,502,200        135        10/20/17        (10,500 ) 

Intuit, Inc.

      285        4,050,990        145        10/20/17        (32,775 ) 

J.B. Hunt Transport Services, Inc.

      595        6,609,260        115        11/17/17        (96,688 ) 

Johnson & Johnson

      285        3,705,285        133        11/3/17        (28,642 ) 

JPMorgan Chase & Co.

      405        3,868,155        95        10/20/17        (61,560 ) 

KeyCorp

      1,930        3,632,260        20        11/3/17        (52,110 ) 

LKQ Corp.

      1,880        6,766,120        38        11/17/17        (88,393 ) 

Lululemon Athletica, Inc.

      525        3,268,125        65        10/20/17        (33,337 ) 

Mattel, Inc.

      1,120        1,733,760        17        10/20/17        (11,200 ) 

Microsoft Corp.

      1,100        8,193,900        75        10/20/17        (85,250 ) 

Mondelez International, Inc., Class A

      965        3,923,690        42        10/20/17        (18,335 ) 

Newell Brands, Inc.

      880        3,754,960        45        10/20/17        (11,000 ) 

NIKE, Inc., Class B

      685        3,551,725        55        11/17/17        (26,030 ) 

 

5

 

 

                                                                                                                            
Description    Number of
Contracts		      Notional
Amount		      Exercise
Price		      Expiration
Date		      Value  

Olin Corp.

      745        2,551,625        37        11/17/17        (49,495 ) 

Palo Alto Networks, Inc.

      415        5,980,150        155        10/20/17        (24,485 ) 

Priceline Group, Inc. (The)

      10        1,830,820        1,890        10/20/17        (8,400 ) 

Raytheon Co.

      395        7,369,910        190        11/17/17        (108,033 ) 

S&P Global, Inc.

      160        2,500,960        155        10/20/17        (42,800 ) 

salesforce.com, inc.

      1,060        9,902,520        100        11/17/17        (81,090 ) 

Starbucks Corp.

      600        3,222,600        56        10/27/17        (15,000 ) 

Texas Instruments, Inc.

      440        3,944,160        88        10/20/17        (105,820 ) 

Unilever NV - NY Shares

      320        1,889,280        63        10/20/17        (2,400 ) 

Vertex Pharmaceuticals, Inc.

      310        4,713,240        165        10/20/17        (24,800 ) 

Visa, Inc., Class A

      1,470        15,470,280        107        10/6/17        (18,375 ) 

Walt Disney Co. (The)

      450        4,435,650        101        11/3/17        (44,100 ) 

Zoetis, Inc.

      720        4,590,720        65        10/27/17        (34,200 ) 
              

 

 

  

Total

                $ (3,794,132 ) 
              

 

 

  

At September 30, 2017, the Fund had sufficient cash and/or securities to cover commitments under open derivative contracts.

The Fund is subject to equity price risk in the normal course of pursuing its investment objectives. The Fund writes covered call options on individual stocks above the current value of the stock to generate premium income. In writing call options on individual stocks, the Fund in effect, sells potential appreciation in the value of the applicable stock above the exercise price in exchange for the option premium received. The Fund retains the risk of loss, minus the premium received, should the price of the underlying stock decline.

At September 30, 2017, the aggregate fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in a liability position and whose primary underlying risk exposure is equity price risk was $3,794,132.

Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

 

•   Level 1 — quoted prices in active markets for identical investments

 

•   Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

•   Level 3 — significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments)

In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

 

6

 

 

At September 30, 2017, 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

    $ 729,822,631 *     $ —      $ —      $ 729,822,631  

Total Investments

    $     729,822,631      $     —      $     —      $     729,822,631  
Liability Description                                

Covered Call Options Written

    $ (3,794,132 )     $ —      $ —      $ (3,794,132 ) 

Total

    $ (3,794,132 )     $ —      $ —      $ (3,794,132 ) 

 

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

The Fund held no investments or other financial instruments as of December 31, 2016 whose fair value was determined using Level 3 inputs. At September 30, 2017, there were no investments transferred between Level 1 and Level 2 during the fiscal year to date then ended.

For information on the Fund’s policy regarding the valuation of investments and other significant accounting policies, please refer to the Fund’s most recent financial statements included in its semiannual or annual report to shareholders.

 

7

 

 

Item 2. Controls and Procedures

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

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

Item 3. Exhibits

A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act is attached hereto.

Signatures

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

Eaton Vance Enhanced Equity Income Fund II

 

By:   /s/ Edward J. Perkin
  Edward J. Perkin
  President
Date:   November 27, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:   /s/ Edward J. Perkin
  Edward J. Perkin
  President
Date:   November 27, 2017

 

By:   /s/ James F. Kirchner
  James F. Kirchner
  Treasurer
Date:   November 27, 2017