Eaton Vance Tax-Managed Buy-Write Income Fund

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File Number: 811-21676

 

 

Eaton Vance Tax-Managed Buy-Write

Income Fund

(Exact Name of Registrant as Specified in Charter)

 

 

Two International Place, Boston, Massachusetts 02110

(Address of Principal Executive Offices)

 

 

Maureen A. Gemma

Two International Place, Boston, Massachusetts 02110

(Name and Address of Agent for Services)

 

 

(617) 482-8260

(Registrant’s Telephone Number)

 

 

December 31

Date of Fiscal Year End

June 30, 2013

Date of Reporting Period

 

 

 


Item 1. Reports to Stockholders


LOGO

 

 

Eaton Vance

Tax-Managed

Buy-Write Income Fund (ETB)

Semiannual Report

June 30, 2013

 

 

 

 

LOGO


 

Commodity Futures Trading Commission Registration. Effective December 31, 2012, the Commodity Futures Trading Commission (“CFTC”) adopted certain regulatory changes that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The Fund has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and is not subject to the CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator.

Managed Distribution Plan. Pursuant to an exemptive order issued by the Securities and Exchange Commission (Order), the Fund is authorized to distribute long-term capital gains to shareholders more frequently than once per year. Pursuant to the Order, the Fund’s Board of Trustees approved a Managed Distribution Plan (MDP) pursuant to which the Fund makes monthly cash distributions to common shareholders, stated in terms of a fixed amount per common share.

The Fund currently distributes monthly cash distributions equal to $0.1080 per share in accordance with the MDP. The Fund’s distribution frequency changed from quarterly to monthly beginning in January 2013. You should not draw any conclusions about the Fund’s investment performance from the amount of these distributions or from the terms of the MDP. The MDP will be subject to regular periodic review by the Fund’s Board of Trustees and the Board may amend or terminate the MDP at any time without prior notice to Fund shareholders. However, at this time there are no reasonably foreseeable circumstances that might cause the termination of the MDP.

The Fund may distribute more than its net investment income and net realized capital gains and, therefore, a distribution may include a return of capital. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.” With each distribution, the Fund will issue a notice to shareholders and a press release containing information about the amount and sources of the distribution and other related information. The amounts and sources of distributions contained in the notice and press release are only estimates and are not provided for tax purposes. The amounts and sources of the Fund’s distributions for tax purposes will be reported to shareholders on Form 1099-DIV for each calendar year.

Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.


Semiannual Report June 30, 2013

Eaton Vance

Tax-Managed Buy-Write Income Fund

Table of Contents

 

Performance

     2   

Fund Profile

     2   

Fund Snapshot

     3   

Endnotes and Additional Disclosures

     4   

Financial Statements

     5   

Annual Meeting of Shareholders

     18   

Board of Trustees’ Contract Approval

     19   

Officers and Trustees

     22   

Important Notices

     23   


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Performance1

 

Portfolio Managers Walter A. Row III, CFA, CMT, David Stein, Ph.D. and Thomas Seto

 

% Average Annual Total Returns    Inception Date      Six Months      One Year      Five Years      Since
Inception
 

Fund at NAV

     04/29/2005         8.78      12.59      9.06      7.97

Fund at Market Price

             8.08         18.03         8.43         7.09   

S&P 500 Index

     04/29/2005         13.82      20.60      7.01      6.32

CBOE S&P 500 BuyWrite Index

     04/29/2005         4.87         5.29         3.34         4.24   
% Premium/Discount to NAV                                        
                 –6.45
Distributions2                                        

Total Distributions per share for the period

               $ 0.648   

Distribution Rate at NAV

                 8.36

Distribution Rate at Market Price

                 8.93

Fund Profile

 

 

Sector Allocation (% of total investments)3

 

 

 

LOGO

Top 10 Holdings (% of total investments)3

 

 

Exxon Mobil Corp.

    3.1

Apple, Inc.

    2.9   

Google, Inc., Class A

    2.2   

Microsoft Corp.

    2.1   

Chevron Corp.

    2.0   

Wells Fargo & Co.

    1.8   

AT&T, Inc.

    1.8   

International Business Machines Corp.

    1.7   

JPMorgan Chase & Co.

    1.6   

Coca-Cola Co. (The)

    1.6   
         

Total

    20.8
         
 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested. Fund performance at market price will differ from its results at NAV due to factors such as changing perceptions about the Fund, market conditions, fluctuations in supply and demand for Fund shares, or changes in Fund distributions. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance less than one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

 

  2  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Fund Snapshot4

 

 

Objective

  The primary investment objective is to provide current income and gains, with a secondary objective of capital appreciation.

Strategy

  The Fund invests in a diversified portfolio of common stocks and writes call options on one or more U.S. indices on a substantial portion of the value of its common stock portfolio to generate current earnings from the option premium. The Fund evaluates returns on an after tax basis and seeks to minimize and defer federal income taxes incurred by shareholders in connection with their investment in the Fund.

 

Options Strategy

  Write Index Covered Calls

Equity Benchmark1

  S&P 500 Index

Morningstar Category

  Large Blend

Distribution Frequency

  Monthly

Common Stock Portfolio

   

Positions Held

  201

% US / Non-US

  98.8/1.2

Weighted Avg. Market Cap

  $113.3 Billion

Call Options

   

% Portfolio with Call Options

  95%

Average Days to Expiration

  18 days

Weighted Average %

  1.5%

of Strike Prices

  out-of-the-money

    

 

 

See Endnotes and Additional Disclosures in this report.

 

  3  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Endnotes and Additional Disclosures

 

 

1 

S&P 500 Index is an unmanaged index of large-cap stocks commonly used as a measure of U.S. stock market performance. CBOE S&P 500 BuyWrite Index measures the performance of a hypothetical buy-write strategy on the S&P 500 Index. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index.

 

2 

The Distribution Rate is based on the Fund’s last regular distribution per share in the period (annualized) divided by the Fund’s NAV or market price at the end of the period. The Fund’s distributions may be composed of ordinary income, tax-exempt income, net realized capital gains and return of capital. In recent years, a significant portion of the Fund’s distributions has been characterized as a return of capital. The Fund’s distributions are determined by the investment adviser based on its current assessment of the Fund’s long-term return potential. As portfolio and market conditions change, the rate of distributions paid by the Fund could change.

 

3 

Depictions do not reflect the Fund’s option positions. Excludes cash and cash equivalents.

 

4 

The following terms as used in the Fund snapshot:

 

   Weighted Average Market Cap: An indicator of the size of the companies in which the Fund invests and is the sum of each security’s weight in the portfolio multiplied by its market cap. Market Cap is determined by multiplying the price of a share of a company’s common stock by the number of shares outstanding.

 

   Call Option: For an index call option, the buyer has the right to receive from the seller (or “writer”) a cash payment at the option expiration date equal to any positive difference between the value of the index at contract expiration and the exercise price. The buyer of a call option makes a cash payment (premium) to the seller (writer) of the option upon entering into the option contract.

 

   Covered Call Strategy: A strategy of owning a portfolio of common stocks and writing call options on all or a portion of such stocks to generate current earnings from option premium.

 

   Out-of-the-Money: For a call option on an index, the extent to which the exercise price of the option exceeds the current price of the value of the index.

 

   Fund snapshot and profile subject to change due to active management.

 

    

 

 

  4  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Portfolio of Investments (Unaudited)

 

 

Common Stocks — 99.9%   
   
Security   Shares     Value  
   

Aerospace & Defense — 3.3%

  

Boeing Co. (The)

    26,422      $ 2,706,670   

Honeywell International, Inc.

    45,524        3,611,874   

Northrop Grumman Corp.

    21,600        1,788,480   

Textron, Inc.

    19,301        502,791   

United Technologies Corp.

    42,843        3,981,828   
                 
    $ 12,591,643   
                 

Air Freight & Logistics — 0.7%

  

C.H. Robinson Worldwide, Inc.

    5,324      $ 299,794   

United Parcel Service, Inc., Class B

    25,904        2,240,178   
                 
    $ 2,539,972   
                 

Airlines — 0.1%

  

Southwest Airlines Co.

    36,616      $ 471,980   
                 
    $ 471,980   
                 

Auto Components — 0.7%

  

Dana Holding Corp.

    31,658      $ 609,733   

Goodyear Tire & Rubber Co. (The)(1)

    10,898        166,630   

Johnson Controls, Inc.

    36,367        1,301,575   

Lear Corp.

    7,250        438,335   
                 
    $ 2,516,273   
                 

Automobiles — 0.3%

  

Ford Motor Co.

    76,877      $ 1,189,287   
                 
    $ 1,189,287   
                 

Beverages — 2.7%

  

Coca-Cola Co. (The)

    149,622      $ 6,001,339   

PepsiCo, Inc.

    51,618        4,221,836   
                 
    $ 10,223,175   
                 

Biotechnology — 2.1%

  

Amgen, Inc.

    23,888      $ 2,356,790   

Celgene Corp.(1)

    27,163        3,175,626   

Elan Corp. PLC ADR(1)

    17,123        242,119   

Gilead Sciences, Inc.(1)

    38,604        1,976,911   

Vertex Pharmaceuticals, Inc.(1)

    1,850        147,760   
                 
    $ 7,899,206   
                 
Security   Shares     Value  
   

Capital Markets — 1.3%

  

Greenhill & Co., Inc.

    14,014      $ 641,000   

Invesco, Ltd.

    38,480        1,223,664   

Lazard, Ltd., Class A

    21,525        692,029   

Legg Mason, Inc.

    10,446        323,930   

State Street Corp.

    27,413        1,787,602   

Walter Investment Management Corp.(1)

    7,355        248,673   
                 
    $ 4,916,898   
                 

Chemicals — 1.8%

  

CF Industries Holdings, Inc.

    2,700      $ 463,050   

Dow Chemical Co. (The)

    64,146        2,063,577   

E.I. du Pont de Nemours & Co.

    46,387        2,435,317   

Eastman Chemical Co.

    3,608        252,596   

Sherwin-Williams Co. (The)

    9,183        1,621,718   
                 
    $ 6,836,258   
                 

Commercial Banks — 3.6%

  

Bank of Montreal

    4,957      $ 287,655   

BankUnited, Inc.

    10,483        272,663   

BB&T Corp.

    51,539        1,746,141   

Fifth Third Bancorp

    70,279        1,268,536   

KeyCorp

    85,122        939,747   

M&T Bank Corp.

    6,860        766,605   

PNC Financial Services Group, Inc. (The)

    22,704        1,655,576   

SunTrust Banks, Inc.

    5,538        174,835   

Wells Fargo & Co.

    164,065        6,770,962   
                 
    $ 13,882,720   
                 

Commercial Services & Supplies — 0.6%

  

Avery Dennison Corp.

    15,307      $ 654,527   

Waste Management, Inc.

    37,595        1,516,207   
                 
    $ 2,170,734   
                 

Communications Equipment — 2.7%

  

Brocade Communications Systems, Inc.(1)

    42,403      $ 244,241   

Cisco Systems, Inc.

    222,878        5,418,164   

QUALCOMM, Inc.

    76,698        4,684,714   
                 
    $ 10,347,119   
                 

Computers & Peripherals — 2.9%

  

Apple, Inc.

    28,043      $ 11,107,271   
                 
    $ 11,107,271   
                 
 

 

  5   See Notes to Financial Statements.


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Portfolio of Investments (Unaudited) — continued

 

 

Security   Shares     Value  
   

Construction & Engineering — 0.5%

  

Fluor Corp.

    33,265      $ 1,972,947   
                 
    $ 1,972,947   
                 

Consumer Finance — 1.5%

  

American Express Co.

    49,193      $ 3,677,669   

Discover Financial Services

    40,754        1,941,520   
                 
    $ 5,619,189   
                 

Containers & Packaging — 0.2%

  

MeadWestvaco Corp.

    21,446      $ 731,523   
                 
    $ 731,523   
                 

Distributors — 0.6%

  

Genuine Parts Co.

    28,209      $ 2,202,277   
                 
    $ 2,202,277   
                 

Diversified Financial Services — 4.4%

  

Bank of America Corp.

    139,554      $ 1,794,664   

Citigroup, Inc.

    118,771        5,697,445   

CME Group, Inc.

    14,875        1,130,203   

JPMorgan Chase & Co.

    113,958        6,015,843   

McGraw Hill Financial, Inc.

    38,912        2,069,729   
                 
    $ 16,707,884   
                 

Diversified Telecommunication Services — 2.5%

  

AT&T, Inc.

    190,600      $ 6,747,240   

Verizon Communications, Inc.

    52,772        2,656,542   
                 
    $ 9,403,782   
                 

Electric Utilities — 0.9%

  

Duke Energy Corp.

    28,786      $ 1,943,055   

Edison International

    20,090        967,534   

Pinnacle West Capital Corp.

    7,168        397,609   

Xcel Energy, Inc.

    12,009        340,335   
                 
    $ 3,648,533   
                 

Electrical Equipment — 0.8%

  

Emerson Electric Co.

    53,488      $ 2,917,236   
                 
    $ 2,917,236   
                 

Electronic Equipment, Instruments & Components — 0.1%

  

Molex, Inc.

    13,181      $ 386,731   
                 
    $ 386,731   
                 
Security   Shares     Value  
   

Energy Equipment & Services — 1.6%

  

Halliburton Co.

    62,164      $ 2,593,482   

Schlumberger, Ltd.

    51,953        3,722,952   
                 
    $ 6,316,434   
                 

Food & Staples Retailing — 2.2%

  

CVS Caremark Corp.

    60,482      $ 3,458,361   

Wal-Mart Stores, Inc.

    64,853        4,830,900   
                 
    $ 8,289,261   
                 

Food Products — 1.9%

  

ConAgra Foods, Inc.

    29,016      $ 1,013,529   

Green Mountain Coffee Roasters, Inc.(1)

    15,366        1,153,372   

Kellogg Co.

    29,656        1,904,805   

Kraft Foods Group, Inc.

    18,114        1,012,029   

Mondelez International, Inc., Class A

    54,344        1,550,434   

Tyson Foods, Inc., Class A

    28,696        736,913   
                 
    $ 7,371,082   
                 

Health Care Equipment & Supplies — 2.9%

  

Abbott Laboratories

    73,588      $ 2,566,750   

Baxter International, Inc.

    41,401        2,867,847   

Covidien PLC

    11,380        715,119   

Medtronic, Inc.

    41,406        2,131,167   

Stryker Corp.

    36,840        2,382,811   

Zimmer Holdings, Inc.

    5,294        396,732   
                 
    $ 11,060,426   
                 

Health Care Providers & Services — 1.2%

  

DaVita HealthCare Partners, Inc.(1)

    895      $ 108,116   

Express Scripts Holding Co.(1)

    8,616        531,521   

HCA Holdings, Inc.

    8,034        289,706   

Quest Diagnostics, Inc.

    2,801        169,825   

UnitedHealth Group, Inc.

    49,739        3,256,910   

VCA Antech, Inc.(1)

    11,050        288,294   
                 
    $ 4,644,372   
                 

Hotels, Restaurants & Leisure — 1.4%

  

Marriott International, Inc., Class A

    20,645      $ 833,439   

Marriott Vacations Worldwide Corp.(1)

    2,064        89,247   

McDonald's Corp.

    36,654        3,628,746   

Wyndham Worldwide Corp.

    11,235        642,979   
                 
    $ 5,194,411   
                 
 

 

  6   See Notes to Financial Statements.


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Portfolio of Investments (Unaudited) — continued

 

 

Security   Shares     Value  
   

Household Durables — 0.8%

  

Leggett & Platt, Inc.

    11,383      $ 353,897   

Lennar Corp., Class A

    18,642        671,858   

Newell Rubbermaid, Inc.

    76,798        2,015,948   
                 
    $ 3,041,703   
                 

Household Products — 2.0%

  

Clorox Co. (The)

    6,843      $ 568,927   

Kimberly-Clark Corp.

    19,850        1,928,229   

Procter & Gamble Co.

    65,845        5,069,407   
                 
    $ 7,566,563   
                 

Industrial Conglomerates — 1.8%

  

3M Co.

    21,663      $ 2,368,849   

General Electric Co.

    203,336        4,715,362   
                 
    $ 7,084,211   
                 

Insurance — 5.0%

  

ACE, Ltd.

    14,012      $ 1,253,794   

Allstate Corp. (The)

    53,218        2,560,850   

AmTrust Financial Services, Inc.

    2,769        98,853   

Berkshire Hathaway, Inc., Class B(1)

    31,337        3,507,237   

Cincinnati Financial Corp.

    23,600        1,083,240   

Hanover Insurance Group, Inc. (The)

    1,721        84,209   

Hartford Financial Services Group, Inc.

    12,332        381,305   

Lincoln National Corp.

    59,156        2,157,419   

Marsh & McLennan Cos., Inc.

    50,188        2,003,505   

MetLife, Inc.

    14,938        683,563   

Principal Financial Group, Inc.

    29,001        1,086,087   

Prudential Financial, Inc.

    22,391        1,635,215   

Travelers Companies, Inc. (The)

    33,501        2,677,400   
                 
    $ 19,212,677   
                 

Internet & Catalog Retail — 1.0%

  

Amazon.com, Inc.(1)

    2,750      $ 763,647   

priceline.com, Inc.(1)

    1,797        1,486,353   

Shutterfly, Inc.(1)

    28,875        1,610,936   
                 
    $ 3,860,936   
                 

Internet Software & Services — 2.7%

  

Facebook, Inc., Class A(1)

    3,185      $ 79,179   

Google, Inc., Class A(1)

    9,362        8,242,024   

VeriSign, Inc.(1)

    43,013        1,920,961   
                 
    $ 10,242,164   
                 
Security   Shares     Value  
   

IT Services — 3.3%

  

Accenture PLC, Class A

    17,199      $ 1,237,640   

Fidelity National Information Services, Inc.

    26,132        1,119,495   

International Business Machines Corp.

    33,173        6,339,692   

MasterCard, Inc., Class A

    6,214        3,569,943   

Visa, Inc., Class A

    2,919        533,447   
                 
    $ 12,800,217   
                 

Leisure Equipment & Products — 0.6%

  

Mattel, Inc.

    52,463      $ 2,377,099   
                 
    $ 2,377,099   
                 

Life Sciences Tools & Services — 0.7%

  

Thermo Fisher Scientific, Inc.

    32,278      $ 2,731,687   
                 
    $ 2,731,687   
                 

Machinery — 1.2%

  

Caterpillar, Inc.

    31,778      $ 2,621,367   

Snap-On, Inc.

    6,380        570,244   

Stanley Black & Decker, Inc.

    10,773        832,753   

Timken Co. (The)

    7,266        408,931   
                 
    $ 4,433,295   
                 

Media — 4.4%

  

CBS Corp., Class B

    54,268      $ 2,652,077   

Comcast Corp., Class A

    117,307        4,912,818   

Omnicom Group, Inc.

    38,492        2,419,992   

Time Warner, Inc.

    36,488        2,109,736   

Walt Disney Co. (The)

    78,394        4,950,581   
                 
    $ 17,045,204   
                 

Metals & Mining — 0.7%

  

Allegheny Technologies, Inc.

    7,067      $ 185,933   

Freeport-McMoRan Copper & Gold, Inc.

    12,226        337,560   

Nucor Corp.

    47,291        2,048,646   
                 
    $ 2,572,139   
                 

Multi-Utilities — 2.2%

  

Centerpoint Energy, Inc.

    17,504      $ 411,169   

CMS Energy Corp.

    77,060        2,093,720   

Dominion Resources, Inc.

    17,163        975,202   

DTE Energy Co.

    10,342        693,018   

Integrys Energy Group, Inc.

    7,572        443,189   

NiSource, Inc.

    49,999        1,431,971   
 

 

  7   See Notes to Financial Statements.


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Portfolio of Investments (Unaudited) — continued

 

 

Security   Shares     Value  
   

Multi-Utilities (continued)

  

Public Service Enterprise Group, Inc.

    60,956      $ 1,990,823   

TECO Energy, Inc.

    27,984        481,045   
                 
    $ 8,520,137   
                 

Multiline Retail — 1.0%

  

J.C. Penney Co., Inc.(1)

    19,821      $ 338,543   

Kohl’s Corp.

    5,666        286,189   

Macy’s, Inc.

    50,853        2,440,944   

Nordstrom, Inc.

    12,248        734,145   
                 
    $ 3,799,821   
                 

Office Electronics — 0.1%

  

Xerox Corp.

    43,124      $ 391,135   
                 
    $ 391,135   
                 

Oil, Gas & Consumable Fuels — 9.5%

  

Chevron Corp.

    65,682      $ 7,772,808   

ConocoPhillips

    54,643        3,305,902   

EOG Resources, Inc.

    20,592        2,711,555   

Exxon Mobil Corp.

    130,552        11,795,373   

Kinder Morgan, Inc.

    21,161        807,292   

Occidental Petroleum Corp.

    31,010        2,767,022   

Peabody Energy Corp.

    9,782        143,208   

Phillips 66

    31,720        1,868,625   

Range Resources Corp.

    22,269        1,721,839   

Tesoro Corp.

    20,477        1,071,357   

Williams Cos., Inc.

    71,006        2,305,565   

WPX Energy, Inc.(1)

    5,037        95,401   
                 
    $ 36,365,947   
                 

Personal Products — 0.1%

  

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

    4,539      $ 298,530   
                 
    $ 298,530   
                 

Pharmaceuticals — 5.2%

  

AbbVie, Inc.

    23,000      $ 950,820   

Bristol-Myers Squibb Co.

    83,905        3,749,714   

Johnson & Johnson

    53,239        4,571,101   

Merck & Co., Inc.

    122,585        5,694,073   

Pfizer, Inc.

    171,390        4,800,634   
                 
    $ 19,766,342   
                 
Security   Shares     Value  
   

Professional Services — 0.2%

  

ManpowerGroup, Inc.

    4,353      $ 238,544   

Robert Half International, Inc.

    18,170        603,789   
                 
    $ 842,333   
                 

Real Estate Investment Trusts (REITs) — 1.8%

  

Apartment Investment & Management Co., Class A

    12,428      $ 373,337   

AvalonBay Communities, Inc.

    11,002        1,484,280   

Equity Residential

    14,774        857,779   

Health Care REIT, Inc.

    6,813        456,675   

Host Hotels & Resorts, Inc.

    58,590        988,413   

Kimco Realty Corp.

    78,276        1,677,455   

Plum Creek Timber Co., Inc.

    5,304        247,538   

ProLogis, Inc.

    22,296        841,005   
                 
    $ 6,926,482   
                 

Real Estate Management & Development — 0.1%

  

CB Richard Ellis Group, Inc., Class A(1)

    19,604      $ 457,949   
                 
    $ 457,949   
                 

Road & Rail — 1.0%

  

J.B. Hunt Transport Services, Inc.

    3,521      $ 254,357   

Kansas City Southern

    13,949        1,478,036   

Norfolk Southern Corp.

    27,357        1,987,486   
                 
    $ 3,719,879   
                 

Semiconductors & Semiconductor Equipment — 1.7%

  

Advanced Micro Devices, Inc.(1)

    352,424      $ 1,437,890   

Analog Devices, Inc.

    16,160        728,170   

Applied Materials, Inc.

    15,313        228,317   

Cree, Inc.(1)

    21,482        1,371,840   

Cypress Semiconductor Corp.(1)

    60,131        645,206   

Intel Corp.

    59,457        1,440,048   

Teradyne, Inc.(1)

    32,470        570,498   
                 
    $ 6,421,969   
                 

Software — 3.4%

  

Concur Technologies, Inc.(1)

    21,424      $ 1,743,485   

Microsoft Corp.

    227,044        7,839,829   

Oracle Corp.

    106,479        3,271,035   

Symantec Corp.

    8,033        180,502   
                 
    $ 13,034,851   
                 
 

 

  8   See Notes to Financial Statements.


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Portfolio of Investments (Unaudited) — continued

 

 

Security   Shares     Value  
   

Specialty Retail — 1.8%

  

Abercrombie & Fitch Co., Class A

    4,343      $ 196,521   

Advance Auto Parts, Inc.

    3,365        273,137   

Bed Bath & Beyond, Inc.(1)

    6,692        474,463   

Home Depot, Inc. (The)

    65,023        5,037,332   

Tiffany & Co.

    14,641        1,066,450   
                 
    $ 7,047,903   
                 

Textiles, Apparel & Luxury Goods — 0.2%

  

NIKE, Inc., Class B

    15,176      $ 966,408   
                 
    $ 966,408   
                 

Tobacco — 1.8%

  

Philip Morris International, Inc.

    65,027      $ 5,632,639   

Reynolds American, Inc.

    27,499        1,330,126   
                 
    $ 6,962,765   
                 

Trading Companies & Distributors — 0.1%

  

Fastenal Co.

    10,080      $ 462,168   
                 
    $ 462,168   
                 

Total Common Stocks — 99.9%
(identified cost $215,684,743)

    $ 382,111,138   
                 
Call Options Written — (0.5)%   
       
Description   Number of
Contracts
    Strike
Price
    Expiration
Date
    Value  

S&P 500 Index

    500      $ 1,630        7/5/13      $ (156,250

S&P 500 Index

    600        1,645        7/12/13        (204,000

S&P 500 Index

    575        1,620        7/20/13        (839,500

S&P 500 Index

    575        1,630        7/26/13        (810,750
                                 

Total Call Options Written
(premiums received $4,447,570)

   

  $ (2,010,500
   

Other Assets, Less Liabilities — 0.6%

  

  $ 2,260,033   
                                 

Net Assets — 100.0%

  

  $ 382,360,671   
                                 

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

 

ADR     American Depositary Receipt

 

(1) 

Non-income producing security.

 

 

  9   See Notes to Financial Statements.


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Statement of Assets and Liabilities (Unaudited)

 

 

Assets   June 30, 2013  

Investments, at value (identified cost, $215,684,743)

  $ 382,111,138   

Cash

    2,123,191   

Dividends receivable

    533,955   

Total assets

  $ 384,768,284   
Liabilities        

Written options outstanding, at value (premiums received, $4,447,570)

  $ 2,010,500   

Payable to affiliates:

 

Investment adviser fee

    316,188   

Trustees' fees

    3,700   

Accrued expenses

    77,225   

Total liabilities

  $ 2,407,613   

Net Assets

  $ 382,360,671   
Sources of Net Assets        

Common shares, $0.01 par value, unlimited number of shares authorized, 24,654,545 shares issued and outstanding

  $ 246,545   

Additional paid-in capital

    243,364,044   

Accumulated net realized loss

    (16,433,685

Accumulated distributions in excess of net investment income

    (13,679,698

Net unrealized appreciation

    168,863,465   

Net Assets

  $ 382,360,671   
Net Asset Value        

($382,360,671 ÷ 24,654,545 common shares issued and outstanding)

  $ 15.51   

 

  10   See Notes to Financial Statements.


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Statement of Operations (Unaudited)

 

 

Investment Income   Six Months Ended
June 30, 2013
 

Dividends (net of foreign taxes, $1,076)

  $ 4,401,022   

Total investment income

  $ 4,401,022   
Expenses        

Investment adviser fee

  $ 1,899,205   

Trustees' fees and expenses

    7,311   

Custodian fee

    127,056   

Transfer and dividend disbursing agent fees

    9,083   

Legal and accounting services

    27,526   

Printing and postage

    82,985   

Miscellaneous

    30,310   

Total expenses

  $ 2,183,476   

Deduct —

 

Reduction of custodian fee

  $ 506   

Total expense reductions

  $ 506   

Net expenses

  $ 2,182,970   

Net investment income

  $ 2,218,052   
Realized and Unrealized Gain (Loss)        

Net realized gain (loss) —

 

Investment transactions

  $ 10,537,275   

Written options

    (20,709,739

Foreign currency transactions

    (152

Net realized loss

  $ (10,172,616

Change in unrealized appreciation (depreciation) —

 

Investments

  $ 38,114,529   

Written options

    892,764   

Net change in unrealized appreciation (depreciation)

  $ 39,007,293   

Net realized and unrealized gain

  $ 28,834,677   

Net increase in net assets from operations

  $ 31,052,729   

 

  11   See Notes to Financial Statements.


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Statements of Changes in Net Assets

 

 

Increase (Decrease) in Net Assets  

Six Months Ended

June 30, 2013

(Unaudited)

    Year Ended
December 31, 2012
 

From operations —

   

Net investment income

  $ 2,218,052      $ 5,113,160   

Net realized loss from investment transactions, written options and foreign currency transactions

    (10,172,616     (3,651,940

Net change in unrealized appreciation (depreciation) from investments and written options

    39,007,293        35,594,737   

Net increase in net assets from operations

  $ 31,052,729      $ 37,055,957   

Distributions to shareholders —

   

From net investment income

  $ (15,976,145 )*    $ (4,973,235

Tax return of capital

           (26,979,055

Total distributions

  $ (15,976,145   $ (31,952,290

Net increase in net assets

  $ 15,076,584      $ 5,103,667   
Net Assets   

At beginning of period

  $ 367,284,087      $ 362,180,420   

At end of period

  $ 382,360,671      $ 367,284,087   

Accumulated undistributed (distributions in excess of) net investment income

included in net assets

  

  

At end of period

  $ (13,679,698   $ 78,395   

 

* A portion of the distributions may be deemed a tax return of capital at year-end. See Note 2.

 

  12   See Notes to Financial Statements.


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Financial Highlights

 

 

   

Six Months Ended

June 30, 2013
(Unaudited)

    Year Ended December 31,  
      2012     2011     2010     2009     2008  

Net asset value — Beginning of period

  $ 14.900      $ 14.690      $ 15.020      $ 15.590      $ 13.650      $ 19.760   
Income (Loss) From Operations                                                

Net investment income(1)

  $ 0.090      $ 0.207      $ 0.188      $ 0.185      $ 0.223      $ 0.281   

Net realized and unrealized gain (loss)

    1.168        1.299        0.778        1.045        3.517        (4.591

Total income (loss) from operations

  $ 1.258      $ 1.506      $ 0.966      $ 1.230      $ 3.740      $ (4.310
Less Distributions                                                

From net investment income

  $ (0.648 )*    $ (0.202   $ (0.184   $ (0.183   $ (0.300   $ (0.280

From net realized gain

                  (0.126     (0.040            (0.470

Tax return of capital

           (1.094     (0.986     (1.577     (1.500     (1.050

Total distributions

  $ (0.648   $ (1.296   $ (1.296   $ (1.800   $ (1.800   $ (1.800

Net asset value — End of period

  $ 15.510      $ 14.900      $ 14.690      $ 15.020      $ 15.590      $ 13.650   

Market value — End of period

  $ 14.510      $ 14.030      $ 12.840      $ 14.410      $ 16.850      $ 12.530   

Total Investment Return on Net Asset Value(2)

    8.78 %(3)      11.25     7.78     8.82     30.53     (22.44 )%(4) 

Total Investment Return on Market Value(2)

    8.08 %(3)      19.85     (1.74 )%      (3.47 )%      53.69     (19.29 )%(4) 
Ratios/Supplemental Data                                                

Net assets, end of period (000's omitted)

  $ 382,361      $ 367,284      $ 362,180      $ 370,403      $ 383,356      $ 335,611   

Ratios (as a percentage of average daily net assets):

           

Expenses(5)

    1.15 %(6)      1.14     1.15     1.12     1.12     1.11

Net investment income

    1.17 %(6)      1.38     1.30     1.26     1.61     1.68

Portfolio Turnover

    1 %(3)      6     20     11     34     49

 

(1) 

Computed using average shares outstanding.

 

(2) 

Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund's dividend reinvestment plan.

 

(3) 

Not annualized.

 

(4) 

During the year ended December 31, 2008, the sub-adviser reimbursed the Fund for a realized loss on the disposal of an investment security which did not meet investment guidelines. The loss was less than $0.01 per share and had no effect on total return.

 

(5) 

Excludes the effect of custody fee credits, if any, of less than 0.005%.

 

(6) 

Annualized.

 

* A portion of the distributions may be deemed a tax return of capital at year-end. See Note 2.

 

  13   See Notes to Financial Statements.


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Notes to Financial Statements (Unaudited)

 

 

1  Significant Accounting Policies

Eaton Vance Tax-Managed Buy-Write 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 and gains, with a secondary objective of capital appreciation.

The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America.

A  Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.

Equity Securities. Equity securities (including common shares of closed-end investment companies) listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices.

Derivatives. Exchange-traded options are valued at the mean between the bid and asked prices at valuation time as reported by the Options Price Reporting Authority for U.S. listed options or by the relevant exchange or board of trade for non-U.S. listed options. Over-the-counter options are valued by a third party pricing service using techniques that consider factors including the value of the underlying instrument, the volatility of the underlying instrument and the period of time until option expiration.

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.

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 fairly reflects the security’s value, or the amount that the Fund might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of 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 condition, 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.

At December 31, 2012, the Fund, for federal income tax purposes, had deferred capital losses of $4,716,800 which will reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. The deferred capital losses are treated as arising on the first day of the Fund’s next taxable year.

As of June 30, 2013, 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  Expense Reduction — State Street Bank and Trust Company (SSBT) serves as custodian of the Fund. Pursuant to the custodian agreement, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance the Fund maintains with SSBT. All credit balances, if any, used to reduce the Fund’s custodian fees are reported as a reduction of expenses in the Statement of Operations.

 

  14  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Notes to Financial Statements (Unaudited) — continued

 

 

F  Foreign Currency Translation — Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions. Recognized gains or losses on investment transactions attributable to changes in foreign currency exchange rates are recorded for financial statement purposes as net realized gains and losses on investments. That portion of unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.

G  Use of Estimates — The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.

H  Indemnifications — Under the 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 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.

I  Written Options — Upon the writing of a call or a put option, the premium received by the Fund is included in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written, in accordance with the 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 strike 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 strike 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.

J  Interim Financial Statements — The interim financial statements relating to June 30, 2013 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund's management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.

2  Distributions to Shareholders

Subject to its Managed Distribution Plan, the Fund 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. The Fund distinguishes between distributions on a tax basis and a financial reporting basis. Accounting principles generally accepted in the United States of America require that only distributions in excess of tax basis earnings and profits be reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income. Distributions in any year may include a substantial return of capital component. For the six months ended June 30, 2013, the amount of distributions estimated to be a tax return of capital was approximately $13,631,000. The final determination of tax characteristics of the Fund’s distributions will occur at the end of the year, at which time it will be reported to the shareholders.

3  Investment Adviser Fee and Other Transactions with Affiliates

The investment adviser fee is earned by Eaton Vance Management (EVM) as compensation for management and investment advisory services rendered to the Fund. The fee is computed at an annual rate of 1.00% of the 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 six months ended June 30, 2013, the Fund's investment adviser fee amounted to $1,899,205. Pursuant to a sub-advisory agreement, EVM has delegated a portion of the investment management to Parametric Portfolio Associates LLC (Parametric), a majority-owned subsidiary of Eaton Vance Corp. EVM pays Parametric a portion of its advisory fee for sub-advisory services provided to the 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 six months ended June 30, 2013, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of EVM.

 

  15  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Notes to Financial Statements (Unaudited) — continued

 

 

4  Purchases and Sales of Investments

Purchases and sales of investments, other than short-term obligations, aggregated $2,320,804 and $37,358,715, respectively, for the six months ended June 30, 2013.

5  Common Shares of Beneficial Interest

The Fund may issue common shares pursuant to its dividend reinvestment plan. There were no common shares issued by the Fund for the six months ended June 30, 2013 and the year ended December 31, 2012.

On August 6, 2012, the Board of Trustees of the Fund authorized the repurchase by the Fund of up to 10% of its then currently outstanding common shares in open-market transactions at a discount to net asset value (NAV). There were no repurchases of common shares by the Fund for the six months ended June 30, 2013 and the year ended December 31, 2012.

6  Federal Income Tax Basis of Investments

The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2013, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

  $ 215,606,311   

Gross unrealized appreciation

  $ 166,645,114   

Gross unrealized depreciation

    (140,287

Net unrealized appreciation

  $ 166,504,827   

7  Financial Instruments

The Fund may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities. These financial instruments may include written options and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Fund has in particular classes of financial instruments and do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. A summary of written options at June 30, 2013 is included in the Portfolio of Investments.

Written options activity for the six months ended June 30, 2013 was as follows:

 

     Number of
Contracts
     Premiums
Received
 

Outstanding, beginning of period

    2,485       $ 4,068,031   

Options written

    15,150         26,937,024   

Options terminated in closing purchase transactions

    (13,595      (23,237,609

Options expired

    (1,790      (3,319,876

Outstanding, end of period

    2,250       $ 4,447,570   

All of the assets of the Fund are subject to segregation to satisfy the requirements of the escrow agent. At June 30, 2013, the Fund had sufficient cash and/or securities to cover commitments under these contracts.

The Fund is subject to equity price risk in the normal course of pursuing its investment objectives. The Fund writes index call options above the current value of the index to generate premium income. In writing index call options, the Fund in effect, sells potential appreciation in the value of the applicable index 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 index decline.

 

  16  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Notes to Financial Statements (Unaudited) — continued

 

 

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 June 30, 2013 was as follows:

 

    Fair Value  
Derivative   Asset Derivative      Liability Derivative  

Written options

  $         —       $ (2,010,500 )(1) 

 

(1) 

Statement of Assets and Liabilities location: Written options outstanding, at value.

The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations and whose primary underlying risk exposure is equity price risk for the six months ended June 30, 2013 was as follows:

 

Derivative  

Realized Gain (Loss)

on Derivatives Recognized

in Income

    

Change in Unrealized

Appreciation (Depreciation) on

Derivatives Recognized in Income

 

Written options

  $ (20,709,739 )(1)     $ 892,764 (2) 

 

(1) 

Statement of Operations location: Net realized gain (loss) – Written options.

 

(2) 

Statement of Operations location: Change in unrealized appreciation (depreciation) – Written options.

8  Fair Value Measurements

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

 

Ÿ  

Level 1 – quoted prices in active markets for identical investments

 

Ÿ  

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

 

Ÿ  

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

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

At June 30, 2013, 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

  $ 382,111,138    $         —       $         —       $ 382,111,138   

Total Investments

  $ 382,111,138       $       $       $ 382,111,138   

Liability Description

                                  

Call Options Written

  $ (2,010,500    $       $       $ (2,010,500

Total

  $ (2,010,500    $       $       $ (2,010,500

 

* 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, 2012 whose fair value was determined using Level 3 inputs. At June 30, 2013, there were no investments transferred between Level 1 and Level 2 during the six months then ended.

 

  17  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Annual Meeting of Shareholders

 

 

The Fund held its Annual Meeting of Shareholders on April 26, 2013. The following action was taken by the shareholders:

Item 1:  The election of William H. Park, Ronald A. Pearlman and Harriett Tee Taggart as Class II Trustees of the Fund for a three-year term expiring in 2016.

 

Nominee for Trustee
Elected by All Shareholders
  Number of Shares  
  For      Withheld  

William H. Park

    22,854,805         431,660   

Ronald A. Pearlman

    22,836,964         449,501   

Harriett Tee Taggart

    22,848,939         437,526   

 

  18  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

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 each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees, including by a vote of 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 of the Boards of Trustees (each a “Board”) of the Eaton Vance group of mutual funds (the “Eaton Vance Funds”) held on April 23, 2013, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of the Contract Review Committee of the Board, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by each adviser to the Eaton Vance Funds (including information specifically requested by the Board) for a series of meetings of the Contract Review Committee held between February and April 2013, as well as information considered during prior meetings of the committee. Such information included, among other things, the following:

Information about Fees, Performance and Expenses

 

Ÿ  

An independent report comparing the advisory and related fees paid by each fund with fees paid by comparable funds;

 

Ÿ  

An independent report comparing each fund’s total expense ratio and its components to comparable funds;

 

Ÿ  

An independent report comparing the investment performance of each fund (including, where relevant, yield data, Sharpe ratios and information ratios) to the investment performance of comparable funds over various time periods;

 

Ÿ  

Data regarding investment performance in comparison to benchmark indices and customized peer groups, in each case as approved by the Board with respect to the funds;

 

Ÿ  

For each fund, comparative information concerning the fees charged and the services provided by each adviser in managing other accounts (including mutual funds, other collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund;

 

Ÿ  

Profitability analyses for each adviser with respect to each fund;

Information about Portfolio Management and Trading

 

Ÿ  

Descriptions of the investment management services provided to each fund, including the investment strategies and processes employed, and any changes in portfolio management processes and personnel;

 

Ÿ  

Information about the allocation of brokerage and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through client commission arrangements and the fund’s policies with respect to “soft dollar” arrangements;

 

Ÿ  

Data relating to portfolio turnover rates of each fund;

 

Ÿ  

The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes;

 

Ÿ  

Information about each adviser’s processes for monitoring best execution of portfolio transactions, and other policies and practices of each adviser with respect to trading;

Information about each Adviser

 

Ÿ  

Reports detailing the financial results and condition of each adviser;

 

Ÿ  

Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts;

 

Ÿ  

Copies of the Codes of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes;

 

Ÿ  

Copies of or descriptions of each adviser’s policies and procedures relating to proxy voting, the handling of corporate actions and class actions;

 

Ÿ  

Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates on behalf of the funds (including descriptions of various compliance programs) and their record of compliance with investment policies and restrictions, including policies with respect to market-timing, late trading and selective portfolio disclosure, and with policies on personal securities transactions;

 

Ÿ  

Descriptions of the business continuity and disaster recovery plans of each adviser and its affiliates;

 

Ÿ  

A description of Eaton Vance Management’s procedures for overseeing third party advisers and sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters;

 

  19  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Board of Trustees’ Contract Approval — continued

 

 

Other Relevant Information

 

Ÿ  

Information concerning the nature, cost and character of the administrative and other non-investment management services provided by Eaton Vance Management and its affiliates;

 

Ÿ  

Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and

 

Ÿ  

The terms of each advisory agreement.

In addition to the information identified above, the Contract Review Committee considered information provided from time to time by each adviser throughout the year at meetings of the Board and its committees. Over the course of the twelve-month period ended April 30, 2013, with respect to one or more funds, the Board met eight times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met eight, twenty-one, five, nine and thirteen times respectively. At such meetings, the Trustees participated in investment and performance reviews with the portfolio managers and other investment professionals of each adviser relating to each fund. The Board and its Committees considered the investment and trading strategies used in pursuing each fund’s investment objective, including, where relevant, the use of derivative instruments, as well as processes for monitoring best execution of portfolio transactions and risk management techniques. The Board and its Committees also 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 and other fund advisers with respect to such matters.

For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.

The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each advisory 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 advisory and sub-advisory agreement.

Results of the Process

Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement of Eaton Vance Tax-Managed Buy-Write Income Fund (the “Fund”) with Eaton Vance Management (the “Adviser”) and the sub-advisory agreement with Parametric Portfolio Associates LLC (the “Sub-adviser”), an affiliate of Eaton Vance Management, including their fee structures, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of each agreement. The Board accepted the recommendation of the Contract Review Committee as well as the factors considered and conclusions reached by the Contract Review Committee with respect to the agreements. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement and the sub-advisory agreement for the Fund.

Nature, Extent and Quality of Services

In considering whether to approve the investment advisory agreement and the sub-advisory agreement of the Fund, the Board evaluated the nature, extent and quality of services provided to the Fund by the Adviser and the Sub-adviser.

The Board considered the Adviser’s and the Sub-adviser’s management capabilities and investment process with respect to the types of investments held by the Fund, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Fund. With respect to the Adviser, the Board considered the Adviser’s responsibilities supervising the Sub-adviser and coordinating its activities in implementing the Fund’s investment strategy. In particular, the Board considered, where relevant, the abilities and experience of such investment personnel in analyzing factors such as tax efficiency and special considerations relevant to investing in stocks and selling call options on one or more U.S. indices. The Board noted that the Adviser has devoted extensive resources to in-house equity research and also draws upon independent research available from third-party sources. With respect to the Sub-adviser, the Board noted the Sub-adviser’s experience in deploying quantitative-based investment strategies. The Board also took into account the resources dedicated to portfolio management and other services, including the compensation methods of the Adviser to recruit and retain investment personnel, and the time and attention devoted to the Fund by senior management.

The Board reviewed the compliance programs of the Adviser and relevant affiliates thereof, including the Sub-adviser. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment personnel, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also evaluated 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.

 

  20  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Board of Trustees’ Contract Approval — continued

 

 

The Board considered shareholder and other administrative services provided or managed 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 family of funds.

After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser and the Sub-adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement and the sub-advisory agreement.

Fund Performance

The Board compared the Fund’s investment performance to a relevant universe of comparable funds identified by an independent data provider and appropriate benchmark indices, as well as a customized peer group of similarly managed funds approved by the Board. The Board reviewed comparative performance data for the one-, three- and five-year periods ended September 30, 2012 for the Fund. The Board concluded that the performance of the Fund was satisfactory.

Management Fees and Expenses

The Board reviewed contractual investment advisory fee rates payable by the Fund (referred to as “management fees”). As part of its review, the Board considered the management fees and the Fund’s total expense ratio for the year ended September 30, 2012, as compared to a group of similarly managed funds selected by an independent data provider. The Board also considered factors that had an impact on Fund expense ratios, as identified by management in response to inquiries from the Contract Review Committee, as well as actions taken by management in recent years to reduce expenses at the Eaton Vance fund complex level, including the negotiation of reduced fees for transfer agency and custody services.

After reviewing the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser and the Sub-adviser, the Board concluded that the management fees charged for advisory and related services are reasonable.

Profitability

The Board reviewed the level of profits realized by the Adviser and relevant affiliates thereof, including the Sub-adviser, 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 revenue sharing or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect benefits received by the Adviser and its affiliates, including the Sub-adviser, in connection with their relationships with the Fund, including the benefits of research services that may be available to the Adviser or the Sub-adviser as a result of securities transactions effected for the Fund and other investment advisory clients.

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, including the Sub-adviser, are reasonable.

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 the economies of scale 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 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. The Board also considered the fact that the Fund is not continuously offered and that the Fund’s assets are not expected to increase materially in the foreseeable future. The Board concluded that, in light of the level of the Adviser’s profits with respect to the Fund, the implementation of breakpoints in the advisory fee schedule is not appropriate at this time.

 

  21  


Eaton Vance

Tax-Managed Buy-Write Income Fund

June 30, 2013

 

Officers and Trustees

 

 

Officers of Eaton Vance Tax-Managed Buy-Write Income Fund

 

 

Walter A. Row, III

President

Duncan W. Richardson

Vice President

Maureen A. Gemma

Vice President, Secretary and Chief Legal Officer

James F. Kirchner

Treasurer

Paul M. O’Neil

Chief Compliance Officer

 

 

Trustees of Eaton Vance Tax-Managed Buy-Write Income Fund

 

 

Ralph F. Verni

Chairman

Scott E. Eston

Benjamin C. Esty

Thomas E. Faust Jr.*

Allen R. Freedman

William H. Park

Ronald A. Pearlman

Helen Frame Peters

Lynn A. Stout

Harriett Tee Taggart

 

 

*

Interested Trustee

 

 

Number of Employees

The Fund is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as a closed-end management investment company and has no employees.

Number of Shareholders

As of June 30, 2013, Fund records indicate that there are 10 registered shareholders and approximately 18,081 shareholders owning the Fund shares in street name, such as through brokers, banks, and financial intermediaries.

If you are a street name shareholder and wish to receive Fund reports directly, which contain important information about the Fund, please write or call:

Eaton Vance Distributors, Inc.

Two International Place

Boston, MA 02110

1-800-262-1122

New York Stock Exchange symbol

The New York Stock Exchange symbol is ETB.

 

  22  


Eaton Vance Funds

 

IMPORTANT NOTICES

 

 

Privacy.  The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:

 

Ÿ  

Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions.

 

Ÿ  

None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker-dealers.

 

Ÿ  

Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information.

 

Ÿ  

We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Privacy Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com.

Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management’s Real Estate Investment Group and Boston Management and Research. In addition, our Privacy Policy applies only to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial advisor/broker-dealer, it is likely that only such advisor’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures. For more information about Eaton Vance’s Privacy Policy, 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. Eaton Vance, or your financial advisor, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial advisor, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial advisor. Your instructions that householding not apply to delivery of your Eaton Vance documents will be effective within 30 days of receipt by Eaton Vance or your financial advisor.

Portfolio Holdings.  Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) will file a schedule of portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).

Proxy Voting.  From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying Portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request, by calling 1-800-262-1122 and by accessing the SEC’s website at www.sec.gov.

Share Repurchase Program.  On August 6, 2012, the Fund’s Board of Trustees approved a share repurchase program authorizing the Fund to repurchase up to 10% of its currently outstanding common shares 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.

Closed-End Fund Information.  The Eaton Vance closed-end funds make certain fund performance data and portfolio characteristics available on the Eaton Vance website after the end of each month. 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”.

 

  23  


 

 

This Page Intentionally Left Blank


Investment Adviser and Administrator

Eaton Vance Management

Two International Place

Boston, MA 02110

Sub-Adviser

Parametric Portfolio Associates LLC

1918 Eighth Avenue, Suite 3100

Seattle, WA 98101

Custodian

State Street Bank and Trust Company

200 Clarendon Street

Boston, MA 02116

Transfer Agent

American Stock Transfer & Trust Company

59 Maiden Lane

Plaza Level

New York, NY 10038

Fund Offices

Two International Place

Boston, MA 02110

 


LOGO

 

2427-8/13   CE-TMBWISRC


Item 2. Code of Ethics

Not required in this filing.

Item 3. Audit Committee Financial Expert

The registrant’s Board has designated William H. Park, an independent trustee, as its audit committee financial expert. Mr. Park is a certified public accountant who is a consultant and private investor. Previously, he served as the Chief Financial Officer of Aveon Group, L.P. (an investment management firm), as the Vice Chairman of Commercial Industrial Finance Corp. (specialty finance company), as President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm), as Executive Vice President and Chief Financial Officer of United Asset Management Corporation (an institutional investment management firm) and as a Senior Manager at Price Waterhouse (now PricewaterhouseCoopers) (an independent registered public accounting firm).

Item 4. Principal Accountant Fees and Services

Not required in this filing.

Item 5. Audit Committee of Listed Registrants

Not required in this filing.

Item 6. Schedule of Investments

Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not required in this filing.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Not required in this filing.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

No such purchases this period.

Item 10. Submission of Matters to a Vote of Security Holders

No Material Changes.

Item 11. Controls and Procedures

(a) It is the conclusion of the 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 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 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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits

 

(a)(1)    Registrant’s Code of Ethics – Not applicable (please see Item 2).
(a)(2)(i)    Treasurer’s Section 302 certification.
(a)(2)(ii)    President’s Section 302 certification.
(b)    Combined Section 906 certification.
(c)    Registrant’s notices to shareholders pursuant to Registrant’s exemptive order granting an exemption from Section 19(b) of the 1940 Act and Rule 19b-1 thereunder regarding distributions paid pursuant to the Registrant’s Managed Distribution Plan.


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 Tax-Managed Buy-Write Income Fund

 

By:  

/s/ Walter A. Row, III

  Walter A. Row, III
  President
Date:   August 9, 2013

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

 

By:  

/s/ James F. Kirchner

  James F. Kirchner
  Treasurer
Date:   August 9, 2013
By:  

/s/ Walter A. Row, III

  Walter A. Row, III
  President
Date:   August 9, 2013