BlackRock Enhanced Large Cap Core Fund, Inc.

Regulatory Filings • Sep 29, 2011

N-Q 1 i00393_cii-nq.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-21506

Name of Fund: BlackRock Enhanced Capital and Income Fund, Inc. (CII)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Enhanced Capital and Income Fund, Inc., 55 East 52 nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 882-0052, Option 4

Date of fiscal year end: 10/31/2011

Date of reporting period: 07/31/2011

Item 1 – Schedule of Investments

insert

Schedule of Investments July 31, 2011 (Unaudited) BlackRock Enhanced Capital and Income Fund, Inc. (CII) (Percentages shown are based on Net Assets)

| Common
Stocks | | Value |
| --- | --- | --- |
| Aerospace & Defense — 5.0% | | |
| Honeywell
International, Inc. (a) | 270,400 | $ 14,358,240 |
| Northrop
Grumman Corp. (a) | 154,500 | 9,348,795 |
| Raytheon Co.
(a) | 177,000 | 7,917,210 |
| | | 31,624,245 |
| Capital Markets — 3.3% | | |
| Invesco Ltd.
(a) | 590,900 | 13,106,162 |
| Morgan
Stanley (a) | 332,613 | 7,400,640 |
| | | 20,506,802 |
| Chemicals — 1.6% | | |
| E.I. du Pont
de Nemours & Co. (a) | 195,700 | 10,062,894 |
| Commercial Banks — 1.2% | | |
| Wells Fargo
& Co. (a) | 266,500 | 7,446,010 |
| Communications Equipment — 0.4% | | |
| Nokia Oyj
(a) | 389,100 | 2,256,780 |
| Diversified Financial Services — 3.6% | | |
| Citigroup,
Inc. (a) | 228,930 | 8,777,176 |
| JPMorgan
Chase & Co. (a) | 340,600 | 13,777,270 |
| | | 22,554,446 |
| Diversified Telecommunication Services — 7.6% | | |
| AT&T
Inc. (a) | 437,000 | 12,786,620 |
| CenturyLink,
Inc. (a) | 506,811 | 18,807,756 |
| Verizon
Communications, Inc. (a) | 453,700 | 16,011,073 |
| | | 47,605,449 |
| Electric Utilities — 2.7% | | |
| NextEra
Energy, Inc. (a) | 128,000 | 7,072,000 |
| The Southern
Co. (a) | 254,300 | 10,055,022 |
| | | 17,127,022 |
| Electrical Equipment — 1.9% | | |
| Emerson
Electric Co. (a) | 244,000 | 11,977,960 |
| Energy Equipment & Services — 3.3% | | |
| Ensco Plc -
ADR (a) | 240,600 | 12,811,950 |
| Halliburton
Co. (a) | 142,900 | 7,820,917 |
| | | 20,632,867 |
| Food Products — 7.9% | | |
| General
Mills, Inc. (a) | 313,300 | 11,701,755 |
| Kraft Foods,
Inc. (a) | 565,700 | 19,448,766 |
| Unilever NV
– ADR (a) | 572,100 | 18,581,808 |
| | | 49,732,329 |
| Household Products — 1.3% | | |
| Kimberly-Clark
Corp. | 127,500 | 8,333,400 |

| Common
Stocks | | Value |
| --- | --- | --- |
| IT Services — 1.7% | | |
| International Business Machines Corp. (a) | 57,200 | $ 10,401,820 |
| Industrial Conglomerates — 2.3% | | |
| General
Electric Co. (a) | 639,700 | 11,457,027 |
| Tyco
International Ltd. (a) | 66,600 | 2,949,714 |
| | | 14,406,741 |
| Insurance — 7.3% | | |
| ACE Ltd. (a) | 226,000 | 15,137,480 |
| MetLife,
Inc. (a) | 284,100 | 11,707,761 |
| The
Travelers Cos., Inc. (a) | 345,000 | 19,019,850 |
| | | 45,865,091 |
| Media — 4.9% | | |
| Comcast
Corp., Special Class A (a) | 646,900 | 15,098,646 |
| Time Warner,
Inc. (a) | 445,700 | 15,670,812 |
| | | 30,769,458 |
| Metals & Mining — 2.1% | | |
| Nucor Corp.
(a) | 341,100 | 13,265,379 |
| Multi-Utilities — 1.3% | | |
| Dominion Resources, Inc. (a) | 100,300 | 4,859,535 |
| Public Service Enterprise Group, Inc. (a) | 99,700 | 3,265,175 |
| | | 8,124,710 |
| Oil, Gas & Consumable Fuels — 7.7% | | |
| Chevron
Corp. (a) | 198,100 | 20,606,362 |
| Exxon Mobil
Corp. (a) | 200,800 | 16,021,832 |
| Marathon Oil
Corp. (a) | 224,200 | 6,943,474 |
| Marathon
Petroleum Corp. (b) | 112,100 | 4,908,859 |
| | | 48,480,527 |
| Pharmaceuticals — 12.9% | | |
| Bristol-Myers
Squibb Co. (a) | 696,400 | 19,958,824 |
| Eli Lilly
& Co. (a) | 485,100 | 18,579,330 |
| Johnson
& Johnson (a) | 131,200 | 8,500,448 |
| Merck &
Co., Inc. (a) | 459,400 | 15,679,322 |
| Pfizer, Inc.
(a) | 961,500 | 18,499,260 |
| | | 81,217,184 |
| Semiconductors & Semiconductor Equipment — 8.9% | | |
| Analog
Devices, Inc. (a) | 419,000 | 14,413,600 |
| Intel Corp.
(a) | 681,000 | 15,206,730 |
| LSI Corp.
(a)(b) | 1,191,900 | 8,772,384 |
| Maxim
Integrated Products, Inc. (a) | 779,000 | 17,885,840 |
| | | 56,278,554 |
| Software — 1.3% | | |
| Microsoft
Corp. (a) | 308,700 | 8,458,380 |

Portfolio Abbreviation

ADR American Depositary Receipts

BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JULY 31, 2011 1

Schedule of Investments (continued) BlackRock Enhanced Capital and Income Fund, Inc. (CII) (Percentages shown are based on Net Assets)

| Common
Stocks | | Value |
| --- | --- | --- |
| Specialty Retail — 3.6% | | |
| Home Depot,
Inc. (a) | 371,100 | $ 12,962,523 |
| Limited
Brands, Inc. (a) | 259,600 | 9,828,456 |
| | | 22,790,979 |
| Total Long-Term Investments (Cost – $641,806,540) – 93.8% | | 589,919,027 |

| Short-Term
Securities — BlackRock Liquidity Funds, TempFund, Institutional Class, 0.05% (c)(d) | 28,353,161 |
| --- | --- |
| Total Short-Term Securities (Cost – $28,353,161) – 4.5% | 28,353,161 |
| Total Investments Before Outstanding Options Written (Cost – $670,159,701*) – 98.3% | 618,272,188 |

| Options
Written | Contracts | | |
| --- | --- | --- | --- |
| Exchange-Traded Call Options — (0.4)% | | | |
| ACE, Ltd., Strike Price $65, Expires 8/20/11 | 790 | (223,175 | ) |
| AT&T Inc: | | | |
| Strike Price $31, Expires 8/20/11 | 232,000 | (15,080) | |
| Strike Price $30, Expires 9/17/11 | 96,000 | (44,160) | |
| Analog Devices, Inc.: | | | |
| Strike Price $37, Expires 8/20/11 | 115,000 | (34,500) | |
| Strike Price $37, Expires 9/17/11 | 115,000 | (63,250) | |
| CenturyLink, Inc.: | | | |
| Strike Price $40, Expires 8/20/11 | 89,000 | (4,425) | |
| Strike Price $41, Expires 8/20/11 | 59,000 | (1,470) | |
| Strike Price $42, Expires 8/20/11 | 130,000 | (3,250) | |
| Citigroup, Inc.: | | | |
| Strike Price $39, Expires 8/20/11 | 40,000 | (41,800) | |
| Strike Price $40, Expires 8/20/11 | 20,000 | (13,500) | |
| Strike Price $42, Expires 9/17/11 | 20,000 | (14,600) | |
| Comcast Corp., Special Class A, Strike Price $23, Expires 8/20/11 | 1,060 | (100,700) | |
| Dominion Resources, Inc., Strike Price $50, Expires 8/20/11 | 105 | (2,625) | |
| Eli Lilly & Co., Strike Price $38, Expires 8/20/11 | 1,315 | (99,283) | |
| Ensco Plc - ADR, Strike Price $52.50, Expires 8/20/11 | 1,325 | (284,875 | ) |
| Exxon Mobil Corp., Strike Price $82.50, Expires 8/20/11 | 350 | (20,125 | ) |
| General Electric Co., Strike Price $19, Expires 8/20/11 | 1,200 | (16,800 | ) |
| General Mills, Inc.: | | | |
| Strike Price $38, Expires 8/20/11 | 48,000 | (13,282 | ) |
| Strike Price $38, Expires 9/17/11 | 97,000 | (58,383 | ) |

Options Written		Value
Exchange-Traded Call Options (concluded)
Halliburton Co., Strike Price $55, Expires 8/20/11	545	$ (101,370	)
Home Depot, Inc., Strike Price $37, Expires 8/20/11	2,780	(72,280	)
Honeywell International, Inc.:
Strike Price $57.50, Expires 8/20/11	75,000	(13,875	)
Strike Price $57.50, Expires 9/17/11	53,000	(26,765	)
Intel Corp.:
Strike Price $23, Expires 8/20/11	206,000	(51,375	)
Strike Price $23, Expires 9/17/11	33,000	(16,500	)
International Business Machines Corp., Strike Price $175, Expires 8/20/11	280	(215,600	)
JPMorgan Chase & Co.:
Strike Price $42, Expires 8/20/11	60,000	(37,200	)
Strike Price $43, Expires 9/17/11	60,000	(46,800	)
LSI Corp., Strike Price $7, Expires 9/17/11	2,235	(139,688	)
Limited Brands, Inc.:
Strike Price $37, Expires 8/20/11	72,000	(140,400	)
Strike Price $40, Expires 8/20/11	72,000	(43,200	)
Strike Price $42, Expires 8/20/11	52,000	(11,700	)
Maxim Intergrated Products:
Strike Price $25, Expires 8/20/11	30,000	(4,500	)
Strike Price $26, Expires 8/20/11	137,000	(6,825	)
Strike Price $27, Expires 8/20/11	67,000	(3,325	)
Merck & Co., Inc., Strike Price $37, Expires 8/20/11	1,260	(4,410	)
MetLife, Inc., Strike Price $42, Expires 9/17/11	995	(159,200	)
Microsoft Corp., Strike Price $28, Expires 9/17/11	270	(17,280	)
Morgan Stanley:
Strike Price $22, Expires 8/20/11	50,000	(51,250	)
Strike Price $25, Expires 9/17/11	67,000	(20,948	)
Nokia Oyj - ADR, Strike Price $7, Expires 9/17/11	595	(5,057	)
Nucor Corp., Strike Price $41, Expires 9/17/11	1,200	(87,000	)
Pfizer, Inc., Strike Price $21, Expires 8/20/11	3,720	(16,740	)
Raytheon Co., Strike Price $49, Expires 8/20/11	660	(3,300	)
The Southern Co., Strike Price $40, Expires 8/20/11	950	(28,975	)
Time Warner, Inc., Strike Price $37, Expires 8/20/11	1,230	(39,975	)
Tyco International, Ltd., Strike Price $47, Expires 8/20/11	365	(14,782	)
Verizon Communications, Inc., Strike Price $38, Expires 8/20/11	2,500	(10,000	)
Wells Fargo & Co., Strike Price $29, Expires 9/17/11	935	(73,865	)
		(2,519,468	)

BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JULY 31, 2011 2

Schedule of Investments (continued) BlackRock Enhanced Capital and Income Fund, Inc. (CII) (Percentages shown are based on Net Assets)

| Options
Written | Notional Amount (000) | | |
| --- | --- | --- | --- |
| Over-the-Counter Call Options — (0.4)% | | | |
| ACE, Ltd., Strike Price $64.10, Expires 9/08/11, Broker Credit Suisse International | $ 46 | $ (167,191 | ) |
| Bristol-Myers Squibb Co., Strike Price $29.45, Expires 9/06/11, Broker Credit Suisse International | 523 | (187,985 | ) |
| CenturyLink, Inc., Strike Price $39.62, Expires 9/08/11, Broker Societe Generale | 72 | (16,774 | ) |
| Chevron Corp., Strike Price $101, Expires 8/01/11, Broker UBS AG | 149 | (464,472 | ) |
| Comcast Corp., Strike Price $22.87, Expires 8/04/11, Broker Societe Generale | 250 | (135,537 | ) |
| E.I. du Pont de Nemours & Co., Strike Price $55.02, Expires 9/06/11, Broker UBS AG | 54 | (24,124 | ) |
| Eli Lilly & Co., Strike Price $38.45, Expires 9/08/11, Broker UBS AG | 136 | (102,895 | ) |
| Emerson Electric Co., Strike Price $58.50, Expires 8/12/11, Broker Citibank NA | 86 | (598 | ) |
| Exxon Mobil Corp., Strike Price $83.37, Expires 9/09/11, Broker Goldman Sachs Bank USA | 76 | (61,881 | ) |
| General Electric Co., Strike Price $19.06, Expires 9/08/11, Broker Goldman Sachs Bank USA | 104 | (21,514 | ) |
| General Mills, Inc.: | | | |
| Strike Price $37.85, Expires 8/31/11, Broker JP Morgan Chase Bank NA | 65,000 | (28,227 | ) |
| Strike Price $38.50, Expires 8/31/11, Broker JP Morgan Chase Bank NA | 25,000 | (5,479 | ) |
| Halliburton Co., Strike Price $48.50, Expires 8/01/11, Broker Citibank NA | 24 | (149,520 | ) |
| Honeywell International, Inc., Strike Price $58, Expires 8/31/11, Broker Goldman Sachs Bank USA | 75 | (20,710 | ) |
| International Business Machines Corp., Strike Price $166, Expires 8/20/11, Broker Goldman Sachs Bank USA | 4 | (57,073 | ) |
| Invesco Ltd.: | | | |
| Strike Price $23.41, Expires 8/01/11, Broker Morgan Stanley Capital Services Inc. | 105,000 | (244 | ) |
| Strike Price $23.41, Expires 8/09/11, Broker Morgan Stanley Capital Services Inc. | 102,000 | (6,197 | ) |
| Johnson & Johnson, Strike Price D $67.54, Expires 8/25/11, Broker Goldman Sachs Bank USA | 99 | (17,799 | ) |
| Options
Written | Notional Amount (000) | Value | |
| Over-the-Counter Call Options (continued) | | | |
| Kraft Foods, Inc.: | | | |
| Strike
Price $34.30, Expires 8/10/11, Broker UBS AG | $ 214,000 | $ (91,239 | ) |
| Strike
Price $35.20, Expires 9/09/11, Broker Jeffries & Co. Inc. | 2,000 | (813 | ) |
| LSI Corp.: | | | |
| Strike
Price $7.40, Expires 8/18/11, Broker Credit Suisse International | 216,000 | (41,815 | ) |
| Strike
Price $7.40, Expires 8/25/11, Broker Credit Suisse International | 216,000 | (49,229 | ) |
| Marathon Oil Corp., Strike Price $52.65, Expires 8/09/11, Broker CitiBank NA | 124 | (159,578 | ) |
| Maxim Intergrated Products, Inc., Strike Price $24.03, Expires 9/07/11, Broker Credit Suisse International | 196 | (75,615 | ) |
| Merck & Co., Inc., Strike Price $36.75, Expires 8/05/11, Broker Morgan Stanley Capital Services Inc. | 127 | (209 | ) |
| Nextera Energy, Inc., Strike Price $57.40, Expires 8/31/11, Broker UBS AG | 45 | (15,101 | ) |
| Nokia Oyj - ADR, Strike Price $6.50, Expires 8/20/11, Broker Morgan Stanley Capital Services Inc. | 75 | (3,157 | ) |
| Northrop Grumman Corp., Strike Price $68.15, Expires 9/06/11, Broker Societe Generale | 116 | (16,797 | ) |
| Pfizer, Inc., Strike Price $21.50, Expires 8/04/11, Broker Goldman Sachs Bank USA | 176 | (23 | ) |
| Public Service Enterprise Group, Strike Price $31.61, Expires 8/09/11, Broker Goldman Sachs Bank USA | 55 | (68,387 | ) |
| Raytheon Co., Strike Price $45.89, Expires 8/29/11, Broker Credit Suisse International | 67 | (39,308 | ) |
| The Southern Co., Strike Price $39.45, Expires 8/09/11, Broker JP Morgan Chase Bank NA | 960 | (384,605 | ) |
| The Travelers Cos., Inc.: | | | |
| Strike
Price $59.19, Expires 8/29/11, Broker Goldman Sachs Bank USA | 145,000 | (24,388 | ) |
| Strike
Price $57.98, Expires 9/09/11, Broker Credit Suisse International | 45,000 | (16,473 | ) |
| Time Warner, Inc., Strike Price $37, Expires 9/02/11, Broker Credit Suisse International | 123 | (51,371 | ) |

BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JULY 31, 2011 3

Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

Options Written	Notional Amount (000)	Value
Over-the-Counter
Call Options (concluded)
Unilever NV – ADR:
Strike
Price $32.95, Expires 8/12/11, Broker Morgan Stanley Capital Services Inc.	$ 100,000	$ (35,476	)
Strike
Price $33.49, Expires 9/29/11, Broker Morgan Stanley Capital Services Inc.	100,000	(39,069	)
		(2,580,873	)
Total
Options Written (Premiums Received – $7,808,233) – (0.8)%		(5,100,341	)
Total Investments, Net of Outstanding Options Written – 97.5%		$ 613,171,847
Other
Assets Less Liabilities – 2.5%		16,015,486
Net Assets
– 100.0%		$ 629,187,333

• The cost and unrealized appreciation (depreciation) of investments as of July 31, 2011, as computed for federal income tax purposes, were as follows:

Aggregate cost	$
Gross unrealized
appreciation	—
Gross unrealized
depreciation	(89,487,361	)
Net unrealized depreciation	$ (89,487,361	)

| (a) | Security, or portion
thereof, pledged/held as collateral for outstanding options written. |
| --- | --- |
| (b) | Non-income producing
security. |
| (c) | Investments in companies
considered to be an affiliate of the Fund during the period, for purposes of
Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as
follows: |

Affiliate — BlackRock Liquidity Funds, TempFund, Institutional Class	11,668,594	16,684,567	28,353,161	Income — $ 25,632

(d) Represents the current yield as of report date.

BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JULY 31, 2011 4

Schedule of Investments (concluded) BlackRock Enhanced Capital and Income Fund, Inc. (CII)

| • | For Fund compliance
purposes, the Fund’s industry classifications refer to any one or more of the
sector sub-classifications used by one or more widely recognized market
indexes or rating group indexes, and/or as defined by Fund management. These
definitions may not apply for purposes of this report, which may combine such
sector sub-classifications for reporting ease. | |
| --- | --- | --- |
| • | Fair Value Measurements -
Various inputs are used in determining the fair value of investments and
derivative financial instruments. These inputs are categorized in three broad
levels for financial reporting purposes as follows: | |
| | • | Level 1 — price quotations
in active markets/exchanges for identical assets and liabilities |
| | • | Level 2 — other observable
inputs (including, but not limited to: quoted prices for similar assets or
liabilities in markets that are active, quoted prices for identical or
similar assets or liabilities in markets that are not active, inputs other
than quoted prices that are observable for the assets or liabilities (such as
interest rates, yield curves, volatilities, prepayment speeds, loss
severities, credit risks and default rates) or other market-corroborated inputs) |
| | • | Level 3 — unobservable
inputs based on the best information available in the circumstances, to the
extent observable inputs are not available (including the Fund’s own
assumptions used in determining the fair value of investments and derivative
financial instruments) |

The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and does not necessarily correspond to the Fund’s perceived risk of investing in those securities. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments and other significant accounting policies, please refer to the Fund’s most recent financial statements as contained in its semi-annual report.

The following tables summarize the inputs used as of July 31, 2011 in determining the fair valuation of the Fund’s investments and derivative financial instruments:

Valuation Inputs	Level 1	Level 2		Total
Assets:
Investments:
Long-Term Investments 1	$ 589,919,027	—	—	$ 589,919,027
Short-Term Securities	28,353,161	—	—	28,353,161
Total	$ 618,272,188	$ —	—	$ 618,272,188

1 See above Schedule of Investments for values in each industry.

Valuation Inputs	Level 1		Level 2			Total
Derivative Financial
Instruments 2
Liabilities:
Equity contracts	$ (2,519,468	)	$ (2,580,873	)	—	$ (5,100,341	)

2 Derivative financial instruments options, which are shown at value.

BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JULY 31, 2011 5

end

Item 2 –	Controls and Procedures
2(a) –	The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this
report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.
2(b) –	There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 3 –	Exhibits
	Certifications – Attached hereto
	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.
	BlackRock Enhanced Capital and Income Fund, Inc.
	By:	/s/ John M. Perlowski
		John M. Perlowski
		Chief Executive Officer (principal executive officer) of
		BlackRock Enhanced Capital and Income Fund, Inc.
	Date: September 26, 2011
	Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
	By:	/s/ John M. Perlowski
		John M. Perlowski
		Chief Executive Officer (principal executive officer) of
		BlackRock Enhanced Capital and Income Fund, Inc.
	Date: September 26, 2011
	By:	/s/ Neal J. Andrews
		Neal J. Andrews
		Chief Financial Officer (principal financial officer) of
		BlackRock Enhanced Capital and Income Fund, Inc.
	Date: September 26, 2011