BlackRock Enhanced Large Cap Core Fund, Inc.

Regulatory Filings • Mar 31, 2011

N-Q 1 i0162_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: 01/31/2011

Item 1 – Schedule of Investments

insert

| Schedule of Investments January 31,
2011 (Unaudited) |
| --- |
| (Percentages shown are based on Net Assets) |

| Common
Stocks | Shares | Value |
| --- | --- | --- |
| Aerospace & Defense — 4.9% | | |
| Honeywell International, Inc. | 207,400 | $ 11,616,474 |
| Northrop Grumman Corp. | 165,300 | 11,455,290 |
| Raytheon Co. (a) | 180,600 | 9,028,194 |
| | | 32,099,958 |
| Capital Markets — 3.8% | | |
| Invesco Ltd. (a) | 600,200 | 14,848,948 |
| Morgan Stanley (a) | 332,613 | 9,778,822 |
| | | 24,627,770 |
| Chemicals — 2.6% | | |
| E.I. du Pont de Nemours & Co. (a) | 341,100 | 17,286,948 |
| Commercial Banks — 1.3% | | |
| Wells Fargo & Co. (a) | 273,100 | 8,853,902 |
| Communications Equipment — 0.8% | | |
| Nokia Oyj - ADR (a) | 471,600 | 5,046,120 |
| Diversified Financial Services — 4.1% | | |
| Citigroup, Inc. (a)(b) | 2,289,300 | 11,034,426 |
| JPMorgan Chase & Co. (a) | 349,800 | 15,720,012 |
| | | 26,754,438 |
| Diversified Telecommunication Services —
7.9% | | |
| AT&T Inc. (a) | 460,800 | 12,681,216 |
| Qwest Communications International, Inc. (a) | 3,086,400 | 22,006,032 |
| Verizon Communications, Inc. (a) | 482,800 | 17,197,336 |
| | | 51,884,584 |
| Electric Utilities — 2.3% | | |
| NextEra Energy, Inc. | 96,944 | 5,182,626 |
| The Southern Co. (a) | 261,500 | 9,837,630 |
| | | 15,020,256 |
| Electrical Equipment — 2.3% | | |
| Emerson Electric Co. | 251,100 | 14,784,768 |
| Energy Equipment & Services — 3.2% | | |
| Ensco Plc – ADR (a) | 250,900 | 13,633,906 |
| Halliburton Co. (a) | 158,200 | 7,119,000 |
| | | 20,752,906 |
| Food Products — 7.2% | | |
| General Mills, Inc. (a) | 325,900 | 11,334,802 |
| Kraft Foods, Inc. (a) | 609,600 | 18,635,472 |
| Unilever NV - ADR | 586,300 | 17,372,069 |
| | | 47,342,343 |
| Household Products — 2.8% | | |
| Kimberly-Clark Corp. (a) | 285,400 | 18,473,942 |
| IT Services — 1.5% | | |
| International Business Machines Corp. (a) | 62,400 | 10,108,800 |
| Industrial Conglomerates — 2.2% | | |
| General Electric Co. (a) | 719,200 | 14,484,688 |
| Insurance — 7.3% | | |
| ACE Ltd. | 233,300 | 14,368,947 |
| MetLife, Inc. (a) | 287,300 | 13,149,721 |
| The Travelers Cos., Inc. (a) | 361,430 | 20,334,052 |
| | | 47,852,720 |
| Common Stocks | Shares | Value |
| Media — 4.6% | | |
| Comcast Corp., Special Class A (a) | 688,800 | $ 14,767,872 |
| Time Warner, Inc. (a) | 485,700 | 15,275,265 |
| | | 30,043,137 |
| Metals & Mining — 2.5% | | |
| Nucor Corp. (a) | 350,500 | 16,091,455 |
| Multi-Utilities — 1.4% | | |
| Dominion Resources, Inc. (a) | 215,800 | 9,395,932 |
| Oil, Gas & Consumable Fuels — 7.3% | | |
| Chevron Corp. (a) | 210,100 | 19,944,793 |
| Exxon Mobil Corp. | 212,200 | 17,120,296 |
| Marathon Oil Corp. (a) | 242,400 | 11,077,680 |
| | | 48,142,769 |
| Pharmaceuticals — 12.3% | | |
| Bristol-Myers Squibb Co. (a) | 763,000 | 19,212,340 |
| Eli Lilly & Co. (a) | 512,100 | 17,805,717 |
| Johnson & Johnson (a) | 143,000 | 8,547,110 |
| Merck & Co, Inc. (a) | 489,900 | 16,249,983 |
| Pfizer, Inc. (a) | 1,053,700 | 19,198,414 |
| | | 81,013,564 |
| Semiconductors & Semiconductor
Equipment — 9.5% | | |
| Analog Devices, Inc. (a) | 445,600 | 17,302,648 |
| Intel Corp. (a) | 729,100 | 15,646,486 |
| LSI Corp. (a)(b) | 1,272,900 | 7,879,251 |
| Maxim Integrated Products, Inc. (a) | 836,800 | 21,606,176 |
| | | 62,434,561 |
| Software — 2.0% | | |
| Microsoft Corp. (a) | 464,300 | 12,872,718 |
| Specialty Retail — 3.4% | | |
| Home Depot, Inc. (a) | 371,100 | 13,645,347 |
| Limited Brands, Inc. (a) | 301,300 | 8,810,012 |
| | | 22,455,359 |
| Total Long-Term Investments (Cost – $649,784,740) – 97.2% | | 637,823,638 |
| Short-Term Securities | | |
| BlackRock Liquidity Funds, TempFund, Institutional Class, 0.17% I(d) | 18,494,223 | 18,494,223 |
| Total Short-Term Securities (Cost – $18,494,223) – 2.8% | | 18,494,223 |
| Total Investments Before Options Written (Cost – $668,278,963*) – 100.0% | | 656,317,861 |

Portfolio Abbreviation

ADR American Depositary Receipts

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

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

| Options
Written | Contracts | Value | |
| --- | --- | --- | --- |
| Exchange-Traded Call Options Written —
(1.0)% | | | |
| AT&T
Inc.: | | | |
| Strike Price $29, Expires 2/19/11 | 1,540 | $ (6,930 | ) |
| Strike Price $29, Expires 3/19/11 | 1,000 | (12,000 | ) |
| Analog
Devices, Inc.: | | | |
| Strike Price $38, Expires 2/19/11 | 1,560 | (234,000 | ) |
| Strike Price $39, Expires 2/19/11 | 120 | (10,800 | ) |
| Bristol-Myers Squibb Co., Strike Price $26, Expires 2/19/11 | 4,195 | (44,047 | ) |
| Chevron Corp., Strike Price $95, Expires 3/19/11 | 1,570 | (334,410 | ) |
| Citigroup, Inc.: | | | |
| Strike Price $5, Expires 2/19/11 | 4,515 | (20,317 | ) |
| Strike Price $5.50, Expires 2/19/11 | 1,000 | (500 | ) |
| Strike Price $5, Expires 3/19/11 | 2,500 | (26,250 | ) |
| Comcast Corp., Special Class A, Strike Price $20.40, Expires 2/07/11 | 2,410 | (260,357 | ) |
| Dominion Resources, Inc., Strike Price $42.50, Expires 3/14/11 | 1,067 | (162,133 | ) |
| E.I. du Pont de Nemours & Co., Strike Price $50, Expires 2/19/11 | 2,560 | (285,440 | ) |
| Eli Lilly & Co.: | | | |
| Strike Price $35, Expires 2/19/11 | 1,400 | (32,900 | ) |
| Strike Price $34.85, Expires 3/08/11 | 1,415 | (67,136 | ) |
| Ensco International Plc, Strike Price $55, Expires 2/19/11 | 150 | (19,500 | ) |
| General Electric Co.: | | | |
| Strike Price $18, Expires 2/19/11 | 4,020 | (876,360 | ) |
| Strike Price $19, Expires 2/19/11 | 1,280 | (161,280 | ) |
| General Mills, Inc., Strike Price $36.60, Expires 3/08/11 | 1,075 | (20,073 | ) |
| Halliburton Co.: | | | |
| Strike Price $40, Expires 3/19/11 | 435 | (245,775 | ) |
| Strike Price $41, Expires 3/19/11 | 435 | (208,800 | ) |
| Home Depot, Inc., Strike Price $37, Expires 3/19/11 | 2,780 | (284,950 | ) |
| Intel Corp.: | | | |
| Strike Price $21, Expires 2/19/11 | 300 | (16,050 | ) |
| Strike Price $22, Expires 3/19/11 | 3,650 | (118,625 | ) |
| International
Business Machines Corp.: | | | |
| Strike Price $145, Expires 2/02/11 | 270 | (459,000 | ) |
| Strike Price $160, Expires 3/19/11 | 70 | (30,450 | ) |
| Invesco
Ltd.: | | | |
| Strike Price $25, Expires 2/19/11 | 1,045 | (44,412 | ) |
| Strike Price $25, Expires 3/19/11, | 1,055 | (79,125 | ) |
| Options Written | Contracts | Value | |
| Exchange-Traded Call Options Written
(continued) | | | |
| JPMorgan Chase & Co.: | | | |
| Strike Price $41, Expires 2/19/11 | 625 | $ (256,250 | ) |
| Strike Price $46, Expires 3/19/11 | 600 | (66,000 | ) |
| Johnson & Johnson, Strike Price $62.50, Expires 2/19/11 | 1,070 | (4,815 | ) |
| Kimberly-Clark Corp., Strike Price $64.50, Expires 2/25/11 | 1,570 | (113,729 | ) |
| Kraft Foods, Inc.: | | | |
| Strike Price $31, Expires 2/19/11 | 2,285 | (63,980 | ) |
| Strike Price $32, Expires 2/19/11 | 2,285 | (13,710 | ) |
| LSI Corp.: | | | |
| Strike Price $6, Expires 2/19/11 | 2,100 | (52,500 | ) |
| Strike Price $6, Expires 3/19/11 | 2,100 | (73,500 | ) |
| Limited Brands, Inc.: | | | |
| Strike Price $29, Expires 3/19/11 | 830 | (107,900 | ) |
| Strike Price $30, Expires 3/19/11 | 830 | (70,550 | ) |
| Marathon Oil Corp., Strike Price $43, Expires 3/19/11 | 1,350 | (455,625 | ) |
| Maxim Integrated Products, Inc.: | | | |
| Strike Price $25, Expires 2/19/11 | 500 | (56,250 | ) |
| Strike Price $26, Expires 3/19/11 | 950 | (80,750 | ) |
| Strike Price $27, Expires 3/19/11 | 500 | (23,750 | ) |
| Merck & Co., Inc., Strike Price $34, Expires 2/19/11 | 2,695 | (80,850 | ) |
| MetLife, Inc.: | | | |
| Strike Price $45, Expires 2/19/11 | 505 | (83,578 | ) |
| Strike Price $47, Expires 3/19/11 | 500 | (61,750 | ) |
| Microsoft Corp.: | | | |
| Strike Price $28.50, Expires 2/19/11 | 2,470 | (41,242 | ) |
| Strike Price $28, Expires 3/19/11 | 1,010 | (65,650 | ) |
| Morgan Stanley, Strike Price $30, Expires 3/19/11 | 1,160 | (98,600 | ) |
| Nokia Oyj: | | | |
| Strike Price $11, Expires 2/19/11 | 825 | (19,387 | ) |
| Strike Price $11, Expires 3/07/11 | 825 | (23,269 | ) |
| Nucor Corp., Strike Price $45, Expires 2/19/11 | 1,220 | (198,250 | ) |
| Pfizer, Inc., Strike Price $18.35, Expires 2/19/11 | 1,915 | (61,743 | ) |
| Qwest Communications International, Inc.: | | | |
| Strike Price $7, Expires 2/19/11 | 1,550 | (31,000 | ) |
| Strike Price $7, Expires 3/19/11 | 1,550 | (31,000 | ) |
| Raytheon Co.: | | | |
| Strike Price $50, Expires 2/19/11 | 690 | (63,480 | ) |
| Strike Price $52.50, Expires 3/19/11 | 665 | (32,585 | ) |

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

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

| Options
Written | Contracts | Value | |
| --- | --- | --- | --- |
| Exchange-Traded Call Options Written (concluded) | | | |
| The Southern
Co.: | | | |
| Strike Price $38, Expires 2/19/11 | 985 | $ (6,895 | ) |
| Strike Price $38.40, Expires 3/19/11 | 970 | (16,279 | ) |
| Time Warner, Inc.: | | | |
| Strike Price $33, Expires 2/19/11 | 1,350 | (23,625 | ) |
| Strike Price $33, Expires 3/19/11 | 1,350 | (44,550 | ) |
| The Travelers Cos., Inc.: | | | |
| Strike Price $55, Expires 2/19/11 | 635 | (107,950 | ) |
| Strike Price $55, Expires 3/07/11 | 635 | (113,687 | ) |
| Verizon Communications, Inc., Strike Price $38, Expires 2/19/11 | 2,650 | (9,275 | ) |
| Wells Fargo & Co., Strike Price $33, Expires 3/19/11 | 1,500 | (135,000 | ) |
| | | (6,850,574 | ) |
| Over-the-Counter Call Options Written – (0.5)% | | | |
| ACE Ltd., Strike Price $61.50, Expires 3/11/11, Broker Credit Suisse International | 81,000 | (143,176 | ) |
| Dominion Resources, Inc., Strike Price $43.25, Expires 2/04/11, Broker UBS AG | 55,000 | (23,802 | ) |
| Emerson Electric Co., Strike Price $58.60, Expires 2/07/11, Broker Citibank NA | 88,000 | (80,646 | ) |
| Ensco International Plc, Strike Price $52.46, Expires 3/10/11, Broker UBS AG | 138,000 | (454,950 | ) |
| Exxon Mobil
Corp.: | | | |
| Strike Price $75.75, Expires 3/11/11, Broker Goldman Sachs USA | 79,500 | (413,531 | ) |
| Strike Price $76, Expires 3/17/11, Broker Goldman Sachs USA | 79,500 | (403,544 | ) |
| General Mills, Inc., Strike Price $36.47, Expires 2/11/11, Broker JPMorgan Chase Bank NA | 68,500 | (1,630 | ) |
| Honeywell International, Inc., Strike Price $53.52, Expires 2/11/11, Broker Morgan Stanley Capital Services, Inc. | 79,000 | (207,119 | ) |
| LSI Corp., Strike Price $6.16, Expires 2/03/11, Broker Credit Suisse International | 36,000 | (1,551 | ) |
| Maxim
Integrated Products, Inc.: | | | |
| Strike Price $23.35, Expires 2/04/11, Broker Credit Suisse International | 171,000 | (422,370 | ) |
| Strike Price $26.48, Expires 3/04/11, Broker Credit Suisse International | 94,000 | (37,315 | ) |
| NextEra
Energy, Inc.: | | | |
| Strike Price $52.94, Expires 2/04/11, Broker UBS AG | 20,000 | (12,332 | ) |
| Options
Written | Contracts | Value | |
| Over-the-Counter Call Options Written (concluded) | | | |
| NextEra
Energy, Inc. (concluded): | | | |
| Strike Price $51.79, Expires 2/11/11, Broker Goldman Sachs USA | 40,000 | $ (72,175 | ) |
| Northrop
Grumman Corp.: | | | |
| Strike Price $67.52, Expires 3/14/11, Broker Goldman Sachs USA | 62,000 | (176,853 | ) |
| Strike Price $67.68, Expires 3/24/11, Broker Goldman Sachs USA | 62,000 | (182,280 | ) |
| Pfizer,
Inc.: | | | |
| Strike Price $18.34, Expires 3/14/11, Broker Credit Suisse International | 405,000 | (188,013 | ) |
| Strike Price $18.82, Expires 3/31/11, Broker Citibank NA | 193,500 | (66,073 | ) |
| Qwest
Communications International, Inc.: | | | |
| Strike Price $7.68, Expires 2/03/11, Broker Brown Brothers | 273,500 | (1,335 | ) |
| Strike Price $7.47, Expires 3/07/11, Broker UBS AG | 552,500 | (9,171 | ) |
| Strike Price $7.20, Expires 3/16/11, Broker Credit Suisse International | 425,000 | (57,588 | ) |
| Strike Price $7.20, Expires 3/25/11, Broker Credit Suisse International | 425,000 | (64,855 | ) |
| Unilever NV, Strike Price $30.48, Expires 2/24/11, Broker Morgan Stanley Capital Services, Inc. | 205,000 | (68,058 | ) |
| | | (3,088,367 | ) |
| Total Options Written (Premiums Received – $8,147,562) – (1.5)% | | (9,938,941 | ) |
| Total Investments, Net of Options Written (Cost – $660,131,401) – 98.5% | | 646,378,920 | |
| Other Assets Less Liabilities – 1.5% | | 9,595,903 | |
| Net Assets – 100.0% | | $ 655,974,823 | |

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

| Aggregate
cost | $ | |
| --- | --- | --- |
| Gross
unrealized appreciation | $ 10,942,495 | |
| Gross
unrealized depreciation | (60,503,445 | ) |
| Net
unrealized depreciation | $ (49,560,950 | ) |

| (a) | Security, or
portion thereof, pledged/held as collateral for outstanding options written. |
| --- | --- |
| (b) | Non-income
producing security. |

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

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

(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 | 6,825,629 | 18,494,223 | Income — $ 10,832 |
| --- | --- | --- | --- | --- |

| (d) | Represents
the current yield as of report date. | |
| --- | --- | --- |
| • | For Fund
compliance purposes, the Fund’s industry classifications refer to any one or
more of the industry sub-classifications used by one or more widely
recognized market indexes or rating group indexes, and/or as defined by Fund
management. This definition may not apply for purposes of this report, which
may combine such industry sub-classifications for reporting ease. | |
| • | Fair Value
Measurements - Various inputs are used in determining the fair value of
investments and derivatives, which are 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 derivatives) |
| The inputs
or methodologies used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For
information about the Fund’s policy regarding valuation of investments and
other significant accounting policies, please refer to the Fund’s most recent
financial statements as contained in its annual report. | | |
| The
following tables summarize the inputs used as of January 31, 2011 in
determining the fair valuation of the Fund’s investments and derivatives: | | |

| Valuation
Inputs | Level 1 | | | Total |
| --- | --- | --- | --- | --- |
| Assets: | | | | |
| Investments in Securities: | | | | |
| Long-Term Investments 1 | $ 637,823,638 | — | — | $ 637,823,638 |
| Short-Term Securities | 18,494,223 | — | — | 18,494,223 |
| Total | $ 656,317,861 | — | — | $ 656,317,861 |

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

| Derivative Financial Instruments 2 — Valuation
Inputs | Level 1 | | Level 2 | Level 3 | | Total | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Liabilities: | | | | | | | |
| Equity contracts | $ (5,433,240 | ) | $ (4,505,701 | ) | — | $ (9,938,941 | ) |

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

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

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: March 25, 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: March 25, 2011
	By:	/s/ Neal J. Andrews
		Neal J. Andrews
		Chief Financial Officer (principal financial officer) of
		BlackRock Enhanced Capital and Income Fund, Inc.
	Date: March 25, 2011