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BlackRock Enhanced Large Cap Core Fund, Inc.

Regulatory Filings Mar 27, 2012

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N-Q 1 i00104_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: 10/31/2012

Date of reporting period: 01/31/2012

Item 1 – Schedule of Investments

insert

| Schedule of Investments January 31, 2012
(Unaudited) |
| --- |
| (Percentages shown are based on Net Assets) |

Common Stocks Shares Value
Aerospace
& Defense — 4.9%
Honeywell International,
Inc. (a) 246,200 $ 14,289,448
Northrop Grumman Corp. (a) 143,700 8,341,785
Raytheon Co. (a) 171,000 8,206,290
30,837,523
Capital
Markets — 3.0%
Invesco Ltd. (a) 560,700 12,654,999
Morgan Stanley 326,513 6,089,467
18,744,466
Chemicals
— 2.5%
EI du Pont de Nemours &
Co. (a) 308,300 15,689,387
Commercial
Banks — 1.2%
Wells Fargo & Co. (a) 255,600 7,466,076
Communications
Equipment — 0.3%
Nokia Oyj - ADR (a) 389,100 1,961,064
Diversified
Financial Services — 3.0%
Citigroup, Inc. (a) 228,930 7,032,730
JPMorgan Chase & Co.
(a) 326,500 12,178,450
19,211,180
Diversified
Telecommunication Services — 7.4%
AT&T, Inc. (a) 421,800 12,405,138
CenturyLink, Inc. (a) 489,800 18,137,294
Verizon Communications,
Inc. (a) 436,200 16,427,292
46,969,724
Electric
Utilities — 2.9%
NextEra Energy, Inc. (a) 126,100 7,547,085
The Southern Co. (a) 232,700 10,601,812
18,148,897
Electrical
Equipment — 2.0%
Emerson Electric Co. (a) 241,400 12,403,132
Energy
Equipment & Services — 4.4%
Ensco Plc - ADR (a) 225,900 11,891,376
Halliburton Co. (a) 140,400 5,163,912
Noble Corp. (a)(b) 314,200 10,946,728
28,002,016
Food
Products — 7.5%
General Mills, Inc. (a) 300,000 11,949,000
Kraft Foods, Inc. (a) 533,000 20,413,900
Unilever NV - ADR (a) 441,900 14,737,365
47,100,265
Health
Care Equipment & Supplies — 1.8%
Medtronic, Inc. (a) 295,600 11,401,292
Household
Products — 3.1%
Kimberly-Clark Corp. (a) 272,200 19,478,632
Industrial
Conglomerates — 2.4%
General Electric Co. (a) 626,800 11,727,428
Tyco International Ltd. (a) 64,100 3,265,895
14,993,323
Common Stocks Shares Value
Insurance
— 6.8%
ACE Ltd. (a) 215,200 $ 14,977,920
MetLife, Inc. (a) 274,700 9,705,151
The Travelers Cos., Inc.
(a) 313,200 18,259,560
42,942,631
IT
Services — 1.2%
International Business
Machines Corp. (a) 38,800 7,472,880
Media —
5.6%
Comcast Corp., Special Class
A (a) 598,500 15,255,765
Time Warner, Inc. (a) 412,800 15,298,368
Walt Disney Co. (a) 127,200 4,948,080
35,502,213
Metals
& Mining — 2.9%
Freeport-McMoRan Copper & Gold, Inc., Class B (a) 84,000 3,881,640
Nucor Corp. (a) 323,000 14,370,270
18,251,910
Multi-Utilities
— 2.0%
Dominion Resources, Inc.
(a) 195,200 9,767,808
Public Service Enterprise Group, Inc. (a) 92,900 2,818,586
12,586,394
Oil, Gas
& Consumable Fuels — 7.2%
Chevron Corp. (a) 183,000 18,863,640
Exxon Mobil Corp. (a) 184,800 15,475,152
Marathon Oil Corp. (a) 212,900 6,682,931
Marathon Petroleum Corp.
(a) 109,700 4,192,734
45,214,457
Pharmaceuticals
— 13.2%
Bristol-Myers Squibb Co.
(a) 646,200 20,833,488
Eli Lilly & Co. (a) 460,300 18,292,322
Johnson & Johnson (a) 130,400 8,594,664
Merck & Co., Inc. (a) 425,900 16,294,934
Pfizer, Inc. (a) 913,000 19,538,200
83,553,608
Semiconductors
& Semiconductor Equipment — 9.4%
Analog Devices, Inc. (a) 401,300 15,702,869
Intel Corp. (a) 624,600 16,501,932
LSI Corp. (a)(b) 1,101,400 8,337,598
Maxim Integrated Products, Inc. (a) 709,500 19,042,980
59,585,379
Software —
1.9%
Microsoft Corp. (a) 406,500 12,003,945
Specialty
Retail — 3.7%
Home Depot, Inc. (a) 310,300 13,774,217
Limited Brands, Inc. (a) 226,500 9,481,290
23,255,507

BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JANUARY 31, 2012 1

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

| Total
Long-Term Investments (Cost – $650,773,988) – 100.3% | Shares | Value — $ 632,775,901 | |
| --- | --- | --- | --- |
| Short-Term Securities | | | |
| BlackRock Liquidity Funds, TempFund, Institutional Class, 0.15%, (c)(d) | 8,322,793 | 8,322,793 | |
| Total
Short-Term Securities (Cost – $8,322,793) – 1.3% | | 8,322,793 | |
| Total
Investments Before Options Written (Cost – $659,096,781) – 101.6% | | 641,098,694 | |
| Options Written | Contracts | | |
| Exchange-Traded
Call Options — (1.3)% | | | |
| ACE, Ltd.: | | | |
| Strike Price $67.50, Expires 2/18/12 | 400 | (125,000 | ) |
| Strike Price $70, Expires 2/18/12 | 740 | (109,150 | ) |
| Analog Devices, Inc.: | | | |
| Strike Price $35, Expires 2/18/12 | 1,115 | (479,450 | ) |
| Strike Price $40, Expires 3/17/12 | 1,090 | (103,550 | ) |
| Bristol-Myers Squibb Co., Strike Price $34.50, Expires 2/18/12 | 2,485 | (5,572 | ) |
| CenturyLink, Inc.: | | | |
| Strike Price $36, Expires 2/18/12 | 850 | (136,000 | ) |
| Strike Price $37, Expires 2/18/12 | 850 | (76,500 | ) |
| Citigroup, Inc.: | | | |
| Strike Price $29, Expires 2/18/12 | 300 | (63,750 | ) |
| Strike Price $32, Expires 3/17/12 | 500 | (59,500 | ) |
| Comcast Corp., Special Class A: | | | |
| Strike Price $23.25, Expires 2/03/12 | 1,050 | (235,200 | ) |
| Strike Price $25.70, Expires 3/12/12 | 2,240 | (140,024 | ) |
| E.I. du Pont de Nemours & Co.: | | | |
| Strike Price $46, Expires 2/18/12 | 430 | (211,775 | ) |
| Strike Price $50, Expires 3/17/12 | 1,265 | (232,128 | ) |
| Eli Lilly & Co.: | | | |
| Strike Price $40, Expires 2/18/12 | 1,280 | (55,040 | ) |
| Strike Price $40, Expires 4/21/12 | 1,250 | (111,875 | ) |
| Emerson Electric Co., Strike Price $50, Expires 2/18/12 | 845 | (164,775 | ) |
| Options
Written | Contracts | Value | |
| Exchange-Traded Call Options (continued) | | | |
| Ensco Plc — ADR, Strike Price $52.50, Expires 3/17/12 | 790 | $ (189,600 | ) |
| ExxonMobil Corp., Strike Price $85, Expires 4/21/12 | 340 | (68,170 | ) |
| Freeport-McMoRan Copper & Gold, Inc., Strike Price $40, Expires 2/18/12 | 460 | (295,550 | ) |
| General Electric Co.: | | | |
| Strike Price $17.45, Expires 2/18/12 | 1,045 | (132,051 | ) |
| Strike Price $19, Expires 3/17/12 | 520 | (20,280 | ) |
| Strike Price $19, Expires 3/17/12 | 625 | (94,375 | ) |
| General Mills, Inc., Strike Price $41, Expires 2/18/12 | 460 | (3,450 | ) |
| Halliburton Co., Strike Price $36, Expires 2/18/12 | 385 | (62,178 | ) |
| Home Depot, Inc., Strike Price $45, Expires 3/17/12 | 2,320 | (244,760 | ) |
| Honeywell International, Inc.: | | | |
| Strike Price $55, Expires 2/18/12 | 720 | (235,800 | ) |
| Strike Price $57.50, Expires 3/17/12 | 1,120 | (217,280 | ) |
| Intel Corp., Strike Price $27, Expires 3/17/12 | 2,190 | (94,170 | ) |
| International Business Machines Corp., Strike Price $195, Expires 3/17/12 | 210 | (63,105 | ) |
| Invesco Ltd., Strike Price $22.50, Expires 3/17/12 | 290 | (26,100 | ) |
| JPMorgan Chase & Co., Strike Price $38, Expires 3/17/12 | 1,140 | (139,650 | ) |
| Kraft Foods, Inc.: | | | |
| Strike Price $37, Expires 2/18/12 | 680 | (95,540 | ) |
| Strike Price $38, Expires 2/18/12 | 1,990 | (118,405 | ) |
| Limited Brands, Inc., Strike Price $40, Expires 2/18/12 | 1,700 | (382,500 | ) |
| LSI Corp.: | | | |
| Strike Price $6, Expires 2/18/12 | 1,200 | (192,000 | ) |
| Strike Price $7, Expires 3/17/12 | 190 | (14,250 | ) |
| Strike Price $8, Expires 3/17/12 | 2,180 | (43,600 | ) |
| Marathon Oil Corp., Strike Price $33, Expires 3/17/12 | 745 | (42,837 | ) |
| Marathon Petroleum Corp., Strike Price $40, Expires 3/17/12 | 385 | (39,462 | ) |
| Maxim Integrated Products, Inc., Strike Price $28, Expires 3/17/12 | 3,900 | (156,000 | ) |
| Medtronic, Inc., Strike Price $36, Expires 2/18/12 | 1,625 | (443,625 | ) |
| Merck & Co., Inc., Strike Price $39, Expires 3/17/12 | 1,140 | (59,280 | ) |
| MetLife, Inc., Strike Price $38, Expires 3/17/12 | 960 | (60,960 | ) |

BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JANUARY 31, 2012 2

Schedule of Investments (continued)
(Percentages shown are based on Net Assets)
Options Written Contracts Value
Exchange-Traded
Call Options (concluded)
Microsoft Corp.:
Strike Price $26, Expires 2/18/12 585 $ (207,675 )
Strike Price $19, Expires 3/17/12 1,140 (115,710 )
Strike Price $30, Expires 3/17/12 840 (39,480 )
NextEra Energy, Inc., Strike Price $60, Expires 2/18/12 445 (25,587 )
Noble Corp.:
Strike Price $33, Expires 2/18/12 885 (187,178 )
Strike Price $35, Expires 3/17/12 840 (115,500 )
Nokia Oyj — ADR:
Strike Price $6, Expires 3/17/12 682 (5,797 )
Strike Price $6, Expires 4/21/12 682 (13,640 )
Northrop Grumman Corp., Strike Price $62.50, Expires 3/17/12 1,075 (13,437 )
Nucor Corp.:
Strike Price $43, Expires 3/17/12 1,005 (251,753 )
Strike Price $43, Expires 4/21/12 125 (37,687 )
Pfizer, Inc.:
Strike Price $22, Expires 2/18/12 1,400 (9,100 )
Strike Price $21, Expires 3/17/12 1,370 (60,965 )
Raytheon Co., Strike Price $47, Expires 2/18/12 1,285 (173,475 )
Southern Co., Strike Price $45, Expires 2/18/12 880 (51,040 )
Time Warner, Inc.:
Strike Price $34, Expires 2/18/12 870 (278,400 )
Strike Price $35, Expires 2/18/12 870 (200,535 )
Strike Price $38, Expires 3/17/12 530 (34,980 )
Travelers Cos., Inc., Strike Price $60, Expires 4/21/12 1,325 (142,438 )
Tyco International Ltd., Strike Price $46, Expires 2/18/12 225 (111,375 )
Verizon Communications, Inc., Strike Price $39, Expires 2/18/12 2,400 (16,800 )
Walt Disney Co., Strike Price $40, Expires 2/18/12 700 (39,200 )
Wells Fargo & Co., Strike Price $31, Expires 3/17/12 900 (33,300 )
(8,009,319 )
Options
Written Contracts Value
Over-the-Counter Call Options — (0.2)%
AT&T, Inc., Strike Price $30.42, Expires 2/15/12, Broker Morgan Stanley & Co., Inc. 316,000 $ (7,835 )
Bristol-Myers Squibb Co., Strike Price $35.25, Expires 3/05/12, Broker Credit Suisse Securities (USA) LLC 236,000 (3,233 )
CenturyLink, Inc., Strike Price $37.55, Expires 3/06/12, Broker Morgan Stanley & Co., Inc. 197,000 (96,221 )
Chevron Corp., Strike Price $107.50, Expires 3/13/13, Broker UBS 100,000 (91,888 )
Dominion Resources, Inc.:
Strike Price $50.69, Expires 2/13/12, Broker Goldman Sachs & Co. 10,500 (2,815 )
Strike Price $51.22, Expires 2/29/12, Broker Goldman Sachs & Co. 97,500 (29,321 )
ExxonMobil Corp., Strike Price $88.53, Expires 3/23/12, Broker Deutsche Bank Securities, Inc. 67,700 (30,001 )
General Mills, Inc.:
Strike Price $40.55, Expires 2/23/12 Broker Morgan Stanley & Co., Inc. 94,000 (25,276 )
Strike Price $40.70, Expires 3/01/12 Broker Morgan Stanley & Co., Inc. 85,000 (14,858 )
Halliburton Co., Strike Price $36.12, Expires 3/05/12, Broker Morgan Stanley & Co., Inc. 38,500 (75,262 )
Invesco Ltd.:
Strike Price $20.00, Expires 2/13/12 Broker Morgan Stanley & Co., Inc. 72,000 (185,040 )
Strike Price $21.46, Expires 2/23/12 Broker Morgan Stanley & Co., Inc. 95,500 (123,713 )
Johnson & Johnson, Strike Price $65.50, Expires 3/13/12, Broker Deutsche Bank Securities, Inc. 98,000 (116,646 )
Kimberly-Clark Corp., Strike Price $74, Expires 3/13/12, Broker Credit Suisse Securities (USA) LLC 150,000 (33,476 )
Kraft Foods, Inc., Strike Price $37.78, Expires 2/23/12, Broker Credit Suisse Securities (USA) LLC 133,000 (96,800 )
LSI Corp., Strike Price $6.34, Expires 2/13/12, Broker Goldman Sachs & Co. 248,500 (305,920 )
Merck & Co., Inc., Strike Price $35.96, Expires 2/03/12, Broker Deutsche Bank Securities, Inc. 120,200 (276,941 )
Pfizer, Inc., Strike Price $21.59, Expires 3/27/12, Broker Morgan Stanley & Co., Inc. 225,000 (68,671 )

BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JANUARY 31, 2012 3

Schedule of Investments (continued)
(Percentages shown are based on Net Assets)
Value
Options
Written
Over-the-Counter
Call Options (concluded)
Public Service Enterprise Group, Inc., Strike Price $30.80, Expires 3/23/12, Broker Deutsche Bank Securities, Inc. 51,000 $ (23,256 )
Southern Co., Strike Price $45.41, Expires 4/10/12, Broker Goldman Sachs & Co. 86,000 (53,621 )
Travelers Cos., Inc., Strike Price $60.59, Expires 3/05/12, Broker Bank of America NA 40,000 (11,627 )
Unilever NV - ADR:
Strike Price $34.75, Expires 2/13/12, Broker Morgan Stanley & Co., Inc. 55,000 (6,527 )
Strike Price $33.20, Expires 3/26/12, Broker Morgan Stanley & Co., Inc. 100,000 (88,291 )
(1,767,239 )
Total
Options Written (Premiums Received – $8,591,620) – (1.5)% (9,776,558 )
Total
Investments, Net of Outstanding Options Written – 100.1% 631,322,136
Liabilities in Excess of Other Assets – (0.1)% (395,756 )
Net Assets – 100.0% $ 630,926,380
  • As of January 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:
Tax cost $
Gross unrealized
appreciation $ 11,603,569
Gross unrealized
depreciation (76,150,841 )
Net unrealized depreciation $ (64,547,272 )

| (a) | All or a portion of
security has been pledged/segregated as collateral in connection with
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 | 2,617,964 | 5,704,829 | 8,322,793 | Income — $ 3,850 |
| --- | --- | --- | --- | --- |

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

Portfolio Abbreviation

ADR American Depositary Receipts

| • | 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. 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 into a
disclosure hierarchy consisting of three broad levels for financial reporting
purposes as follows: | |
| | • | Level 1 — unadjusted 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) |

BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JANUARY 31, 2012 4

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

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instruments 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 annual report.

The following tables summarize the inputs used as of January 31, 2012 in determining the fair valuation of the Fund’s investments and derivative financial instruments:

Valuation Inputs Level 1 Total
Assets:
Investments:
Long-Term Investments 1 $ 632,775,901 — — $ 632,775,901
Short-Term Securities 8,322,793 — — 8,322,793
Total $ 641,098,694 — — $ 641,098,694

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 $ (7,402,097 ) $ (2,374,461 ) — $ (9,776,558 )

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

BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JANUARY 31, 2012 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: March 23, 2012
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 23, 2012
By: /s/ Neal J. Andrews
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock Enhanced Capital and Income Fund, Inc.
Date: March 23, 2012

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