BLACKROCK ENHANCED CAPITAL & INCOME FUND, INC.

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 52nd Street, New York, NY 10055

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

Date of fiscal year end:  12/31/2017

Date of reporting period:  09/30/2017

Item 1 – Schedule of Investments

Schedule of Investments September 30, 2017 (Unaudited)

   

BlackRock Enhanced Capital and Income Fund (CII)

(Percentages shown are based on Net Assets)

 

Common Stocks    Shares     Value  
Airlines — 1.5%  

Delta Air Lines, Inc. (a)

      228,136     $ 11,000,718  
Auto Components — 1.8%             

Goodyear Tire & Rubber Co. (a)

      265,381       8,823,918  

Lear Corp. (a)

      23,950       4,145,266  
    

 

 

  
               12,969,184  
Banks — 12.4%             

Bank of America Corp. (a)(b)

      837,606       21,224,936  

Citigroup, Inc. (a)

      91,513       6,656,656  

JPMorgan Chase & Co. (a)(b)

      285,110       27,230,856  

Regions Financial Corp. (a)

      362,509       5,521,012  

SunTrust Banks, Inc. (a)

      231,139       13,815,178  

U.S. Bancorp (a)

      286,534       15,355,357  
    

 

 

  
               89,803,995  
Biotechnology — 4.5%             

Biogen, Inc. (a)(c)

      52,949       16,579,391  

Gilead Sciences, Inc. (a)

      200,270       16,225,875  
    

 

 

  
               32,805,266  
Capital Markets — 1.9%             

E*Trade Financial Corp. (a)(c)

      13,243       577,527  

Goldman Sachs Group, Inc. (a)

      56,698       13,448,199  
    

 

 

  
               14,025,726  
Chemicals — 2.5%             

DowDuPont, Inc. (a)

      266,449       18,446,264  
Communications Equipment — 2.0%             

Cisco Systems, Inc. (a)

      444,454       14,946,988  
Construction & Engineering — 0.4%  

EMCOR Group, Inc. (a)

      38,318       2,658,503  
Consumer Finance — 1.0%             

SLM Corp. (a)(c)

      643,933       7,385,911  
Containers & Packaging — 1.8%  

Avery Dennison Corp. (a)

      49,010       4,819,644  

Packaging Corp. of America (a)

      74,284       8,518,889  
    

 

 

  
               13,338,533  
Diversified Telecommunication Services — 0.2%  

AT&T, Inc. (a)

      37,503       1,468,992  
Electric Utilities — 1.4%  

FirstEnergy Corp. (a)

      331,947       10,233,926  
Electronic Equipment, Instruments & Components — 2.2%  

CDW Corp. (a)

      126,517       8,350,122  

Flex Ltd. (a)(c)

      444,675       7,368,265  
    

 

 

  
               15,718,387  
Food & Staples Retailing — 4.8%             

CVS Health Corp. (a)(b)

      137,450       11,177,434  

Wal-Mart Stores, Inc. (a)

      188,100       14,698,134  
Common Stocks    Shares     Value  
Food & Staples Retailing (continued)  

Walgreens Boots Alliance, Inc. (a)

      119,591     $ 9,234,817  
    

 

 

  
               35,110,385  
Health Care Equipment & Supplies — 1.2%  

Baxter International, Inc. (a)

      134,956       8,468,489  
Health Care Providers & Services — 6.8%             

Anthem, Inc. (a)

      17,318       3,288,342  

Centene Corp. (a)(c)

      89,151       8,627,142  

Humana, Inc. (a)

      63,416       15,450,040  

Laboratory Corp. of America Holdings (a)(c)

      36,871       5,566,415  

UnitedHealth Group, Inc. (a)

      83,019       16,259,271  
    

 

 

  
               49,191,210  
Hotels, Restaurants & Leisure — 1.5%             

Carnival Corp. (a)

      166,451       10,747,741  
Household Durables — 2.6%             

D.R. Horton, Inc. (a)

      308,599       12,322,358  

Lennar Corp., Class A (a)

      59,939       3,164,779  

NVR, Inc. (a)(c)

      1,270       3,625,850  
    

 

 

  
               19,112,987  
Household Products — 0.2%             

Energizer Holdings, Inc. (a)

      37,500       1,726,875  
Insurance — 0.6%             

Hartford Financial Services Group, Inc. (a)

      79,598       4,412,117  
Internet Software & Services — 4.5%             

Alphabet, Inc., Class A (a)(c)

      33,329       32,453,114  
IT Services — 2.7%             

Amdocs Ltd. (a)

      94,443       6,074,574  

Cognizant Technology Solutions Corp., Class A (a)

      183,589       13,317,546  
    

 

 

  
               19,392,120  
Machinery — 2.9%             

Fortive Corp. (a)

      92,749       6,565,702  

Stanley Black & Decker, Inc. (a)

      77,566       11,710,139  

WABCO Holdings, Inc. (a)(c)

      20,269       2,999,812  
    

 

 

  
               21,275,653  
Media — 2.9%             

Comcast Corp., Class A (a)(b)

      543,920       20,930,042  
Metals & Mining — 1.0%             

Rio Tinto PLC - ADR (a)

      151,326       7,141,074  
Multi-Utilities — 0.6%             

Public Service Enterprise Group, Inc. (a)

      88,048       4,072,220  
Oil, Gas & Consumable Fuels — 6.5%             

BP PLC - ADR (a)

      204,292       7,850,942  
 

 

     
                
   BLACKROCK ENHANCED CAPITAL AND INCOME FUND    SEPTEMBER 30, 2017    1

Schedule of Investments (continued)    BlackRock Enhanced Capital and Income Fund (CII)

 

Common Stocks    Shares     Value  
Oil, Gas & Consumable Fuels (continued)             

Chevron Corp. (a)(b)

      129,713     $ 15,241,277  

Marathon Oil Corp. (a)

      130,908       1,775,112  

Statoil ASA - ADR (a)

      120,101       2,412,829  

Suncor Energy, Inc. (a)

      361,226       12,653,747  

TOTAL SA - ADR (a)

      87,509       4,683,482  

Valero Energy Corp. (a)

      34,618       2,663,163  
    

 

 

  
               47,280,552  
Pharmaceuticals — 4.3%             

Merck & Co., Inc. (a)

      100,975       6,465,429  

Novo Nordisk A/S - ADR (a)

      73,861       3,556,407  

Pfizer, Inc. (a)

      588,353       21,004,202  
    

 

 

  
               31,026,038  
Professional Services — 0.7%             

Robert Half International, Inc. (a)

      106,070       5,339,564  
Road & Rail — 2.1%             

Norfolk Southern Corp. (a)

      113,149       14,962,824  
Software — 8.6%             

Activision Blizzard, Inc. (a)

      190,940       12,317,539  

Dell Technologies, Inc., Class V (a)(c)

      88,843       6,859,568  

Microsoft Corp. (a)(b)

      398,650       29,695,439  

Oracle Corp. (a)

      287,714       13,910,972  
    

 

 

  
               62,783,518  
Specialty Retail — 5.4%             

Home Depot, Inc. (a)(b)

      101,513       16,603,466  

Lowe’s Cos., Inc. (a)(b)

      185,268       14,810,324  

Urban Outfitters, Inc. (a)(c)

      323,576       7,733,467  
    

 

 

  
               39,147,257  
Common Stocks    Shares     Value  
Technology Hardware, Storage & Peripherals — 5.3%  

Apple, Inc. (a)(b)

      250,316     $ 38,578,702  
Tobacco — 2.3%             

Altria Group, Inc. (a)(b)

      266,262       16,886,336  
Total Long-Term Investments
(Cost — $590,272,990) — 101.1%		       734,841,211  
    
   
Short-Term Securities               

BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.91% (d)(e)

      3,284,861       3,284,861  
Total Short-Term Securities
(Cost — $3,284,861) — 0.5%		       3,284,861  
Total Investments Before Options Written
(Cost — $593,557,851) — 101.6%		       738,126,072  
Options Written
(Premiums Received — $7,812,287) — (1.5)%		       (11,153,038 ) 
Total Investments, Net of Options Written
(Cost — $585,745,564) — 100.1%		       726,973,034  

Liabilities in Excess of Other Assets — (0.1)%

 

     (380,060 ) 
    

 

 

  

Net Assets — 100.0%

 

   $ 726,592,974  
    

 

 

  
 
Notes to Schedule of Investments

 

(a)   All or a portion of security has been pledged and/or segregated as collateral in connection with outstanding exchange-traded options written.

 

(b)   All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

 

(c)   Non-income producing security.

 

(d)   Annualized 7-day yield as of period end.

 

     
                
2    BLACKROCK ENHANCED CAPITAL AND INCOME FUND    SEPTEMBER 30, 2017   

Schedule of Investments (continued)    BlackRock Enhanced Capital and Income Fund (CII)

 

(e)   During the period ended September 30, 2017, investments in issuers considered to be affiliates of the Trust for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

 

Affiliate  

Shares Held at

December 31,
2016

      Net
Activity		     

Shares Held

at September 30,
2017

      Value at
September
30, 2017		      Income      Net
Realized
Gain (Loss)		      Change in
Unrealized
Appreciation
(Depreciation)		  

BlackRock Liquidity Funds, T-Fund, Institutional Class

     24,715,046        (21,430,185 )       3,284,861      $ 3,284,861      $ 60,315        —        —  

SL Liquidity Series, LLC, Money Market Series

     695,518        (695,518 )       —        —        1,192 1       —      $ (54 ) 

Total

      $ 3,284,861      $ 61,507        —      $ (54 ) 

 

1   

Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

For Trust compliance purposes, the Trust’s industry classifications refer to 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 the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

 

Portfolio Abbreviations
ADR    American Depositary Receipts
OTC    Over-the-Counter

 

Derivative Financial Instruments Outstanding as of Period End

 

Exchange-Traded Options Written  
Description   Number of
Contracts		        Expiration
Date		        Exercise
Price		       

Notional

Amount
(000)

     Value  

Call

                       

Bank of America Corp.

     216          10/02/17          USD       24.25          USD       547     $ (23,672 ) 

DowDuPont, Inc.

     130          10/05/17          USD       65.25          USD       900       (52,037 ) 

Alphabet, Inc., Class A

     28          10/06/17          USD           962.50          USD           2,726       (42,420 ) 

Bank of America Corp.

     213          10/06/17          USD       24.00          USD       540       (28,861 ) 

Bank of America Corp.

     212          10/06/17          USD       24.50          USD       537       (18,974 ) 

Baxter International, Inc.

     562          10/06/17          USD       62.00          USD       3,527       (57,886 ) 

CVS Health Corp.

     236          10/06/17          USD       78.00          USD       1,919       (79,650 ) 

Chevron Corp.

     54          10/06/17          USD       110.00          USD       635       (40,635 ) 

Cisco Systems, Inc.

     154          10/06/17          USD       32.00          USD       518       (25,179 ) 

Citigroup, Inc.

     75          10/06/17          USD       67.50          USD       546       (39,188 ) 

Comcast Corp., Class A

     96          10/06/17          USD       41.00          USD       369       (864 ) 

Flex Ltd.

     165          10/06/17          USD       16.50          USD       273       (3,382 ) 

Home Depot, Inc.

     172          10/06/17          USD       150.00          USD       2,813       (233,920 ) 

Humana, Inc.

     96          10/06/17          USD       255.00          USD       2,339       (3,360 ) 

Lowe’s Cos., Inc.

     211          10/06/17          USD       76.00          USD       1,687       (85,455 ) 

Merck & Co., Inc.

     56          10/06/17          USD       65.50          USD       359       (448 ) 

Microsoft Corp.

     698          10/06/17          USD       73.50          USD       5,199       (83,411 ) 

Pfizer, Inc.

     302          10/06/17          USD       34.00          USD       1,078       (52,850 ) 

Suncor Energy, Inc.

     433          10/06/17          USD       31.50          USD       1,517       (154,798 ) 

UnitedHealth Group, Inc.

     24          10/06/17          USD       195.00          USD       470       (4,740 ) 

Valero Energy Corp.

     40          10/06/17          USD       70.00          USD       308       (30,500 ) 

Wal-Mart Stores, Inc.

     233          10/06/17          USD       80.00          USD       1,821       (1,864 ) 

Pfizer, Inc.

     90          10/12/17          USD       33.75          USD       321       (17,766 ) 

 

     
                
   BLACKROCK ENHANCED CAPITAL AND INCOME FUND    SEPTEMBER 30, 2017    3

Schedule of Investments (continued)    BlackRock Enhanced Capital and Income Fund (CII)

 

Exchange-Traded Options Written (continued)  
Description   Number of
Contracts		        Expiration
Date		      Exercise
Price		       

Notional

Amount
(000)

     Value  

Altria Group, Inc.

     40        10/13/17      USD     65.25        USD     254     $ (876 ) 

Altria Group, Inc.

     125        10/13/17      USD     63.00        USD     793       (12,750 ) 

Anthem, Inc.

     10        10/13/17      USD         197.50        USD             190       (270 ) 

Apple, Inc.

     114        10/13/17      USD     160.00        USD     1,757       (3,933 ) 

Apple, Inc.

     232        10/13/17      USD     162.50        USD     3,576       (3,596 ) 

BP PLC - ADR

     179        10/13/17      USD     36.00        USD     688       (44,303 ) 

Cisco Systems, Inc.

     162        10/13/17      USD     32.00        USD     545       (26,811 ) 

Cognizant Technology Solutions Corp., Class A

     182        10/13/17      USD     71.00        USD     1,320       (33,670 ) 

Comcast Corp., Class A

     572        10/13/17      USD     41.00        USD     2,201       (3,432 ) 

Delta Air Lines, Inc.

     109        10/13/17      USD     48.00        USD     526       (12,644 ) 

DowDuPont, Inc.

     155        10/13/17      USD     66.85        USD     1,073       (40,803 ) 

Flex Ltd.

     164        10/13/17      USD     16.50        USD     272       (4,346 ) 

JPMorgan Chase & Co.

     269        10/13/17      USD     92.00        USD     2,569       (93,478 ) 

Marathon Oil Corp.

     190        10/13/17      USD     11.50        USD     258       (39,425 ) 

Merck & Co., Inc.

     49        10/13/17      USD     64.50        USD     314       (1,813 ) 

Microsoft Corp.

     336        10/13/17      USD     75.50        USD     2,503       (12,096 ) 

Suncor Energy, Inc.

     358        10/13/17      USD     33.00        USD     1,254       (76,433 ) 

UnitedHealth Group, Inc.

     26        10/13/17      USD     200.00        USD     509       (1,885 ) 

Valero Energy Corp.

     42        10/13/17      USD     69.50        USD     323       (34,335 ) 

WABCO Holdings, Inc.

     114        10/13/17      USD     136.90        USD     1,687       (134,283 ) 

Walgreens Boots Alliance, Inc.

     148        10/13/17      USD     82.00        USD     1,143       (1,480 ) 

AT&T, Inc.

     94        10/20/17      USD     38.00        USD     368       (11,280 ) 

Activision Blizzard, Inc.

     157        10/20/17      USD     67.50        USD     1,013       (6,437 ) 

Alphabet, Inc., Class A

     19        10/20/17      USD     975.00        USD     1,850       (28,405 ) 

Altria Group, Inc.

     610        10/20/17      USD     65.00        USD     3,869       (25,620 ) 

Anthem, Inc.

     37        10/20/17      USD     195.00        USD     703       (4,551 ) 

Avery Dennison Corp.

     146        10/20/17      USD     95.00        USD     1,436       (56,210 ) 

BP PLC - ADR

     179        10/20/17      USD     36.00        USD     688       (44,392 ) 

Bank of America Corp.

     503        10/20/17      USD     24.00        USD     1,275       (74,444 ) 

CDW Corp.

     310        10/20/17      USD     65.00        USD     2,046       (49,600 ) 

Centene Corp.

     498        10/20/17      USD     95.00        USD     4,819       (181,770 ) 

Chevron Corp.

     54        10/20/17      USD     110.00        USD     635       (41,445 ) 

Cisco Systems, Inc.

     392        10/20/17      USD     31.00        USD     1,318       (102,900 ) 

Citigroup, Inc.

     24        10/20/17      USD     70.00        USD     175       (7,560 ) 

Citigroup, Inc.

     75        10/20/17      USD     67.50        USD     546       (40,500 ) 

Cognizant Technology Solutions Corp., Class A

     311        10/20/17      USD     72.50        USD     2,256       (32,655 ) 

DowDuPont, Inc.

     389        10/20/17      USD     65.00        USD     2,693       (168,243 ) 

FirstEnergy Corp.

     210        10/20/17      USD     33.00        USD     647       (1,050 ) 

FirstEnergy Corp.

     183        10/20/17      USD     32.00        USD     564       (1,830 ) 

Flex Ltd.

     328        10/20/17      USD     17.00        USD     543       (3,608 ) 

Fortive Corp.

     244        10/20/17      USD     66.15        USD     1,727       (115,301 ) 

Gilead Sciences, Inc.

     462        10/20/17      USD     82.50        USD     3,743       (52,206 ) 

Goodyear Tire & Rubber Co.

     379        10/20/17      USD     31.00        USD     1,260       (88,118 ) 

Hartford Financial Services Group, Inc.

     140        10/20/17      USD     55.00        USD     776       (13,860 ) 

Humana, Inc.

     113        10/20/17      USD     260.00        USD     2,753       (5,650 ) 

Laboratory Corp. of America Holdings

     202        10/20/17      USD     155.00        USD     3,050       (22,220 ) 

Lear Corp.

     134        10/20/17      USD     165.00        USD     2,319       (125,290 ) 

Lennar Corp., Class A

     154        10/20/17      USD     52.50        USD     813       (21,483 ) 

Lowe’s Cos., Inc.

     304        10/20/17      USD     75.00        USD     2,430       (156,560 ) 

Marathon Oil Corp.

     127        10/20/17      USD     11.00        USD     172       (32,703 ) 

Merck & Co., Inc.

     61        10/20/17      USD     65.00        USD     391       (2,501 ) 

Microsoft Corp.

     348        10/20/17      USD     75.00        USD     2,592       (26,970 ) 

 

     
                
4    BLACKROCK ENHANCED CAPITAL AND INCOME FUND    SEPTEMBER 30, 2017   

Schedule of Investments (continued)    BlackRock Enhanced Capital and Income Fund (CII)

 

Exchange-Traded Options Written (continued)  
Description   Number of
Contracts		        Expiration
Date		      Exercise
Price		       

Notional

Amount
(000)

     Value  

Microsoft Corp.

     155        10/20/17      USD     74.50        USD     1,155     $ (15,965 ) 

Novo Nordisk A/S - ADR

     182        10/20/17      USD     49.00        USD     876       (8,645 ) 

Oracle Corp.

     49        10/20/17      USD     50.00        USD     237       (906 ) 

Packaging Corp. of America

     137        10/20/17      USD         115.00        USD           1,571       (25,345 ) 

Pfizer, Inc.

     327        10/20/17      USD     34.00        USD     1,167       (57,879 ) 

Rio Tinto PLC - ADR

     348        10/20/17      USD     47.50        USD     1,642       (32,190 ) 

SLM Corp.

     472        10/20/17      USD     11.00        USD     541       (31,152 ) 

Stanley Black & Decker, Inc.

     213        10/20/17      USD     140.00        USD     3,216       (239,625 ) 

Stanley Black & Decker, Inc.

     213        10/20/17      USD     150.00        USD     3,216       (59,640 ) 

SunTrust Banks, Inc.

     115        10/20/17      USD     60.00        USD     687       (13,742 ) 

SunTrust Banks, Inc.

     318        10/20/17      USD     55.00        USD     1,901       (158,205 ) 

TOTAL SA - ADR

     166        10/20/17      USD     51.25        USD     888       (39,278 ) 

U.S. Bancorp

     448        10/20/17      USD     52.50        USD     2,401       (71,456 ) 

UnitedHealth Group, Inc.

     317        10/20/17      USD     200.00        USD     6,208       (61,815 ) 

Urban Outfitters, Inc.

     373        10/20/17      USD     22.00        USD     891       (82,060 ) 

Valero Energy Corp.

     20        10/20/17      USD     70.00        USD     154       (14,150 ) 

Wal-Mart Stores, Inc.

     362        10/20/17      USD     80.00        USD     2,829       (28,236 ) 

Walgreens Boots Alliance, Inc.

     528        10/20/17      USD     82.50        USD     4,077       (3,696 ) 

Activision Blizzard, Inc.

     78        10/27/17      USD     67.00        USD     503       (5,694 ) 

Alphabet, Inc., Class A

     23        10/27/17      USD     952.50        USD     2,240       (90,045 ) 

Altria Group, Inc.

     464        10/27/17      USD     64.50        USD     2,943       (35,496 ) 

Anthem, Inc.

     4        10/27/17      USD     195.00        USD     76       (950 ) 

Anthem, Inc.

     8        10/27/17      USD     192.50        USD     152       (2,680 ) 

Apple, Inc.

     229        10/27/17      USD     165.00        USD     3,529       (12,251 ) 

BP PLC - ADR

     86        10/27/17      USD     36.00        USD     330       (22,188 ) 

BP PLC - ADR

     267        10/27/17      USD     37.00        USD     1,026       (43,254 ) 

Bank of America Corp.

     507        10/27/17      USD     23.50        USD     1,285       (100,386 ) 

Baxter International, Inc.

     142        10/27/17      USD     64.00        USD     891       (10,721 ) 

Biogen, Inc.

     64        10/27/17      USD     327.50        USD     2,004       (30,720 ) 

CVS Health Corp.

     218        10/27/17      USD     83.00        USD     1,773       (13,298 ) 

Carnival Corp.

     233        10/27/17      USD     67.50        USD     1,504       (8,737 ) 

Cisco Systems, Inc.

     1,137        10/27/17      USD     32.50        USD     3,824       (131,324 ) 

Citigroup, Inc.

     36        10/27/17      USD     69.00        USD     262       (15,030 ) 

Cognizant Technology Solutions Corp., Class A

     516        10/27/17      USD     73.00        USD     3,743       (51,600 ) 

Comcast Corp., Class A

     586        10/27/17      USD     39.00        USD     2,255       (38,090 ) 

Delta Air Lines, Inc.

     323        10/27/17      USD     51.00        USD     1,558       (15,181 ) 

DowDuPont, Inc.

     99        10/27/17      USD     70.50        USD     685       (5,643 ) 

Goldman Sachs Group, Inc.

     135        10/27/17      USD     235.00        USD     3,202       (87,413 ) 

Goodyear Tire & Rubber Co.

     628        10/27/17      USD     33.50        USD     2,088       (54,950 ) 

Hartford Financial Services Group, Inc.

     140        10/27/17      USD     55.00        USD     776       (20,370 ) 

Home Depot, Inc.

     193        10/27/17      USD     160.00        USD     3,157       (93,605 ) 

JPMorgan Chase & Co.

     136        10/27/17      USD     93.50        USD     1,299       (35,292 ) 

JPMorgan Chase & Co.

     122        10/27/17      USD     95.50        USD     1,165       (17,507 ) 

Lowe’s Cos., Inc.

     138        10/27/17      USD     81.00        USD     1,103       (12,075 ) 

Marathon Oil Corp.

     157        10/27/17      USD     12.00        USD     213       (25,198 ) 

Merck & Co., Inc.

     195        10/27/17      USD     65.50        USD     1,249       (10,237 ) 

Microsoft Corp.

     70        10/27/17      USD     74.00        USD     521       (14,035 ) 

Oracle Corp.

     384        10/27/17      USD     51.00        USD     1,857       (5,184 ) 

Oracle Corp.

     161        10/27/17      USD     50.00        USD     778       (4,347 ) 

Pfizer, Inc.

     814        10/27/17      USD     35.50        USD     2,906       (50,875 ) 

U.S. Bancorp

     412        10/27/17      USD     52.00        USD     2,208       (85,902 ) 

UnitedHealth Group, Inc.

     27        10/27/17      USD     197.50        USD     529       (9,112 ) 

Urban Outfitters, Inc.

     278        10/27/17      USD     23.50        USD     664       (36,140 ) 

Valero Energy Corp.

     74        10/27/17      USD     70.50        USD     569       (50,690 ) 

 

     
                
   BLACKROCK ENHANCED CAPITAL AND INCOME FUND    SEPTEMBER 30, 2017    5

Schedule of Investments (continued)

    BlackRock Enhanced Capital and Income Fund (CII)

 

Exchange-Traded Options Written (continued)  
Description   Number of
Contracts		        Expiration
Date		      Exercise
Price		       

Notional

Amount
(000)

     Value  

Wal-Mart Stores, Inc.

     63        10/27/17      USD     81.50        USD     492     $ (2,614 ) 

FirstEnergy Corp.

     184        10/31/17      USD     32.01        USD     567       (4,229 ) 

TOTAL SA - ADR

     83        10/31/17      USD     53.50        USD     444       (8,641 ) 

AT&T, Inc.

     112        11/03/17      USD     39.00        USD     439       (8,456 ) 

Activision Blizzard, Inc.

     327        11/03/17      USD     64.50        USD     2,109       (83,058 ) 

Alphabet, Inc., Class A

     18        11/03/17      USD     970.00        USD     1,753       (55,440 ) 

Anthem, Inc.

     4        11/03/17      USD     190.00        USD     76       (1,980 ) 

Apple, Inc.

     353        11/03/17      USD         160.00        USD           5,440       (76,072 ) 

Bank of America Corp.

     496        11/03/17      USD     25.50        USD     1,257       (31,248 ) 

Baxter International, Inc.

     11        11/03/17      USD     64.00        USD     69       (874 ) 

Carnival Corp.

     424        11/03/17      USD     66.50        USD     2,738       (34,980 ) 

Cisco Systems, Inc.

     52        11/03/17      USD     33.00        USD     175       (4,264 ) 

Cisco Systems, Inc.

     206        11/03/17      USD     33.50        USD     693       (10,815 ) 

Comcast Corp., Class A

     804        11/03/17      USD     38.50        USD     3,094       (77,988 ) 

DowDuPont, Inc.

     386        11/03/17      USD     71.00        USD     2,672       (26,055 ) 

Goldman Sachs Group, Inc.

     28        11/03/17      USD     232.50        USD     664       (24,710 ) 

Humana, Inc.

     89        11/03/17      USD     245.00        USD     2,168       (45,835 ) 

JPMorgan Chase & Co.

     157        11/03/17      USD     96.00        USD     1,500       (22,294 ) 

Marathon Oil Corp.

     165        11/03/17      USD     13.50        USD     224       (10,395 ) 

Microsoft Corp.

     200        11/03/17      USD     75.00        USD     1,490       (32,200 ) 

Norfolk Southern Corp.

     152        11/03/17      USD     134.00        USD     2,010       (47,500 ) 

Oracle Corp.

     460        11/03/17      USD     50.00        USD     2,224       (15,410 ) 

Pfizer, Inc.

     3        11/03/17      USD     36.00        USD     11       (147 ) 

Suncor Energy, Inc.

     123        11/03/17      USD     35.00        USD     431       (11,070 ) 

U.S. Bancorp

     105        11/03/17      USD     54.00        USD     563       (9,765 ) 

SunTrust Banks, Inc.

     425        11/06/17      USD     57.30        USD     2,540       (150,593 ) 

Bank of America Corp.

     503        11/09/17      USD     24.70        USD     1,275       (61,243 ) 

Citigroup, Inc.

     131        11/09/17      USD     69.35        USD     953       (50,919 ) 

Dell Technologies, Inc., Class V

     134        11/09/17      USD     75.46        USD     1,035       (41,895 ) 

U.S. Bancorp

     140        11/09/17      USD     52.25        USD     750       (28,391 ) 

Activision Blizzard, Inc.

     213        11/10/17      USD     64.50        USD     1,374       (63,474 ) 

Alphabet, Inc., Class A

     28        11/10/17      USD     985.00        USD     2,726       (70,280 ) 

Apple, Inc.

     167        11/10/17      USD     157.50        USD     2,574       (58,450 ) 

Apple, Inc.

     166        11/10/17      USD     160.00        USD     2,558       (42,579 ) 

Baxter International, Inc.

     27        11/10/17      USD     62.50        USD     169       (4,428 ) 

Chevron Corp.

     162        11/10/17      USD     118.00        USD     1,904       (31,185 ) 

Comcast Corp., Class A

     477        11/10/17      USD     38.50        USD     1,835       (51,516 ) 

DowDuPont, Inc.

     155        11/10/17      USD     69.00        USD     1,073       (26,505 ) 

Humana, Inc.

     50        11/10/17      USD     245.00        USD     1,218       (32,500 ) 

JPMorgan Chase & Co.

     244        11/10/17      USD     95.50        USD     2,330       (44,774 ) 

Microsoft Corp.

     225        11/10/17      USD     74.50        USD     1,676       (45,675 ) 

Oracle Corp.

     72        11/10/17      USD     50.00        USD     348       (2,952 ) 

Pfizer, Inc.

     411        11/10/17      USD     35.50        USD     1,467       (32,880 ) 

UnitedHealth Group, Inc.

     62        11/10/17      USD     197.50        USD     1,214       (25,606 ) 

FirstEnergy Corp.

     500        11/13/17      USD     32.55        USD     1,542       (7,312 ) 

Pfizer, Inc.

     705        11/13/17      USD     35.40        USD     2,517       (51,466 ) 

Activision Blizzard, Inc.

     140        11/17/17      USD     67.50        USD     903       (27,650 ) 

Altria Group, Inc.

     225        11/17/17      USD     64.01        USD     1,427       (31,808 ) 

Anthem, Inc.

     32        11/17/17      USD     195.00        USD     608       (11,040 ) 

Apple, Inc.

     115        11/17/17      USD     170.00        USD     1,772       (9,487 ) 

BP PLC - ADR

     412        11/17/17      USD     37.00        USD     1,583       (72,512 ) 

Bank of America Corp.

     485        11/17/17      USD     25.00        USD     1,229       (51,168 ) 

 

     
                
6    BLACKROCK ENHANCED CAPITAL AND INCOME FUND    SEPTEMBER 30, 2017   

Schedule of Investments (continued)

   

BlackRock Enhanced Capital and Income Fund (CII)

 

Exchange-Traded Options Written (continued)  
Description   Number of
Contracts		        Expiration
Date		      Exercise
Price		       

Notional

Amount
(000)

     Value  

Bank of America Corp.

     302        11/17/17      USD     26.00        USD     765     $ (16,761 ) 

Biogen, Inc.

     123        11/17/17      USD     320.00        USD     3,851       (122,385 ) 

CVS Health Corp.

     301        11/17/17      USD     81.35        USD     2,448       (62,458 ) 

Carnival Corp.

     424        11/17/17      USD     67.50        USD     2,738       (32,860 ) 

Chevron Corp.

     130        11/17/17      USD     112.25        USD     1,528       (69,363 ) 

Chevron Corp.

     313        11/17/17      USD         113.25        USD           3,678       (144,880 ) 

Cisco Systems, Inc.

     341        11/17/17      USD     34.00        USD     1,147       (21,312 ) 

Citigroup, Inc.

     162        11/17/17      USD     70.00        USD     1,178       (59,940 ) 

Comcast Corp., Class A

     456        11/17/17      USD     40.00        USD     1,755       (24,396 ) 

D.R. Horton, Inc.

     124        11/17/17      USD     38.00        USD     495       (34,410 ) 

Delta Air Lines, Inc.

     323        11/17/17      USD     50.00        USD     1,558       (32,462 ) 

DowDuPont, Inc.

     151        11/17/17      USD     65.00        USD     1,045       (71,348 ) 

Flex Ltd.

     1,102        11/17/17      USD     17.00        USD     1,826       (43,529 ) 

Gilead Sciences, Inc.

     639        11/17/17      USD     85.00        USD     5,177       (95,850 ) 

Goldman Sachs Group, Inc.

     148        11/17/17      USD     235.00        USD     3,510       (124,690 ) 

Goodyear Tire & Rubber Co.

     452        11/17/17      USD     34.00        USD     1,503       (40,680 ) 

Home Depot, Inc.

     193        11/17/17      USD     160.00        USD     3,157       (122,555 ) 

JPMorgan Chase & Co.

     136        11/17/17      USD     95.00        USD     1,299       (31,620 ) 

Lennar Corp., Class A

     175        11/17/17      USD     52.50        USD     924       (33,775 ) 

Marathon Oil Corp.

     70        11/17/17      USD     13.00        USD     95       (6,860 ) 

Marathon Oil Corp.

     10        11/17/17      USD     14.00        USD     14       (475 ) 

Merck & Co., Inc.

     195        11/17/17      USD     65.51        USD     1,249       (16,736 ) 

Microsoft Corp.

     160        11/17/17      USD     77.50        USD     1,192       (13,440 ) 

Norfolk Southern Corp.

     92        11/17/17      USD     130.00        USD     1,217       (52,440 ) 

Novo Nordisk A/S - ADR

     183        11/17/17      USD     50.00        USD     881       (19,215 ) 

Oracle Corp.

     384        11/17/17      USD     51.10        USD     1,857       (9,669 ) 

Oracle Corp.

     72        11/17/17      USD     50.00        USD     348       (3,456 ) 

Pfizer, Inc.

     425        11/17/17      USD     34.00        USD     1,517       (81,600 ) 

Regions Financial Corp.

     424        11/17/17      USD     15.00        USD     646       (29,044 ) 

Rio Tinto PLC - ADR

     27        11/17/17      USD     50.00        USD     127       (1,822 ) 

Rio Tinto PLC - ADR

     177        11/17/17      USD     47.50        USD     835       (27,081 ) 

SLM Corp.

     594        11/17/17      USD     11.00        USD     681       (48,708 ) 

Suncor Energy, Inc.

     187        11/17/17      USD     35.00        USD     655       (19,448 ) 

TOTAL SA - ADR

     67        11/17/17      USD     55.00        USD     359       (3,685 ) 

U.S. Bancorp

     364        11/17/17      USD     52.50        USD     1,951       (71,708 ) 

U.S. Bancorp

     106        11/17/17      USD     55.00        USD     568       (7,261 ) 

Urban Outfitters, Inc.

     200        11/17/17      USD     22.00        USD     478       (53,000 ) 

Valero Energy Corp.

     14        11/17/17      USD     75.00        USD     108       (5,075 ) 

Dell Technologies, Inc., Class V

     340        11/28/17      USD     76.60        USD     2,625       (99,361 ) 

TOTAL SA - ADR

     165        12/08/17      USD     53.45        USD     883       (24,750 ) 

Bank of America Corp.

     665        12/15/17      USD     26.00        USD     1,685       (51,205 ) 

Bank of America Corp.

     504        12/15/17      USD     25.00        USD     1,277       (64,260 ) 

Delta Air Lines, Inc.

     500        12/15/17      USD     50.00        USD     2,411       (69,500 ) 

Norfolk Southern Corp.

     152        12/15/17      USD     135.00        USD     2,010       (62,320 ) 

Pfizer, Inc.

     158        12/15/17      USD     36.00        USD     564       (11,060 ) 

Suncor Energy, Inc.

     163        12/15/17      USD     35.00        USD     571       (20,456 ) 

Urban Outfitters, Inc.

     281        12/15/17      USD     24.00        USD     672       (58,308 ) 

Total

 

   $ (9,291,634 ) 
                      

 

 

  

 

     
                
   BLACKROCK ENHANCED CAPITAL AND INCOME FUND    SEPTEMBER 30, 2017    7

Schedule of Investments (continued)

   

BlackRock Enhanced Capital and Income Fund (CII)

 

OTC Options Written  
Description   Counterparty    Number of
Contracts		      Expiration
Date		      Exercise
Price		      Notional
Amount
(000)		     Value  

Call

                    

D.R. Horton, Inc.

   Bank of America N.A.      48,100        10/02/17      USD     36.50      USD     1,921     $ (165,149 ) 

SLM Corp.

   Bank of America N.A.      72,300        10/03/17      USD     10.52      USD     829       (69,076 ) 

Energizer Holdings, Inc.

   Barclays Bank PLC      13,100        10/04/17      USD     42.32      USD     603       (49,127 ) 

Activision Blizzard, Inc.

   UBS AG      13,500        10/05/17      USD     63.61      USD     871       (16,478 ) 

Regions Financial Corp.

   Citibank N.A.      40,000        10/11/17      USD     14.57      USD     609       (29,550 ) 

Robert Half International, Inc.

   Deutsche Bank AG      30,000        10/12/17      USD     44.82      USD     1,510       (166,323 ) 

Amdocs Ltd.

   Bank of America N.A.      25,000        10/16/17      USD     65.15      USD     1,608       (11,452 ) 

Packaging Corp. of America

   Bank of America N.A.      27,200        10/16/17      USD         117.00      USD           3,119       (24,185 ) 

Public Service Enterprise Group, Inc.

   Barclays Bank PLC      34,000        10/16/17      USD     46.20      USD     1,573       (24,155 ) 

D.R. Horton, Inc.

   Bank of America N.A.      48,100        10/17/17      USD     36.50      USD     1,921       (169,176 ) 

Fortive Corp.

   Barclays Bank PLC      8,000        10/24/17      USD     70.39      USD     566       (10,560 ) 

Regions Financial Corp.

   UBS AG      45,500        10/27/17      USD     14.55      USD     693       (39,645 ) 

Statoil ASA - ADR

   Citibank N.A.      34,000        10/30/17      USD     18.75      USD     683       (48,142 ) 

Rio Tinto PLC - ADR

   Morgan Stanley & Co. International PLC      17,800        10/31/17      USD     48.42      USD     840       (13,580 ) 

SLM Corp.

   UBS AG      59,500        10/31/17      USD     10.89      USD     682       (48,560 ) 

Public Service Enterprise Group, Inc.

   Barclays Bank PLC      14,400        11/01/17      USD     46.71      USD     666       (11,378 ) 

Robert Half International, Inc.

   Deutsche Bank AG      30,000        11/01/17      USD     44.82      USD     1,510       (168,920 ) 

SLM Corp.

   Morgan Stanley & Co. International PLC      68,500        11/06/17      USD     10.43      USD     786       (84,511 ) 

SunTrust Banks, Inc.

   Credit Suisse International      41,300        11/06/17      USD     54.80      USD     2,469       (224,390 ) 

Rio Tinto PLC - ADR

   Barclays Bank PLC      10,200        11/10/17      USD     49.10      USD     481       (7,898 ) 

Amdocs Ltd.

   UBS AG      27,000        11/20/17      USD     63.41      USD     1,737       (60,392 ) 

Avery Dennison Corp.

   Citibank N.A.      12,300        11/20/17      USD     98.80      USD     1,210       (38,186 ) 

CDW Corp.

   Bank of America N.A.      38,500        11/20/17      USD     65.10      USD     2,541       (98,363 ) 

EMCOR Group, Inc.

   UBS AG      21,000        11/20/17      USD     67.81      USD     1,457       (106,197 ) 

Statoil ASA - ADR

   JPMorgan Chase Bank N.A.      32,000        11/27/17      USD     20.12      USD     643       (16,125 ) 

Regions Financial Corp.

   Morgan Stanley & Co. International PLC      71,300        12/04/17      USD     14.35      USD     1,086       (81,847 ) 

SLM Corp.

   Morgan Stanley & Co. International PLC      47,200        12/06/17      USD     11.50      USD     541       (27,881 ) 

Flex Ltd.

   Morgan Stanley & Co. International PLC      68,600        12/11/17      USD     16.60      USD     1,137       (50,158 ) 

Total

                     $ (1,861,404 ) 
                   

 

 

  

 

     
                
8    BLACKROCK ENHANCED CAPITAL AND INCOME FUND    SEPTEMBER 30, 2017   

Schedule of Investments (concluded)

   

BlackRock Enhanced Capital and Income Fund (CII)

 

 

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:

 

  •  

Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Trust has the ability to access

 

  •  

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 Trust’s own assumptions used in determining the fair value of investments and derivative financial instruments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Trust’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities. For information about the Trust’s policy regarding valuation of investments and derivative financial instruments, refer to the Trust’s most recent financial statements as contained in its annual report.

The following tables summarize the Trust’s investments and derivative financial instruments categorized in the disclosure hierarchy:

 

     Level 1        Level 2        Level 3     Total  

Assets:

              
Investments:              

Long-Term Investments:

              

Common Stocks1

     734,841,211          —          —       734,841,211  
Short-Term Securities     3,284,861          —          —       3,284,861  
 

 

 

  

Total

   $ 738,126,072          —          —     $ 738,126,072  
 

 

 

  
Derivative Financial Instruments2              

Liabilities:

              
Equity contracts   $ (7,793,241 )       $ (3,359,797 )         —     $ (11,153,038 ) 
 

 

 

  

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

     

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

     

During the period ended September 30, 2017, there were no transfers between levels.

 

     
                
   BLACKROCK ENHANCED CAPITAL AND INCOME FUND    SEPTEMBER 30, 2017    9

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: November 20, 2017

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

 

By:

       /s/ John M. Perlowski                        
      John M. Perlowski
      Chief Executive Officer (principal executive officer) of
      BlackRock Enhanced Capital and Income Fund, Inc.

Date: November 20, 2017

 

By:

       /s/ Neal J. Andrews                           
      Neal J. Andrews
      Chief Financial Officer (principal financial officer) of
      BlackRock Enhanced Capital and Income Fund, Inc.

Date: November 20, 2017