UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

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: 04/30/2011

Item 1 – Report to Stockholders

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April 30, 2011

Semi-Annual Report (Unaudited)

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

Not FDIC Insured • No Bank Guarantee • May Lose Value

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Section 19(b) Disclosure

BlackRock Enhanced Capital and Income Fund, Inc. (CII) (the “Fund”), acting pursuant to a Securities and Exchange Commission (“SEC”) exemptive
order and with the approval of the Fund’s Board of Directors (the “Board”), has adopted a plan, consistent with its investment objectives and policies to
support a level distribution of income, capital gains and/or return of capital (the “Plan”). In accordance with the Plan, the Fund currently distributes
$0.360 per share on a quarterly basis.

The fixed amount distributed per share is subject to change at the discretion of the Fund’s Board. Under the Plan, the Fund will distribute all available
investment income to its shareholders, consistent with its primary investment objectives and as required by the Internal Revenue Code of 1986, as
amended (the “Code”). If sufficient investment income is not available on a quarterly basis, the Fund will distribute long-term capital gains and/or
return of capital to shareholders in order to maintain a level distribution. Each quarterly distribution to shareholders is expected to be at the fixed
amount established by the Board, except for extraordinary distributions and potential distribution rate increases or decreases to enable the Fund to
comply with the distribution requirements imposed by the Code.

Shareholders should not draw any conclusions about the Fund’s investment performance from the amount of these distributions or from the terms of the
Plan. The Fund’s total return performance on net asset value is presented in its financial highlights table.

The Board may amend, suspend or terminate the Fund’s Plan without prior notice if it deems such action to be in the best interest of the Fund or its
shareholders. The suspension or termination of the Plan could have the effect of creating a trading discount (if the Fund’s stock is trading at or above
net asset value) or widening an existing trading discount. The Fund is subject to risks that could have an adverse impact on its ability to maintain level
distributions. Examples of potential risks include, but are not limited to, economic downturns impacting the markets, decreased market volatility, com-
panies suspending or decreasing corporate dividend distributions and changes in the Code. Please refer to the Fund’s prospectus for a more complete
description of its risks.

Please refer to Additional Information for a cumulative summary of the Section 19(a) notices for the Fund’s current fiscal period. Section 19(a) notices
for the Fund, as applicable, are available on the BlackRock website www.blackrock.com.

 

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Dear Shareholder

Time and again, we have seen how various global events and developing trends can have significant influence on financial markets. I hope you find
that the following review of recent market conditions provides additional perspective on the performance of your investments as you read this share-
holder report.

Over the past 12 months, we have seen a sluggish, stimulus-driven economic recovery at long last gain real traction, accelerate, and transition into
a consumption-driven expansion. For the most part, 2010 was plagued with widely fluctuating economic data, but as the year drew to a close, it
became clear that cyclical stimulus had beaten out structural problems as economic data releases generally became more positive and financial
markets showed signs of continuing improvement. Although the sovereign debt crisis in Europe and high inflation in developing markets that troubled
the global economy in 2010 remain challenges today, overall investor confidence has improved considerably. During the first four months of 2011,
that confidence was shaken by political turmoil in the Middle East/North Africa region, soaring prices of oil and other commodities, tremendous nat-
ural disasters in Japan and a change in the ratings outlook for US debt. However, strong corporate earnings prevailed and financial markets resumed
their course while the global economy continued to garner strength.

Equity markets experienced uneven growth and high volatility in 2010, but ended the year with gains. Following a strong start to 2011, the series of
confidence-shaking events brought spurts of heightened volatility to markets worldwide, but was not enough to derail the bull market. Overall, global
equities posted strong returns over the past 12 months. Emerging market equities, which had outperformed developed markets earlier in the period,
fell prey to heightened inflationary pressures and underperformed developed markets later in the period. In the United States, strong corporate earn-
ings and positive signals from the labor market were sources of encouragement for equity investors, although the housing market did not budge from
its slump. Early in 2011, the US Federal Reserve announced that it would continue its Treasury purchase program (“QE2”) through to completion
and keep interest rates low for an extended period. This compelled investors to continue buying riskier assets, furthering the trend of small cap
stocks outperforming large caps.

While fixed income markets saw yields trend lower (pushing bond prices higher) through most of 2010, the abrupt reversal in investor sentiment
and risk tolerance in the fourth quarter drove yields sharply upward. Global credit markets were surprisingly resilient in the face of recent headwinds
and yields regained relative stability as the period came to a close. Yield curves globally remained steep by historical standards and higher-risk
sectors continued to outperform higher-quality assets. The tax-exempt municipal market enjoyed a powerful rally during the period of low yields in
2010, but when that trend reversed, the market was dealt an additional blow as it became evident that the Build America Bond program would
not be extended. Meanwhile, municipal finance troubles raised credit concerns among investors and tax-exempt mutual funds experienced heavy
outflows, resulting in wider spreads and falling prices. The new year brought relief from these headwinds and a steady rebound in the tax-exempt
municipal market.

Cash investments, as represented by the 3-month Treasury bill, returned only a fraction over 0% for the 12-month period as short-term interest rates
remained low. Yields on money market securities remain near all-time lows.

 

While no one can peer into a crystal ball and eliminate the uncertainties presented by the economic landscape and financial markets, BlackRock
can offer investors the next best thing: partnership with the world’s largest asset management firm that delivers consistent long-term investment
results with fewer surprises. For additional market perspective and investment insight, visit www.blackrock.com/shareholdermagazine, where you’ll
find the most recent issue of our award-winning Shareholder® magazine, as well as its quarterly companion newsletter, Shareholder Perspectives.
As always, we thank you for entrusting BlackRock with your investments, and we look forward to your continued partnership in the months and
years ahead.

 

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Fund Summary as of April 30, 2011

Fund Overview

BlackRock Enhanced Capital and Income Fund, Inc.’s (CII) (the “Fund”) investment objective is to provide investors with a combination of current
income and capital appreciation. The Fund seeks to achieve its investment objective by investing in a portfolio of equity and debt securities of US and
foreign issuers. The Fund may invest directly in such securities or synthetically through the use of derivatives. The Fund utilizes an option writing (selling)
strategy to enhance dividend yield.

No assurance can be given that the Fund’s investment objective will be achieved.

Portfolio Management Commentary

How did the Fund perform?

• For the six months ended April 30, 2011, the Fund returned 9.85%
based on market price and 11.87% based on net asset value
(“NAV”). For the same period, the benchmark S&P 500 Value Index
returned 17.97%. All returns reflect reinvestment of dividends. The
Fund's premium to NAV, which narrowed during the period, accounts
for the difference between performance based on price and perform-
ance based on NAV. The following discussion relates to performance
based on NAV.

What factors influenced performance?

• The main detractor from Fund performance relative to the S&P 500
Value Index was stock selection within health care. The Fund’s under-
weight position in the energy sector also hampered returns. On an
individual security basis, Eli Lilly & Co., Kimberly-Clark Corp. and
Kraft Foods, Inc. detracted from performance.

• Contributing positively to performance was the Fund’s underweight
and stock selection in the financials sector. The Fund’s slight over-
weight and stock selection within consumer discretionary aided
returns as did stock selection within information technology (“IT”).
On an individual security basis, overweight positions in Exxon Mobil
Corp., MetLife, Inc. and The Travelers Cos., Inc. boosted returns.

Describe recent portfolio activity.

• During the six-month period, we increased the Fund’s exposure to
the health care, financials and industrials sectors, while reducing
exposure to energy.

Describe Fund positioning at period end.

• At period end, the Fund is overweight in the IT, industrials and materi-
als sectors, while underweight in financials, utilities, consumer discre-
tionary, energy and consumer staples. The Fund is neutral in health
care.

• The economy has improved, although it is behind the level of growth
typically seen at this point in the economic cycle. Despite strong cycli-
cal tailwinds, some macroeconomic headwinds remain which lend to
caution on our part. Our caution stems from: the absolute level of
unemployment remaining high; state, local and federal budget deficits
being worrisome; the financial system remaining fragile; turmoil in the
Middle East and North Africa which has impacted oil prices; and the
earthquake in Japan which may cause supply disruptions. These
concerns are somewhat offset by improving consumer confidence,
equity markets continuing to be priced at reasonable valuations, US
corporate balance sheets that are flush with cash and a more
business-friendly tone from Washington DC. Given this backdrop,
portfolio positioning is more balanced. Our IT exposure gives us a
cyclical posture that is offset by more defensive positions in
consumer staples and health care. We favor large-cap companies
and companies that have a greater exposure to global growth.

• On June 1, 2011, the Fund announced the reduction of its quarterly
distribution per share effective with its declaration that day. This divi-
dend reduction takes into account the Fund’s relatively high current
distribution level, the current level of the Fund’s net assets and current
and projected levels of dividend income, option premiums and
volatility in the market.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions.
These views are not intended to be a forecast of future events and are no guarantee of future results.

 

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¹ Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price. Past performance does not guarantee future
results.
² The Quarterly Distribution per Common Share, declared on June 1, 2011, was decreased to $0.360 per share. The yield on Closing Market Price, Current Quarterly
Distribution per Common Share and Current Annualized Distribution per Common Share do not reflect the new distribution rate. The new distribution rate is not constant and
is subject to change in the future. A portion of the distribution may be deemed a tax return of capital or net realized gain.

The table below summarizes the changes in the Fund’s market price and NAV per share:

 

The following charts show the ten largest holdings and sector allocations of the Fund’s long-term investments:

 

 

For Fund compliance purposes, the Fund’s sector classifications refer to any one
or more of the sector sub-classifications used by one or more widely recognized
market indexes or ratings group indexes, and/or as defined by Fund management.
These definitions may not apply for purposes of this report, which may combine
sector sub-classifications for reporting ease.

 

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Derivative Financial Instruments

The Fund may invest in various derivative financial instruments, including
options, as specified in Note 2 of the Notes to Financial Statements,
which may constitute forms of economic leverage. Such instruments are
used to obtain exposure to a market without owning or taking physical
custody of securities or to hedge market, equity and/or foreign currency
exchange rate risks. Such derivative financial instruments involve risks,
including the imperfect correlation between the value of a derivative
instrument and the underlying asset, possible default of the counterparty
to the transaction or illiquidity of the derivative instrument. The Fund’s
ability to use a derivative instrument successfully depends on the
investment advisor’s ability to predict pertinent market movements
accurately, which cannot be assured. The use of derivative financial
instruments may result in losses greater than if they had not been
used, may require the Fund to sell or purchase portfolio investments
at inopportune times or for distressed values, may limit the amount of
appreciation the Fund can realize on an investment, may result in lower
dividends paid to shareholders or may cause the Fund to hold an invest-
ment that it might otherwise sell. The Fund’s investments in these instru-
ments are discussed in detail in the Notes to Financial Statements.

 

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Schedule of Investments April 30, 2011 (Unaudited)
 (Percentages shown are based on Net Assets)

 

 

 

See Notes to Financial Statements.

 

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

 

 

See Notes to Financial Statements.

 

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

* The cost and unrealized appreciation (depreciation) of investments as of April
30, 2011, as computed for federal income tax purposes were as follows:

(a) Security, or a 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:

(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 rec-
ognized 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 industry 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 summa-
rized in three broad levels for financial statement 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 liabili-
ties (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 invest-
ments and derivative financial instruments)

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 derivative finan-
cial instruments and other significant accounting policies, please refer to Note 1
of the Notes to Financial Statements.

The following tables summarize the inputs used as of April 30, 2011 in
determining the fair valuation of the Fund’s investments and derivative
financial instruments:

 

 

See Notes to Financial Statements.

 

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See Notes to Financial Statements.

 

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See Notes to Financial Statements.

 

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See Notes to Financial Statements.

 

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¹ Based on average shares outstanding.
² A portion of the dividends from net investment income may be deemed a tax return of capital or net realized gain at fiscal year end.
³ Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Where
applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.
⁴ Aggregate total investment return.
⁵ Annualized.

See Notes to Financial Statements.

 

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Notes to Financial Statements (Unaudited)

1. Organization and Significant Accounting Policies:

BlackRock Enhanced Capital and Income Fund, Inc. (the “Fund”) is
registered under the Investment Company Act of 1940, as amended
(the “1940 Act”), as a diversified, closed-end management investment
company. The Fund is organized as a Maryland corporation. The Fund's
financial statements are prepared in conformity with accounting princi-
ples generally accepted in the United States of America ("US GAAP"),
which may require management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The Fund
determines and makes available for publication the net asset value of
its Common Shares on a daily basis.

The following is a summary of significant accounting policies followed by
the Fund:

Valuation: US GAAP defines fair value as the price the Fund would
receive to sell an asset or pay to transfer a liability in an orderly transac-
tion between market participants at the measurement date. The Fund
fair values its financial instruments at market value using independent
dealers or pricing services under policies approved by the Board of
Directors (the “Board”). Equity investments traded on a recognized secu-
rities exchange or the NASDAQ Global Market System are valued at the
last reported sale price that day or the NASDAQ official closing price, if
applicable. For equity investments traded on more than one exchange,
the last reported sale price on the exchange where the stock is primarily
traded is used. Equity investments traded on a recognized exchange for
which there were no sales on that day are valued at the last available
bid (long positions) or ask (short positions) price. If no bid or ask price
is available, the prior day’s price will be used, unless it is determined
that such prior day’s price no longer reflects the fair value of the security.
Investments in open-end investment companies are valued at net asset
value each business day. Short-term securities with remaining maturities
of 60 days or less may be valued at amortized cost, which approximates
fair value.

Securities and other assets and liabilities denominated in foreign curren-
cies are translated into US dollars using exchange rates determined as
of the close of business on the New York Stock Exchange (“NYSE”).
Foreign currency exchange contracts are valued at the mean between
the bid and ask prices and are determined as of the close of business
on the NYSE. Interpolated values are derived when the settlement date
of the contract is an interim date for which quotations are not available.

Exchange-traded options are valued at the mean between the last bid
and ask prices at the close of the options market in which the options
trade. An exchange-traded option for which there is no mean price is val-
ued at the last bid (long positions) or ask (short positions) price. If no
bid or ask price is available, the prior day’s price will be used, unless it is
determined that the prior day’s price no longer reflects the fair value of
the option. Over-the-counter (“OTC”) options are valued by an independ-
ent pricing service using a mathematical model which incorporates a
number of market data factors, such as the trades and prices of the
underlying instruments.

In the event that application of these methods of valuation results in a
price for an investment which is deemed not to be representative of the
market value of such investment or is not available, the investment will
be valued in accordance with a policy approved by the Board as reflect-
ing fair value (“Fair Value Assets”). When determining the price for Fair
Value Assets, the investment advisor and/or the sub-advisor seeks to
determine the price that the Fund might reasonably expect to receive
from the current sale of that asset in an arm’s-length transaction. Fair
value determinations shall be based upon all available factors that the
investment advisor and/or sub-advisor deems relevant. The pricing of
all Fair Value Assets is subsequently reported to the Board or a
committee thereof.

Generally, trading in foreign instruments is substantially completed
each day at various times prior to the close of business on the NYSE.
Occasionally, events affecting the values of such instruments may occur
between the foreign market close and the close of business on the NYSE
that may not be reflected in the computation of the Fund's net assets.
If events (for example, a company announcement, market volatility or a
natural disaster) occur during such periods that are expected to materi-
ally affect the value of such instruments, those instruments may be Fair
Value Assets and be valued at their fair value, as determined in good
faith by the investment advisor using a pricing service and/or policies
approved by the Board. Each business day, the Fund uses a pricing serv-
ice to assist with the valuation of certain foreign exchange-traded equity
securities and foreign exchange-traded and OTC options (the “Systematic
Fair Value Price”). Using current market factors, the Systematic Fair Value
Price is designed to value such foreign securities and foreign options at
fair value as of the close of business on the NYSE, which follows the
close of the local markets.

Foreign Currency Transactions: The Fund's books and records are main-
tained in US dollars. Purchases and sales of investment securities are
recorded at the rates of exchange prevailing on the date the transactions
are entered into. Generally, when the US dollar rises in value against a
foreign currency, the Fund's investments denominated in that currency
will lose value because its currency is worth fewer US dollars; the oppo-
site effect occurs if the US dollar falls in relative value.

The Fund reports realized currency gains (losses) on foreign currency
related transactions as components of net realized gain (loss) for
financial reporting purposes, whereas such components are treated
as ordinary income for federal income tax purposes.

 

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Notes to Financial Statements (continued)

Segregation and Collateralization: In cases in which the 1940 Act and
the interpretive positions of the Securities and Exchange Commission
(“SEC”) require that the Fund either delivers collateral or segregates
assets in connection with certain investments (e.g., foreign currency
exchange contracts and options written), the Fund will, consistent with
SEC rules and/or certain interpretive letters issued by the SEC, segregate
collateral or designate on its books and records cash or other liquid
securities having a market value at least equal to the amount that would
otherwise be required to be physically segregated. Furthermore, based
on requirements and agreements with certain exchanges and third party
broker-dealers, each party to such transactions has requirements to
deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: For financial reporting
purposes, investment transactions are recorded on the dates the trans-
actions are entered into (the trade dates). Realized gains and losses
on investment transactions are determined on the identified cost basis.
Dividend income is recorded on the ex-dividend dates. Dividends from
foreign securities where the ex-dividend date may have passed are
subsequently recorded when the Fund has determined the ex-dividend
date. Under the applicable foreign tax laws, a withholding tax at various
rates may be imposed on capital gains, dividends and interest.

Dividends and Distributions: Dividends and distributions paid by the
Fund are recorded on the ex-dividend dates. Subject to the Fund’s level
distribution plan, the Fund intends to make quarterly cash dividends
and/or distributions to shareholders, which may consist of net invest-
ment income, net options premium and net realized and unrealized
gains on investments. The portion of dividends and distributions that
exceeds the Fund's current and accumulated earnings and profits,
which are measured on a tax basis, may be treated as a tax return of
capital. The character of dividends and distributions are determined in
accordance with federal income tax regulations, which may differ from
US GAAP.

Income Taxes: It is the Fund’s policy to comply with the requirements
of the Internal Revenue Code of 1986, as amended, applicable to
regulated investment companies and to distribute substantially all of
its taxable income to its shareholders. Therefore, no federal income
tax provision is required.

The Fund files US federal and various state and local tax returns. No
income tax returns are currently under examination. The statute of limita-
tions on the Fund's US federal tax returns remains open for the year
ended December 31, 2007, the period ended October 31, 2008 and
the two years ended October 31, 2010. The statutes of limitations on the
Fund's state and local tax returns may remain open for an additional
year depending upon the jurisdiction. There are no uncertain tax
positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund are charged to the Fund.
Other operating expenses shared by several funds are pro rated among
those funds on the basis of relative net assets or other appropriate
methods. The Fund has an arrangement with the custodian whereby fees
may be reduced by credits earned on uninvested cash balances, which
if applicable are shown as fees paid indirectly in the Statement of
Operations. The custodian imposes fees on overdrawn cash balances,
which can be offset by accumulated credits earned or may result in
additional custody charges.

2. Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using
derivative contracts both to increase the return of the Fund and to
economically hedge, or protect, its exposure to certain risks such as
equity risk or foreign currency exchange rate risk. These contracts may
be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an
unfavorable change in the market rates or values of the underlying
instrument or if the counterparty does not perform under the contract.
The Fund's maximum risk of loss from counterparty credit risk on OTC
derivatives is generally the aggregate unrealized gain netted against
any collateral pledged by/posted to the counterparty. For OTC options
purchased, the Fund bears the risk of loss in the amount of the premi-
ums paid plus the positive change in market values net of any collateral
received on the options should the counterparty fail to perform under
the contracts. Options written by the Fund do not give rise to counter-
party credit risk, as options written obligate the Fund to perform and not
the counterparty. Counterparty risk related to exchange-traded contracts
and options is deemed to be minimal due to the protection against
defaults provided by the exchange on which these contracts trade.

The Fund may mitigate counterparty risk by procuring collateral and
through netting provisions included within an International Swaps
and Derivatives Association, Inc. master agreement (“ISDA Master
Agreement”) implemented between the Fund and each of its respective
counterparties. The ISDA Master Agreement allows the Fund to offset
with each separate counterparty certain derivative financial instrument’s
payables and/or receivables with collateral held. The amount of collat-
eral moved to/from applicable counterparties is generally based upon
minimum transfer amounts of up to $500,000. To the extent amounts
due to the Fund from its counterparties are not fully collateralized con-
tractually or otherwise, the Fund bears the risk of loss from counterparty
non-performance. See Note 1 “Segregation and Collateralization” for
information with respect to collateral practices. In addition, the Fund
manages counterparty risk by entering into agreements only with

 

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Notes to Financial Statements (continued)

counterparties that it believes have the financial resources to honor
its obligations and by monitoring the financial stability of those
counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives
to terminate derivative contracts prior to maturity in the event the Fund's
net assets decline by a stated percentage or the Fund fails to meet the
terms of its ISDA Master Agreements, which would cause the Fund to
accelerate payment of any net liability owed to the counterparty.

Options: The Fund purchases and writes call and put options to increase
or decrease its exposure to underlying instruments (including equity risk)
and/or, in the case of options written, to generate gains from options
premiums. A call option gives the purchaser of the option the right (but
not the obligation) to buy, and obligates the seller to sell (when the
option is exercised), the underlying instrument at the exercise or strike
price at any time or at a specified time during the option period. A put
option gives the holder the right to sell and obligates the writer to buy
the underlying instrument at the exercise or strike price at any time or
at a specified time during the option period. When the Fund purchases
(writes) an option, an amount equal to the premium paid (received)
by the Fund is reflected as an asset (liability). The amount of the asset
(liability) is subsequently marked-to-market to reflect the current market
value of the option purchased (written). When an instrument is pur-
chased or sold through an exercise of an option, the related premium
paid (or received) is added to (or deducted from) the basis of the instru-
ment acquired or deducted from (or added to) the proceeds of the
instrument sold. When an option expires (or the Fund enters into a
closing transaction), the Fund realizes a gain or loss on the option to the
extent of the premiums received or paid (or gain or loss to the extent the
cost of the closing transaction exceeds the premiums received or paid).
When the Fund writes a call option, such option is “covered,” meaning
that the Fund holds the underlying instrument subject to being called by
the option counterparty. When the Fund writes a put option, such option
is covered by cash in an amount sufficient to cover the obligation.

The Fund also purchases or sells listed or OTC foreign currency options,
foreign currency futures and related options on foreign currency futures
as a short or long hedge against possible variations in foreign exchange
rates or to gain exposure to foreign currencies (foreign currency
exchange rate risk). When foreign currency is purchased or sold through
an exercise of a foreign currency option, the related premium paid (or
received) is added to (or deducted from) the basis of the foreign cur-
rency acquired or deducted from (or added to) the proceeds of the
foreign currency sold. Such transactions may be effected with respect
to hedges on non-US dollar denominated instruments owned by the
Fund but not yet delivered, or committed or anticipated to be
purchased by the Fund.

In purchasing and writing options, the Fund bears the risk of an unfavor-
able change in the value of the underlying instrument or the risk that
the Fund may not be able to enter into a closing transaction due to an
illiquid market. Exercise of a written option could result in the Fund
purchasing or selling a security at a price different from the current
market value.

 

 

For the six months ended April 30, 2011, the average quarterly balances
of outstanding derivative financial instruments were as follows:

 

3. Investment Advisory Agreement and Other Transactions
with Affiliates:

As of April 30, 2011, The PNC Financial Services Group, Inc. ("PNC"),
Bank of America Corporation ("BAC") and Barclays Bank PLC
("Barclays") were the largest stockholders of BlackRock, Inc.
("BlackRock"). Due to the ownership structure, PNC is an affiliate of
the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Fund entered into an Investment Advisory Agreement with BlackRock
Advisors, LLC (the “Manager”), the Fund's investment advisor, an indirect,
wholly owned subsidiary of BlackRock, to provide investment advisory
and administration services. The Manager is responsible for the manage-
ment of the Fund's portfolio and provides the necessary personnel, facil-
ities, equipment and certain other services necessary to the operations
of the Fund. For such services, the Fund pays the Manager a monthly fee
at an annual rate of 0.85% of the Fund's average daily net assets.

 

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Notes to Financial Statements (continued)

The Manager voluntarily agreed to waive its investment advisory fees by
the amount of investment advisory fees the Fund pays to the Manager
indirectly through its investment in affiliated money market funds, how-
ever the Manager does not waive its investment advisory fees by the
amount of investment advisory fees paid through the Fund's investment
in other affiliated investment companies, if any. This amount is shown as,
or included in, fees waived by advisor in the Statement of Operations.

The Manager entered into a sub-advisory agreement with BlackRock
Investment Management, LLC (“BIM”), an affiliate of the Manager. The
Manager pays BIM for services it provides, a monthly fee that is a
percentage of the investment advisory fees paid by the Fund to
the Manager.

For the period November 1, 2010 to December 31, 2010, the Fund
reimbursed the Manager $5,426 for certain accounting services, which
are included in accounting services in the Statement of Operations.

Effective January 1, 2011, the Fund no longer reimburses the Manager
for accounting services.

Certain officers and/or directors of the Fund are officers and/or directors
of BlackRock or its affiliates. The Fund reimburses the Manager for com-
pensation paid to the Fund's Chief Compliance Officer.

4. Investments:

Purchases and sales of investments, excluding short-term securities
for the six months ended April 30, 2011, were $702,352,482 and
$708,321,521, respectively.

Transactions in options written for the six months ended April 30, 2011,
were as follows:

 

As of April 30, 2011, the value of portfolio securities subject to cover
call options written was $424,220,632.

5. Market and Credit Risk:

In the normal course of business, the Fund invests in securities and
enters into transactions where risks exist due to fluctuations in the mar-
ket (market risk) or failure of the issuer of a security to meet all its obli-
gations (issuer credit risk). The value of securities held by the Fund may
decline in response to certain events, including those directly involving
the issuers whose securities are owned by the Fund; conditions affecting
the general economy; overall market changes; local, regional or global
political, social or economic instability; and currency and interest rate
and price fluctuations. Similar to issuer credit risk, the Fund may be
exposed to counterparty credit risk, or the risk that an entity with which
the Fund has unsettled or open transactions may fail to or be unable to
perform on its commitments. The Fund manages counterparty credit risk
by entering into transactions only with counterparties that it believes
have the financial resources to honor their obligations and by monitoring
the financial stability of those counterparties. Financial assets, which
potentially expose the Fund to market, issuer and counterparty credit
risks, consist principally of financial instruments and receivables due
from counterparties. The extent of the Fund's exposure to market, issuer
and counterparty credit risks with respect to these financial assets is
generally approximated by their value recorded in the Fund's Statement
of Assets and Liabilities, less any collateral held by the Fund.

6. Capital Share Transactions:

The Fund is authorized to issue 200 million of $0.10 par value shares,
all of which were initially classified as Common Shares.

At April 30, 2011, 26,677 shares were owned by an affiliate of
the Manager.

Shares issued and outstanding increased by 367,118 for the six months
ended April 30, 2011 and 800,970 for the year ended October 31,
2010 as a result of dividend reinvestment.

7. Capital Loss Carryforwards:

As of October 31, 2010, the Fund had capital loss carryforwards avail-
able to offset future realized capital gains through the indicated expira-
tion dates:

 

 

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Notes to Financial Statements (concluded)

Under the recently enacted Regulated Investment Company
Modernization Act of 2010, capital losses incurred by the Fund after
October 31, 2011 will not be subject to expiration. In addition, these
losses must be utilized prior to the losses incurred in pre-enactment
taxable years.

8. Subsequent Events:

Management's evaluation of the impact of all subsequent events on
the Fund's financial statements was completed through the date the
financial statements were issued and the following items were noted:

The Fund will pay a net investment income dividend in the amount of
$0.36 per share on June 30, 2011 to shareholders of record on
June 15, 2011.

 

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Officers and Directors

Richard E. Cavanagh, Chair of the Board and Director
Karen P. Robards, Vice Chair of the Board, Chair of the Audit Committee
and Director
Michael Castellano, Director and Member of the Audit Committee
Richard S. Davis, Director
Frank J. Fabozzi, Director and Member of the Audit Committee
Kathleen F. Feldstein, Director
James T. Flynn, Director and Member of the Audit Committee
Henry Gabbay, Director
Jerrold B. Harris, Director
R. Glenn Hubbard, Director
W. Carl Kester, Director and Member of the Audit Committee
John M. Perlowski, President and Chief Executive Officer
Anne Ackerley, Vice President
Brendan Kyne, Vice President
Neal Andrews, Chief Financial Officer
Jay Fife, Treasurer
Brian Kindelan, Chief Compliance Officer
Ira P. Shapiro, Secretary

Investment Advisor
BlackRock Advisors, LLC
Wilmington, DE 19809

Sub-Advisor
BlackRock Investment Management, LLC
Plainsboro, NJ 08536

Custodian
Brown Brothers, Harriman & Co.
Boston, MA 02109

Transfer Agent
BNY Mellon Shareowner Services
Jersey City, NJ 07310

Accounting Agent
State Street Bank and Trust Company
Princeton, NJ 08540

Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540

Legal Counsel
Skadden, Arps, Slate, Meagher & Flom LLP
New York, NY 10036

Address of the Fund
100 Bellevue Parkway
Wilmington, DE 19809

Effective November 10, 2010, Ira P. Shapiro became Secretary of the Fund.

Effective February 11, 2011, John M. Perlowski became President and Chief Executive Officer of the Fund.

Effective April 14, 2011, Michael Castellano became a Director of the Fund and Member of the Audit Committee.

 

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Additional Information

General Information

The Fund does not make available copies of its Statements of Additional
Information because the Fund’s shares are not continuously offered,
which means that the Statement of Additional Information of the Fund
has not been updated after completion of the Fund’s offerings and the
information contained in the Fund’s Statement of Additional Information
may have become outdated.

During the period there were no material changes in the Fund’s invest-
ment objectives or policies or to the Fund’s charter or by-laws that would
delay or prevent a change of control of the Fund that were not approved
by shareholders or in the principal risk factors associated with invest-
ment in the Fund. There have been no changes in the persons who
are primarily responsible for the day-to-day management of the
Fund’s portfolio.

Quarterly performance, semi-annual and annual reports and other
information regarding the Fund may be found on BlackRock’s website,
which can be accessed at http://www.blackrock.com. This reference
to BlackRock’s website is intended to allow investors public access to
information regarding the Fund and does not, and is not intended to,
incorporate BlackRock’s website into this report.

Electronic Delivery

Electronic copies of most financial reports are available on the Fund’s
website or shareholders can sign up for e-mail notifications of quarterly
statements, annual and semi-annual reports by enrolling in the Fund’s
electronic delivery program.

Shareholders Who Hold Accounts with Investment Advisors, Banks
or Brokerages:

Please contact your financial advisor to enroll. Please note that not all
investment advisors, banks or brokerages may offer this service.

Householding

The Fund will mail only one copy of shareholder documents, including
annual and semi-annual reports and proxy statements, to shareholders
with multiple accounts at the same address. This practice is commonly
called “householding” and is intended to reduce expenses and eliminate
duplicate mailings of shareholder documents. Mailings of your share-
holder documents may be householded indefinitely unless you instruct
us otherwise. If you do not want the mailing of these documents to be
combined with those for other members of your household, please
call (800) 441-7762.

Availability of Quarterly Schedule of Investments

The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (the “SEC”) for the first and third
quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are
available on the SEC’s website at http://www.sec.gov and may also be
reviewed and copied at the SEC’s Public Reference Room in Washington,
DC. Information on how to access documents on the SEC’s website
without charge may be obtained by calling (800) SEC-0330. The Fund’s
Forms N-Q may also be obtained upon request and without charge by
calling (800) 441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Fund uses to deter-
mine how to vote proxies relating to portfolio securities is available
(1) without charge, upon request, by calling (800) 441-7762;
(2) at http://www.blackrock.com; and (3) on the SEC’s website
at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Fund voted proxies relating to securities
held in the Fund’s portfolio during the most recent 12-month period
ended June 30 is available upon request and without charge
(1) at http://www.blackrock.com or by calling (800) 441-7762
and (2) on the SEC’s website at http://www.sec.gov.

Availability of Fund Updates

BlackRock will update performance and certain other data for the Fund
on a monthly basis on its website in the “Closed-end Funds” section of
http://www.blackrock.com. Investors and others are advised to
periodically check the website for updated performance information
and the release of other material information about the Fund.

 

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Additional Information (continued)

Section 19(a) Notices

These reported amounts and sources of distributions are estimates and are not being provided for tax reporting purposes. The actual amounts and
sources for tax reporting purposes will depend upon the Fund’s investment experience during the year and may be subject to changes based on
the tax regulations. The Fund will provide a Form 1099-DIV each calendar year that will explain the character of these dividends and distributions
for federal income tax purposes.

 

The Fund estimates that it has distributed more than the amount of earned income and net realized gains; therefore, a portion of the distribution
may be a return of capital. A return of capital may occur, for example, when some or all of the shareholder’s investment in the Fund is returned to the
shareholder. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income’.

 

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Additional Information (concluded)

Dividend Policy

The Fund’s dividend policy is to distribute all or a portion of its net invest-
ment income to its shareholders on a quarterly basis. In order to provide
shareholders with a more stable level of dividend distributions, the Fund
may at times pay out less than the entire amount of net investment
income earned in any particular quarter and may at times in any parti-
cular quarter pay out such accumulated but undistributed income in
addition to net investment income earned in that quarter. As a result,
the dividends paid by the Fund for any particular quarter may be more
or less than the amount of net investment income earned by the Fund
during such quarter. The Fund’s current accumulated but undistributed
net investment income, if any, is disclosed in the Statement of Assets
and Liabilities, which comprises part of the financial information included
in this report.

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and for-
mer fund investors and individual clients (collectively, “Clients”) and to
safeguarding their non-public personal information. The following infor-
mation is provided to help you understand what personal information
BlackRock collects, how we protect that information and why in certain
cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with
those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and
about you from different sources, including the following: (i) information
we receive from you or, if applicable, your financial intermediary, on appli-
cations, forms or other documents; (ii) information about your transac-
tions with us, our affiliates, or others; (iii) information we receive from a
consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non-
public personal information about its Clients, except as permitted by law
or as is necessary to respond to regulatory requests or to service Client
accounts. These non-affiliated third parties are required to protect the
confidentiality and security of this information and to use it only for its
intended purpose.

We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services
that may be of interest to you. In addition, BlackRock restricts access
to non-public personal information about its Clients to those BlackRock
employees with a legitimate business need for the information. BlackRock
maintains physical, electronic and procedural safeguards that are designed
to protect the non-public personal information of its Clients, including pro-
cedures relating to the proper storage and disposal of such information.

 

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This report is transmitted to shareholders only. It is not a

prospectus. Past performance results shown in this report

should not be considered a representation of future per-

formance. Statements and other information herein are

as dated and are subject to change.

---

Item 2 – Code of Ethics – Not Applicable to this semi-annual report

Item 3 – Audit Committee Financial Expert – Not Applicable to this semi-annual report

Item 4 – Principal Accountant Fees and Services – Not Applicable to this semi-annual report

Item 5 – Audit Committee of Listed Registrants – Not Applicable to this semi-annual report

Item 6 – Investments
(a) The registrant’s Schedule of Investments is included as part of the Report to
Stockholders filed under Item 1 of this Form.
(b) Not Applicable due to no such divestments during the semi-annual period covered since
the previous Form N-CSR filing.

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management
Investment Companies – Not Applicable to this semi-annual report

Item 8 – Portfolio Managers of Closed-End Management Investment Companies
(a) Not Applicable to this semi-annual report
(b) As of the date of this filing, there have been no changes in any of the portfolio managers
identified in the most recent annual report on Form N-CSR.

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and
Affiliated Purchasers – Not Applicable

Item 10 – Submission of Matters to a Vote of Security Holders – There have been no material
changes to these procedures.

Item 11 – Controls and Procedures

(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.

(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 second fiscal quarter
of the period covered by this report that have materially affected, or are reasonably likely to
materially affect, the registrant’s internal control over financial reporting.

Item 12 – Exhibits attached hereto

(a)(1) – Code of Ethics – Not Applicable to this semi-annual report

(a)(2) – Certifications – Attached hereto

(a)(3) – Not Applicable

(b) – Certifications – Attached hereto

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12(c) – Notices to the registrant’s common shareholders in accordance with the order under Section
6(c) of the 1940 Act granting an exemption from Section 19(b) of the 1940 Act and Rule
19b-1 under the 1940 Act, dated May 9, 2009<sup>1

1</sup> The Fund has received exemptive relief from the Securities and Exchange Commission permitting it
to make periodic distributions of long-term capital gains with respect to its outstanding common
stock as frequently as twelve times each year, and as frequently as distributions are specified by or in
accordance with the terms of its outstanding preferred stock. This relief is conditioned, in part, on an
undertaking by the Fund to make the disclosures to the holders of the Fund’s common shares, in
addition to the information required by Section 19(a) of the 1940 Act and Rule 19a-1 thereunder. The
Fund is likewise obligated to file with the SEC the information contained in any such notice to
shareholders and, in that regard, has attached hereto copies of each such notice made during the
period.

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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: July 5, 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: July 5, 2011

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

Date: July 5, 2011

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