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: 12/31/2018

Date of reporting period: 09/30/2018

Item 1 – Schedule of Investments

Schedule of Investments  (unaudited)

September 30, 2018

   

BlackRock Enhanced Capital and Income Fund (CII)

(Percentages shown are based on Net Assets)

 

Security   Shares     Value  
Common Stocks — 100.8%  

Airlines — 1.5%

 

Delta Air Lines, Inc.

     200,836     $ 11,614,346  
   

 

 

  
Banks — 10.3%  

Bank of America Corp.(a)(b)

     707,172       20,833,287  

JPMorgan Chase & Co.(a)

     239,356       27,008,931  

Regions Financial Corp.

     323,265       5,931,913  

SunTrust Banks, Inc.

     204,304       13,645,464  

U.S. Bancorp

     260,889       13,777,548  
   

 

 

  
    81,197,143  
Biotechnology — 3.2%  

Biogen, Inc.(c)

     44,347       15,668,239  

Gilead Sciences, Inc.

     120,663       9,316,390  
   

 

 

  
    24,984,629  
Capital Markets — 0.8%  

E*Trade Financial Corp.(c)

     121,117       6,345,320  
   

 

 

  
Chemicals — 2.0%  

DowDuPont, Inc.

     242,040       15,565,592  
   

 

 

  
Commercial Services & Supplies — 1.1%  

KAR Auction Services, Inc.

     148,065       8,838,000  
   

 

 

  
Communications Equipment — 3.0%  

Cisco Systems, Inc.

     488,510       23,766,012  
   

 

 

  
Consumer Finance — 1.7%  

Ally Financial, Inc.

     286,038       7,565,705  

SLM Corp.(c)

     529,692       5,906,066  
   

 

 

  
    13,471,771  
Containers & Packaging — 1.3%  

Packaging Corp. of America

     96,044       10,535,066  
   

 

 

  
Electric Utilities — 2.9%  

FirstEnergy Corp.

     352,361       13,097,258  

PG&E Corp.(c)

     203,857       9,379,461  
   

 

 

  
    22,476,719  
Electronic Equipment, Instruments & Components — 1.7%  

CDW Corp.

     154,243       13,715,288  
   

 

 

  
Food & Staples Retailing — 2.4%  

Walmart, Inc.

     199,886       18,771,294  
   

 

 

  
Food Products — 1.1%  

J.M. Smucker Co.

     86,006       8,825,076  
   

 

 

  
Health Care Equipment & Supplies — 1.4%  

Baxter International, Inc.

     147,116       11,341,172  
   

 

 

  
Health Care Providers & Services — 9.2%  

Centene Corp.(c)

     75,344       10,908,304  

CVS Health Corp.(b)

     86,560       6,814,003  

Humana, Inc.

     56,654       19,178,512  

Laboratory Corp. of America Holdings(c)

     86,938       15,099,392  
Security   Shares     Value  
Health Care Providers & Services (continued)  

UnitedHealth Group, Inc.

     76,844     $ 20,443,578  
   

 

 

  
    72,443,789  
Hotels, Restaurants & Leisure — 1.6%  

Carnival Corp.

     193,617       12,346,956  
   

 

 

  
Household Durables — 2.6%  

D.R. Horton, Inc.

     328,525       13,857,184  

Lennar Corp., Class A

     87,906       4,104,331  

NVR, Inc.(c)

     1,081       2,670,935  
   

 

 

  
    20,632,450  
Independent Power and Renewable Electricity Producers — 0.5%  

AES Corp.

     262,692       3,677,688  
   

 

 

  
Industrial Conglomerates — 0.7%  

General Electric Co.

     481,941       5,441,114  
   

 

 

  
Insurance — 1.6%  

Assured Guaranty Ltd.

     125,164       5,285,676  

Hartford Financial Services Group, Inc.

     150,809       7,534,417  
   

 

 

  
    12,820,093  
Internet Software & Services — 5.0%  

Alphabet, Inc., Class A(c)

     32,634       39,391,849  
   

 

 

  
IT Services — 2.7%  

Amdocs Ltd.

     83,760       5,526,485  

Cognizant Technology Solutions Corp., Class A

     208,383       16,076,748  
   

 

 

  
    21,603,233  
Machinery — 2.1%  

Allison Transmission Holdings, Inc.

     138,599       7,208,534  

Fortive Corp.(d)

     112,062       9,435,620  
   

 

 

  
    16,644,154  
Media — 3.3%  

Comcast Corp., Class A(b)

     573,906       20,322,011  

DISH Network Corp., Class A(c)

     168,177       6,014,010  
   

 

 

  
    26,336,021  
Metals & Mining — 1.3%  

Freeport-McMoRan, Inc.

     522,764       7,276,875  

Rio Tinto PLC — ADR

     57,596       2,938,548  
   

 

 

  
    10,215,423  
Oil, Gas & Consumable Fuels — 6.2%  

BP PLC — ADR

     198,654       9,157,949  

Chevron Corp.

     141,903       17,351,899  

Marathon Oil Corp.

     277,252       6,454,427  

Suncor Energy, Inc.

     404,193       15,638,227  
   

 

 

  
    48,602,502  
Pharmaceuticals — 4.5%  

Novo Nordisk A/S — ADR

     187,440       8,835,922  
 

 

 

     1  

Schedule of Investments  (unaudited) (continued)

September 30, 2018

   

BlackRock Enhanced Capital and Income Fund (CII)

(Percentages shown are based on Net Assets)

 

Security   Shares      Value  
Pharmaceuticals (continued)  

Pfizer, Inc.

     606,087      $ 26,710,254  
    

 

 

  
     35,546,176  
Road & Rail — 2.1%  

Norfolk Southern Corp.

     92,406        16,679,283  
    

 

 

  
Semiconductors & Semiconductor Equipment — 0.6%  

Taiwan Semiconductor Manufacturing Co. Ltd.—ADR

     105,580        4,662,413  
    

 

 

  
Software — 7.8%  

Dell Technologies, Inc., Class V(c)

     128,187        12,449,522  

Microsoft Corp.(b)

     393,598        45,015,803  

Oracle Corp.

     74,470        3,839,673  
    

 

 

  
     61,304,998  
Specialty Retail — 5.6%  

Home Depot, Inc.

     38,408        7,956,217  

Lowe’s Cos., Inc.(b)

     169,254        19,433,744  

O’Reilly Automotive, Inc.(c)

     30,524        10,601,596  
Security   Shares      Value  
Specialty Retail (continued)  

Urban Outfitters, Inc.(c)

     158,018      $ 6,462,936  
    

 

 

  
     44,454,493  
Technology Hardware, Storage & Peripherals — 6.8%  

Apple, Inc.

     236,816        53,458,844  
    

 

 

  
Tobacco — 2.2%  

Altria Group, Inc.(b)

     288,708        17,411,979  
    

 

 

  

Total Long-Term Investments — 100.8%
(Cost — $574,808,920)

 

      795,120,886  
    

 

 

  
Short-Term Securities — 0.5%  

BlackRock Liquidity Funds, T-Fund, Institutional Class, 1.97%(e)(g)

     1,068,071        1,068,071  

SL Liquidity Series, LLC, Money Market Series, 2.26%(e)(f)(g)

     2,808,796        2,809,077  
    

 

 

  

Total Short-Term Securities — 0.5%
(Cost — $3,877,148)

 

      3,877,148  
    

 

 

  

Total Investments Before Options Written — 101.3%
(Cost — $578,686,068)

 

      798,998,034  
    

 

 

  

Options Written — (0.9)%
(Premiums Received — $7,519,133)

 

      (6,776,054 ) 
    

 

 

  

Total Investments, Net of Options Written — 100.4%
(Cost — $571,166,935)

 

      792,221,980  

Liabilities in Excess of Other Assets — (0.4)%

 

      (3,059,359 ) 
    

 

 

  

Net Assets — 100.0%

 

    $ 789,162,621  
    

 

 

  
 
(a) 

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

(b) 

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

(c) 

Non-income producing security.

(d) 

Security, or a portion of the security, is on loan.

(e)

Annualized 7-day yield as of period end.

(f)

Security was purchased with the cash collateral from loaned securities.

(g)

During the period ended September 30, 2018, 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, and/or related parties of the Trust were as follows:

 

Affiliate    Shares
Held at
12/31/17		      Net
Activity		      Shares
Held at
09/30/18		      Value at
09/30/18		      Income      Net Realized
Gain (Loss)(a)		      Change in
Unrealized
Appreciation
(Depreciation)		  

BlackRock Liquidity Funds, T-Fund, Institutional Class

      3,142,974        (2,074,903 )       1,068,071      $ 1,068,071      $ 48,393      $ —      $ —  

SL Liquidity Series, LLC, Money Market Series

      —        2,808,796        2,808,796        2,809,077        13,681 (b)        (97 )       —  
           

 

 

     

 

 

     

 

 

     

 

 

  
            $ 3,877,148      $ 62,074      $ (97 )     $ —  
           

 

 

     

 

 

     

 

 

     

 

 

  

 

  (a)

Includes net capital gain distributions, if applicable.

 
  (b) 

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.

 

 

 

2   

Schedule of Investments  (unaudited) (continued)

September 30, 2018

   

BlackRock Enhanced Capital and Income Fund (CII)

 

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

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.

      69          10/01/18        USD     31.50        USD     203        $ —  

FirstEnergy Corp.

      418          10/03/18        USD     37.08        USD     1,554          (15,333 ) 

Bank of America Corp.

      68          10/04/18        USD     31.75        USD     200          (6 ) 

Alphabet, Inc., Class A

      16          10/05/18        USD     1,215.00        USD     1,931          (13,280 ) 

BP PLC — ADR

      97          10/05/18        USD     44.00        USD     447          (20,952 ) 

Bank of America Corp.

      754          10/05/18        USD     31.50        USD     2,221          (1,131 ) 

Bank of America Corp.

      191          10/05/18        USD     31.00        USD     563          (286 ) 

Baxter International, Inc.

      121          10/05/18        USD     74.50        USD     933          (32,428 ) 

Biogen, Inc.

      30          10/05/18        USD     350.00        USD     1,060          (22,200 ) 

CVS Health Corp.

      283          10/05/18        USD     76.50        USD     2,228          (70,609 ) 

Carnival Corp.

      306          10/05/18        USD     63.50        USD     1,951          (26,010 ) 

Chevron Corp.

      111          10/05/18        USD     123.00        USD     1,357          (8,159 ) 

Cisco Systems, Inc.

      81          10/05/18        USD     47.00        USD     394          (13,770 ) 

Cisco Systems, Inc.

      116          10/05/18        USD     48.00        USD     564          (9,106 ) 

Cognizant Technology Solutions Corp., Class A

      230          10/05/18        USD     78.50        USD     1,774          (3,450 ) 

Comcast Corp., Class A

      389          10/05/18        USD     38.50        USD     1,377          (5,057 ) 

D.R. Horton, Inc.

      114          10/05/18        USD     46.00        USD     481          (684 ) 

DISH Network Corp., Class A

      429          10/05/18        USD     38.00        USD     1,534          (8,580 ) 

Delta Air Lines, Inc.

      169          10/05/18        USD     60.00        USD     977          (1,859 ) 

DowDuPont, Inc.

      299          10/05/18        USD     71.00        USD     1,923          (598 ) 

Freeport-McMoRan, Inc.

      265          10/05/18        USD     14.50        USD     369          (2,252 ) 

General Electric Co.

      270          10/05/18        USD     13.00        USD     305          (540 ) 

General Electric Co.

      105          10/05/18        USD     13.35        USD     119          —  

Gilead Sciences, Inc.

      167          10/05/18        USD     77.50        USD     1,289          (10,354 ) 

Hartford Financial Services Group, Inc.

      178          10/05/18        USD     50.50        USD     889          (3,026 ) 

Humana, Inc.

      88          10/05/18        USD     335.00        USD     2,979          (41,360 ) 

JPMorgan Chase & Co.

      61          10/05/18        USD     115.00        USD     688          (1,433 ) 

JPMorgan Chase & Co.

      210          10/05/18        USD     116.00        USD     2,370          (2,205 ) 

Lowe’s Cos., Inc.

      281          10/05/18        USD     109.00        USD     3,226          (168,600 ) 

Marathon Oil Corp.

      69          10/05/18        USD     21.50        USD     161          (12,593 ) 

Marathon Oil Corp.

      57          10/05/18        USD     22.50        USD     133          (5,301 ) 

Microsoft Corp.

      306          10/05/18        USD     109.00        USD     3,500          (170,595 ) 

Norfolk Southern Corp.

      209          10/05/18        USD     180.00        USD     3,772          (40,233 ) 

Oracle Corp.

      208          10/05/18        USD     50.00        USD     1,072          (34,216 ) 

PG&E Corp.

      513          10/05/18        USD     45.02        USD     2,360          (64,684 ) 

Pfizer, Inc.

      377          10/05/18        USD     40.05        USD     1,661          (152,211 ) 

SLM Corp.

      1,123          10/05/18        USD     11.27        USD     1,252          (8,092 ) 

Suncor Energy, Inc.

      345          10/05/18        USD     42.00        USD     1,335          (3,105 ) 

U.S. Bancorp

      181          10/05/18        USD     53.51        USD     956          (4,494 ) 

UnitedHealth Group, Inc.

      155          10/05/18        USD     272.50        USD     4,124          (2,557 ) 

 

 

     3  

Schedule of Investments  (unaudited) (continued)

September 30, 2018

   

BlackRock Enhanced Capital and Income Fund (CII)

 

Exchange-Traded Options Written (continued)

 

Description    Number of
Contracts		        Expiration
Date		        Exercise
Price		        Notional
Amount (000)		        Value  

Call

                           

Urban Outfitters, Inc.

      198          10/05/18        USD     47.00        USD     810        $ (1,980 ) 

Walmart, Inc.

      77          10/05/18        USD     97.50        USD     723          (346 ) 

Apple, Inc.

      272          10/12/18        USD     227.50        USD     6,140          (65,552 ) 

BP PLC — ADR

      108          10/12/18        USD     44.00        USD     498          (24,084 ) 

Bank of America Corp.

      190          10/12/18        USD     31.00        USD     560          (1,140 ) 

Bank of America Corp.

      190          10/12/18        USD     31.50        USD     560          (665 ) 

Bank of America Corp.

      82          10/12/18        USD     30.50        USD     242          (1,025 ) 

Bank of America Corp.

      669          10/12/18        USD     31.10        USD     1,971          (4,571 ) 

Baxter International, Inc.

      121          10/12/18        USD     75.00        USD     933          (28,556 ) 

Carnival Corp.

      226          10/12/18        USD     64.00        USD     1,441          (19,210 ) 

Chevron Corp.

      19          10/12/18        USD     121.00        USD     232          (4,465 ) 

Cisco Systems, Inc.

      116          10/12/18        USD     47.94        USD     564          (9,840 ) 

Comcast Corp., Class A

      228          10/12/18        USD     37.00        USD     807          (1,254 ) 

D.R. Horton, Inc.

      316          10/12/18        USD     44.50        USD     1,333          (4,424 ) 

Delta Air Lines, Inc.

      500          10/12/18        USD     58.00        USD     2,892          (60,000 ) 

DowDuPont, Inc.

      124          10/12/18        USD     70.00        USD     797          (372 ) 

E*Trade Financial Corp.

      376          10/12/18        USD     56.50        USD     1,970          (16,920 ) 

Freeport-McMoRan, Inc.

      600          10/12/18        USD     15.00        USD     835          (4,800 ) 

General Electric Co.

      338          10/12/18        USD     13.00        USD     382          (507 ) 

General Electric Co.

      60          10/12/18        USD     12.50        USD     68          (180 ) 

Hartford Financial Services Group, Inc.

      135          10/12/18        USD     51.00        USD     674          (2,835 ) 

JPMorgan Chase & Co.

      41          10/12/18        USD     116.00        USD     463          (2,132 ) 

Lowe’s Cos., Inc.

      87          10/12/18        USD     111.00        USD     999          (38,498 ) 

Marathon Oil Corp.

      193          10/12/18        USD     22.50        USD     449          (21,134 ) 

Microsoft Corp.

      306          10/12/18        USD     113.00        USD     3,500          (74,205 ) 

Oracle Corp.

      55          10/12/18        USD     50.00        USD     284          (9,708 ) 

Oracle Corp.

      55          10/12/18        USD     51.00        USD     284          (5,307 ) 

PG&E Corp.

      100          10/12/18        USD     49.00        USD     460          (1,500 ) 

Pfizer, Inc.

      377          10/12/18        USD     40.15        USD     1,661          (149,096 ) 

Suncor Energy, Inc.

      81          10/12/18        USD     40.00        USD     313          (1,336 ) 

U.S. Bancorp

      138          10/12/18        USD     55.00        USD     729          (690 ) 

U.S. Bancorp

      130          10/12/18        USD     54.66        USD     687          (1,771 ) 

UnitedHealth Group, Inc.

      107          10/12/18        USD     267.50        USD     2,847          (21,400 ) 

Urban Outfitters, Inc.

      98          10/12/18        USD     47.00        USD     401          (490 ) 

Hartford Financial Services Group, Inc.

      238          10/17/18        USD     50.44        USD     1,189          (12,382 ) 

Ally Financial, Inc.

      656          10/19/18        USD     28.00        USD     1,735          (6,560 ) 

Altria Group, Inc.

      133          10/19/18        USD     62.50        USD     802          (3,724 ) 

Altria Group, Inc.

      418          10/19/18        USD     65.00        USD     2,521          (2,508 ) 

Amdocs Ltd.

      235          10/19/18        USD     67.50        USD     1,551          (5,875 ) 

Apple, Inc.

      271          10/19/18        USD     230.00        USD     6,118          (61,653 ) 

Assured Guaranty Ltd.

      200          10/19/18        USD     38.00        USD     845          (87,500 ) 

Assured Guaranty Ltd.

      200          10/19/18        USD     42.00        USD     845          (18,400 ) 

BP PLC — ADR

      147          10/19/18        USD     43.00        USD     678          (47,408 ) 

Bank of America Corp.

      288          10/19/18        USD     32.00        USD     848          (1,296 ) 

Baxter International, Inc.

      125          10/19/18        USD     77.50        USD     964          (11,563 ) 

Biogen, Inc.

      46          10/19/18        USD     355.00        USD     1,625          (35,650 ) 

CDW Corp.

      851          10/19/18        USD     90.00        USD     7,567          (85,100 ) 

Carnival Corp.

      412          10/19/18        USD     64.00        USD     2,627          (45,320 ) 

Chevron Corp.

      161          10/19/18        USD     125.00        USD     1,969          (12,961 ) 

Cisco Systems, Inc.

      296          10/19/18        USD     46.00        USD     1,440          (79,920 ) 

Cisco Systems, Inc.

      116          10/19/18        USD     48.00        USD     564          (11,484 ) 

Cognizant Technology Solutions Corp., Class A

      189          10/19/18        USD     80.00        USD     1,458          (4,252 ) 

 

 

4   

Schedule of Investments  (unaudited) (continued)

September 30, 2018

   

BlackRock Enhanced Capital and Income Fund (CII)

 

Exchange-Traded Options Written (continued)

 

Description    Number of
Contracts		        Expiration
Date		        Exercise
Price		        Notional
Amount (000)		        Value  

Call

                           

Comcast Corp., Class A

      367          10/19/18        USD     35.55        USD     1,300        $ (20,778 ) 

Comcast Corp., Class A

      111          10/19/18        USD     36.25        USD     393          (3,237 ) 

D.R. Horton, Inc.

      299          10/19/18        USD     72.50        USD     1,923          (448 ) 

D.R. Horton, Inc.

      114          10/19/18        USD     46.00        USD     481          (1,026 ) 

DISH Network Corp., Class A

      200          10/19/18        USD     37.50        USD     715          (9,000 ) 

Delta Air Lines, Inc.

      284          10/19/18        USD     60.00        USD     1,642          (17,892 ) 

DowDuPont, Inc.

      158          10/19/18        USD     70.00        USD     1,016          (1,027 ) 

FirstEnergy Corp.

      201          10/19/18        USD     38.00        USD     747          (6,030 ) 

Fortive Corp.

      347          10/19/18        USD     90.00        USD     2,922          (20,820 ) 

Freeport-McMoRan, Inc.

      492          10/19/18        USD     15.00        USD     685          (7,134 ) 

General Electric Co.

      260          10/19/18        USD     12.00        USD     294          (1,950 ) 

General Electric Co.

      155          10/19/18        USD     13.00        USD     175          (387 ) 

Gilead Sciences, Inc.

      158          10/19/18        USD     75.00        USD     1,220          (45,425 ) 

Hartford Financial Services Group, Inc.

      63          10/19/18        USD     50.00        USD     315          (4,725 ) 

Home Depot, Inc.

      120          10/19/18        USD     200.00        USD     2,486          (97,500 ) 

J.M. Smucker Co.

      227          10/19/18        USD     115.00        USD     2,329          (2,837 ) 

JPMorgan Chase & Co.

      166          10/19/18        USD     115.00        USD     1,873          (17,181 ) 

Laboratory Corp. of America Holdings

      257          10/19/18        USD     175.00        USD     4,464          (55,898 ) 

Lennar Corp., Class A

      157          10/19/18        USD     52.50        USD     733          (3,689 ) 

Lowe’s Cos., Inc.

      68          10/19/18        USD     110.00        USD     781          (37,400 ) 

Marathon Oil Corp.

      249          10/19/18        USD     21.00        USD     580          (60,632 ) 

Marathon Oil Corp.

      57          10/19/18        USD     23.00        USD     133          (5,244 ) 

Microsoft Corp.

      164          10/19/18        USD     115.00        USD     1,876          (28,126 ) 

Microsoft Corp.

      250          10/19/18        USD     110.00        USD     2,859          (128,125 ) 

Norfolk Southern Corp.

      114          10/19/18        USD     180.00        USD     2,058          (36,480 ) 

Novo Nordisk A/S — ADR

      139          10/19/18        USD     49.00        USD     655          (2,780 ) 

O’Reilly Automotive, Inc.

      84          10/19/18        USD     350.00        USD     2,917          (44,100 ) 

Oracle Corp.

      34          10/19/18        USD     49.00        USD     175          (9,180 ) 

Packaging Corp. of America

      53          10/19/18        USD     115.00        USD     581          (2,120 ) 

Pfizer, Inc.

      377          10/19/18        USD     40.25        USD     1,661          (146,011 ) 

Regions Financial Corp.

      349          10/19/18        USD     20.00        USD     640          (872 ) 

Rio Tinto PLC — ADR

      105          10/19/18        USD     53.50        USD     536          (4,455 ) 

SLM Corp.

      487          10/19/18        USD     12.00        USD     543          (5,844 ) 

SunTrust Banks, Inc.

      97          10/19/18        USD     75.00        USD     648          (436 ) 

Suncor Energy, Inc.

      75          10/19/18        USD     40.00        USD     290          (2,287 ) 

Suncor Energy, Inc.

      226          10/19/18        USD     40.50        USD     874          (4,520 ) 

Taiwan Semiconductor Manufacturing Co. Ltd. — ADR

      243          10/19/18        USD     47.00        USD     1,073          (5,467 ) 

U.S. Bancorp

      122          10/19/18        USD     54.50        USD     644          (3,355 ) 

U.S. Bancorp

      299          10/19/18        USD     53.95        USD     1,579          (12,731 ) 

Walmart, Inc.

      374          10/19/18        USD     97.50        USD     3,512          (20,196 ) 

Altria Group, Inc.

      419          10/26/18        USD     65.00        USD     2,527          (9,218 ) 

Apple, Inc.

      228          10/26/18        USD     227.50        USD     5,147          (98,610 ) 

Apple, Inc.

      260          10/26/18        USD     217.50        USD     5,869          (279,500 ) 

BP PLC — ADR

      164          10/26/18        USD     45.00        USD     756          (26,896 ) 

Bank of America Corp.

      316          10/26/18        USD     31.50        USD     931          (4,108 ) 

Baxter International, Inc.

      110          10/26/18        USD     78.00        USD     848          (9,405 ) 

Biogen, Inc.

      53          10/26/18        USD     350.00        USD     1,873          (82,945 ) 

CVS Health Corp.

      193          10/26/18        USD     77.50        USD     1,519          (49,119 ) 

Carnival Corp.

      120          10/26/18        USD     65.00        USD     765          (10,200 ) 

Chevron Corp.

      155          10/26/18        USD     119.00        USD     1,895          (63,550 ) 

Cisco Systems, Inc.

      402          10/26/18        USD     47.50        USD     1,956          (57,888 ) 

Cognizant Technology Solutions Corp., Class A

      126          10/26/18        USD     79.00        USD     972          (7,560 ) 

Comcast Corp., Class A

      273          10/26/18        USD     36.00        USD     967          (17,745 ) 

 

 

     5  

Schedule of Investments  (unaudited) (continued)

September 30, 2018

   

BlackRock Enhanced Capital and Income Fund (CII)

 

Exchange-Traded Options Written (continued)

 

Description    Number of
Contracts		        Expiration
Date		        Exercise
Price		        Notional
Amount (000)		        Value  

Call

                           

D.R. Horton, Inc.

      210          10/26/18        USD     43.50        USD     886        $ (13,545 ) 

Delta Air Lines, Inc.

      151          10/26/18        USD     59.00        USD     873          (17,214 ) 

DowDuPont, Inc.

      123          10/26/18        USD     70.50        USD     791          (1,230 ) 

Freeport-McMoRan, Inc.

      246          10/26/18        USD     15.50        USD     342          (4,059 ) 

General Electric Co.

      173          10/26/18        USD     13.00        USD     195          (778 ) 

Hartford Financial Services Group, Inc.

      152          10/26/18        USD     51.50        USD     759          (8,132 ) 

Humana, Inc.

      67          10/26/18        USD     340.00        USD     2,268          (33,500 ) 

JPMorgan Chase & Co.

      114          10/26/18        USD     117.00        USD     1,286          (8,550 ) 

Lowe’s Cos., Inc.

      305          10/26/18        USD     115.00        USD     3,502          (67,558 ) 

Marathon Oil Corp.

      572          10/26/18        USD     21.50        USD     1,332          (119,548 ) 

Microsoft Corp.

      133          10/26/18        USD     115.00        USD     1,521          (35,578 ) 

Oracle Corp.

      247          10/26/18        USD     49.00        USD     1,274          (67,678 ) 

Pfizer, Inc.

      185          10/26/18        USD     42.00        USD     815          (41,533 ) 

Pfizer, Inc.

      176          10/26/18        USD     41.69        USD     776          (46,356 ) 

Suncor Energy, Inc.

      116          10/26/18        USD     40.00        USD     449          (3,944 ) 

Suncor Energy, Inc.

      68          10/26/18        USD     40.50        USD     263          (2,040 ) 

U.S. Bancorp

      197          10/26/18        USD     54.50        USD     1,040          (7,092 ) 

UnitedHealth Group, Inc.

      53          10/26/18        USD     267.50        USD     1,410          (24,778 ) 

Urban Outfitters, Inc.

      250          10/26/18        USD     44.00        USD     1,023          (12,500 ) 

DowDuPont, Inc.

      230          10/29/18        USD     71.60        USD     1,479          (1,503 ) 

Cisco Systems, Inc.

      116          10/30/18        USD     48.75        USD     564          (8,794 ) 

AES Corp.

      566          10/31/18        USD     14.00        USD     792          (17,860 ) 

General Electric Co.

      73          10/31/18        USD     12.00        USD     82          (1,371 ) 

Novo Nordisk A/S — ADR

      419          10/31/18        USD     47.74        USD     1,975          (33,951 ) 

Alphabet, Inc., Class A

      41          11/02/18        USD     1,210.00        USD     4,949          (162,565 ) 

BP PLC — ADR

      54          11/02/18        USD     45.00        USD     249          (9,882 ) 

Bank of America Corp.

      619          11/02/18        USD     31.50        USD     1,824          (10,214 ) 

Biogen, Inc.

      26          11/02/18        USD     345.00        USD     919          (48,620 ) 

Chevron Corp.

      124          11/02/18        USD     120.00        USD     1,516          (53,010 ) 

Chevron Corp.

      44          11/02/18        USD     125.00        USD     538          (7,326 ) 

Cisco Systems, Inc.

      120          11/02/18        USD     47.50        USD     584          (18,660 ) 

Cognizant Technology Solutions Corp., Class A

      184          11/02/18        USD     79.00        USD     1,420          (24,840 ) 

Comcast Corp., Class A

      226          11/02/18        USD     37.50        USD     800          (7,119 ) 

D.R. Horton, Inc.

      395          11/02/18        USD     45.00        USD     1,666          (15,208 ) 

E*Trade Financial Corp.

      128          11/02/18        USD     55.50        USD     671          (16,832 ) 

Freeport-McMoRan, Inc.

      530          11/02/18        USD     14.00        USD     738          (35,510 ) 

Freeport-McMoRan, Inc.

      246          11/02/18        USD     15.50        USD     342          (5,166 ) 

General Electric Co.

      109          11/02/18        USD     13.50        USD     123          (545 ) 

Gilead Sciences, Inc.

      317          11/02/18        USD     75.00        USD     2,448          (120,460 ) 

Hartford Financial Services Group, Inc.

      63          11/02/18        USD     51.00        USD     315          (4,945 ) 

Humana, Inc.

      43          11/02/18        USD     340.00        USD     1,456          (28,595 ) 

JPMorgan Chase & Co.

      60          11/02/18        USD     115.00        USD     677          (9,330 ) 

JPMorgan Chase & Co.

      60          11/02/18        USD     118.00        USD     677          (4,410 ) 

Lowe’s Cos., Inc.

      189          11/02/18        USD     116.00        USD     2,170          (38,367 ) 

Marathon Oil Corp.

      327          11/02/18        USD     23.00        USD     761          (38,586 ) 

Microsoft Corp.

      164          11/02/18        USD     116.00        USD     1,876          (40,836 ) 

PG&E Corp.

      100          11/02/18        USD     48.00        USD     460          (9,000 ) 

Pfizer, Inc.

      444          11/02/18        USD     43.00        USD     1,957          (69,708 ) 

Suncor Energy, Inc.

      84          11/02/18        USD     40.50        USD     325          (3,822 ) 

U.S. Bancorp

      245          11/02/18        USD     56.00        USD     1,294          (3,797 ) 

UnitedHealth Group, Inc.

      107          11/02/18        USD     267.50        USD     2,847          (55,640 ) 

Urban Outfitters, Inc.

      251          11/02/18        USD     46.00        USD     1,027          (7,530 ) 

Walmart, Inc.

      274          11/02/18        USD     95.00        USD     2,573          (44,251 ) 

 

 

6   

Schedule of Investments  (unaudited) (continued)

September 30, 2018

   

BlackRock Enhanced Capital and Income Fund (CII)

 

Exchange-Traded Options Written (continued)

 

Description    Number of
Contracts		        Expiration
Date		        Exercise
Price		       

Notional

Amount (000)

        Value  

Call

                           

Novo Nordisk A/S — ADR

      419          11/06/18        USD     47.74        USD     1,975        $ (38,047 ) 

SunTrust Banks, Inc.

      368          11/07/18        USD     71.71        USD     2,458          (15,533 ) 

Apple, Inc.

      271          11/09/18        USD     225.00        USD     6,118          (220,188 ) 

Bank of America Corp.

      137          11/09/18        USD     30.50        USD     404          (6,302 ) 

Cisco Systems, Inc.

      120          11/09/18        USD     48.80        USD     584          (11,484 ) 

Comcast Corp., Class A

      273          11/09/18        USD     36.00        USD     967          (24,570 ) 

DowDuPont, Inc.

      98          11/09/18        USD     67.00        USD     630          (9,604 ) 

General Electric Co.

      168          11/09/18        USD     12.00        USD     190          (3,612 ) 

Suncor Energy, Inc.

      76          11/09/18        USD     41.00        USD     294          (3,192 ) 

AES Corp.

      310          11/16/18        USD     14.00        USD     434          (13,175 ) 

AES Corp.

      566          11/16/18        USD     14.10        USD     792          (20,297 ) 

Ally Financial, Inc.

      173          11/16/18        USD     28.00        USD     458          (6,487 ) 

Altria Group, Inc.

      617          11/16/18        USD     65.00        USD     3,721          (24,989 ) 

BP PLC — ADR

      54          11/16/18        USD     45.00        USD     249          (10,260 ) 

BP PLC — ADR

      142          11/16/18        USD     47.00        USD     655          (11,644 ) 

Bank of America Corp.

      316          11/16/18        USD     32.00        USD     931          (6,162 ) 

Baxter International, Inc.

      37          11/16/18        USD     77.50        USD     285          (6,845 ) 

Centene Corp.

      228          11/16/18        USD     143.50        USD     3,301          (139,484 ) 

Chevron Corp.

      124          11/16/18        USD     120.00        USD     1,516          (59,210 ) 

Cisco Systems, Inc.

      226          11/16/18        USD     48.00        USD     1,099          (40,680 ) 

Comcast Corp., Class A

      141          11/16/18        USD     37.50        USD     499          (5,922 ) 

E*Trade Financial Corp.

      162          11/16/18        USD     55.00        USD     849          (28,188 ) 

FirstEnergy Corp.

      208          11/16/18        USD     37.00        USD     773          (22,880 ) 

Fortive Corp.

      45          11/16/18        USD     85.00        USD     379          (10,238 ) 

Freeport-McMoRan, Inc.

      496          11/16/18        USD     15.00        USD     690          (21,328 ) 

General Electric Co.

      70          11/16/18        USD     14.00        USD     79          (245 ) 

General Electric Co.

      74          11/16/18        USD     13.00        USD     84          (666 ) 

Gilead Sciences, Inc.

      21          11/16/18        USD     75.00        USD     162          (8,925 ) 

Home Depot, Inc.

      91          11/16/18        USD     210.00        USD     1,885          (39,358 ) 

J.M. Smucker Co.

      246          11/16/18        USD     113.80        USD     2,524          (18,464 ) 

Laboratory Corp. of America Holdings

      221          11/16/18        USD     175.00        USD     3,838          (99,450 ) 

Lennar Corp., Class A

      150          11/16/18        USD     52.50        USD     700          (7,950 ) 

Microsoft Corp.

      54          11/16/18        USD     115.00        USD     618          (18,360 ) 

O’Reilly Automotive, Inc.

      84          11/16/18        USD     350.00        USD     2,917          (111,720 ) 

Oracle Corp.

      145          11/16/18        USD     50.00        USD     748          (31,393 ) 

Pfizer, Inc.

      185          11/16/18        USD     42.98        USD     815          (28,095 ) 

Regions Financial Corp.

      750          11/16/18        USD     19.00        USD     1,376          (26,250 ) 

SLM Corp.

      488          11/16/18        USD     12.00        USD     544          (8,296 ) 

SunTrust Banks, Inc.

      190          11/16/18        USD     72.50        USD     1,269          (7,315 ) 

Suncor Energy, Inc.

      113          11/16/18        USD     42.00        USD     437          (3,390 ) 

U.S. Bancorp

      122          11/16/18        USD     55.00        USD     644          (6,100 ) 

Walmart, Inc.

      374          11/16/18        USD     97.50        USD     3,512          (61,336 ) 

General Electric Co.

      121          12/21/18        USD     13.00        USD     137          (2,057 ) 
                          

 

 

  
                           $ (6,402,544 ) 
                          

 

 

  

OTC Options Written

 

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

Call

                                

Novo Nordisk A/S — ADR

    Barclays Bank PLC        5,300          10/01/18          USD       51.00       USD          250        $ —  

Ally Financial, Inc.

    Goldman Sachs International        39,600          10/02/18          USD       27.65       USD          1,047          (148 ) 

Ally Financial, Inc.

    Morgan Stanley & Co. International PLC        34,800          10/04/18          USD       27.33       USD          920          (1,248 ) 

 

 

     7  

Schedule of Investments  (unaudited) (continued)

September 30, 2018

   

BlackRock Enhanced Capital and Income Fund (CII)

 

OTC Options Written (continued)

 

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

Call

                       

Centene Corp.

     Barclays Bank PLC        18,600        10/04/18        USD        145.04        USD        2,693      $ (24,813 ) 

FirstEnergy Corp.

     JPMorgan Chase Bank N.A.        40,600        10/11/18        USD        37.50        USD        1,509        (14,856 ) 

Allison Transmission Holdings, Inc.

     Barclays Bank PLC        20,000        10/18/18        USD        50.20        USD        1,040        (42,877 ) 

Packaging Corp. of America

     Barclays Bank PLC        28,300        10/23/18        USD        118.95        USD        3,104        (3,544 ) 

Regions Financial Corp.

    
 Morgan Stanley & Co.
International PLC		  
 		      33,000        10/24/18        USD        19.42        USD        606        (2,687 ) 

Rio Tinto PLC — ADR

     Bank of America N.A.        21,100        10/29/18        USD        49.75        USD        1,077        (49,241 ) 

Assured Guaranty Ltd.

     Bank of America N.A.        28,800        10/30/18        USD        42.39        USD        1,216        (23,197 ) 

Regions Financial Corp.

     Citibank N.A.        34,800        10/30/18        USD        19.33        USD        639        (6,213 ) 

SLM Corp.

     Goldman Sachs International        81,500        10/30/18        USD        12.02        USD        909        (8,200 ) 

SunTrust Banks, Inc.

     Citibank N.A.        46,800        10/30/18        USD        74.25        USD        3,126        (8,821 ) 

Taiwan Semiconductor Manufacturing Co. Ltd. — ADR

     Barclays Bank PLC        33,700        10/30/18        USD        45.04        USD        1,488        (31,647 ) 

KAR Auction Services, Inc.

     UBS AG        51,800        10/31/18        USD        61.83        USD        3,092        (32,694 ) 

bpost SA

     Citibank N.A.        16,300        11/09/18        USD        46.50        USD        751        (12,728 ) 

Amdocs Ltd.

     JPMorgan Chase Bank N.A.        22,500        11/15/18        USD        66.31        USD        1,485        (35,363 ) 

Allison Transmission Holdings, Inc.

     Barclays Bank PLC        28,500        11/19/18        USD        51.90        USD        1,482        (57,787 ) 

BP PLC — ADR

     Citibank N.A.        16,300        11/30/18        USD        46.50        USD        751        (17,446 ) 
                      

 

 

  
                       $ (373,510 ) 
  

 

 

  

 

 

8   

Schedule of Investments  (unaudited) (continued)

September 30, 2018

   

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 quoted prices in active markets/exchanges for identical assets or liabilities that 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 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 semi-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 Stocks(a)

    $ 795,120,886        $ —        $ —        $ 795,120,886  

Short-Term Securities

     1,068,071          —          —          1,068,071  
  

 

 

       

 

 

       

 

 

       

 

 

  
   $ 796,188,957        $ —        $ —        $ 796,188,957  
  

 

 

       

 

 

       

 

 

       

 

 

  

Investments Valued at NAV(b)

                     2,809,077  
                  $ 798,998,034  
                 

 

 

  

Derivative Financial Instruments(c)

                  

Liabilities:

                 

Equity contracts

   $ (5,411,613 )       $ (1,364,441 )       $ —        $ (6,776,054 ) 
  

 

 

       

 

 

       

 

 

       

 

 

  

 

  (a)

See above Schedule of Investments for values in each industry.

 
  (b)

As of September 30, 2018, certain investments of the Trust’s were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

 
  (c)

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

 

 

 

     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 19, 2018

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 19, 2018
By:      /s/ Neal J. Andrews                          
     Neal J. Andrews
     Chief Financial Officer (principal financial officer) of
     BlackRock Enhanced Capital and Income Fund, Inc.
Date: November 19, 2018