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 811-21793
Name of Fund: BlackRock Enhanced Government Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, BlackRock Enhanced Government Fund, Inc., 800 Scudders Mill
Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011,
Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 12/31/2006
Date of reporting period: 07/01/06 - 09/30/06
Item 1 - Schedule of Investments
BlackRock Enhanced Government Fund, Inc.
Schedule of Investments as of September 30, 2006 (in U.S. dollars)
Face Interest Maturity
Issue Amount Rate Date(s) Value
Government & Agency Obligations - 25.6%
Fannie Mae $ 5,000,000 2.375 % 2/15/2007 $ 4,946,710
3,500,000 5.25 4/15/2007 3,499,010
3,050,000 6.375 6/15/2009 3,160,630
2,000,000 6.625 9/15/2009 2,093,068
1,375,000 7.25 1/15/2010 1,471,661
3,000,000 6.00 5/15/2011 3,133,968
Federal Farm Credit Bank 3,500,000 4.55 6/08/2020 3,304,959
Federal Home Loan Bank System 1,000,000 4.125 10/19/2007 989,897
Freddie Mac 1,500,000 5.875 3/21/2011 1,546,545
1,000,000 6.25 7/15/2032 1,158,437
U.S. Treasury Bonds 789,000 8.125 8/15/2019 1,040,494
1,220,000 8.50 2/15/2020 1,662,535
2,500,000 6.25 5/15/2030 3,004,493
1,500,000 4.50 2/15/2036 1,437,305
U.S. Treasury Notes 8,000,000 6.50 10/15/2006 8,002,816
11,500,000 3.625 6/30/2007 (d) 11,383,206
1,990,000 3.00 2/15/2008 1,942,815
4,800,000 8.75 5/15/2020 6,680,250
Total Government & Agency Obligations (Cost - $60,703,970) - 25.6% 60,458,799
Government Agency Mortgage-Backed Securities** - 58.7%
Fannie Mae Guaranteed Pass-Through Certificates 9,201,021 4.50 4/01/2020-11/01/2020 8,880,651
1,955,458 4.66 7/01/2010 1,919,439
6,456,473 4.681 2/01/2013 6,405,273
9,222,840 5.32 10/01/2035 (a) 9,123,866
21,084,468 5.50 11/01/2020-11/01/2035 20,819,149
2,848,751 5.707 2/01/2012 2,958,954
2,371,342 6.00 10/01/2035 2,382,881
5,626,025 6.60 1/01/2011 5,853,674
Fannie Mae Trust Series 2006-37 Class DB 3,000,000 6.00 4/25/2035 3,018,000
Fannie Mae Trust Series 2006-58 Class DA 2,894,459 5.50 9/25/2025 2,891,952
Freddie Mac Mortgage Participation Certificates 1,116,690 4.50 5/01/2034 1,047,455
4,723,904 5.00 5/01/2020 4,642,134
15,662,961 5.00 11/01/2035 15,072,329
4,729,915 5.011 10/01/2035 (a) 4,657,250
689,535 5.50 10/01/2035 680,346
2,633,150 6.00 10/01/2035 2,647,615
5,344,106 6.50 9/01/2035-10/01/2035 5,444,118
Freddie Mac Multiclass Certificates Series 2958 Class MD 5,000,000 5.50 1/15/2031 4,963,908
Freddie Mac Multiclass Certificates Series 3136 Class PD 1,674,840 6.00 12/15/2034 1,689,118
Freddie Mac Multiclass Certificates Series 3173 Class PE 3,000,000 6.00 4/15/2035 3,020,994
Ginnie Mae MBS Certificates 3,137,762 5.00 11/15/2035 3,049,189
3,319,783 5.50 11/15/2035 3,297,956
Ginnie Mae Trust Series 2005-87 Class C 10,000,000 5.328 9/16/2034 (a) 9,965,860
Ginnie Mae Trust Series 2006-3 Class C 10,000,000 5.235 4/16/2039 (a) 9,778,301
Ginnie Mae Trust Series 2006-5 Class A 3,932,883 4.241 7/16/2029 3,843,063
Government Agency Mortgage-Backed Securities**
Ginnie Mae Trust Series 2006-30 Class IO 8,982,230 0.80 5/16/2046 (e) 510,999
Total Government Agency Mortgage-Backed Securities (Cost - $139,068,485) - 58.7% 138,564,474
Non-Government Agency Mortgage-Backed Securities** - 14.7%
Banc of America Alternative Loan Trust Series 2005-10 Class 1CB3 1,245,000 5.50 11/25/2035 1,215,633
CS First Boston Mortgage Securities Corp. Series 2005-11 Class 6A5 2,083,595 6.00 12/25/2035 2,108,007
CitiMortgage Alternative Loan Trust Series 2006-A2 Class A2 2,478,600 6.00 5/25/2036 2,504,161
Credit Suisse Mortgage Capital Certificates Series 2006-C3 Class A3 2,850,000 5.828 6/15/2038 (a) 2,962,593
Freddie Mac Multiclass Certificates Series 3081 Class CP 1,600,000 5.50 10/15/2034 1,567,876
Greenwich Capital Commercial Funding Corp. Series 2006-GG7 1,500,000 5.912 7/10/2038 (a) 1,570,470
JPMorgan Chase Commercial Mortgage Securities Corp. Series 2006-CB14
Class A2 1,400,000 5.437 12/12/2044 1,412,457
JPMorgan Chase Commercial Mortgage Securities Corp. Series 2006-CB15
Class A4 2,500,000 5.814 6/12/2043 (a) 2,584,940
JPMorgan Chase Commercial Mortgage Securities Corp. Series 2006-LDP7
Class A4 2,000,000 5.876 4/15/2045 (a) 2,089,100
JPMorgan Mortgage Trust Series 2005-A2 Class 4A1 4,277,408 5.209 4/25/2035 (a) 4,184,524
LB-UBS Commercial Mortgage Trust Series 2004-C6 Class A3 5,000,000 4.547 8/15/2029 4,884,811
Master Asset Securitization Trust Series 2003-9 Class 2A8 1,550,000 5.50 10/25/2033 1,512,639
Residential Funding Mortgage Security I Series 2006-S1 Class 1A5 1,677,000 5.25 1/25/2036 1,667,578
Residential Funding Mortgage Security I Series 2006-S3 Class A2 1,952,000 5.50 3/25/2036 1,891,588
Wells Fargo Mortgage Backed Securities Trust Series 2005-13 Class A1 2,747,109 5.00 11/25/2020 2,719,585
Total Non-Government Agency Mortgage-Backed Securities (Cost - $34,197,895) - 14.7% 34,875,962
Beneficial
Interest
Short-Term Securities
$ 2,026,019 BlackRock Liquidity Series, LLC Cash Sweep Series I, 5.18% (b)(c) 2,026,019
11,206,250 BlackRock Liquidity Series, LLC Money Market Series, 5.33% (b)(c)(g) 11,206,250
Total Short-Term Securities (Cost - $13,232,269) - 5.6% 13,232,269
Total Investments (Cost - $247,202,619) - 104.6% 247,131,504
Number of
Contracts Options Written
Call Options Written - (0.4%)
2,300 FNMA, expiring October 2006 at USD 95.656 (137,471)
1,400 FNMA, expiring October 2006 at USD 97.859, Broker Lehman Brothers Special Finance (72,688)
2,800 FNMA, expiring October 2006 at USD 98.015, Broker Royal Bank of Scotland Group Plc (163,660)
130,000 FNMA, expiring October 2006 at USD 99.593, Broker Lehman Brothers Special Finance (56,264)
1,850 FNMA, expiring October 2006 at USD 100.02, Broker Royal Bank of Scotland Group Plc (87,690)
6+ Pay a fixed rate of 5.01% and receive a floating rate based on 3-month LIBOR,
expiring November 2006, Broker UBS Warburg (f) (17,760)
7+ Pay a fixed rate of 5.025% and receive a floating rate based on 3-month LIBOR,
expiring November 2006, Broker JPMorgan Chase (f) (30,875)
11+ Pay a fixed rate of 5.05% and receive a floating rate based on 3-month LIBOR,
expiring November 2006, Broker UBS Warburg (f) (22,000)
3+ Pay a fixed rate of 5.13% and receive a floating rate based on 3-month LIBOR,
expiring November 2006, Broker UBS Warburg (f) (19,875)
2+ Pay a fixed rate of 5.25% and receive a floating rate based on 3-month LIBOR,
expiring November 2006, Broker JPMorgan Chase (f) (21,810)
300,000 U.S. Treasury Notes, expiring October 2006 at USD 99.632, Broker Lehman Brothers
Special Finance (176,340)
180,000 U.S. Treasury Notes, expiring October 2006 at USD 100.15, Broker Lehman Brothers
Special Finance (29,592)
70,000 U.S. Treasury Notes, expiring October 2006 at USD 100.41, Broker Lehman Brothers
Special Finance (22,225)
150,000 U.S. Treasury Notes, expiring October 2006 at USD 101, Broker Lehman Brothers
Special Finance (146,820)
Total Options Written (Premiums Received - $622,398) - (0.4%) (1,005,070)
Total Investments, Net of Options Written (Cost - $246,580,221*) - 104.2% 246,126,434
Liabilities in Excess of Other Assets - (4.2%) (10,010,893)
--------------
Net Assets - 100.0% $ 236,115,541
==============
* The cost and unrealized appreciation (depreciation) of investments,
net of options written, as of September 30, 2006, as computed for
federal income tax purposes, were as follows:
Aggregate cost $ 246,580,221
================
Gross unrealized appreciation $ 934,496
Gross unrealized depreciation (1,388,283)
----------------
Net unrealized depreciation $ (453,787)
================
** Mortgage-Backed Securities are subject to principal paydowns as a result
of prepayments or refinancing of the underlying mortgage instructions.
As a result the average life may be substantially less than the original
maturity.
+ One contract represents a notional amount of $1,000,000.
(a) Floating rate security.
(b) Investments in companies considered to be an affiliate of the Fund,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Net Interest
Affiliate Activity Income
BlackRock Liquidity Series, LLC
Cash Sweep Series I $ 105,769 $ 189,689
BlackRock Liquidity Series, LLC
Money Market Series $ (25,177,500) $ 10,607
(c) Represents the current yield as of September 30, 2006.
(d) Security, or a portion of security, is on loan.
(e) Represents the interest-only portion of a mortgage-backed security.
(f) This European style swaption, which can be exercised only on the
expiration date, represents a standby commitment whereby the writer
of the option is obligated to enter into a predetermined interest
rate swap contract upon exercise of swaption.
(g) Security was purchased with the cash proceeds from securities loans.
Item 2 - Controls and Procedures
2(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our
evaluation of these controls and procedures as of a date within 90
days prior to the filing date of this report.
2(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the last fiscal quarter of
the period covered by this report that has materially affected, or is
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 Government Fund, Inc.
By: /s/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.
Chief Executive Officer
BlackRock Enhanced Government Fund, Inc.
Date: November 17, 2006
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/ Robert C. Doll, Jr.
-----------------------
Robert C. Doll, Jr.
Chief Executive Officer
BlackRock Enhanced Government Fund, Inc.
Date: November 17, 2006
By: /s/ Donald C. Burke
-----------------------
Donald C. Burke
Chief Financial Officer
BlackRock Enhanced Government Fund, Inc.
Date: November 17, 2006