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UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
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. (EGF)

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock
Enhanced Government 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: 12/31/2011

Date of reporting period: 03/31/2011

Item 1 – Schedule of Investments


BlackRock Enhanced Government Fund, Inc. (EGF)
Schedule of Investments March 31, 2011 (Unaudited) 
(Percentages shown are based on Net Assets)

    Par   
Asset-Backed Securities (a)    (000)  Value 
First Franklin Mortgage Loan       
Asset-Backed Certificates,       
Series 2005-FF2, Class M2,       
0.69%, 3/25/35  $ 3,220  $ 2,901,168 
GSAA Home Equity Trust,       
Series 2005-1, Class AF2,       
4.32%, 11/25/34    293  294,137 
Securitized Asset-Backed Receivables     
LLC Trust:       
Series 2005-0P1, Class M2,       
0.70%, 1/25/35    2,000  1,542,040 
Series 2005-OP2, Class M1,       
0.68%, 10/25/35    1,025  720,981 
Soundview Home Equity Loan       
Trust, Series 2007-OPT5,       
Class 2A2, 1.20%, 10/25/37    2,500  1,505,218 
Total Asset-Backed Securities – 3.7%    6,963,544 
Non-Agency Mortgage-Backed       
Securities       
Collateralized Mortgage       
Obligations — 2.9%       
Bank of America Mortgage       
Securities Inc., Series 2003-J,       
Class 2A1, 3.22%, 11/25/33 (a)    314  306,750 
Bear Stearns Alt-A Trust,       
Series 2004-13, Class A1,       
0.99%, 11/25/34 (a)    415  378,784 
Countrywide Alternative Loan       
Trust, Series 2006-41CB,       
Class 2A17, 6.00%, 1/25/37    1,011  828,967 
Homebanc Mortgage Trust,       
Series 2005-4, Class A1, 0.52%,       
10/25/35 (a)    1,650  1,253,472 
Thornburg Mortgage Securities Trust (a):     
Series 2006-6, Class A1,       
0.37%, 11/25/46    1,462  1,442,692 
Series 2007-2, Class A2A,       
0.38%, 6/25/37    1,006  981,568 
WaMu Mortgage Pass-Through       
Certificates, Series 2005-AR7,       
Class A1, 2.78%, 8/25/35 (a)    284  280,801 
      5,473,034 
Commercial Mortgage-Backed       
Securities — 4.8%       
Bear Stearns Commercial       
Mortgage Securities,       
Series 2001-T0P2, Class A2,       
6.48%, 2/15/35    297  296,946 

 

Non-Agency Mortgage-Backed  Par   
Securities  (000)  Value 
Commercial Mortgage-Backed     
Securities (concluded)     
Commercial Mortgage Pass-     
Through Certificates,     
Series 2007-C9, Class A2,     
5.81%, 12/10/49 (a)  $ 3,250  $ 3,319,343 
Credit Suisse Mortgage Capital     
Certificates, Series 2007-C5,     
Class A2, 5.59%, 9/15/40  3,400  3,482,860 
LB-UBS Commercial Mortgage     
Trust, Series 2007-C1, Class A2,     
5.32%, 2/15/40  2,000  2,037,173 
    9,136,322 
Interest Only Collateralized     
Mortgage Obligations — 0.0%     
CitiMortgage Alternative Loan     
Trust, Series 2007-A5,     
Class 1A7, 6.00%, 5/25/37  510  48,990 
Total Non-Agency Mortgage-Backed     
Securities – 7.7%    14,658,346 
Preferred Securities     
Capital Trusts     
Diversified Financial     
Services — 1.1%     
JPMorgan Chase Capital XXII,     
6.45%, 1/15/87  2,000  2,012,798 
Electric Utilities — 1.1%     
PPL Capital Funding, 6.70%,     
3/30/67 (a)  2,000  1,972,500 
Insurance — 1.3%     
The Allstate Corp., 6.50%,     
5/15/67 (a)  2,000  2,032,500 
ZFS Finance (USA) Trust V, 6.50%,     
5/09/67 (a)(b)  504  505,260 
    2,537,760 
Total Capital Trusts – 3.5%    6,523,058 

 

Portfolio Abbreviations     
To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated 
according to the following list:     
GO  General Obligation Bonds  LIBOR  London InterBank Offered Rate 

 

BLACKROCK ENHANCED GOVERNMENT FUND, INC. MARCH 31, 2011 1


BlackRock Enhanced Government Fund, Inc. (EGF)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

Trust Preferreds    Shares  Value 
Capital Markets — 1.0%       
Morgan Stanley Capital Trust VIII,       
6.45%, 4/15/67    80,000  $ 1,936,800 
Media — 1.1%       
Comcast Corp., 6.63%, 5/15/56    80,000  2,082,400 
Total Trust Preferreds – 2.1%      4,019,200 
Total Preferred Securities – 5.6%      10,542,258 
    Par   
Taxable Municipal Bonds    (000)   
State of California, GO, Various       
Purpose 3, Mandatory Put       
Bonds, 5.65%, 4/01/39 (a)  $ 1,680  1,761,799 
Total Taxable Municipal Bonds – 0.9%    1,761,799 
U.S. Government Sponsored Agency     
Securities       
Agency Obligations — 3.3%       
Fannie Mae, 5.25%, 8/01/12    2,460  2,602,021 
Federal Farm Credit Bank, 4.55%,       
6/08/20    3,500  3,699,367 
      6,301,388 
Collateralized Mortgage       
Obligations — 11.2%       
Ginnie Mae Mortgage-Backed       
Securities, Class C (a):       
Series 2005-87, 5.27%,       
9/16/34    10,000  10,692,302 
Series 2006-3, 5.24%,       
4/16/39    10,000  10,588,940 
      21,281,242 
Interest Only Collateralized       
Mortgage Obligations — 0.4%       
Ginnie Mae Mortgage-Backed       
Securities (a):       
Series 2006-30, Class IO,       
0.75%, 5/16/46 (a)    8,015  279,112 
Series 2010-162, Class WI,       
4.50%, 6/16/39    2,243  383,741 
      662,853 
Mortgage-Backed       
Securities — 60.5%       
Fannie Mae Mortgage-Backed       
Securities:       
4.00%, 4/01/24 - 10/01/24    7,290  7,526,708 
4.50%, 4/01/39 - 5/15/41 (c)  27,000  27,535,640 
4.99%, 2/01/13    5,079  5,294,833 
5.00%, 11/01/33 - 2/01/40 (d)  20,328  21,406,863 
5.24%, 4/01/12 (d)    7,939  8,111,953 
5.50%, 7/01/17 -       
5/15/41 (c)(d)    27,543  29,626,640 
6.00%, 2/01/36 - 3/01/38    10,989  11,981,945 
6.11%, 2/01/12    2,315  2,370,546 

 

U.S. Government Sponsored Agency  Par   
Securities    (000)  Value 
Mortgage-Backed Securities (concluded)     
Freddie Mac Mortgage-Backed       
Securities, 4.50%, 5/01/34  $ 791  $ 811,717 
Ginnie Mae Mortgage-Backed       
Securities, 5.00%, 11/15/35    29  30,986 
      114,697,831 
Total U.S. Government Sponsored       
Agency Securities – 75.4%      142,943,314 
U.S. Treasury Obligations       
U.S. Treasury Bonds:       
4.38%, 5/15/40 (e)    10,000  9,776,600 
3.88%, 8/15/40 (e)    12,000  10,738,128 
4.25%, 11/15/40 (d)    6,500  6,216,639 
U.S. Treasury Notes:       
1.88%, 6/30/15 (e)    29,125  29,109,069 
2.13%, 2/29/16    1,245  1,241,109 
2.50%, 6/30/17 (d)(e)    18,000  17,803,125 
2.63%, 11/15/20 (e)    8,940  8,342,137 
Total U.S. Treasury Obligations – 43.9%    83,226,807 
Total Long-Term Investments       
(Cost – $259,313,585) – 137.2%      260,096,068 
Short-Term Securities    Shares   
BlackRock Liquidity Funds,       
TempFund, Institutional Class,       
0.14% (f)(g)    11,139,924  11,139,924 
Total Short-Term Securities       
(Cost – $11,139,924) – 5.9%      11,139,924 
Total Investments Before Options Written   
(Cost – $270,453,509*) – 143.1%    271,235,992 
    Notional   
    Amount   
Options Written    (000)   
Over-the-Counter Call       
Swaptions — (0.2)%       
Pay a fixed rate of 0.81% and receive     
a floating rate based on 3-month     
LIBOR, Expires 4/27/11, Broker       
Deutsche Bank AG    $ 25,000  (5,345) 
Pay a fixed rate of 0.90% and receive     
a floating rate based on 3-month     
LIBOR, Expires 4/27/11, Broker       
UBS AG    25,000  (14,800) 
Pay a fixed rate of 2.30% and receive     
a floating rate based on 3-month     
LIBOR, Expires 4/27/11, Broker       
Citibank NA    10,000  (22,821) 

 

2 BLACKROCK ENHANCED GOVERNMENT FUND, INC. MARCH 31, 2011


BlackRock Enhanced Government Fund, Inc. (EGF)
Schedule of Investments (continued)
(Percentages shown are based on Net Assets)

    Notional   
    Amount   
Options Written    (000)  Value 
Over-the-Counter Call Swaptions       
(concluded)       
Pay a fixed rate of 2.30% and receive       
a floating rate based on 3-month       
LIBOR, Expires 4/27/11, Broker       
UBS AG  $ 40,000  $ (91,284) 
Pay a fixed rate of 3.45% and receive       
a floating rate based on 3-month       
LIBOR, Expires 4/27/11, Broker       
UBS AG    20,000  (94,586) 
Pay a fixed rate of 4.20% and receive       
a floating rate based on 3-month       
LIBOR, Expires 4/27/11, Broker       
UBS AG    5,000  (47,729) 
Total Options Written       
(Premiums Received – $269,100) – (0.2)%    (276,565) 
Total Investments, Net of Options Written – 142.9%  270,959,427 
Liabilities in Excess of Other Assets – (42.9)%  (81,377,403) 
Net Assets – 100.0%      $ 189,582,024 


* The cost and unrealized appreciation (depreciation) of investments as of
March 31, 2011, as computed for federal income tax purposes were as
follows:

Aggregate cost  $ 270,454,574 
Gross unrealized appreciation  $     6,792,924 
Gross unrealized depreciation (6,011,506)
Net  unrealized appreciation   $       781,418 


(a) Variable rate security. Rate shown is as of report date.
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration to qualified institutional investors.
(c) Represents or includes a to-be-announced (“TBA”) transaction. Unsettled
TBA transactions as of report date were as follows:
Unrealized

  Market  Appreciation 
Counterparty  Value  (Depreciation) 
CitiGroup Global Markets, Inc.  $    853,000  $    3,000 
Credit Suisse Securities (USA) LLC  $ 4,766,829  $(35,983) 
Deutsche Bank Securities, Inc.  $ 1,919,250  $    6,469 
JP Morgan Securities, Inc.  $     959,625 $   3,515 
Morgan Stanley & Co., Inc.  $ 1,066,250  $    3,750 


(d) All or a portion of security has been pledged as collateral in connection
with swaps.
(e) All or a portion of security has been pledged as collateral in connection
with open reverse repurchase agreements.
(f) 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:

     Shares Held  Shares Held   
     at December  at March 31,   
Affiliate       31, 2010                     Net Activity  2011  Income 
BlackRock       
Liquidity Funds,       
TempFund,       
Institutional       
Class      13,611,942                 (2,472,018)  11,139,924  $ 3,666 


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

BLACKROCK ENHANCED GOVERNMENT FUND, INC. MARCH 31, 2011 3


 BlackRock Enhanced Government Fund, Inc. (EGF)
Schedule of Investments (continued)

• Reverse repurchase agreements outstanding as of March 31, 2011 were as follows:       
  Interest  Trade  Maturity  Net Closing    Face 
Counterparty  Rate  Date  Date  Amount    Amount 
Barclays Capital, Inc.  0.24%  11/01/10  Open  $   $30,399,219 
Credit Suisse Securities (USA) LLC  0.16%  1/25/11  Open      10,875,000 
Credit Suisse Securities (USA) LLC  0.17%  1/25/11  Open      9,800,000 
Barclays Capital, Inc.  0.19%  3/01/11  Open  7,502,477    7,471,875 
Total        $ $ 58,546,094 

 

•  Interest rate swaps outstanding as of March 31, 2011 were as follows:       
          Notional   
  Fixed  Floating    Expiration  Amount  Unrealized 
  Rate  Rate  Counterparty  Date  (000)  Depreciation 
  4.63% 1  3-month LIBOR  Deutsche Bank AG  3/18/13  $ 50,000  $ (3,596,436) 
  5.71% 1  3-month LIBOR  Deutsche Bank AG  6/22/17  $ 25,000  (4,183,661) 
  5.96% 1  3-month LIBOR  Deutsche Bank AG  12/27/37  $ 23,900  (6,619,496) 
  Total          $ (14,399,593) 
  1Pays fixed interest rate and receives floating rate.       

 

•Fair Value Measurements - Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs
are summarized in three broad levels for financial reporting 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
liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-
corroborated inputs)

•Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available
(including the Fund's own assumptions used in determining the fair value of investments and derivative financial instruments)

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 financial instruments and other significant accounting policies,
please refer to the Fund’s most recent financial statements as contained in its annual report.

The following tables summarize the inputs used as of March 31, 2011 in determining the fair valuation of the Fund's investments and derivative
financial instruments:

Valuation Inputs  Level 1  Level 2   Level 3  Total 
Assets:         
Investments:         
Long-Term Investments:         
Asset-Backed Securities  --  $ 6,963,544  --  $ 6,963,544 
Non-Agency Mortgage-Backed Securities  --  14,658,346  --  14,658,346 
Preferred Securities  $ 4,019,200  6,523,058  --  10,542,258 
Taxable Municipal Bonds  --  1,761,799  --  1,761,799 
U.S. Government Sponsored Agency Securities  --  142,943,314  --  142,943,314 
U.S. Treasury Obligations  --  83,226,807  --  83,226,807 
Short-Term Securities:         
Money Market Funds  11,139,924  --  --  11,139,924 
Total  $ 15,159,124  $ 256,076,868  -- $ 271,235,992 

 

4 BLACKROCK ENHANCED GOVERNMENT FUND, INC. MARCH 31, 2011


BlackRock Enhanced Government Fund, Inc. (EGF)
Schedule of Investments(concluded)

Valuation Inputs  Level 1  Level 2  Level 3  Total 
Derivative Financial Instruments1         
Liabilities:         
Interest rate contracts  --  $ (14,676,158)   -- $ (14,676,158) 
1 Derivative financial instruments are swaps and options. Swaps are valued at the unrealized appreciation/depreciation on the instrument and 
options are shown at value.         

 

BLACKROCK ENHANCED GOVERNMENT FUND, INC. MARCH 31, 2011 5


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
31940 Act3)) areeffective 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 Government Fund, Inc.

By: /S/ John M. Perlowski
John M. Perlowski
Chief Executive Officer of
BlackRock Enhanced Government Fund, Inc.

Date: May 25, 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 Government Fund, Inc.

Date: May 25, 2011

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

Date: May 25, 2011