BlackRock Capital Appreciation Fund NCSR Certified annual shareholder report (management investment company)

BlackRock Capital Appreciation Fund N-CSRCertified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number 811-06669

Name of Fund: BlackRock Capital Appreciation Fund, Inc.

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Capital

Appreciation Fund, Inc., 55 East 52^nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800) 441-7762

Date of fiscal year end: 09/30/2012

Date of reporting period: 09/30/2012

Item 1 – Report to Stockholders


		September 30, 2012

Annual Report

BlackRock Capital Appreciation Fund, Inc.


Not FDIC Insured § No Bank Guarantee § May Lose Value

Table of Contents


	Page
Dear Shareholder		3
Annual Report:
Fund Summary		4
About Fund Performance		6
Disclosure of Expenses		6
Financial Statements:
Schedule of Investments		7
Statement of Assets and Liabilities		10
Statement of Operations		11
Statements of Changes in Net Assets		12
Financial Highlights		13
Notes to Financial Statements		17
Report of Independent Registered Public Accounting Firm		23
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement		24
Officers and Directors		28
Additional Information		31
A World-Class Mutual Fund Family		33



2	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Dear Shareholder

Late in the summer of 2011, financial markets were upended by sovereign debt turmoil in the United States and Europe as well as growing concerns about the future of the global economy. Investor confidence had crumbled. However, the fourth quarter of 2011 brought improving economic data and more concerted efforts among European leaders toward stemming the region’s debt crisis, gradually drawing investors back to the markets. Improving sentiment carried over into early 2012 as investors felt some relief from the world’s financial woes. Volatility abated and risk assets (including stocks, commodities and high yield bonds) moved boldly higher through the first two months of 2012, while climbing Treasury yields pressured higher-quality fixed income assets.

Markets reversed course in the spring when Europe’s debt problems boiled over once again. High levels of volatility returned as political instability in Greece threatened the country’s membership in the eurozone. Spain faced severe deficit issues while the nation’s banks clamored for liquidity. Yields on Spanish and Italian government debt rose to levels deemed unsustainable. European leaders conferred and debated vehemently over the need for fiscal integration among the 17 nations comprising the euro currency bloc as a means to resolve the crisis for the long term.

Alongside the drama in Europe, investors were discouraged by gloomy economic reports from various parts of the world. A slowdown in China, a key powerhouse for global growth, became particularly worrisome. In the United States, disappointing jobs reports dealt a crushing blow to investor sentiment. Risk assets sold off in the second quarter as investors again retreated to safe haven assets.

Despite ongoing concerns about the health of the global economy and the debt crisis in Europe, most asset classes enjoyed a robust summer rally powered mainly by expectations for policy stimulus from central banks in Europe and the United States. Although global economic data continued to be mixed, the spate of downside surprises seen in the second quarter had receded and, outside of Europe, the risk of recession largely subsided. Additionally, in response to growing debt pressures, the European Central Bank allayed investors’ fears by stating its conviction to hold the eurozone together. Early in September, the European Central Bank announced a plan to purchase sovereign debt in the eurozone’s most troubled nations. Later that month, the US Federal Reserve announced its long-awaited - and surprisingly aggressive – stimulus program, committing to purchase $40 billion of agency mortgage-backed securities per month until the US economy exhibits enough strength to sustain real growth and improving labor market conditions. These central bank actions boosted risk assets globally as investors increased their risk appetites in their search for higher returns.

All asset classes performed well for the 12-month period ended September 30, 2012, with particularly strong returns from US stocks and high yield bonds. For the six-month period ended September 30, 2012, fixed income investments outperformed equities. US Treasury bonds posted exceptional gains by historical standards and outperformed investment-grade corporate bonds and tax-exempt municipals. High yield bonds also generated solid returns. US stocks finished the six-month period with modest gains, while international and emerging market stocks lagged other asset classes amid ongoing uncertainty. Near-zero short term interest rates continued to keep yields on money market securities near their all-time lows.

The financial world is more uncertain than ever, but there are new avenues of opportunity – new ways to invest and new markets in which to invest. We believe it’s our responsibility to help investors adapt to today’s new world of investing and build the portfolios these times require. We encourage you to visit www.blackrock.com/newworld for more information.

Sincerely,

LOGO

Rob Kapito

President, BlackRock Advisors, LLC

LOGO

“The financial world is more uncertain than ever, but there are new avenues of opportunity.”

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of September 30, 2012


	6-month			12-month
US large cap equities (S&P 500^® Index)		3.43	%		30.20	%
US small cap equities (Russell 2000^® Index)		1.60			31.91
International equities (MSCI Europe, Australasia, Far East Index)		(0.70	)		13.75
Emerging market equities (MSCI Emerging Markets Index)		(1.84	)		16.93
3-month Treasury bill (BofA Merrill Lynch 3-Month US Treasury Bill Index)		0.06			0.07
US Treasury securities (BofA Merrill Lynch 10- Year US Treasury Index)		6.78			5.66
US investment grade bonds (Barclays US Aggregate Bond Index)		3.68			5.16
Tax-exempt municipal bonds (S&P Municipal Bond Index)		4.50			8.84
US high yield bonds (Barclays US Corporate High Yield 2% Issuer Capped Index)		6.40			19.35

Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.



		THIS PAGE NOT PART OF YOUR FUND REPORT				3

Fund Summary as of September 30, 2012

Investment Objective

BlackRock Capital Appreciation Fund, Inc.’s (the “Fund”) investment objective is to seek long-term growth of capital.

Portfolio Management Commentary

How did the Fund perform?

—

For the 12-month period ended September 30, 2012, the Fund generated a positive double-digit return, but underperformed its benchmark, the Russell 1000^® Growth Index, and the broad-market S&P 500^® Index. The following discussion of relative performance pertains to the Russell 1000^® Growth Index.

What factors influenced performance?

—

Stock selection in the consumer discretionary sector had the most notable positive impact on relative performance. The Fund’s investments in The Home Depot, Inc. and Comcast Corp. each rose by more than 50% during the period. In the hotels, restaurants & leisure industry, an underweight position in McDonald’s Corp. as well as an opportunistic investment in Chipotle Mexican Grill, Inc. generated favorable results.

—

Also contributing positively, was stock selection in the information technology (“IT”) sector, where the Fund’s holdings in the internet software & services industry added the most value, with shares of Rackspace Hosting, Inc. and eBay, Inc. increasing during the period. The Fund’s overall largest holding, Apple, Inc., rose 75% and helped compensate for underperformance among the Fund’s semiconductor holdings.

—

Detracting from performance was stock selection in the health care sector. The Fund experienced weakness across several industries, but most significantly within biotechnology where positions in Vertex Pharmaceuticals, Inc. and Celgene Corp. declined during the period. Elsewhere in the sector, investments in Johnson & Johnson and AmerisourceBergen Corp. hindered returns.

—

The Fund’s consumer staples holdings also hurt performance for the period. Shares of Green Mountain Coffee Roasters, Inc. sold off sharply due to fraud allegations, weaker earnings and concerns about future earnings growth. In addition, the Fund’s position in The Procter & Gamble Co. contributed to relative underperformance as these shares lagged the broader market rally.

—

Stock selection in the energy sector had a negative impact on performance during the period. Concerns about a global economic slowdown and slowing commodities demand in China pressured shares of coal miner Alpha Natural Resources, Inc. Despite performing well earlier in the period, Range Resources Corp. detracted for the overall period as historically warm weather in the United States during the winter months led to lower prices for natural gas and shares of natural gas producers.

Describe recent portfolio activity.

—

During the 12-month period, the Fund increased its investments in health care and industrials, while reducing its allocations to the energy and consumer staples sectors. Key positions initiated during the period included Express Scripts Holding Co. and Eaton Corp. The largest sales included The Procter & Gamble Co., Exxon Mobil Corp. and Schlumberger Ltd.

Describe portfolio positioning at period end.

—

As of period end, the Fund’s notable sector overweights relative to the Russell 1000^® Growth Index included health care and industrials, while the Fund held a significant underweight to the consumer staples sector.

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.

Portfolio Information


Ten Largest Holdings	Percent of Long-Term Investments
Apple, Inc.		9	%
QUALCOMM, Inc.		4
Amazon.com, Inc.		4
The Boeing Co.		4
Google, Inc., Class A		4
Microsoft Corp.		3
The Coca-Cola Co.		3
Danaher Corp.		3
Costco Wholesale Corp.		3
Express Scripts Holding Co.		3


Sector Allocation	Percent of Long-Term Investments
Information Technology		34	%
Consumer Discretionary		16
Health Care		15
Industrials		14
Consumer Staples		8
Financials		4
Energy		4
Materials		3
Telecommunication Services		2

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.



4	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Total Return Based on a $10,000 Investment

LOGO

Assuming maximum sales charges, if any, transaction costs and other operating expenses, including investment advisory fees. Institutional Shares do not have a sales charge.

The Fund invests primarily in common stock of US companies that Fund management believes have shown above-average growth rates in earnings over the long-term.

This unmanaged broad-based index is a subset of the Russell 1000^®Index consisting of those Russell 1000^® securities with greater-than-average growth orientation.

⁴

This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly New York Stock Exchange (“NYSE”) issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.

Performance Summary for the Period Ended September 30, 2012


				Average Annual Total Returns⁵
				1 Year						5 Years						10 Years
	6-Month Total Returns			w/o sales charge			w/sales charge			w/o sales charge			w/sales charge			w/o sales charge			w/sales charge
BlackRock		0.04	%		24.00	%		N/A			2.20	%		N/A			8.14	%		N/A
Institutional		0.00			23.81			N/A			2.07			N/A			7.98			N/A
Investor A		(0.12	)		23.58			17.10	%		1.74			0.66	%		7.72			7.14	%
Investor B		(0.62	)		22.30			17.80			0.84			0.45			7.05			7.05
Investor C		(0.52	)		22.52			21.52			1.00			1.00			6.94			6.94
Class R		(0.32	)		23.21			N/A			1.40			N/A			7.25			N/A
Russell 1000^® Growth Index		1.84			29.19			N/A			3.24			N/A			8.41			N/A
S&P 500^® Index		3.43			30.20			N/A			1.05			N/A			8.01			N/A

⁵

Assuming maximum sales charges, if any. Average annual total returns with and without sales charges reflect reductions for distribution and service fees. See “About Fund Performance” on page 6 for a detailed description of share classes, including any related sales charges and fees.

N/A - Not applicable as share class and index do not have a sales charge.

Past performance is not indicative of future results.

Expense Example


	Actual									Hypothetical⁷
	Beginning Account Value April 1, 2012			Ending Account Value September 30, 2012			Expenses Paid During the Period⁶			Beginning Account Value April 1, 2012			Ending Account Value September 30, 2012			Expenses Paid During the Period⁶			Annualized Expense Ratio
BlackRock		$	1,000.00		$	1,000.40		$	3.60		$	1,000.00		$	1,021.40		$	3.64		0.72	%
Institutional		$	1,000.00		$	1,000.00		$	4.50		$	1,000.00		$	1,020.50		$	4.55		0.90	%
Investor A		$	1,000.00		$	998.80		$	5.45		$	1,000.00		$	1,019.55		$	5.50		1.09	%
Investor B		$	1,000.00		$	993.80		$	10.17		$	1,000.00		$	1,014.80		$	10.28		2.04	%
Investor C		$	1,000.00		$	994.80		$	9.53		$	1,000.00		$	1,015.45		$	9.62		1.91	%
Class R		$	1,000.00		$	996.80		$	7.04		$	1,000.00		$	1,017.95		$	7.11		1.41	%

⁶

For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period shown).

⁷

Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 366.

See “Disclosure of Expenses” on page 6 for further information on how expenses were calculated.



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	5

About Fund Performance

•

BlackRock and Institutional Shares are not subject to any sales charge. These shares bear no ongoing distribution or service fees and are available only to eligible investors. Prior to June 28, 2010, BlackRock Shares performance results are those of the Institutional Shares of BlackRock Capital Appreciation Portfolio, a series of BlackRock^SM Funds (the “Predecessor Fund”). Prior to June 28, 2010, Institutional Shares performance results are those of BlackRock Shares restated to reflect Institutional Share fees.

•

Investor A Shares are subject to a maximum initial sales charge (front-end load) of 5.25% and a service fee of 0.25% per year (but no distribution fee).

•

Investor B Shares are subject to a maximum contingent deferred sales charge (“CDSC”) of 4.50% declining to 0% after six years. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year. These shares automatically convert to Investor A Shares after approximately eight years. (There is no initial sales charge for automatic share conversions.) All returns for periods greater than eight years reflect this conversion. These shares are only available through exchanges, dividend reinvestments by existing shareholders or for purchase by certain qualified employee benefit plans.

•

Investor C Shares are subject to a 1.00% CDSC if redeemed within one year of purchase. In addition, these shares are subject to a distribution fee of 0.75% per year and a service fee of 0.25% per year.

•

Class R Shares are not subject to any sales charge. These shares are subject to a distribution fee of 0.25% per year and a service fee of 0.25% per year. These shares are available only to certain retirement and other similar plans. Prior to June 28, 2010, Class R Shares performance results are those of BlackRock Shares (which have no distribution or service fees) restated to reflect Class R Share fees.

Performance information reflects past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Refer to www.blackrock.com/funds to obtain performance data current to the most recent month-end. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Figures shown in the performance tables on the previous page assume reinvestment of all dividends and distributions, if any, at net asset value (“NAV”) on the ex-dividend date. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.

Performance for the Fund for periods prior to June 28, 2010 is based on performance of the Predecessor Fund, that reorganized with the Fund on that date.

Performance for the Fund for the periods prior to January 28, 2005 is based on performance of a certain former State Street Research mutual fund that reorganized with the Predecessor Fund on that date.

BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, waived and/or reimbursed a portion of the Fund’s expenses. Without such waiver and/or reimbursement, the Fund’s performance would have been lower. The Manager has contractually agreed to waive fees and/or reimburse expenses until February 1, 2022. On February 1 of each year, the waiver agreement will renew automatically so that the agreement will have a perpetual ten year term. This agreement may be terminated upon 90 days’ notice by a majority of the Independent Directors or by a majority shareholder vote. Dividends paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.

Disclosure of Expenses

Shareholders of the Fund may incur the following charges: (a) expenses related to transactions, including sales charges and exchange fees; and (b) operating expenses, including advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses and other Fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on April 1, 2012 and held through September 30, 2012) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

The expense example provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.”

The expense example also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges or exchange fees, if any. Therefore, the hypothetical example is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.



6	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Schedule of Investments September 30, 2012

(Percentages shown are based on Net Assets)


Common Stocks	Shares		Value
Aerospace & Defense – 6.0%
The Boeing Co.		2,927,800	$	203,833,436
Precision Castparts Corp.		327,100		53,428,514
United Technologies Corp.		824,400		64,542,276

				321,804,226
Air Freight & Logistics – 0.6%
United Parcel Service, Inc., Class B		471,100		33,716,627
Auto Components – 0.3%
Allison Transmission Holdings, Inc. (a)		906,200		18,232,744
Automobiles – 0.6%
Tesla Motors, Inc. (a)(b)		1,141,700		33,428,976
Beverages – 4.4%
The Coca-Cola Co.		3,863,808		146,554,237
PepsiCo, Inc.		1,237,300		87,563,721

				234,117,958
Biotechnology – 5.3%
Alexion Pharmaceuticals, Inc. (a)(b)		504,900		57,760,560
ARIAD Pharmaceuticals, Inc. (b)		1,040,800		25,213,380
Biogen Idec, Inc. (b)		458,000		68,347,340
Gilead Sciences, Inc. (a)(b)		1,768,700		117,317,871
Regeneron Pharmaceuticals, Inc. (a)(b)		120,096		18,333,855

				286,973,006
Building Products – 0.4%
Masco Corp.		1,288,289		19,388,749
Capital Markets – 1.7%
The Goldman Sachs Group, Inc.		536,500		60,989,320
Jefferies Group, Inc.		2,220,300		30,395,907

				91,385,227
Chemicals – 2.5%
Celanese Corp.		915,800		34,717,978
Monsanto Co.		1,066,500		97,072,830

				131,790,808
Commercial Banks – 1.4%
Wells Fargo & Co.		2,234,300		77,150,379
Communications Equipment – 5.1%
F5 Networks, Inc. (a)(b)		507,100		53,093,370
QUALCOMM, Inc.		3,520,000		219,964,800

				273,058,170
Computers & Peripherals – 11.7%
Apple, Inc.		755,160		503,888,062
EMC Corp. (a)(b)		3,541,000		96,563,070
Fusion-io, Inc. (a)(b)		926,210		28,036,377

				628,487,509
Diversified Telecommunication Services – 1.9%
Level 3 Communications, Inc. (a)(b)		1,026,300		23,574,111
Verizon Communications, Inc.		1,694,600		77,222,922

				100,797,033
Electrical Equipment – 0.7%
Roper Industries, Inc.		353,700		38,868,093
Energy Equipment & Services – 2.1%
National Oilwell Varco, Inc.		886,500		71,017,515
Noble Corp.		1,210,400		43,308,112

				114,325,627


Common Stocks	Shares		Value
Food & Staples Retailing – 3.3%
Costco Wholesale Corp.		1,377,200	$	137,892,150
Whole Foods Market, Inc.		415,500		40,469,700

				178,361,850
Health Care Equipment & Supplies – 1.1%
Intuitive Surgical, Inc. (a)(b)		122,000		60,466,860
Health Care Providers & Services – 2.5%
Express Scripts Holding Co. (b)		2,148,640		134,655,269
Health Care Technology – 0.8%
Cerner Corp. (a)(b)		577,100		44,673,311
Hotels, Restaurants & Leisure – 3.9%
Las Vegas Sands Corp.		1,292,200		59,919,314
McDonald’s Corp.		742,600		68,133,550
Starbucks Corp.		1,580,080		80,189,060

				208,241,924
Industrial Conglomerates – 2.7%
Danaher Corp.		2,613,844		144,153,497
Internet & Catalog Retail – 5.3%
Amazon.com, Inc. (b)		811,340		206,339,989
priceline.com, Inc. (a)(b)		128,900		79,754,297

				286,094,286
Internet Software & Services – 5.7%
eBay, Inc. (b)		1,737,100		84,093,011
Google, Inc., Class A (a)(b)		256,326		193,397,967
Rackspace Hosting, Inc. (a)(b)		418,434		27,654,303

				305,145,281
IT Services – 1.4%
Visa, Inc., Class A		556,100		74,673,108
Machinery – 3.8%
Eaton Corp.		1,396,900		66,017,494
Stanley Black & Decker, Inc.		1,233,300		94,039,125
Terex Corp. (a)(b)		1,871,845		42,266,260

				202,322,879
Media – 2.3%
CBS Corp., Class B		1,158,100		42,073,773
Comcast Corp., Class A		2,237,600		80,038,952

				122,112,725
Oil, Gas & Consumable Fuels – 1.7%
Anadarko Petroleum Corp.		745,900		52,153,328
Noble Energy, Inc.		435,100		40,338,121

				92,491,449
Personal Products – 0.4%
Herbalife Ltd. (a)		462,277		21,911,930
Pharmaceuticals – 4.9%
Eli Lilly & Co.		1,584,700		75,130,627
Merck & Co., Inc.		1,493,100		67,338,810
Pfizer, Inc.		2,761,000		68,610,850
Valeant Pharmaceuticals International, Inc. (b)		899,000		49,687,730

				260,768,017
Professional Services – 0.1%
Manpower, Inc.		217,920		8,019,456
Real Estate Investment Trusts (REITs) – 1.1%
American Tower Corp.		834,200		59,553,538

See Notes to Financial Statements.



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	7

Schedule of Investments (continued)


Common Stocks	Shares		Value
Semiconductors & Semiconductor Equipment – 2.1%
Avago Technologies Ltd.		363,100	$	12,659,482
Broadcom Corp., Class A (b)		1,482,719		51,272,423
ON Semiconductor Corp. (b)		1,310,600		8,086,402
Xilinx, Inc.		1,151,500		38,471,615

				110,489,922
Software – 8.2%
Microsoft Corp.		5,577,600		166,100,928
Oracle Corp.		2,240,300		70,547,047
Red Hat, Inc. (b)		1,094,854		62,340,987
Salesforce.com, Inc. (a)(b)		451,454		68,932,511
VMware, Inc., Class A (a)(b)		725,307		70,166,199

				438,087,672
Specialty Retail – 1.7%
The Home Depot, Inc.		1,481,867		89,460,311
Textiles, Apparel & Luxury Goods – 2.0%
Michael Kors Holdings Ltd. (b)		919,200		48,883,056
Under Armour, Inc., Class A (a)(b)		1,091,800		60,955,194

				109,838,250
Total Long-Term Investments (Cost – $4,113,952,375) – 99.7%				5,355,046,667


Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.15% (c)(d)		28,521,348	$	28,521,348
	Beneficial Interest (000)
BlackRock Liquidity Series, LLC Money Market Series, 0.29% (c)(d)(e)	$	488,682		488,681,735
Total Short-Term Securities (Cost – $517,203,083) – 9.6%				517,203,083
Total Investments (Cost – $4,631,155,458) – 109.3%				5,872,249,750
Liabilities in Excess of Other Assets – (9.3)%				(498,011,463	)

Net Assets – 100.0%			$	5,374,238,287

(a)	Security, or a portion of security, is on loan.

(b)	Non-income producing security.

(c)	Investments in issuers considered to be an affiliate of the Fund during the year ended September 30, 2012, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:


Affiliate	Shares/ Beneficial Interest Held at September 30, 2011		Net Activity			Shares/ Beneficial Interest Held at September 30, 2012		Income		Realized Gain
BlackRock Liquidity Funds, TempFund, Institutional Class		74,155,048		(45,633,700	)		28,521,348	$	52,325	$	1,079
BlackRock Liquidity Series, LLC Money Market Series	$	143,560,634	$	345,121,101		$	488,681,735	$	3,846,231		–

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

(e)	Security was purchased with the cash collateral from loaned securities. The Fund may withdraw up to 25% of its investment daily, although the manager of the BlackRock Liquidity Series, LLC Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

—

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 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 such industry sub-classifications for reporting ease.

See Notes to Financial Statements.



8	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Schedule of Investments (concluded)

—

Fair Value Measurements – Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows:

—

Level 1 - unadjusted price quotations in active markets/exchanges for identical assets and liabilities that the Fund has the ability to access

—

Level 2 - other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

—

Level 3 - unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments)

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 level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investment and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy as of September 30, 2012:


	Level 1		Level 2		Level 3	Total
Assets:
Investments:
Long-Term Investments¹	$	5,355,046,667		–	–	$	5,355,046,667
Short-Term Securities		28,521,348	$	488,681,735	–		517,203,083
Total	$	5,383,568,015	$	488,681,735	–	$	5,872,249,750

Certain of the Fund’s liabilities are held at carrying amount, which approximates fair value for financial statement purposes. As of September 30, 2012, collateral on securities loaned at value of $488,681,735 is categorized as Level 2 within the disclosure hierarchy.

There were no transfers between levels during the year ended September 30, 2012.

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

See Notes to Financial Statements.



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	9

Statement of Assets and Liabilities

September 30, 2012


Assets
Investments at value – unaffiliated (including securities loaned at value of $478,375,587) (cost – $4,113,952,375)	$	5,355,046,667
Investments at value – affiliated (cost – $517,203,083)		517,203,083
Investments sold receivable		37,665,538
Capital shares sold receivable		6,421,429
Dividends receivable – unaffiliated		2,456,167
Dividends receivable – affiliated		2,758
Securities lending income receivable – affiliated		504,103
Receivable from Manager		63,557
Prepaid expenses		260,362

Total assets		5,919,623,664


Liabilities
Collateral on securities loaned at value		488,681,735
Investments purchased payable		35,291,208
Capital shares redeemed payable		15,048,534
Investment advisory fees payable		2,697,336
Service and distribution fees payable		1,008,149
Other affiliates payable		176,054
Officer’s and Directors’ fees payable		25,449
Other accrued expenses payable		2,456,912

Total liabilities		545,385,377

Net Assets	$	5,374,238,287


Net Assets Consist of
Paid-in capital	$	4,623,969,430
Undistributed net investment income		10,416,075
Accumulated net realized loss		(501,241,510	)
Net unrealized appreciation/depreciation		1,241,094,292

Net Assets	$	5,374,238,287


Net Asset Value
BlackRock – Based on net assets of $1,010,258,933 and 40,234,248 shares outstanding, 300,000,000 shares authorized, $0.10 par value	$	25.11

Institutional – Based on net assets of $1,514,880,712 and 60,458,933 shares outstanding, 300,000,000 shares authorized, $0.10 par value	$	25.06

Investor A – Based on net assets of $2,085,079,097 and 86,496,214 shares outstanding, 300,000,000 shares authorized, $0.10 par value	$	24.11

Investor B – Based on net assets of $60,559,297 and 2,889,999 shares outstanding, 500,000,000 shares authorized, $0.10 par value	$	20.95

Investor C – Based on net assets of $586,861,973 and 27,801,334 shares outstanding, 300,000,000 shares authorized, $0.10 par value	$	21.11

Class R – Based on net assets of $116,598,275 and 5,291,780 shares outstanding, 500,000,000 shares authorized, $0.10 par value	$	22.03

See Notes to Financial Statements.



10	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Statement of Operations

Year Ended September 30, 2012


Investment Income
Dividends – unaffiliated	$	63,205,199
Securities lending – affiliated		3,846,231
Dividends – affiliated		52,325

Total income		67,103,755


Expenses
Investment advisory		31,210,524
Service and distribution – class specific		12,392,983
Transfer agent – class specific		10,099,572
Administration		500,382
Registration		258,170
Custodian		310,460
Printing		156,846
Professional		133,648
Officer and Directors		120,636
Miscellaneous		96,855

Total expenses		55,280,076
Less fees waived by Manager		(28,906	)
Less transfer agent fees waived – class specific		(9,102	)
Less transfer agent fees reimbursed – class specific		(549,479	)
Less fees paid indirectly		(454	)

Total expenses after fees waived, reimbursed and paid indirectly		54,692,135

Net investment income		12,411,620


Realized and Unrealized Gain
Net realized gain (loss) from:
Investments		(19,798,514	)
Redemption-in-kind transactions		77,205,090
Capital gain distributions received from affiliated investment companies		1,079

		57,407,655

Net change in unrealized appreciation/depreciation on investments		1,010,347,065

Total realized and unrealized gain		1,067,754,720

Net Increase in Net Assets Resulting from Operations	$	1,080,166,340

See Notes to Financial Statements.



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	11

Statements of Changes in Net Assets


	Year Ended September 30,
Increase in Net Assets:	2012			2011
Operations
Net investment income (loss)	$	12,411,620		$	(5,538,306	)
Net realized gain (loss)		(19,797,435	)		114,668,498
Net realized gain from redemption-in-kind transactions		77,205,090			–
Net change in unrealized appreciation/depreciation		1,010,347,065			(415,909,131	)

Net increase (decrease) in net assets resulting from operations		1,080,166,340			(306,778,939	)

Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(198,639,550	)		1,340,202,068

Net Assets
Total increase in net assets		881,526,790			1,033,423,129
Beginning of year		4,492,711,497			3,459,288,368
End of year	$	5,374,238,287		$	4,492,711,497

Undistributed (accumulated) net investment income (loss)	$	10,416,075		$	(1,995,545	)

See Notes to Financial Statements.



12	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Financial Highlights


	BlackRock
	Year Ended September 30,
	2012		2011			2010¹			2009¹			2008¹
Per Share Operating Performance
Net asset value, beginning of year	$	20.25	$	20.86		$	18.72		$	18.94		$	22.62
Net investment income²		0.14		0.07			0.05			0.09			0.09
Net realized and unrealized gain (loss)		4.72		(0.68	)		2.16			(0.31	)		(3.77	)³
Net increase (decrease) from investment operations		4.86		(0.61	)		2.21			(0.22	)		(3.68	)
Dividends from net investment income		–		–			(0.07	)		–			–
Net asset value, end of year	$	25.11	$	20.25		$	20.86		$	18.72		$	18.94

Total Investment Return⁴
Based on net asset value		24.00%		(2.92)%			11.93%			(1.18)%	⁵		(16.26)%	⁶

Ratios to Average Net Assets
Total expenses		0.77%		0.76%			0.87%			0.92%			0.85%
Total expenses after fees waived, reimbursed and paid indirectly		0.72%		0.72%			0.72%			0.71%			0.70%
Net investment income		0.60%		0.28%			0.25%			0.59%			0.42%

Supplemental Data
Net assets, end of year (000)	$	1,010,259	$	883,370		$	292,967		$	192,614		$	77,323
Portfolio turnover		77%		81%			71%			87%			80%


	Institutional
	Year Ended September 30,							Period June 28, 2010⁷to
	2012			2011				September 30, 2010
Per Share Operating Performance
Net asset value, beginning of period		$	20.24		$	20.86			$ 19.39
Net investment income²			0.11			0.05			0.01
Net realized and unrealized gain (loss)			4.71			(0.67	)		1.46
Net increase (decrease) from investment operations			4.82			(0.62	)		1.47
Net asset value, end of period		$	25.06		$	20.24			$ 20.86

Total Investment Return⁴
Based on net asset value			23.81%			(2.97)%			7.58%	⁸

Ratios to Average Net Assets
Total expenses.			0.84%			0.78%			0.80%	⁹
Total expenses after fees waived, reimbursed and paid indirectly			0.84%			0.78%			0.80%	⁹
Net investment income			0.48%			0.21%			0.08%	⁹

Supplemental Data
Net assets, end of period (000)		$	1,514,881		$	1,025,307			$728,129
Portfolio turnover			77%			81%			71%

On June 28, 2010, BlackRock Capital Appreciation Portfolio was reorganized into the Fund. The activity in the table presented above is for the accounting survivor, BlackRock Capital Appreciation Portfolio, for the periods prior to the date of the reorganization, and for the post-reorganization combined fund thereafter. The net asset values and other per share information have been restated for periods prior to the reorganization to reflect the share conversion ratio of 0.80500157.

Based on average shares outstanding.

Includes redemption fees, which are less than $0.01 per share.

⁴

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁵

Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (1.31)%.

⁶

Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷

Commencement of operations.

⁸

Aggregate total investment return.

⁹

Annualized.

Financial Highlights (continued)


	Investor A
	Year Ended September 30,
	2012		2011			2010¹			2009¹			2008¹
Per Share Operating Performance
Net asset value, beginning of year	$	19.51	$	20.17		$	18.12		$	18.37		$	22.11
Net investment income (loss)²		0.05		(0.02	)		(0.04	)		0.01			(0.03	)
Net realized and unrealized gain (loss)		4.55		(0.64	)		2.09			(0.26	)		(3.71	)³
Net increase (decrease) from investment operations		4.60		(0.66	)		2.05			(0.25	)		(3.74	)
Dividends from net investment income		–		–			(0.00	)⁴		–			–
Net asset value, end of year	$	24.11	$	19.51		$	20.17		$	18.12		$	18.37

Total Investment Return⁵
Based on net asset value		23.58%		(3.27)%			11.37%			(1.37)%	⁶		(16.91)%	⁷

Ratios to Average Net Assets
Total expenses		1.09%		1.08%			1.15%	⁸		1.35%	⁸		1.33%	⁸
Total expenses after fees waived, reimbursed and paid indirectly		1.09%		1.07%			1.13%			1.23%			1.23%
Net investment income (loss)		0.23%		(0.09)%			(0.21)%			0.07%			(0.10)%

Supplemental Data
Net assets, end of year (000)	$	2,085,079	$	1,848,149		$	1,583,570		$	169,865		$	125,521
Portfolio turnover		77%		81%			71%			87%			80%

Based on average shares outstanding.

Includes redemption fees, which are less than $0.01 per share.

⁴

Less than $(0.01) per share.

⁵

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁶

Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (1.51)%.

⁷

Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁸

Includes recoupment of past waived fees. There was no financial impact to the expense ratios.

Financial Highlights (continued)


	Investor B
	Year Ended September 30,
	2012			2011			2010¹			2009¹			2008¹
Per Share Operating Performance
Net asset value, beginning of year	$	17.13		$	17.87		$	16.18		$	16.60		$	20.08
Net investment loss²		(0.14	)		(0.20	)		(0.18	)		(0.09	)		(0.17	)
Net realized and unrealized gain (loss)		3.96			(0.54	)		1.87			(0.33	)		(3.31	)³
Net increase (decrease) from investment operations		3.82			(0.74	)		1.69			(0.42	)		(3.48	)
Net asset value, end of year	$	20.95		$	17.13		$	17.87		$	16.18		$	16.60


Total Investment Return⁴
Based on net asset value		22.30%			(4.14)%			10.34%			(2.52)%	⁵		(17.32)%	⁶


Ratios to Average Net Assets
Total expenses		2.04%			1.99%			2.01%	⁷		2.36%	⁷		2.11%	⁷
Total expenses after fees waived, reimbursed and paid indirectly		2.04%			1.99%			2.00%			2.11%			2.00%
Net investment loss		(0.72)%			(1.01)%			(1.10)%			(0.77)%			(0.87)%


Supplemental Data
Net assets, end of year (000)	$	60,559		$	96,030		$	171,808		$	10,279		$	19,663
Portfolio turnover		77%			81%			71%			87%			80%

Based on average shares outstanding.

Includes redemption fees, which are less than $0.01 per share.

⁴

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁵

Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (2.67)%.

⁶

Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷

Includes recoupment of past waived fees. There was no financial impact to the expense ratios for the years ended September 30, 2008 and September 30, 2010. Excluding the recoupment of past waived fees for the year ended September 30, 2009, the ratio would have been 2.27%.

See Note to Financial Statements.



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	15

Financial Highlights (concluded)


	Investor C
	Year Ended September 30,
	2012		2011		2010¹		2009¹		2008¹
Per Share Operating Performance
Net asset value, beginning of year	$	17.23	$	17.96	$	16.25	$	16.63	$	20.09
Net investment loss²		(0.12)		(0.19)		(0.17)		(0.09)		(0.13)
Net realized and unrealized gain (loss)		4.00		(0.54)		1.88		(0.29)		(3.33)	³
Net increase (decrease) from investment operations		3.88		(0.73)		1.71		(0.38)		(3.46)
Net asset value, end of year	$	21.11	$	17.23	$	17.96	$	16.25	$	16.63

Total Investment Return⁴
Based on net asset value		22.52%		(4.07)%		10.52%		(2.29)%⁵		(17.22)%	⁶

Ratios to Average Net Assets
Total expenses		1.92%		1.91%		1.97%		2.04%		1.96%
Total expenses after fees waived, reimbursed and paid indirectly		1.92%		1.91%		1.94%		1.92%		1.85%
Net investment loss		(0.60)%		(0.93)%		(1.04)%		(0.61)%		(0.73)%

Supplemental Data
Net assets, end of year (000)	$	586,862	$	552,456	$	608,137	$	22,986	$	12,361
Portfolio turnover		77%		81%		71%		87%		80%


				Class R
							Period June 28, 2010⁷to September 30, 2010
	Year Ended September 30,

	2012			2011
Per Share Operating Performance
Net asset value, beginning of period		$ 17.88			$ 18.56			$ 17.28
Net investment loss²		(0.01	)		(0.09	)		(0.03	)
Net realized and unrealized gain (loss)		4.16			(0.59	)		1.31
Net increase (decrease) from investment operations		4.15			(0.68	)		1.28
Net asset value, end of period		$ 22.03			$ 17.88			$ 18.56

Total Investment Return⁴
Based on net asset value		23.21%			(3.66)%			7.41%	⁸

Ratios to Average Net Assets
Total expenses		1.39%			1.40%			1.44%	⁹
Total expenses after fees waived, reimbursed and paid indirectly		1.39%			1.40%			1.43%	⁹
Net investment loss		(0.07)%			(0.42)%			(0.55)%	⁹

Supplemental Data
Net assets, end of period (000)		$116,598			$87,400			$74,677
Portfolio turnover		77%			81%			71%

Based on average shares outstanding.

Includes redemption fees, which are less than $0.01 per share.

⁴

Where applicable, total investment returns exclude the effects of any sales charges and include the reinvestment of dividends and distributions.

⁵

Includes proceeds received from a settlement of litigation, which impacted the Fund’s total return. Excluding these proceeds, the Fund’s total return would have been (2.43)%.

⁶

Redemption fee of 2.00% is reflected in total return calculations. There was no impact to the return.

⁷

Commencement of operations.

⁸

Aggregate total investment return.

⁹

Annualized.

See Notes to Financial Statements.



16	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Notes to Financial Statements

1. Organization and Significant Accounting Policies:

BlackRock Capital Appreciation Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, open-end management investment company. The Fund is organized as a Maryland corporation. The Fund’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund offers multiple classes of shares. BlackRock and Institutional Shares are sold without a sales charge and only to certain eligible investors. Investor A Shares are generally sold with a front-end sales charge. Investor B and Investor C Shares may be subject to a CDSC. Class R Shares are sold without a sales charge and only to certain retirement and other similar plans. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that Investor A, Investor B, Investor C and Class R Shares bear certain expenses related to the shareholder servicing of such shares, and Investor B, Investor C and Class R Shares also bear certain expenses related to the distribution of such shares. Investor B Shares automatically convert to Investor A Shares after approximately eight years. Investor B Shares are only available through exchanges, dividend reinvestment by existing shareholders or for purchase by certain qualified employee benefit plans. Each class has exclusive voting rights with respect to matters relating to its shareholder servicing and distribution expenditures (except that Investor B shareholders may vote on material changes to the Investor A distribution and service plan).

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 transaction 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 of the Fund (the “Board”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Fund for all financial instruments.

Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System (“NASDAQ”) 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 price. If no bid 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 registered investment companies are valued at NAV each business day.

The Fund values its investment in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor in the Money Market Series to withdraw more than 25% on any one day.

In the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the Global Valuation Committee, or its delegate, 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 consistent with the principles of fair value measurement which include the market approach, income approach and/or cost approach, as appropriate. A market approach generally consists of using comparable market transactions. The income approach generally is used to discount future cash flows to present value and adjusted for liquidity as appropriate. These factors include but are not limited to (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. Due to the inherent uncertainty of valuations of such investments, the fair values may differ from the values that would have been used had an active market existed. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Fund’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof on a quarterly basis.



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	17

Notes to Financial Statements (continued)

Redemptions-In-Kind: The Fund transferred securities and cash to shareholders in connection with a redemption-in-kind transaction. For purposes of US GAAP, these transactions were treated as a sale of securities and the resulting gains and losses were recognized based on the market value of the securities on the date of the transfer. For tax purposes, no gains or losses were recognized. Gains and losses resulting from such redemptions-in-kind are shown as redemption-in-kind transactions in the Statement of Operations.

Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions 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. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The portion of distributions that exceed the Fund’s current and accumulated earnings and profits, which are measured on a tax basis, will constitute a nontaxable return of capital. Distributions in excess of the Fund’s taxable income and net capital gains, but not in excess of the Fund’s earnings and profits, will be taxable to shareholders as ordinary income and will not constitute a nontaxable return of capital. Capital losses carried forward from years beginning before 2011 do not reduce earnings and profits, even if such carried forward losses offset current year realized gains. The character and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Fund may lend securities to approved borrowers, such as banks, brokers and other financial institutions. The borrower pledges cash, securities issued or guaranteed by the US government or irrevocable letters of credit issued by a bank as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. During the term of the loan, the Fund earns dividend or interest income on the securities loaned but does not receive dividend or interest income on the securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral.

The Fund also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. During the year ended September 30, 2012, any securities on loan were collateralized by cash.

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 limitations on the Fund’s US federal tax returns remains open for each of the four years ended August 31, 2012 and the period ended September 30, 2012. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.

Recent Accounting Standard: In December 2011, the Financial Accounting Standards Board issued guidance that will expand current disclosure requirements on the offsetting of certain assets and liabilities. The new disclosures will be required for investments and derivative financial instruments subject to master netting or similar agreements which are eligible for offset in the Statement of Assets and Liabilities and will require an entity to disclose both gross and net information about such investments and transactions in the financial statements. The guidance is effective for financial statements with fiscal years beginning on or after January 1, 2013, and interim periods within those fiscal years. Management is evaluating the impact of this guidance on the Fund’s financial statement disclosures.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses pro rated to the Fund are allocated daily to each class based on its 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. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”) is the largest stockholder and an affiliate, for 1940 Act purposes, of BlackRock, Inc. (“BlackRock”).



18	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Notes to Financial Statements (continued)

The Fund entered into an Investment Advisory Agreement with 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 management of the Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays the Manager a monthly fee based on a percentage of the Fund’s average daily net assets at the following annual rates:


Average Daily Net Assets	Investment Advisory Fee
First $1 Billion		0.650	%
$1 Billion - $1.5 Billion		0.625	%
$1.5 Billion - $5 Billion		0.600	%
$5 Billion - $7.5 Billion		0.575	%
Greater than $7.5 Billion		0.550	%

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. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with the Fund’s investment in other affiliated investment companies, if any. This amount is shown as fees waived by Manager in the Statement of Operations. For the year ended September 30, 2012, the amount waived was $28,906.

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.

The Fund entered into a Distribution Agreement and Distribution and Service Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution and Service Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the shares of the Fund as follows:


	Service Fee			Distribution Fee
Investor A		0.25	%		–
Investor B		0.25	%		0.75	%
Investor C		0.25	%		0.75	%
Class R		0.25	%		0.25	%

Pursuant to sub-agreements with BRIL, broker-dealers and BRIL provide shareholder servicing and distribution services to the Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to Investor A, Investor B, Investor C and Class R shareholders.

For the year ended September 30, 2012, the following table shows the class specific service and distribution fees borne directly by each class of the Fund:

Pursuant to written agreements, certain financial intermediaries, some of which may be affiliates, provide the Fund with sub-accounting, recordkeeping, sub-transfer agency and other administrative services with respect to sub-accounts they service. For these services, these entities receive an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the year ended Sep-tember 30, 2012, the Fund paid $711,882 to the affiliates in return for these services, which is included in transfer agent — class specific in the Statement of Operations.

The Manager maintains a call center, which is responsible for providing certain shareholder services to the Fund, such as responding to shareholder inquiries and processing transactions based upon instructions from shareholders with respect to the subscription and redemption of Fund shares. For the year ended September 30, 2012, the Fund reimbursed the Manager the following amounts for costs incurred in running the call center, which are included in transfer agent — class specific in the Statement of Operations:


BlackRock	$	5,527
Institutional		7,656
Investor A		43,816
Investor B		2,651
Investor C		9,948
Class R		1,182
Total	$	70,780

For the year ended September 30, 2012, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:


BlackRock	$	1,310,925
Institutional		2,558,408
Investor A		3,977,461
Investor B		334,624
Investor C		1,648,400
Class R		269,754
Total	$	10,099,572



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	19

Notes to Financial Statements (continued)

The Manager contractually agreed to waive and/or reimburse fees or expenses, excluding interest expense, dividend expense, acquired fund fees and expenses and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business, in order to limit expenses. The expense limitations as a percentage of average daily net assets are as follows:


BlackRock	0.72	%
Investor C	1.94	%

The Manager has agreed not to reduce or discontinue this contractual waiver or reimbursement prior to February 1, 2022 unless approved by the Board, including a majority of the Independent Directors. On February 1 of each year, the waiver will renew automatically, so that the agreement will have a perpetual ten-year term.

These amounts are shown as transfer agent fees waived — class specific and transfer agent fees reimbursed — class specific, respectively, in the Statement of Operations. Class specific expense waivers or reimbursements are as follows:


	BlackRock			Investor C			Total
Transfer Agent Fees Waived		$	5,527		$	3,575		$	9,102
Transfer Agent Fees Reimbursed		$	532,162		$	17,317		$	549,479

For the year ended September 30, 2012, affiliates earned underwriting discounts, direct commissions and dealer concessions on sales of the Fund’s Investor A Shares of $109,019.

For the year ended September 30, 2012, affiliates received CDSCs relating to transactions in Investor A, Investor B, and Investor C Shares of $32,185, $26,783 and $53,488, respectively.

The Fund received an exemptive order from the SEC permitting it, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BIM as the securities lending agent. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. As securities lending agent, BIM is responsible for all transaction fees and all other operational costs relating to securities lending activities, other than extraordinary expenses. BIM does not receive any fees for managing the cash collateral. The market value of securities on loan and the value of the related collateral, if applicable, are shown in the Statement of Assets and Liabilities as securities loaned at value and collateral on securities loaned at value, respectively. The cash collateral invested by BIM is disclosed in the Schedule of Investments, if any. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of rebates paid to, or fees paid by, borrowers of securities. The Fund retains 65% of securities lending income and pays a fee to BIM equal to 35% of such income. The share of income earned by the Fund is shown as securities lending — affiliated in the Statement of Operations. For the year ended September 30, 2012,

BIM received $2,088,957 in securities lending agent fees related to securities lending activities for the Fund.

Certain officers and/or directors of the Fund are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Fund’s Chief Compliance Officer.

3. Investments:

Purchases and sales of investments, excluding short-term securities, for the year ended September 30, 2012, were $3,965,612,512 and $4,096,393,998, including $208,366,711 of sales representing redemptions-in-kind, respectively.

4. Income Tax Information:

US GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share. The following permanent differences as of September 30, 2012 attributable to an in-kind redemption and the expiration of capital loss carryforward were reclassified to the following accounts:


Paid-in capital	$	33,151,620
Accumulated net realized loss	$	(33,151,620	)

As of September 30, 2012, the tax components of undistributed net earnings were as follows:


Undistributed ordinary income	$	10,416,076
Capital loss carryforwards		(489,683,982	)
Net unrealized gains¹		1,229,536,763
Total	$	750,268,857

¹	The difference between book-basis and tax-basis net unrealized gains was attributable primarily to the tax deferral of losses on wash sales.

As of September 30, 2012, the Fund had a capital loss carryforward of $489,683,982, of which $10,784,067 expires in 2015, $105,719,903 expires in 2016, $270,456,080 expires in 2017 and $102,723,932 has no expiration.

As of September 30, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:


Tax cost	$	4,642,712,987
Gross unrealized appreciation	$	1,313,673,432
Gross unrealized depreciation		(84,136,669	)
Net unrealized appreciation	$	1,229,536,763

5. Borrowings:

The Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2012 and was subsequently renewed until November 2013. The Fund may borrow under the credit agreement to fund shareholder redemptions. Effective November 2010



20	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Notes to Financial Statements (continued)

to November 2011, the credit agreement had the following terms: a commitment fee of 0.08% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month London Interbank Offered Rate (“LIBOR”) plus 1.00% per annum or (b) the Fed Funds rate plus 1.00% per annum on amounts borrowed. In addition, the Fund paid administration and arrangement fees which were allocated to the Fund based on its net assets as of October 31, 2010. The credit agreement, which expired in November 2011, was renewed until November 2012. Effective November 2011 to November 2012, the credit agreement has the following terms: a commitment fee of 0.065% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 0.80% per annum or (b) the Fed Funds rate plus 0.80% per annum on amounts borrowed. In addition, the Fund paid administration and arrangement fees which were allocated to the Fund based on its net assets as of October 31, 2011. The Fund did not borrow under the credit agreement during the year ended September 30, 2012.

6. Concentration, 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 market (market risk) or failure of the issuer of a security to meet all its obligations (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 Statement of Assets and Liabilities, less any collateral held by the Fund.

As of September 30, 2012, the Fund invested a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting the information technology sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

7. Capital Share Transactions:

Transactions in capital shares for each class were as follows:


	Year Ended September 30, 2012						Year Ended September 30, 2011
	Shares			Amount			Shares			Amount
BlackRock
Shares sold		10,174,795		$	234,574,632			42,558,670		$	979,285,363
Shares redeemed.		(13,560,749	)		(315,232,539	)		(12,981,790	)		(296,790,502	)
Net increase (decrease)		(3,385,954	)	$	(80,657,907	)		29,576,880		$	682,494,861


Institutional
Shares sold		34,848,559		$	797,746,170			27,651,181		$	652,485,632
Shares redeemed.		(25,056,499	)¹		(598,600,221	)		(11,894,145	)		(277,153,373	)
Net increase.		9,792,060		$	199,145,949			15,757,036		$	375,332,259
¹Including (8,411,787) representing redemptions-in-kind.
Investor A
Shares sold and automatic conversion of shares		17,901,330		$	397,911,577			40,270,918		$	916,973,192
Shares redeemed.		(26,124,463	)		(585,341,776	)		(24,046,729	)		(538,998,855	)
Net increase (decrease)		(8,223,133	)	$	(187,430,199	)		16,224,189		$	377,974,337



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	21

Notes to Financial Statements (concluded)


	Year Ended September 30, 2012						Year Ended September 30, 2011
	Shares			Amount			Shares			Amount
Investor B
Shares sold		439,851		$	8,534,562			1,005,491		$	20,082,825
Shares redeemed and automatic conversion of shares		(3,156,755	)		(61,959,048	)		(5,014,374	)		(100,264,415	)
Net decrease		(2,716,904	)	$	(53,424,486	)		(4,008,883	)	$	(80,181,590	)

Investor C
Shares sold		4,119,392		$	80,738,283			7,126,468		$	144,094,375
Shares redeemed		(8,380,932	)		(165,001,407	)		(8,917,981	)		(178,344,833	)
Net decrease		(4,261,540	)	$	(84,263,124	)		(1,791,513	)	$	(34,250,458	)

Class R
Shares sold		2,448,435		$	50,024,385			3,165,431		$	66,191,205
Shares redeemed		(2,045,131	)		(42,034,168	)		(2,301,249	)		(47,358,546	)
Net increase		403,304		$	7,990,217			864,182		$	18,832,659
Total Net Increase (Decrease)		(8,392,167	)	$	(198,639,550	)		56,621,891		$	1,340,202,068

8. Subsequent Events:

Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.



22	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of BlackRock Capital Appreciation Fund, Inc.:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the BlackRock Capital Appreciation Fund, Inc. (the “Fund”), as of September 30, 2012, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2012, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of September 30, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Philadelphia, Pennsylvania

November 21, 2012



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	23

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement

The Board of Directors (the “Board,” and the members of which are referred to as “Board Members”) of the BlackRock Capital Appreciation Fund, Inc. (the “Fund”) met on April 10, 2012 and May 8-9, 2012 to consider the approval of the Fund’s investment advisory agreement (the “Advisory Agreement”) with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor. The Board also considered the approval of the sub-advisory agreement (the “Sub-Advisory Agreement”) between the Manager and BlackRock Investment Management, LLC (the “Sub-Advisor”), with respect to the Fund. The Manager and the Sub-Advisor are referred to herein as “BlackRock.” The Advisory Agreement and the Sub-Advisory Agreement are referred to herein as the “Agreements.”

Activities and Composition of the Board

The Board consists of thirteen individuals, ten of whom are not “interested persons” of the Fund as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chairman of the Board is an Independent Board Member. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Performance Oversight Committee and the Executive Committee, each of which also has one interested Board Member).

The Agreements

Pursuant to the 1940 Act, the Board is required to consider the continuation of the Agreements on an annual basis. The Board has four quarterly meetings per year, each extending over two days, and a fifth meeting to consider specific information surrounding the consideration of renewing the Agreements. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to the Fund by BlackRock, its personnel and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services, risk oversight, compliance and assistance in meeting applicable legal and regulatory requirements.

The Board, acting directly and through its committees, considers at each of its meetings, and from time to time as appropriate, factors that are relevant to its annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to the Fund and its shareholders. Among the matters the Board considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management’s and portfolio managers’ analysis of the reasons for any over performance or underperformance against its peers and/or benchmark, as applicable; (b) fees, including advisory, administration,

if applicable, and other amounts paid to BlackRock and its affiliates by the Fund for services, such as marketing and distribution, call center and fund accounting; (c) Fund operating expenses and how BlackRock allocates expenses to the Fund; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of the Fund’s investment objective, policies and restrictions; (e) the Fund’s compliance with its Code of Ethics and other compliance policies and procedures; (f) the nature, cost and character of non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) the use of brokerage commissions and execution quality of portfolio transactions; (j) BlackRock’s implementation of the Fund’s valuation and liquidity procedures; (k) an analysis of management fees for products with similar investment objectives across the open-end fund, exchange traded fund (“ETF”), closed-end fund and institutional account product channels, as applicable; (l) BlackRock’s compensation methodology for its investment professionals and the incentives it creates; and (m) periodic updates on BlackRock’s business.

The Board has engaged in an ongoing strategic review with BlackRock of opportunities to consolidate funds and of BlackRock’s commitment to investment performance. In addition, the Board requested, to the extent reasonably possible, an analysis of the risk and return relative to selected funds in peer groups. BlackRock provides information to the Board in response to specific questions. These questions covered issues such as profitability, investment performance and management fee levels. The Board considered the importance of: (i) managing fixed income assets with a view toward preservation of capital; (ii) portfolio managers’ investments in the funds they manage; (iii) BlackRock’s controls surrounding the coding of quantitative investment models; and (iv) BlackRock’s oversight of relationships with third party service providers.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April 10, 2012 meeting, the Board requested and received materials specifically relating to the Agreements. The Board is engaged in a process with its independent legal counsel and BlackRock to review periodically the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses and the investment performance of the Fund as compared with a peer group of funds as determined by Lipper (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates; (c) a general analysis provided by BlackRock concerning investment management fees (a combination of the advisory fee and the administration fee, if any) charged to other clients, such as institutional clients, ETFs and closed-end funds, under similar investment mandates, as well as the performance of such other clients, as applicable; (d) the existence, impact and sharing of potential economies of scale; (e) a



24	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)

summary of aggregate amounts paid by the Fund to BlackRock; (f) sales and redemption data regarding the Fund’s shares; and (g) if applicable, a comparison of management fees to similar BlackRock open-end funds, as classified by Lipper.

At an in-person meeting held on April 10, 2012, the Board reviewed materials relating to its consideration of the Agreements. As a result of the discussions that occurred during the April 10, 2012 meeting, and as a culmination of the Board’s year-long deliberative process, the Board presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the May 8-9, 2012 Board meeting.

At an in-person meeting held on May 8-9, 2012, the Board, including all the Independent Board Members, approved the continuation of the Advisory Agreement between the Manager and the Fund and the Sub-Advisory Agreement between the Manager and the Sub-Advisor with respect to the Fund, each for a one-year term ending June 30, 2013. In approving the continuation of the Agreements, the Board considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Fund and BlackRock; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with the Fund; (d) economies of scale; (e) fall-out benefits to BlackRock as a result of its relationship with the Fund; and (f) other factors deemed relevant by the Board Members.

The Board also considered other matters it deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to the distribution of Fund shares and securities lending, services related to the valuation and pricing of Fund portfolio holdings, direct and indirect benefits to BlackRock and its affiliates from their relationship with the Fund and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as controlling, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services Provided by BlackRock: The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of the Fund. Throughout the year, the Board compared Fund performance to the performance of a comparable group of mutual funds and/or the performance of a relevant benchmark, if any. The Board met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. The Board also reviewed the materials provided by the Fund’s portfolio management team discussing Fund performance and the Fund’s investment objective, strategies and outlook.

The Board considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and the Fund’s portfolio management team, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance, BlackRock’s credit analysis capabilities, BlackRock’s risk analysis and oversight capabilities and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board engaged in a review of BlackRock’s compensation structure with respect to the Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.

In addition to advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to the Fund. BlackRock and its affiliates provide the Fund with certain administrative, shareholder and other services (in addition to any such services provided to the Fund by third parties) and officers and other personnel as are necessary for the operations of the Fund. In particular, BlackRock and its affiliates provide the Fund with the following administrative services including, among others: (i) preparing disclosure documents, such as the prospectus, the statement of additional information and periodic shareholder reports; (ii) assisting with daily accounting and pricing; (iii) overseeing and coordinating the activities of other service providers; (iv) organizing Board meetings and preparing the materials for such Board meetings; (v) providing legal and compliance support; and (vi) performing other administrative functions necessary for the operation of the Fund, such as tax reporting, fulfilling regulatory filing requirements and call center services. The Board reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of the Fund and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of the Fund. In preparation for the April 10, 2012 meeting, the Board worked with its independent legal counsel, BlackRock and Lipper to develop a template for, and was provided with, reports independently prepared by Lipper, which included a comprehensive analysis of the Fund’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of the Fund as compared to funds in the Fund’s applicable Lipper category. The Board was provided with a description of the methodology used by Lipper to select peer funds and periodically meets with Lipper representatives to review their methodology. The Board and the Board’s Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of the Fund throughout the year.

The Board noted that the Fund ranked in the fourth, third and second quartiles against its Lipper Performance Universe for the one-, three- and



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	25

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)

five-year periods reported, respectively. The Board and BlackRock reviewed and discussed the reasons for the Fund’s underperformance during the one-year and three-year periods compared with its Peers. The Board was informed that, among other things, the portfolio’s aggressive positioning generated relative underperformance as investors sold more volatile high growth holdings in favor of more defensive dividend yielding companies. The increased importance of macroeconomic developments overshadowed company results during 2011, making it a challenging backdrop for the bottom-up stock pickers.

The Board and BlackRock discussed BlackRock’s strategy for improving the Fund’s performance and BlackRock’s commitment to providing the resources necessary to assist the Fund’s portfolio managers and to improve the Fund’s performance.

C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Fund: The Board, including the Independent Board Members, reviewed the Fund’s contractual management fee rate compared with the other funds in its Lipper category. It also compared the Fund’s total expense ratio, as well as actual management fee rate, to those of other funds in its Lipper category. The Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.

The Board received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided the Fund. The Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to the Fund. The Board reviewed BlackRock’s profitability with respect to the Fund and other funds the Board currently oversees for the year ended December 31, 2011 compared to available aggregate profitability data provided for the years ended December 31, 2010 and December 31, 2009. The Board reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, expense allocations and business mix, and the difficulty of comparing profitability as a result of those factors.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Board considered BlackRock’s operating margin, in general, compared to the operating margin for leading investment management firms whose operations include advising open-end funds, among other product types. In addition, the Board considered, among other things, certain third party data comparing BlackRock’s operating margin with that of other publicly-traded asset management firms. The Board considered the differences

between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

In addition, the Board considered the cost of the services provided to the Fund by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of the Fund and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs to the management of the Fund. The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Board.

The Board noted that the Fund’s contractual management fee ratio (a combination of the advisory fee and the administration fee, if any) was lower than or equal to the median contractual management fee ratio paid by the Fund’s Peers, in each case before taking into account any expense reimbursements or fee waivers. The Board also noted that the Fund has an advisory fee arrangement that includes breakpoints that adjust the fee ratio downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Fund’s total net expenses on a class-by-class basis, as applicable.

D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of the Fund increase, as well as the existence of expense caps. The Board also considered the extent to which the Fund benefits from such economies and whether there should be changes in the advisory fee rate or structure in order to enable the Fund to participate in these economies of scale, for example through the use of revised breakpoints in the advisory fee based upon the asset level of the Fund. In its consideration, the Board Members took into account the existence of expense caps and further considered the continuation and/or implementation, as applicable, of such caps.

E. Other Factors Deemed Relevant by the Board Members: The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from their respective relationships with the Fund, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Fund, including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a



26	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (concluded)

number of its other client accounts. The Board further noted that it had considered the investment by BlackRock’s funds in ETFs without any offset against the management fees payable by the funds to BlackRock.

In connection with its consideration of the Agreements, the Board also received information regarding BlackRock’s brokerage and soft dollar practices. The Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.

The Board noted the competitive nature of the open-end fund marketplace, and that shareholders are able to redeem their Fund shares if they believe that the Fund’s fees and expenses are too high or if they are dissatisfied with the performance of the Fund.

Conclusion

The Board, including all the Independent Board Members, approved the continuation of the Advisory Agreement between the Manager and the Fund for a one-year term ending June 30, 2013, and the Sub-Advisory

Agreement between the Manager and the Sub-Advisor with respect to the Fund for a one-year term ending June 30, 2013. Based upon its evaluation of all of the aforementioned factors in their totality, the Board, including the Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of the Fund and its shareholders. In arriving at its decision to approve the Agreements, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for the Fund reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. As a result, the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	27

Officers and Directors


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Director²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Independent Directors¹

Robert M. Hernandez 55 East 52nd Street New York, NY 10055 1944	Chairman of the Board and Director	Since 2007	Director, Vice Chairman and Chief Financial Officer of USX Corporation (energy and steel business) from 1991 to 2001; Director, TE Connectivity (electronics) from 2006 to 2012.	29 RICs consisting of 82 Portfolios	ACE Limited (insurance company); Eastman Chemical Company (chemicals); RTI International Metals, Inc. (metals)

Fred G. Weiss 55 East 52nd Street New York, NY 10055 1941	Vice Chairman of the Board and Director	Since 2007	Managing Director, FGW Associates (consulting and investment company) since 1997; Director and Treasurer, Michael J. Fox Foundation for Parkinson’s Research since 2000; Director, BTG International Plc (medical technology commercialization company) from 2001 to 2007.	29 RICs consisting of 82 Portfolios	Watson Pharmaceuticals, Inc.

James H. Bodurtha 55 East 52nd Street New York, NY 10055 1944	Director	Since 2002	Director, The China Business Group, Inc. (consulting firm) since 1996 and Executive Vice President thereof from 1996 to 2003; Chairman of the Board, Berkshire Holding Corporation since 1980.	29 RICs consisting of 82 Portfolios	None

Bruce R. Bond 55 East 52nd Street New York, NY 10055 1946	Director	Since 2007	Trustee and Member of the Governance Committee, State Street Research Mutual Funds from 1997 to 2005; Board Member of Governance, Audit and Finance Committee, Avaya Inc. (computer equipment) from 2003 to 2007.	29 RICs consisting of 82 Portfolios	None

Donald W. Burton 55 East 52nd Street New York, NY 10055 1944	Director	Since 2007	Managing General Partner, The Burton Partnership, LP (an investment partnership) since 1979; Managing General Partner, The South Atlantic Venture Funds since 1983; Director, Lifestyle Family Fitness (fitness industry) since 2006; Director, IDology, Inc. (technology solutions) since 2006; Member of the Investment Advisory Council of the Florida State Board of Administration from 2001 to 2007.	29 RICs consisting of 82 Portfolios	Knology, Inc. (telecommunications); Capital Southwest (financial)

Honorable Stuart E. Eizenstat 55 East 52nd Street New York, NY 10055 1943	Director	Since 2007	Partner and Head of International Practice, Covington and Burling LLP (law firm) since 2001; International Advisory Board Member, The Coca Cola Company from 2002 to 2011; Advisory Board Member, Veracity Worldwide LLC (risk management) since 2007; Member of the International Advisory Board GML (energy) since 2003; Advisory Board Member, BT Americas (telecommunications) from 2004 to 2010.	29 RICs consisting of 82 Portfolios	Alcatel-Lucent (telecommunications); Global Specialty Metallurgical (metallurgical industry); UPS Corporation (delivery service)

Kenneth A. Froot 55 East 52nd Street New York, NY 10055 1957	Director	Since 2005	Professor, Harvard University since 1992.	29 RICs consisting of 82 Portfolios	None

John F. O’Brien 55 East 52nd Street New York, NY 10055 1943	Director	Since 2007	Chairman and Director, Woods Hole Oceanographic Institute since 2009 and Trustee thereof from 2003 to 2009; Director, Ameresco, Inc. (energy solutions company) from 2006 to 2007.	29 RICs consisting of 82 Portfolios	Cabot Corporation (chemicals); LKQ Corporation (auto parts manufacturing); TJX Companies, Inc. (retailer)

Roberta Cooper Ramo 55 East 52nd Street New York, NY 10055 1942	Director	Since 2002	Shareholder, Modrall, Sperling, Roehl, Harris & Sisk, P.A. (law firm) since 1993; Chairman of the Board, Cooper’s, Inc. (retail) since 2000; Director ECMC Group (service provider to students, schools and lenders) since 2001; President, The American Law Institute (non-profit) since 2008; President, American Bar Association from 1995 to 1996.	29 RICs consisting of 82 Portfolios	None



28	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Officers and Directors (continued)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served as a Director²	Principal Occupation(s) During Past 5 Years	Number of BlackRock- Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Directorships
Independent Directors¹(concluded)

David H. Walsh 55 East 52nd Street New York, NY 10055 1941	Director	Since 2007	Director, National Museum of Wildlife Art since 2007; Trustee, University of Wyoming Foundation since 2008; Director, Ruckleshaus Institute and Haub School of Natural Resources at the University of Wyoming from 2006 to 2008; Director, The American Museum of Fly Fishing since 1997; Director, The National Audubon Society from 1998 to 2005.	29 RICs consisting of 82 Portfolios	None

	¹Each Independent Director holds office until his or her successor is duly elected and qualifies or until his or her earlier death, resignation or removal as provided by the Fund’s by-laws or charter or statute. In no event may an Independent Director hold office beyond December 31 of the year in which he or she turns 74.

	²Date shown is the earliest date a person has served for the Fund covered by this annual report. Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. (“BlackRock”) in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Directors as joining the Fund’s board in 2007, each Director first became a member of the board of other legacy MLIM or legacy BlackRock Funds as follows: James H. Bodurtha, 1995; Bruce R. Bond, 2005; Donald W. Burton, 2002; Stuart E. Eizenstat, 2001; Kenneth A. Froot, 2005; Robert M. Hernandez, 1996; John F. O’Brien, 2004; Roberta Cooper Ramo, 2000; David H. Walsh, 2003; and Fred G. Weiss, 1998.


Interested Directors³

Paul L. Audet 55 East 52nd Street New York, NY 10055 1953	Director	Since 2011	Senior Managing Director of BlackRock and Head of U.S. Mutual Funds since 2011; Chair of the U.S. Mutual Funds Committee reporting to the Global Executive Committee since 2011; Head of BlackRock’s Real Estate business from 2008 to 2011; Member of BlackRock’s Global Operating and Corporate Risk Management Committees and of the BlackRock Alternative Investors Executive Committee and Investment Committee for the Private Equity Fund of Funds business since 2008; Head of BlackRock’s Global Cash Management business from 2005 to 2010; Acting Chief Financial Officer of BlackRock from 2007 to 2008; Chief Financial Officer of BlackRock from 1998 to 2005.	160 RICs consisting of 278 Portfolios	None

Laurence D. Fink 55 East 52nd Street New York, NY 10055 1952	Director	Since 2007	Chairman and Chief Executive Officer of BlackRock since its formation in 1998 and of BlackRock’s predecessor entities since 1988 and Chairman of the Executive and Management Committees; Formerly Managing Director, The First Boston Corporation, Member of its Management Committee, Co-head of its Taxable Fixed Income Division and Head of its Mortgage and Real Estate Products Group; Chairman of the Board of several of BlackRock’s alternative investment vehicles; Director of several of BlackRock’s offshore funds; Member of the Board of Trustees of New York University, Chair of the Financial Affairs Committee and a member of the Executive Committee, the Ad Hoc Committee on Board Governance, and the Committee on Trustees; Co-Chairman of the NYU Hospitals Center Board of Trustees, Chairman of the Development/Trustee Stewardship Committee and Chairman of the Finance Committee; Trustee, The Boys’ Club of New York.	29 RICs consisting of 82 Portfolios	BlackRock

Henry Gabbay 55 East 52nd Street New York, NY 10055 1947	Director	Since 2007	Consultant, BlackRock from 2007 to 2008; Managing Director, BlackRock from 1989 to 2007; Chief Adminis trative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006.	160 RICs consisting of 278 Portfolios	None

	³ Messrs. Audet and Fink are both “interested persons,” as defined in the 1940 Act, of the Fund based on their positions with BlackRock and its affiliates. Mr. Gabbay is an “interested person” of the Fund based on his former positions with BlackRock and its affiliates as well as his ownership of BlackRock and The PNC Financial Services Group, Inc. securities. Mr. Audet and Mr. Gabbay are also Directors of the BlackRock registered closed-end funds and Directors of other BlackRock registered open-end funds. Interested Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	29

Officers and Directors (concluded)


Name, Address, and Year of Birth	Position(s) Held with Fund	Length of Time Served	Principal Occupation(s) During Past 5 Years
Fund Officers¹

John M. Perlowski 55 East 52nd Street New York, NY 10055 1964	President and Chief Executive Officer	Since 2010	Managing Director of BlackRock since 2009; Global Head of BlackRock Fund Administration since 2009; Managing Director and Chief Operating Officer of the Global Product Group at Goldman Sachs Asset Management, L.P. from 2003 to 2009; Treasurer of Goldman Sachs Mutual Funds from 2003 to 2009 and Senior Vice President thereof from 2007 to 2009; Director of Goldman Sachs Offshore Funds from 2002 to 2009; Director of Family Resource Network (charitable foundation) since 2009.

Brendan Kyne 55 East 52nd Street New York, NY 10055 1977	Vice President	Since 2009	Managing Director of BlackRock since 2010; Director of BlackRock from 2008 to 2009; Head of Product Development and Management for BlackRock’s U.S. Retail Group since 2009 and Co-head thereof from 2007 to 2009; Vice President of BlackRock from 2005 to 2008.

Neal Andrews 55 East 52nd Street New York, NY 10055 1966	Chief Financial Officer	Since 2007	Managing Director of BlackRock since 2006; Senior Vice President and Line of Business Head of Fund Accounting and Administration at PNC Global Investment Servicing (U.S.) Inc. from 1992 to 2006.

Jay Fife 55 East 52nd Street New York, NY 10055 1970	Treasurer	Since 2007	Managing Director of BlackRock since 2007; Director of BlackRock in 2006; Assistant Treasurer of the MLIM and Fund Asset Management, L.P. advised funds from 2005 to 2006; Director of MLIM Fund Services Group from 2001 to 2006.

Brian Kindelan 55 East 52nd Street New York, NY 10055 1959	Chief Compliance Officer and Anti-Money Laundering Officer	Since 2007	Chief Compliance Officer of the BlackRock-advised Funds since 2007; Managing Director and Senior Counsel of BlackRock since 2005.

Benjamin Archibald 55 East 52nd Street New York, NY 10055 1975	Secretary	Since 2012	Director of BlackRock since 2010; Assistant Secretary to the Funds from 2010 to 2012; General Counsel and Chief Operating Officer of Uhuru Capital Management from 2009 to 2010; Executive Director and Counsel of Goldman Sachs Asset Management from 2005 to 2009.

	¹Officers of the Fund serve at the pleasure of the Board of Directors.

	Further information about the Fund’s Officers and Directors is available in the Fund’s Statement of Additional Information, which can be obtained without charge by calling 1-800-441-7762.



Investment Advisor	Sub-Advisor	Accounting Agent and	Address of the Fund
BlackRock Advisors, LLC	BlackRock Investment	Transfer Agent	100 Bellevue Parkway
Wilmington, DE 19809	Management, LLC	BNY Mellon Investment	Wilmington, DE 19809
	Princeton, NJ 08540	Servicing (US) Inc.
		Wilmington, DE 19809

Independent Registered Public Accounting Firm Deloitte & Touche LLP Philadelphia, PA 19103	Custodian The Bank of New York Mellon New York, NY 10286	Distributor BlackRock Investments, LLC New York, NY 10022	Legal Counsel Willkie Farr & Gallagher LLP New York, NY 10019

Effective May 8, 2012, Ira P. Shapiro resigned as Secretary of the Fund and Benjamin Archibald became Secretary of the Fund.



30	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

Additional Information

General Information

Electronic Delivery

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

To enroll:

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

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

Shareholders Who Hold Accounts Directly With BlackRock:

1)	Access the BlackRock website at http://www.blackrock.com/ edelivery

2)	Select “eDelivery” under the “More Information” section

3)	Log into your account

Householding

The Fund will mail only one copy of shareholder documents, including prospectuses, 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 shareholder 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 the Fund at (800) 441-7762.

Availability of Quarterly Schedule of Investments

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Forms N-Q. The Fund’s Forms N-Q is 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, D.C. 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 determine 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 portfolios 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.

Shareholder Privileges

Account Information

Call us at (800) 441-7762 from 8:00 AM to 6:00 PM EST on any business day to get information about your account balances, recent transactions and share prices. You can also reach us on the Web at http:// www.blackrock.com/funds.

Automatic Investment Plans

Investor Class shareholders who want to invest regularly can arrange to have $50 or more automatically deducted from their checking or savings account and invested in any of the BlackRock funds.

Systematic Withdrawal Plan

Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock funds, as long as their account balance is at least $10,000.

Retirement Plans

Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	31

Additional Information (concluded)

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information 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 applications, forms or other documents; (ii) information about your transactions 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 procedures relating to the proper storage and disposal of such information.



32	BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012

A World-Class Mutual Fund Family

BlackRock offers a diverse lineup of open-end mutual funds crossing all investment styles and managed by experts in equity, fixed income and tax-exempt investing.


Equity Funds
BlackRock ACWI ex-US Index Fund	BlackRock Global Dividend Income Portfolio	BlackRock Mid-Cap Growth Equity Portfolio
BlackRock All-Cap Energy & Resources Portfolio	BlackRock Global Opportunities Portfolio	BlackRock Mid-Cap Value Opportunities Fund
BlackRock Balanced Capital Fund†	BlackRock Global SmallCap Fund	BlackRock Natural Resources Trust
BlackRock Basic Value Fund	BlackRock Health Sciences Opportunities Portfolio	BlackRock Pacific Fund
BlackRock Capital Appreciation Fund	BlackRock Index Equity Portfolio	BlackRock Real Estate Securities Fund
BlackRock China Fund	BlackRock India Fund	BlackRock Russell 1000 Index Fund
BlackRock Commodity Strategies Fund	BlackRock International Fund	BlackRock Science & Technology
BlackRock Emerging Markets Fund	BlackRock International Index Fund	Opportunities Portfolio
BlackRock Emerging Markets Long/Short	BlackRock International Opportunities Portfolio	BlackRock Small Cap Growth Equity Portfolio
Equity Fund	BlackRock Large Cap Core Fund	BlackRock Small Cap Growth Fund II
BlackRock Energy & Resources Portfolio	BlackRock Large Cap Core Plus Fund	BlackRock Small Cap Index Fund
BlackRock Equity Dividend Fund	BlackRock Large Cap Growth Fund	BlackRock S&P 500 Index Fund
BlackRock EuroFund	BlackRock Large Cap Value Fund	BlackRock S&P 500 Stock Fund
BlackRock Flexible Equity Fund	BlackRock Latin America Fund	BlackRock U.S. Opportunities Portfolio
BlackRock Focus Growth Fund	BlackRock Long-Horizon Equity Fund	BlackRock Value Opportunities Fund
BlackRock Global Allocation Fund†	BlackRock Managed Volatility Portfolio†	BlackRock World Gold Fund
Taxable Fixed Income Funds
BlackRock Bond Index Fund	BlackRock High Yield Bond Portfolio	BlackRock Strategic Income
BlackRock Core Bond Portfolio	BlackRock Inflation Protected Bond Portfolio	Opportunities Portfolio
BlackRock CoreAlpha Bond Fund	BlackRock International Bond Portfolio	BlackRock Total Return Fund
BlackRock Emerging Market Local Debt Portfolio	BlackRock Long Duration Bond Portfolio	BlackRock US Government Bond Portfolio
BlackRock Floating Rate Income Portfolio	BlackRock Low Duration Bond Portfolio	BlackRock US Mortgage Portfolio
BlackRock Global Long/Short Credit Fund	BlackRock Multi-Asset Income Portfolio†	BlackRock World Income Fund
BlackRock GNMA Portfolio	BlackRock Secured Credit Portfolio
Municipal Fixed Income Funds
BlackRock California Municipal Bond Fund	BlackRock National Municipal Fund	BlackRock Pennsylvania Municipal Bond Fund
BlackRock High Yield Municipal Fund	BlackRock New Jersey Municipal Bond Fund	BlackRock Short-Term Municipal Fund
BlackRock Intermediate Municipal Fund	BlackRock New York Municipal Bond Fund


Target Risk & Target Date Funds†
BlackRock Prepared Portfolios	LifePath Active Portfolios		LifePath Portfolios		LifePath Index Portfolios
Conservative Prepared Portfolio	2015	2035	Retirement	2040	Retirement	2040
Moderate Prepared Portfolio	2020	2040	2020	2045	2020	2045
Growth Prepared Portfolio	2025	2045	2025	2050	2025	2050
Aggressive Growth Prepared Portfolio	2030	2050	2030	2055	2030	2055
			2035		2035

†	Mixed asset fund.

BlackRock mutual funds are currently distributed by BlackRock Investments, LLC. You should consider the investment objectives, risks, charges and expenses of the funds under consideration carefully before investing. Each fund’s prospectus contains this and other information and is available at www.blackrock.com or by calling (800) 441-7762 or from your financial advisor. The prospectus should be read carefully before investing.



BLACKROCK CAPITAL APPRECIATION FUND, INC.	SEPTEMBER 30, 2012	33

[THIS PAGE INTENTIONALLY LEFT BLANK.]

This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless accompanied or preceded by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.

LOGO


CapApp-9/12-AR


Item 2 –		Code of Ethics – The registrant (or “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, there have been no amendments to or waivers granted under the code of ethics. A copy of the code of ethics is available without charge at www.blackrock.com.

Item 3 –		Audit Committee Financial Expert – The registrant’s board of directors (the “board of directors”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent: Robert M. Hernandez Fred G. Weiss Stuart E. Eizenstat

		Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification.

Item 4 –		Principal Accountant Fees and Services

		The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

(a) Audit Fees

(b) Audit-Related Fees¹

(c) Tax Fees²

(d) All Other Fees³

Entity Name

Current
Fiscal Year
End

Previous
Fiscal Year
End

Current
Fiscal Year
End

Previous
Fiscal Year
End

Current
Fiscal Year
End

Previous
Fiscal Year
End

Current
Fiscal Year
End

Previous
Fiscal Year
End

BlackRock Capital Appreciation Fund, Inc.

$36,500

$36,100

$22,350

$24,700

The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Fund Service Providers”):


	Current Fiscal Year End	Previous Fiscal Year End
(b) Audit-Related Fees¹	$0	$0
(c) Tax Fees²	$0	$0
(d) All Other Fees³	$2,970,000	$3,030,000

¹ The nature of the services includes assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees.

² The nature of the services includes tax compliance, tax advice and tax planning.

³ Aggregate fees borne by BlackRock in connection with the review of compliance procedures and attestation thereto performed by D&T with respect to all of the registered closed-end funds and some of the registered open-end funds advised by BlackRock.

(e)(1) Audit Committee Pre-Approval Policies and Procedures:

The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Fund Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not Applicable

(g) The aggregate non-audit fees paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Fund Service Providers were:

Entity Name

Current Fiscal Year

End

Previous Fiscal Year

End

BlackRock Capital Appreciation

Fund, Inc.

$22,350

$24,700

Additionally, SSAE 16 Review (Formerly, SAS No. 70) fees for the current and previous fiscal years of $2,970,000 and $3,030,000, respectively, were billed by D&T to the Investment Adviser.

(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser and the Fund Service Providers that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.


Item 5 –		Audit Committee of Listed Registrants – Not Applicable

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

Item 8 –		Portfolio Managers of Closed-End Management Investment Companies – Not Applicable

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 15d-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 – See Item 2

(a)(2) –		Certifications – Attached hereto

(a)(3) –		Not Applicable

(b) –		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 Capital Appreciation Fund, Inc.


By:		/s/ John M. Perlowski
		John M. Perlowski
		Chief Executive Officer (principal executive officer) of
		BlackRock Capital Appreciation Fund, Inc.

Date: December 4, 2012

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 Capital Appreciation Fund, Inc.

Date: December 4, 2012


By:		/s/ Neal J. Andrews
		Neal J. Andrews
		Chief Financial Officer (principal financial officer) of
		BlackRock Capital Appreciation Fund, Inc.

Date: December 4, 2012

See Notes to Financial Statements.

BLACKROCK CAPITAL APPRECIATION FUND, INC.

SEPTEMBER 30, 2012