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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000900092-08-000483.txt : 20080904
<SEC-HEADER>0000900092-08-000483.hdr.sgml : 20080904
<ACCEPTANCE-DATETIME>20080904123727
ACCESSION NUMBER:		0000900092-08-000483
CONFORMED SUBMISSION TYPE:	N-CSRS
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20080630
FILED AS OF DATE:		20080904
DATE AS OF CHANGE:		20080904
EFFECTIVENESS DATE:		20080904

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BLACKROCK ENHANCED CAPITAL & INCOME FUND, INC
		CENTRAL INDEX KEY:			0001278895
		IRS NUMBER:				000000000

	FILING VALUES:
		FORM TYPE:		N-CSRS
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-21506
		FILM NUMBER:		081055849

	BUSINESS ADDRESS:	
		STREET 1:		100 BELLEVUE PARKWAY
		CITY:			WILMINGTON
		STATE:			DE
		ZIP:			19809
		BUSINESS PHONE:		800-441-7762

	MAIL ADDRESS:	
		STREET 1:		100 BELLEVUE PARKWAY
		CITY:			WILMINGTON
		STATE:			DE
		ZIP:			19809

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	BLACKROCK CAPITAL & INCOME STRATEGIES FUND INC
		DATE OF NAME CHANGE:	20061018

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CAPITAL & INCOME STRATEGIES FUND INC
		DATE OF NAME CHANGE:	20040205
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-CSRS
<SEQUENCE>1
<FILENAME>final.htm
<DESCRIPTION>BR ENHANCED CAPITAL & INCOME FUND
<TEXT>

<HTML>
<HEAD>
   <TITLE>CII -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing</TITLE>
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<FONT face="ArialMT,Arial,Helvetica,sans-serif">UNITED STATES</FONT><BR>
<FONT face="ArialMT,Arial,Helvetica,sans-serif"> SECURITIES AND EXCHANGE COMMISSION </FONT><BR>
<FONT face="ArialMT,Arial,Helvetica,sans-serif">Washington, D.C. 20549</FONT><BR>
<BR>
<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">FORM N-CSRS</FONT></B><BR>
<BR>
<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT </FONT></B><BR>
<B><FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">INVESTMENT COMPANIES</FONT></B></TD></TR></TABLE>
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<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Investment Company Act file number 811-21506</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Name of Fund: BlackRock Enhanced Capital and Income Fund, Inc. (CII)</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Name and address of agent for service: Donald C. Burke, Chief Executive Officer, BlackRock </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Enhanced Capital and Income Fund, Inc., 800 Scudders Mill Road, Plainsboro, NJ, 08536.</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Mailing address: P.O. Box 9011, Princeton, NJ, 08543-9011</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Registrant&#146;s telephone number, including area code: (800) 882-0052, Option 4</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date of fiscal year end: 12/31/2008</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date of reporting period: 01/01/2008 &#150; 06/30/2008</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 1 &#150; Report to Stockholders </FONT></TD></TR></TABLE>
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<FONT size=1 face="DIN-Light,Arial,Helvetica,sans-serif">EQUITIES FIXED INCOME REAL ESTATE LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS</FONT><BR>
<BR>
<FONT size=5 face="DIN-Regular,Arial,Helvetica,sans-serif">BlackRock Enhanced Capital</FONT><BR>
<BR>
<FONT size=5 face="DIN-Regular,Arial,Helvetica,sans-serif">and Income Fund, Inc. (CII)</FONT><BR>
<BR>
<FONT face="DIN-Regular,Arial,Helvetica,sans-serif">SEMI-ANNUAL REPORT</FONT><BR>
<BR>
<FONT face="DIN-Regular,Arial,Helvetica,sans-serif">JUNE 30, 2008 | (UNAUDITED)</FONT></TD></TR></TABLE>
</P>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=1 face="DIN-Light,Arial,Helvetica,sans-serif">NOT FDIC INSURED</FONT><BR>
<FONT size=1 face="DIN-Light,Arial,Helvetica,sans-serif">MAY LOSE VALUE</FONT><BR>
<FONT size=1 face="DIN-Light,Arial,Helvetica,sans-serif">NO BANK GUARANTEE</FONT></TD></TR></TABLE>
</P>

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<TR valign="bottom">
	<TD align=left width=71% nowrap>
<FONT color="#0035c4" size=4 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">Table of Contents</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=26% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Page</FONT></B>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">A Letter to Shareholders</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">3</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
<B><FONT size=2 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Semi-Annual Report:</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=26% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund Summary</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Financial Statements:</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=26% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Schedule of Investments</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">5</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Statement of Assets and Liabilities</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">7</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Statement of Operations</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">8</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
 &nbsp; &nbsp; &nbsp;<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Statements of Changes in Net Assets</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">9</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Financial Highlights</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">10</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Notes to Financial Statements</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">11</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Disclosure of Investment Advisory Agreement and Subadvisory Agreement</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">14</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Officers and Directors</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">17</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=71% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Additional Information</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=26% nowrap>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">18</FONT>&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">2 BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JUNE 30, 2008</FONT></P>

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<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#0035c4 size=4>A Letter to Shareholders</FONT></TD></TR></TABLE></P>
<P align=left><B><FONT face=FranklinGothic-Demi,Arial,Helvetica,sans-serif size=2>Dear Shareholder</FONT></B><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Throughout the past year, investors were overwhelmed by lingering credit and financial market troubles, surging oil </FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>prices and more recently, renewed inflation concerns. Healthy nonfinancial corporate profits and robust exporting </FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>activity remained among the few bright spots, helping the economy to grow at a modest, but still positive, pace.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The Federal Reserve Board (the &#147;Fed&#148;) has been aggressive in its attempts to stoke economic growth and ease </FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>financial market instability. In addition to slashing the target federal funds rate 325 basis points (3.25%) between</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>September 2007 and April 2008, the central bank introduced the new Term Securities Lending Facility, granted broker</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>dealers access to the discount window and used its own balance sheet to help negotiate the sale of Bear Stearns.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>As widely anticipated, the end of the period saw a pause in Fed action, as the central bank held the target rate steady</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>at 2.0% amid rising inflationary pressures.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>As the Fed&#146;s bold response to the financial crisis helped ease credit turmoil and investor anxiety, U.S. equity markets</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>sank sharply over the last six months, notwithstanding a brief rally in the spring. International markets were not immune</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>to the tumult, with most regions also registering declines.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Treasury securities also traded in a volatile fashion, but generally rallied (yields fell as prices correspondingly rose),</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>investors continuing to seek safety as part of a broader flight to quality. The yield on 10-year Treasury issues, which fell</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>to 3.34% in March 2008, climbed up to the 4.20% range in mid-June as investors temporarily shifted out of Treasury</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>issues in favor of riskier assets (such as stocks and other high-quality fixed income sectors), then reversed course and</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>declined to 3.99% by period-end when credit fears re-emerged.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Tax-exempt issues eked out gains for the reporting period, but underperformed their taxable counterparts, as the group</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>continued to be pressured by problems among municipal bond insurers and the breakdown in the market for auction</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>rate securities.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The major benchmark indexes generated results that largely reflected heightened investor risk aversion:</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="68%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Total Returns as of June 30, 2008</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>6-month</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="11%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>12-month</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="68%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="11%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="68%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>U.S. equities (S&amp;P 500 Index)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(11.91)%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(13.12)%</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="68%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="11%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="68%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Small cap U.S. equities (Russell 2000 Index)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(9.37)%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(16.19)%</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="68%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="11%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="68%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>International equities (MSCI Europe, Australasia, Far East Index)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(10.96)%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(10.61)%</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="68%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="11%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="68%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Fixed income (Lehman Brothers U.S. Aggregate Index)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.13%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>7.12%</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="68%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="11%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="68%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Tax-exempt fixed income (Lehman Brothers Municipal Bond Index)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.02%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>3.23%</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="68%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="11%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="68%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Capped Index)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(1.08)%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="11%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(1.74)%</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="68%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="11%">
<HR noShade SIZE=1>
</TD></TR></TABLE><BR>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>in an index.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>As you navigate today&#146;s volatile markets, we encourage you to review your investment goals with your financial profes-</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>sional and to make portfolio changes, as needed. For more up-to-date commentary on the economy and financial </FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>markets, we invite you to visit www.blackrock.com/funds. As always, we thank you for entrusting BlackRock with your</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>investment assets, and we look forward to continuing to serve you in the months and years ahead.</FONT></TD></TR></TABLE></P>
<IMG src="enhancedcapincomesar0608x3x1.jpg" border=0>
<BR>
<P align=left><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#4d4d4d size=2>THIS PAGE NOT PART OF YOUR FUND </FONT><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#4d4d4d size=2>REPORT</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>3</FONT></TD></TR></TABLE></P>
<HR align=center width="100%" noShade SIZE=2>

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<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#0035c4 size=4>Fund Summary </FONT><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#0035c4 size=2>as of June 30, 2008</FONT></TD></TR></TABLE></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=2>BlackRock Enhanced Capital and Income Fund, Inc.</FONT></B></TD></TR></TABLE></P>
<P align=left><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Investment Objective</FONT></B></P>
<P align=left><B><FONT face=FranklinGothic-MedCnd,Arial,Helvetica,sans-serif size=2>BlackRock Enhanced Capital and Income Fund, Inc. (CII) (the &#147;Fund&#148;) </FONT></B><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>seeks to provide investors with a combination of current income and capital appreciation. The Fund seeks to achieve its investment objective by investing primarily in a diversified portfolio of common stocks in an attempt to generate current income and by employing a strategy of writing (selling) call options on equity indexes in an attempt to generate gains from option premiums primarily on the S&amp;P 500 Index.</FONT></P>
<P align=left><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Performance</FONT></B></P>
<P align=left><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>For the six months ended June 30, 2008, the Fund returned (8.56)% based on market price and (7.85)% based on net asset value (NAV). For the same period, the benchmark S&amp;P 500 Citigroup Value Index returned (16.04)% . All returns reflect reinvestment of dividends. The Fund&#146;s options investments were the most significant contributor to performance over the period. Allocation and stock selection in information technology, along with stock selection in healthcare and materials, also proved advantageous. Additionally, an overweight in energy and underweight in financials aided returns. Conversely, stock selection in telecommunication services, financials, consumer staples and industrials hindered performance, as did an underweight in utilities.</FONT></P>
<P align=left><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>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.</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD width=12>&nbsp;</TD>
     <TD noWrap><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Fund Information</FONT></B></TD></TR></TABLE></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Symbol on New York Stock Exchange</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>CII</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Initital Offering Date</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="18%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>April 30, 2004</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="52%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Yield on Closing Market Price as of June 30, 2008 ($17.39)</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>1</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="18%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>11.16%</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="52%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Current Quarterly Distribution per share of Common Stock</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>2</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="18%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$0.485</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="52%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Current Annualized Distribution per share of Common Stock</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>2</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$1.94</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="52%" colSpan=3>
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="88%" colSpan=9>&nbsp; &nbsp;<SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1 </FONT></SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Yield on closing market price is calculated by dividing the current annualized distribution per share by the closing market price.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Past performance does not guarantee future results.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="98%" colSpan=11>&nbsp; &nbsp;<SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2 </FONT></SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>The distribution is not constant and is subject to change. A portion of the distribution may be deemed a tax return of capital or net realized</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%">&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>gain at fiscal year end.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="78%" colSpan=7><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The table below summarizes the changes in the Fund&#146;s market price and net asset value per share:</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD></TR>
<TR>
     <TD width="78%" colSpan=7>
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>6/30/08</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="10%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>12/31/07</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="12%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Change</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="8%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>High</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="8%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Low</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="39%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="11%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Market Price</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$17.39</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$20.06</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>(13.31)%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$20.06</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$17.00</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Net Asset Value</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$18.66</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$21.36</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="12%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>(12.64)%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$21.36</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$18.64</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="39%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="11%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="78%" colSpan=7><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The following chart shows the portfolio composition of the Fund&#146;s long-term investments:</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD></TR>
<TR>
     <TD width="78%" colSpan=7>
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%">&nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Portfolio Composition</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD></TR>
<TR>
     <TD width="39%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="11%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=11>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Asset Mix</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>6/30/08</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="8%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>12/31/07</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="39%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="11%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="39%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Common Stocks</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="11%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="12%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>100%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>100%</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="39%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="11%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="12%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD></TR></TABLE><BR>
<P align=left><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>4 BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JUNE 30, 2008</FONT></P>
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<P align="left">
<FONT color="#0035c4" size=4 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">Schedule of Investments </FONT><FONT color="#0035c4" size=2 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">June 30, 2008 (Unaudited)</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Common Stocks</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<B><FONT size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Shares</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=center width=19% nowrap>
<B><FONT size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Value</FONT></B>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=5>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Aerospace &amp; Defense &#151; 4.8%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Honeywell International, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">46,700</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">&#36; 2,348,076</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Northrop Grumman Corp.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">54,400</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">3,639,360</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Raytheon Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">88,900</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">5,003,292</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">10,990,728</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Capital Markets &#151; 4.7%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Bank of New York Mellon Corp.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">106,225</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4,018,492</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Lehman Brothers Holdings, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">92,400</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,830,444</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Morgan Stanley</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">133,200</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4,804,524</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">10,653,460</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Chemicals &#151; 2.8%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Dow Chemical Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">26,300</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">918,133</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">E.I. du Pont de Nemours &amp; Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">128,700</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">5,519,943</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">6,438,076</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Commercial Banks &#151; 0.4%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Wells Fargo &amp; Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">37,500</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">890,625</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Computers &amp; Peripherals &#151; 5.8%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Hewlett-Packard Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">125,100</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">5,530,671</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">International Business Machines Corp.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">64,100</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">7,597,773</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">13,128,444</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Consumer Finance &#151; 0.2%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">SLM Corp. (a)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">25,700</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">497,295</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Diversified Financial Services &#151; 5.2%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Bank of America Corp.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">123,627</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,950,977</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Citigroup, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">126,300</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,116,788</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">JPMorgan Chase &amp; Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">200,972</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">6,895,349</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">11,963,114</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Diversified Telecommunication</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Services &#151; 5.3%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">AT&amp;T Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">139,570</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4,702,113</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Qwest Communications International Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">772,500</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">3,035,925</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Verizon Communications, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">122,000</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4,318,800</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">12,056,838</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Electric Utilities &#151; 3.2%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">FPL Group, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">68,000</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4,459,440</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Southern Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">82,400</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,877,408</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">7,336,848</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Energy Equipment &amp; Services &#151; 5.9%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BJ Services Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">181,100</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">5,784,334</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Halliburton Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">143,800</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">7,631,466</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">13,415,800</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Food Products &#151; 6.9%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">General Mills, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">83,300</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">5,062,141</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Kraft Foods, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">179,300</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">5,101,085</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Unilever NV (b)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=21% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">196,800</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">5,589,120</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=55% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=21% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">15,752,346</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">See Notes to Financial Statements.</FONT></TD></TR></TABLE>
</P>
<P align="center">
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">(Percentages shown are based on Net Assets)</FONT></B></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Common Stocks</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<B><FONT size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Shares</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=center width=19% nowrap>
<B><FONT size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Value</FONT></B>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=5>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Health Care Equipment &amp; Supplies &#151; 2.3%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Baxter International, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">38,000</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">&#36; 2,429,720</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Covidien Ltd.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">58,925</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,821,918</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">5,251,638</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Health Care Providers &amp; Services &#151; 0.8%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Cardinal Health, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">36,200</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,867,196</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Household Products &#151; 2.5%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Clorox Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">22,200</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,158,840</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Kimberly-Clark Corp.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">77,400</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4,626,972</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">5,785,812</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">IT Services &#151; 0.9%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Unisys Corp. (a)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">508,300</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,007,785</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Industrial Conglomerates &#151; 2.9%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">General Electric Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">153,900</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4,107,591</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Tyco International Ltd.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">59,625</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,387,385</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">6,494,976</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Insurance &#151; 7.7%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">American International Group, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">108,000</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,857,680</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Hartford Financial Services Group, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">68,700</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4,435,959</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">MetLife, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">42,700</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,253,279</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Prudential Financial, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">28,300</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,690,642</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Travelers Cos., Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">144,600</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">6,275,640</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">17,513,200</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Machinery &#151; 1.7%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Deere &amp; Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">52,400</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">3,779,612</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Media &#151; 5.4%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Time Warner, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">519,000</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">7,681,200</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Viacom, Inc. Class B (a)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">38,100</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,163,574</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Walt Disney Co.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">106,600</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">3,325,920</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">12,170,694</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Metals &amp; Mining &#151; 1.8%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Alcoa, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">113,000</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4,025,060</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Multi-Utilities &#151; 1.2%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Dominion Resources, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">59,400</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,820,906</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Multiline Retail &#151; 0.5%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Nordstrom, Inc.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">34,100</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,033,230</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Office Electronics &#151; 2.9%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Xerox Corp.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">481,400</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">6,527,784</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Oil, Gas &amp; Consumable</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Fuels &#151; 8.0%</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Anadarko Petroleum Corp.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">22,700</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,698,868</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Chevron Corp.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">39,400</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">3,905,722</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Exxon Mobil Corp.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">115,300</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">10,161,389</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Peabody Energy Corp.</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">27,700</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,438,985</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=57% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=19% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=19% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">18,204,964</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC.</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">JUNE 30, 2008</FONT></TD></TR></TABLE>
</P>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">5</FONT></TD></TR></TABLE>
</P>

<HR noshade align="center" width="100%" size=2>


<!--$$/page=-->
<A name="page_6"></A>
<P align=left><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#0035c4 size=4>Schedule of Investments (concluded)</FONT></P>
<P align=left><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>(Percentages shown are based on Net Assets)</FONT></B></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Common Stocks</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Shares</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="19%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Value</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Pharmaceuticals &#151; 8.9%</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Bristol-Myers Squibb Co.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>397,600</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 8,162,728</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Johnson &amp; Johnson</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>39,600</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2,547,864</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Pfizer, Inc.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>132,900</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2,321,763</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Schering-Plough Corp.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>202,800</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>3,993,132</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Wyeth</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>66,000</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>3,165,360</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>20,190,847</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Semiconductors &amp; Semiconductor Equipment &#151; 8.2%</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Analog Devices, Inc.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>79,500</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2,525,715</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Fairchild Semiconductor International, Inc. (a)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>190,100</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2,229,873</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Intel Corp.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>206,800</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>4,442,064</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>LSI Corp. (a)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>854,100</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>5,244,174</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Micron Technology, Inc. (a)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>688,200</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>4,129,200</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>18,571,026</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Total Common Stocks</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>(Cost &#151; $242,734,766) &#151; 100.9%</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>229,368,304</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=2>
</TD></TR>
<TR>
     <TD width="98%" colSpan=5>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=5>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Beneficial</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Interest</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Short-Term Securities</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>(000)</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>BlackRock Liquidity Series, LLC</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%">&nbsp; &nbsp;<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Cash Sweep Series, 2.56% (c)(d)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$1,432</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1,431,609</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Total Short-Term Securities</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>(Cost &#151; $1,431,609) &#151; 0.6%</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1,431,609</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Total Investments Before Options Written</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>(Cost &#151; $244,166,375*) &#151; 101.5%</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>230,799,913</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=2>
</TD></TR>
<TR>
     <TD width="98%" colSpan=5>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=5>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=5>&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Options Written</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Contracts</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Call Options Written</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Nordstrom, Inc., expiring January 2009 at $40</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>341</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(46,035)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Peabody Energy Corp., expiring December 2008 at $90</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>140</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(182,000)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>S&amp;P 500 Index, expiring August 2008 at $1,370</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>575</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(419,750)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>S&amp;P 500 Index, expiring August 2008 at $1,380</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="13%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>325</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(178,750)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Total Options Written</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="19%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>(Premiums Received &#151; $2,215,110) &#151; (0.4%)</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(826,535)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Total Investments, Net of Options Written &#151; 101.1%</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>229,973,378</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Liabilities in Excess of Other Assets &#151; (1.1%)</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(2,519,896)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="62%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Net Assets &#151; 100.0%</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="13%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="19%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$227,453,482</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="62%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="13%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="19%">
<HR noShade SIZE=1>
</TD></TR></TABLE><BR>
<P align=left>
<TABLE>
<TR>
     <TD width=7>&nbsp;</TD>
     <TD noWrap><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>* The cost and unrealized appreciation (depreciation) of investments, as of June 30,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2008, as computed for federal income tax purposes, were as follows:</FONT></TD></TR></TABLE></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="54%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Aggregate cost</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="43%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 245,027,921</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="54%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="43%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="54%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Gross unrealized appreciation</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="43%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 22,085,328</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="54%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Gross unrealized depreciation</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="43%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(36,313,336)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="54%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="43%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="54%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net unrealized depreciation</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="43%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ (14,228,008)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="54%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="43%">
<HR noShade SIZE=1>
</TD></TR></TABLE><BR>
<P align=left><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(a) Non-income producing security.</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(b) Depositary receipts.</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(c) Investments in companies considered to be an affiliate of the Fund, for purposes</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>of Section 2(a)(3) of the Investment Company Act of 1940, were as follows:</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="29%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Net</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="18%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="29%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Activity</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="18%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Interest</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Affiliate</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="29%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>(000)</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="18%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Income</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="47%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="29%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="18%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>BlackRock Liquidity Series, LLC</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="29%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="18%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="47%">&nbsp; &nbsp; &nbsp;<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Cash Sweep Series</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="29%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>($12,241)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="18%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$197,648</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="47%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="29%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="18%">
<HR noShade SIZE=1>
</TD></TR></TABLE><BR>
<P align=left><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(d) Represents the current yield as of report date.</FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>&#149; </SUB></FONT><FONT face="Franklin Gothic Book" size=2><SUB>For Fund compliance purposes,the Fund&#146;s industry classifications refer to any</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>one or more of the industry sub-classifications used by one or more widely </SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>recognized market indexes or ratings group indexes, and/or as defined by Fund</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>management. This definition may not apply for purposes of this report, which </SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>may combine industry sub-classifications for reporting ease.</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>&#149; </SUB></FONT><FONT face="Franklin Gothic Book" size=2><SUB>Effective January 1,2008,the Fund adopted Financial Accounting Standards</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>Board Statement of Financial Accounting Standards No. 157, &#147;Fair Value</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>Measurements&#148; (&#147;FAS 157&#148;). FAS 157 clarifies the definition of fair value,</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>establishes a framework for measuring fair values and requires additional </SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>disclosures about the use of fair value measurements. Various inputs are used </SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>in determining the fair value of investments, which are as follows:</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>&#149;</SUB></FONT><FONT face="Franklin Gothic Book" size=2><SUB>Level 1 &#151; price quotations in active markets/exchanges for identical securities</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>&#149;</SUB></FONT><FONT face="Franklin Gothic Book" size=2><SUB>Level 2 &#151; other observable inputs (including,but not limited to: quoted</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>prices for similar assets or liabilities in markets that are not active, inputs</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>other than quoted prices that are observable for the assets or liabilities (such</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>as interest rates, yield curves, volatilities, prepayment speeds, loss severities,</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>credit risks, and default rates) or other market-corroborated inputs)</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>&#149;</SUB></FONT><FONT face="Franklin Gothic Book" size=2><SUB>Level 3 - unobservable inputs based on the best information available in the</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>circumstance, to the extent observable inputs are not available (including the</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>Fund&#146;s own assumption used in determining the fair value of investments)</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>The inputs or methodology used for valuing securities are not necessarily an</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>indication of the risk associated with investing in those securities. For informa-</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>tion about the Fund&#146;s policy regarding valuation of investments and other </SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>significant accounting policies, please refer to Note 1 of the Notes to </SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>Financial Statements.</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>The following table summarizes the inputs used as of June 30, 2008 in deter-</SUB></FONT><BR>
<FONT face="Franklin Gothic Book" size=2><SUB>mining the fair valuation of the Fund&#146;s investments:</SUB></FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="42%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Other</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Valuation</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="42%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Investments in</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Financial</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Inputs</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="42%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Securities</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="22%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Instruments*</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="30%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="42%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="22%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="98%" colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Level 1</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="42%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$229,368,304</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ (826,535)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Level 2</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="42%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1,431,609</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Level 3</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="42%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="30%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="42%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="22%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="30%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Total</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="42%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$230,799,913</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ (826,535)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="30%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="42%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="22%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="74%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>* Other financial instruments are options.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="22%">&nbsp; </TD></TR></TABLE><BR>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>See Notes to Financial Statements.</FONT></TD></TR></TABLE></P>
<P align=left><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>6 BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JUNE 30, 2008</FONT></P>
<HR align=center width="100%" noShade SIZE=2>


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<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT color="#0035c4" size=4 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">Statement of Assets and Liabilities</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=20% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<B><FONT size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">June 30, 2008 (Unaudited)</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=20% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
 &nbsp; &nbsp; &nbsp;<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Assets</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=20% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Investments at value &#151; unaffiliated (cost &#151; &#36;242,734,766)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">&#36; 229,368,304</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Investments at value &#151; affiliated (cost &#151; &#36;1,431,609)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,431,609</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Foreign currency at value (cost &#151; &#36;9,142)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">9,358</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Investments sold receivable</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">951,221</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Dividends receivable</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">267,695</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Prepaid expenses</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">521</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Other assets</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,200</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Total assets</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">232,030,908</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=2>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
 &nbsp; &nbsp; &nbsp;<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Liabilities</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=20% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Options written at value (premiums received &#151; &#36;2,215,110)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">826,535</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Investments purchased payable</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,400,418</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Income dividends payable</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,082,866</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Investment advisory fees payable</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">168,310</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Other affiliates payable</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,987</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Other accrued expenses payable</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">97,310</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Total liabilities</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">4,577,426</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=2>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
 &nbsp; &nbsp; &nbsp;<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Net Assets</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=20% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Net assets</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">&#36; 227,453,482</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=2>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
 &nbsp; &nbsp; &nbsp;<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Net Assets Consist of</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=20% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Common Stock, par value, &#36;0.10 per share (200,000,000 shares authorized, 12,188,736 shares issued and outstanding)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">&#36; 1,218,874</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Paid-in capital in excess of par</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">231,130,228</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Distributions in excess of net investment income</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">(10,005,262)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Accumulated net realized gain</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">17,087,313</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Net unrealized appreciation/depreciation</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">(11,977,671)</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=77% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Net assets &#151; &#36;18.66 net asset value per share</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=20% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">&#36; 227,453,482</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">See Notes to Financial Statements.</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC.</FONT></P>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">JUNE 30, 2008</FONT></TD></TR></TABLE>
</P>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">7</FONT></TD></TR></TABLE>
</P>

<HR noshade align="center" width="100%" size=2>



<!--$$/page=-->
<A name="page_8"></A>

<TABLE border=0 cellspacing=0 cellpadding=0>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT color="#0035c4" size=4 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">Statement of Operations</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=38% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<B><FONT size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Six Months Ended June 30, 2008 (Unaudited)</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=38% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
 &nbsp; &nbsp; &nbsp;<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Investment Income</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=38% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Dividends (net of &#36;21,943 foreign withholding tax)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">&#36; 2,891,405</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Interest (including &#36;197,648 from affiliates)</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">198,405</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Total income</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">3,089,810</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=2>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=center width=59% nowrap>
<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Expenses</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=38% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Investment advisory</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,037,545</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Accounting services</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">46,079</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Professional</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">40,187</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Custodian</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">40,183</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Borrowing costs</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">37,668</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Printing</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">32,112</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Officer and Directors</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">16,789</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Registration</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">8,962</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Miscellaneous</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">12,473</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Total expenses</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,271,998</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Net investment income</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">1,817,812</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=2>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
 &nbsp; &nbsp; &nbsp;<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Realized and Unrealized Gain (Loss)</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=38% nowrap>
&nbsp;
	</TD>
</TR>
<TR>
	<TD>
<HR noshade size=1>
	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR>
	<TD colspan=3>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Net realized gain (loss) from:</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=38% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
 &nbsp; &nbsp;<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Investments</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">2,357,573</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
 &nbsp; &nbsp;<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Futures</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">(406,246)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
 &nbsp; &nbsp;<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Options written</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">11,227,722</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">13,179,049</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Net change in unrealized appreciation/depreciation on:</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=left width=38% nowrap>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
 &nbsp; &nbsp;<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Investments</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">(36,395,905)</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
 &nbsp; &nbsp;<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Futures</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">94,114</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
 &nbsp; &nbsp;<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Options written</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">195,670</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
 &nbsp; &nbsp;<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Foreign currency</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">376</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">(36,105,745)</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Total realized and unrealized loss</FONT>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">(22,926,696)</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
<TR valign="bottom">
	<TD align=left width=59% nowrap>
<B><FONT size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Net Decrease in Net Assets Resulting from Operations</FONT></B>&nbsp;
	</TD>
	<TD width=2%>
&nbsp;	</TD>
	<TD align=right width=38% nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">&#36; (21,108,884)</FONT>&nbsp;
	</TD>
</TR>
<TR>
	<TD>
&nbsp;	</TD>
	<TD>&nbsp;
	</TD>
	<TD>
<HR noshade size=1>
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<TABLE><TR><TD nowrap>
<FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">See Notes to Financial Statements.</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">8 BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JUNE 30, 2008</FONT></P>

<HR noshade align="center" width="100%" size=2>


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<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#0035c4 size=4>Statements of Changes in Net Assets</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR>
     <TD width="98%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="27%" colSpan=3><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Six Months Ended</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Year Ended</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="27%" colSpan=3><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>June 30, 2008</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>December 31,</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Increase (Decrease) in Net Assets:</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="10%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>(Unaudited)</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="10%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>2007</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="57%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="15%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%">&nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Operations</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR>
     <TD width="57%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="15%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net investment income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="27%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 1,817,812</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 3,828,423</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net realized gain</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>13,179,049</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>24,442,607</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net change in unrealized appreciation/depreciation</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(36,105,745)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(17,410,396)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="57%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="15%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net increase (decrease) in net assets resulting from operations</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(21,108,884)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>10,860,634</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="57%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="15%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=2>
</TD></TR>
<TR>
     <TD width="98%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%">&nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Dividends and Distributions to Shareholders From</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR>
     <TD width="57%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="15%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net investment income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(11,823,074)</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(4,178,081)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net realized gain</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(25,569,419)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="57%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="15%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Decrease in net assets resulting from dividends and distributions to shareholders</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(11,823,074)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(29,747,500)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="57%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="15%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=2>
</TD></TR>
<TR>
     <TD width="98%" colSpan=7>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%">&nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Net Assets</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR>
<TR>
     <TD width="57%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="15%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Total decrease in net assets</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(32,931,958)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(18,886,866)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Beginning of period</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="15%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>260,385,440</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>279,272,306</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="57%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="15%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>End of period</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="27%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 227,453,482</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 260,385,440</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="57%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="27%" colSpan=3>
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="57%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>End of period distributions in excess of net investment income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="27%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ (10,005,262)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="10%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="57%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="27%" colSpan=3>
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="10%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="74%" colSpan=3>&nbsp; &nbsp;<SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1 </FONT></SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>A portion of the dividends from net investment income may be deemed a tax return of capital or net realized gain at fiscal year end.</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="10%">&nbsp; </TD></TR></TABLE><BR>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>See Notes to Financial Statements.</FONT></TD></TR></TABLE></P>
<P align=left><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC.</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>JUNE 30, 2008</FONT></TD></TR></TABLE></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>9</FONT></TD></TR></TABLE></P>
<HR align=center width="100%" noShade SIZE=2>

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<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#0035c4 size=4>Financial Highlights</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="6%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%">&nbsp; </TD></TR>
<TR>
     <TD width="97%" colSpan=13>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="6%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="19%" colSpan=3></TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="6%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><STRONG><FONT face=Arial size=1>Period</FONT></STRONG></TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%">&nbsp; <STRONG><FONT face=Arial size=1>Six Months Ended</FONT></STRONG>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="25%" colSpan=5><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Year Ended December 31,</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%">&nbsp; <STRONG><FONT size=1><FONT face=Arial>April 30, 2004<SUP>1</SUP></FONT></FONT></STRONG>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>June 30, 2008</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="6%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>to December 31,</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>(Unaudited)</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>2007</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="7%">&nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>2006</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>2005</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%">&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>2004</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="38%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Per Share Operating Performance</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="6%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%">&nbsp; </TD></TR>
<TR>
     <TD width="38%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="97%" colSpan=13>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net asset value, beginning of period</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 21.36</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="9%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 22.91</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 20.31</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 20.76</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 19.10</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="9%" colSpan=3>
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net investment income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.15</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.31</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.37</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.46</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.46</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net realized and unrealized gain (loss)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(1.88)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.58</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>3.69</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.29</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.84</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net increase (decrease) from investment operations</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(1.73)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.89</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>4.06</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.75</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2.30</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Dividends and distributions from:</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="6%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; &nbsp; &nbsp;<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net investment income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.97)</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>3</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.34)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.33)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.47)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.48)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; &nbsp; &nbsp;<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net realized gain</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(2.10)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(1.13)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.73)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.11)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; &nbsp; &nbsp;<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Tax return of capital</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.01)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Total dividends and distributions</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.97)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(2.44)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(1.46)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(1.20)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.60)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Capital charges with respect to the issuance of shares</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(0.04)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net asset value, end of period</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 18.66</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="9%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 21.36</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 22.91</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 20.31</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 20.76</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="9%" colSpan=3>
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Market price, end of period</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 17.39</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="9%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 20.06</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 20.41</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 17.21</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 18.32</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="9%" colSpan=3>
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=2>
</TD></TR>
<TR>
     <TD width="97%" colSpan=13>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Total Investment Return</FONT></B><B><SUP><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>4</FONT></SUP></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="6%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%">&nbsp; </TD></TR>
<TR>
     <TD width="38%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="97%" colSpan=13>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Based on net asset value</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(7.85)%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>5</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>4.79%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>21.70%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>4.69%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>12.30%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>5</FONT></SUP>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Based on market price</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(8.56)%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>5</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>10.47%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>27.95%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>0.52%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(5.36)%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>5</FONT></SUP>&nbsp; </TD></TR>
<TR>
     <TD width="38%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=2>
</TD></TR>
<TR>
     <TD width="97%" colSpan=13>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Ratios to Average Net Assets</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="6%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%">&nbsp; </TD></TR>
<TR>
     <TD width="38%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="97%" colSpan=13>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Total expenses after waiver and excluding interest expense</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.04%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>6</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.19%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.42%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.47%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.20%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>6</FONT></SUP>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Total expenses after waiver</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.04%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>6</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.96%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>3.54%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2.96%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.96%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>6</FONT></SUP>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Total expenses</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.04%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>6</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.96%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>3.54%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2.96%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2.19%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>6</FONT></SUP>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net investment income</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.49%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>6</FONT></SUP>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.36%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1.75%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2.28%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>3.52%</FONT><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>6</FONT></SUP>&nbsp; </TD></TR>
<TR>
     <TD width="38%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=2>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=2>
</TD></TR>
<TR>
     <TD width="97%" colSpan=13>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%">&nbsp; &nbsp; &nbsp;<B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif color=#0035c4 size=1>Supplemental Data</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="6%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="7%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="8%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%">&nbsp; </TD></TR>
<TR>
     <TD width="38%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR>
     <TD width="97%" colSpan=13>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Net assets, end of period (000)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 227,453</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="9%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 260,385</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 279,272</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 260,638</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 266,345</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="9%" colSpan=3>
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Portfolio turnover</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>28%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>63%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>38%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>61%</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>20%</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Amount of loan outstanding, end of period (000)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 100,000</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 109,000</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 109,000</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Average amount of loan outstanding during the period (000)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="9%" colSpan=3><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 38,788</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 107,504</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 109,000</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 98,750</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="9%" colSpan=3>
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="38%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Asset coverage, end of period, per $1,000 of loan outstanding</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="16%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="1%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="6%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>&#151;</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="7%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 3,793</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="8%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 3,391</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=center width="9%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 3,444</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="38%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="16%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="1%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="6%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="7%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="8%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=center width="9%">
<HR noShade SIZE=1>
</TD></TR></TABLE><BR>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Commencement of operations.</FONT> </TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>2</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Based on average shares outstanding.</FONT> </TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>3</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>A portion of the dividends from net investment income may be deemed a tax return of capital or net realized gain at fiscal year end.</FONT> </TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>4</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Total investment returns based on market price, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Total investment returns exclude the effects of sales charges.</FONT> </TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>5</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Aggregate total investment return.</FONT> </TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR>
<TR>
     <TD vAlign=top noWrap><SUP><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>6</FONT></SUP>&nbsp; &nbsp; &nbsp; </TD>
     <TD width="100%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Annualized.</FONT> </TD></TR>
<TR>
     <TD colSpan=2>&nbsp;</TD></TR></TABLE>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>See Notes to Financial Statements.</FONT></TD></TR></TABLE></P>
<P align=left><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>10 BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JUNE 30, 2008</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_11"></A>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#0035c4 size=4>Notes to Financial Statements </FONT><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#0035c4 size=2>(Unaudited)</FONT><BR>
<BR>
<B><FONT face=FranklinGothic-Demi,Arial,Helvetica,sans-serif size=2>1. Significant Accounting Policies:</FONT></B><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>BlackRock Enhanced Capital and Income Fund, Inc. (the &#147;Fund&#148;) is </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>registered under the Investment Company Act of 1940, as amended </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>(the &#147;1940 Act&#148;), as a diversified, closed-end management investment</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>company. The Fund&#146;s financial statements are prepared in conformity</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>with accounting principles generally accepted in the United States of</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>America, which may require the use of management accruals and esti-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>mates. Actual results may differ from these estimates. The Fund deter-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>mines and makes available for publication the net asset value of its</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Common Stock on a daily basis.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The following is a summary of significant accounting policies followed by</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the Fund:</FONT><BR>
<BR>
<B><FONT face=FranklinGothic-MedCnd,Arial,Helvetica,sans-serif size=2>Valuation of Investments: </FONT></B><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Equity investments traded on a recognized</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>securities exchange or the NASDAQ Global Market System are valued at</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the last reported sale price that day or the NASDAQ official closing price,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>if applicable. For equity investments traded on more than one exchange,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the last reported sale price on the exchange where the stock is primarily</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>traded is used. Equity investments traded on a recognized exchange for</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>which there were no sales on that day are valued at the last available</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>bid price. If no bid price is available, the prior day&#146;s price will be used,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>unless it is determined that such prior day&#146;s price no longer reflects the</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>fair value of the security. Investments in open-end investment companies</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>are valued at net asset value each business day. Financial futures con-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>tracts are traded on exchanges and are valued at their last sale price.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Exchange-traded options are valued at the mean between the last bid</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>and ask prices at the close of the options market in which the options</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>trade. An exchange-traded option for which there is no mean price is val-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>ued at the last bid (long position) or ask (short position) price. If no bid</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>or ask price is available, the prior day&#146;s price will be used unless it is</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>determined that the prior day&#146;s price no longer reflects the fair value </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of the option. Over-the-counter options are valued by an independent</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>pricing service using a mathematical model that incorporates a number</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of market data factors.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>In the event that application of these methods of valuation results in a</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>price for an investment which is deemed not to be representative of the</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>market value of such investment, the investment will be valued by a</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>method approved by the Board of Directors (&#147;the Board&#148;) as reflecting</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>fair value (&#147;Fair Value Assets&#148;). When determining the price for Fair Value</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Assets, the investment advisor and/or sub-advisor seeks to determine</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the price that the Fund might reasonably expect to receive from the cur-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>rent sale of that asset in an arm&#146;s-length transaction. Fair value determi-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>nations shall be based upon all available factors that the investment</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>advisor and/or sub-advisor deems relevant. The pricing of all Fair Value</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Assets is subsequently reported to the Board or a committee thereof.</FONT></TD></TR></TABLE></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Generally, trading in foreign securities is substantially completed each</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>day at various times prior to the close of business on the New York </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Stock Exchange (&#147;NYSE&#148;). The values of such securities used in comput-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>ing the net assets of the Fund are determined as of such times. Foreign</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>currency exchange rates generally will be determined as of the close of</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>business on the NYSE. Occasionally, events affecting the values of such</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>securities and such exchange rates may occur between the times at</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>which they are determined and the close of business on the NYSE that</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>may not be reflected in the computation of the Fund&#146;s net assets. If</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>events (for example, a company announcement, market volatility or </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>a natural disaster) occur during such periods that are expected to </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>materially affect the value of such securities, those securities will be </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>valued at their fair value as determined in good faith by the Board or </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>by the investment advisor using a pricing service and/or procedures</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>approved by the Board.</FONT><BR>
<BR>
<B><FONT face=FranklinGothic-MedCnd,Arial,Helvetica,sans-serif size=2>Derivative Financial Instruments: </FONT></B><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The Fund may engage in various </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>portfolio investment strategies to increase the return of the Fund and </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>to hedge, or protect its exposure to interest rate movements and move-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>ments in the securities markets. Losses may arise if the value of the con-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>tract decreases due to an unfavorable change in the price of the under-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>lying security, or if the counterparty does not perform under the contract.</FONT></TD></TR></TABLE></P>
<P align=left><FONT face="Franklin Gothic Book" size=3><SUB>&#149;</SUB></FONT><FONT face="Franklin Gothic Book" size=3><SUB>Financial futures contracts &#151; The Fund may purchase or sell financial</SUB></FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>futures contracts and options on such futures contracts. Financial</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>futures contracts are contracts for delayed delivery of securities at a</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>specific future date and at a specific price or yield. Upon entering</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>into a contract, the Fund deposits, and maintains as collateral, such</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>initial margin as required by the exchange on which the transaction is</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>effected. Pursuant to the contract, the Fund agrees to receive from or</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>pay to the broker an amount of cash equal to the daily fluctuation in</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>value of the contract. Such receipts or payments are known as mar-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>gin variation and are recognized by the Fund as unrealized gains or</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>losses. When the contract is closed, the Fund records a realized gain</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>or loss equal to the difference between the value of the contract at</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the time it was opened and the value at the time it was closed.</FONT><BR>
<BR>
<FONT face="Franklin Gothic Book" size=3><SUB>&#149;</SUB></FONT><FONT face="Franklin Gothic Book" size=3><SUB>Options &#151; The Fund may purchase and write call and put options.</SUB></FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>When the Fund writes an option, an amount equal to the premium</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>received by the Fund is reflected as an asset and an equivalent lia-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>bility. The amount of the liability is subsequently marked-to-market to</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>reflect the current market value of the option written. When a security</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>is purchased or sold through an exercise of an option, the related</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>premium paid (or received) is added to (or deducted from) the basis</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of the security acquired or deducted from (or added to) the proceeds</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of the security sold. When an option expires (or the Fund enters into</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>a closing transaction), the Fund realizes a gain or loss on the option</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>to the extent of the premiums received or paid (or gain or loss to </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the extent the cost of the closing transaction exceeds the premium</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>received or paid).</FONT></P>
<P align=left><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC.</FONT></P>
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     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>JUNE 30, 2008</FONT></TD></TR></TABLE></P>
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     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>11</FONT></TD></TR></TABLE></P>
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<FONT color="#0035c4" size=4 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">Notes to Financial Statements (continued)</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">A call option gives the purchaser of the option the right (but not the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">obligation) to buy, and obligates the seller to sell (when the option is</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">exercised), the underlying position at the exercise price at any time</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">or at a specified time during the option period. A put option gives the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">holder the right to sell and obligates the writer to buy the underlying</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">position at the exercise price at any time or at a specified time dur-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ing the option period.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Foreign Currency Transactions: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Foreign currency amounts are translated</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">into United States dollars on the following basis: (i) market value of</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">investment securities, assets and liabilities at the current rate of</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">exchange; and (ii) purchases and sales of investment securities, income</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">and expenses at the rates of exchange prevailing on the respective dates</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of such transactions.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Fund reports foreign currency related transactions as components of</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">realized gains for financial reporting purposes, whereas such compo-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">nents are treated as ordinary income for federal income tax purposes.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Segregation: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In cases in which the 1940 Act and the interpretive </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">positions of the Securities and Exchange Commission (&#147;SEC&#148;) require</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">that the Fund segregate assets in connection with certain investments</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">(e.g., futures) or certain borrowings, the Fund will, consistent with </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">certain interpretive letters issued by the SEC, designate on its books </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">and records cash or other liquid debt securities having a market value </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">at least equal to the amount that would otherwise be required to be</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">physically segregated.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Investment Transactions and Investment Income: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Investment transac-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">tions are recorded on the dates the transactions are entered into (the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">trade dates). Realized gains and losses on security transactions are</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">determined on the identified cost basis. Dividend income is recorded </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">on the ex-dividend dates. Dividends from foreign securities where the </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ex-dividend date may have passed are subsequently recorded when the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund has determined the ex-dividend date. Interest income is recognized</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">on the accrual basis.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Dividends and Distributions: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Dividends and distributions of capital </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">gains are recorded on the ex-dividend dates. If the total dividends </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">and distributions made in any tax year end exceeds net investment</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">income and accumulated realized capital gains, a portion of the total</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">distribution may be treated as a tax return of capital.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Income Taxes: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">It is the Fund&#146;s policy to comply with the requirements of</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Internal Revenue Code applicable to regulated investment compa-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">nies and to distribute substantially all of its taxable income to its share-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">holders. Therefore, no federal income tax provision is required. Under the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">applicable foreign tax laws, a withholding tax may be imposed on inter-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">est, dividends and capital gains at various rates.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Fund files U.S. federal and various state and local tax returns. No</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">income tax returns are currently under examination. The statute of limita-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">tions on the Fund&#146;s U.S. federal tax returns remain open for the years </FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ended December 31, 2004 through December 31, 2006. The statute of</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">limitations on the Fund&#146;s state and local tax returns may remain open for</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">an additional year depending upon the jurisdiction.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Recent Accounting Pronouncement: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In March 2008, Statement of</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Financial Accounting Standards No. 161, &#147;Disclosures about Derivative</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Instruments and Hedging Activities &#151; an amendment of FASB Statement</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">No. 133&#148; (&#147;FAS 161&#148;) was issued and is effective for fiscal years begin-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ning after November 15, 2008. FAS 161 is intended to improve financial</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">reporting for derivative instruments by requiring enhanced disclosure </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">that enables investors to understand how and why an entity uses </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">derivatives, how derivatives are accounted for, and how derivative instru-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ments affect an entity&#146;s results of operations and financial position. The</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">impact on the Fund&#146;s financial statement disclosures, if any, is currently</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">being assessed.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Deferred Compensation and BlackRock Closed-End Share Equivalent</FONT></B><BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Investment Plan: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Under the deferred compensation plan approved by</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Fund&#146;s Board, non-interested Directors (&#147;Independent Directors&#148;)</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">may defer a portion of their annual complex-wide compensation.</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Deferred amounts earn an approximate return as though equivalent </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">dollar amounts have been invested in common shares of other certain</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BlackRock Closed-End Funds selected by the Independent Directors.</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">This has approximately the same economic effect for the Independent</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Directors as if the Independent Directors had invested the deferred</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">amounts directly in other certain BlackRock Closed-End Funds.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The deferred compensation plan is not funded and obligations there-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">under represent general unsecured claims against the general assets </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of the Fund. The Fund may, however, elect to invest in common stock </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of other certain BlackRock Closed-End Funds selected by the Independ-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ent Directors in order to match its deferred compensation obligations.</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Investments to cover the Fund&#146;s deferred compensation liability, if any, is</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">included in other assets on the Statement of Assets and Liabilities.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Other: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Expenses directly related to the Fund are charged to that </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund. Other operating expenses shared by several funds are pro-rated</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">among those funds on the basis of relative net assets or other appro-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">priate methods.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-Demi,Arial,Helvetica,sans-serif">2. Investment Advisory Agreement and Other Transactions</FONT></B><BR>
<B><FONT size=2 face="FranklinGothic-Demi,Arial,Helvetica,sans-serif">with Affiliates:</FONT></B><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Fund has entered into an Investment Advisory Agreement with</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BlackRock Advisors, LLC (the &#147;Advisor&#148;), an indirect, wholly owned sub-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">sidiary of BlackRock, Inc., to provide investment advisory and adminis-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">tration services. Merrill Lynch &amp; Co., Inc. (&#147;Merrill Lynch&#148;) and The PNC</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Financial Services Group, Inc. are principal owners of BlackRock, Inc.</FONT></TD></TR></TABLE>
</P>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">12 BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JUNE 30, 2008</FONT></P>

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     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#0035c4 size=4>Notes to Financial Statements (concluded)</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The Advisor is responsible for the management of the Fund&#146;s portfolio</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>and provides the necessary personnel, facilities, equipment and certain</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>other services necessary to the operation of the Fund. For such services,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the Fund pays the Advisor a monthly fee at an annual rate of 0.85% of</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the average daily value of the Fund&#146;s net assets plus the proceeds of any</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>outstanding borrowings used for leverage.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The Advisor has entered into separate sub-advisory agreements with</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>BlackRock Investment Management, LLC (&#147;BIM&#148;) and BlackRock</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Financial Management, Inc. (&#147;BFM&#148;), both affiliates of the Advisor, under</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>which the Advisor pays both BIM and BFM, for services they provide, a</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>monthly fee that is an annual percentage of the investment advisory fee</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>paid by the Fund to the Advisor.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>For the six months ended June 30, 2008, the Fund reimbursed the</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Advisor $2,626, for certain accounting services, which is included in</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>accounting services in the Statement of Operations.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Merrill Lynch, Pierce, Fenner &amp; Smith Incorporated, a wholly owned </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>subsidiary of Merrill Lynch, received $24,065 in commissions on the</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>execution of portfolio security transactions for the Fund for the six</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>months ended June 30, 2008.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Certain officers and/or directors of the Fund are officers and/or directors</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of BlackRock, Inc. or its affiliates.</FONT><BR>
<BR>
<B><FONT face=FranklinGothic-Demi,Arial,Helvetica,sans-serif size=2>3. Investments:</FONT></B><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Purchases and sales of investments, excluding short-term securities, for</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the six months ended June 30, 2008 were $80,603,035 and</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>$67,210,573, respectively.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Transactions in call options written for the six months ended June 30,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>2008 were as follows:</FONT></TD></TR></TABLE></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="24%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Premiums</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Call Options Written</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="24%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Contracts</FONT></B>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><B><FONT face=FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif size=1>Received</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD width="48%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="24%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="22%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Outstanding call options written,</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="24%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="22%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%">&nbsp; &nbsp;<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>beginning of period</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1,621</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 4,023,610</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Options written</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>12,603</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>25,925,759</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Options closed</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(9,487)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(19,917,287)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Options expired</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(3,356)</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>(7,816,972)</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="48%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="24%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="22%">
<HR noShade SIZE=1>
</TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=left width="48%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>Outstanding call options written, end</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="24%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=left width="22%">&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD noWrap align=center width="48%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>of period</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="24%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>1,381</FONT>&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD noWrap align=right width="22%"><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=1>$ 2,215,110</FONT>&nbsp; </TD></TR>
<TR>
     <TD width="48%">&nbsp; </TD>
     <TD width="2%">&nbsp; </TD>
     <TD align=right width="24%">
<HR noShade SIZE=1>
</TD>
     <TD width="2%">&nbsp; </TD>
     <TD width="22%">
<HR noShade SIZE=1>
</TD></TR></TABLE><BR>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><B><FONT face=FranklinGothic-Demi,Arial,Helvetica,sans-serif size=2>4. Capital Share Transactions:</FONT></B><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The Fund is authorized to issue 200,000,000 shares of capital stock,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>par value $0.10, all of which were initially classified as Common Stock.</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The Board is authorized, however, to reclassify any unissued shares of</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>capital stock without approval of the holders of Common Stock.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Shares issued and outstanding during the six months ended June 30,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>2008 and the year ended December 31, 2007 remained constant.</FONT><BR>
<BR>
<B><FONT face=FranklinGothic-Demi,Arial,Helvetica,sans-serif size=2>5. Short-Term Borrowings:</FONT></B><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>On May 16, 2008, the Fund terminated its revolving credit and security</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>agreement funded by a commercial paper asset securitization program</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>with Citicorp North America, Inc. (&#147;Citicorp&#148;) as Agent, certain secondary</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>backstop lenders, and certain asset securitization conduits as lenders</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>(the &#147;Lenders&#148;). The agreement had a maximum limit of $135,000,000.</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>For the six months ended June 30, 2008, the Fund did not borrow under</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the facility.</FONT><BR>
<BR>
<B><FONT face=FranklinGothic-Demi,Arial,Helvetica,sans-serif size=2>6. Plan of Reorganization:</FONT></B><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>On March 14, 2008, the Board approved a plan of reorganization for </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the Fund, subject to shareholder approval and certain other conditions,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>whereby the Fund will acquire substantially all of the assets and assume</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>substantially all of the liabilities of BlackRock Enhanced Equity Yield</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Fund, Inc. and BlackRock Enhanced Equity Yield &amp; Premium Fund, Inc.</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>in exchange for newly issued shares of the Fund.</FONT></TD></TR></TABLE></P>
<P align=left><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC.</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>JUNE 30, 2008</FONT></TD></TR></TABLE></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>13</FONT></TD></TR></TABLE></P>
<HR align=center width="100%" noShade SIZE=2>

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<A name="page_14"></A>
<P align=left><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif color=#0035c4 size=4>Disclosure of Investment Advisory Agreement and Subadvisory Agreement</FONT></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The Board of Directors (the &#147;Board,&#148; the members of which are referred</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>to as &#147;Directors&#148;) of the BlackRock Enhanced Capital and Income Fund,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Inc. (the &#147;Fund&#148;) met in April and May 2008 to consider approving the</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>continuation of the Fund&#146;s investment advisory agreement (the &#147;Advisory</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Agreement&#148;) with BlackRock Advisors, LLC (the &#147;Advisor&#148;), the Fund&#146;s</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>investment adviser. The Board also considered the approval of the Fund&#146;s</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>subadvisory agreements (collectively, the &#147;Subadvisory Agreement&#148; and,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>together with the &#147;Advisory Agreement,&#148; the &#147;Agreements&#148;) between the</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Advisor and BlackRock Investment Management, LLC (&#147;BIM&#148;), and</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>between the Advisor and BlackRock Financial Management Inc. (together</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>with BIM, the &#147;Subadvisor&#148;). The Advisor and the Subadvisor are collec-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>tively referred to herein as the &#147;Advisors&#148; and, together with BlackRock,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Inc., &#147;BlackRock.&#148;</FONT><BR>
<BR>
<B><FONT face=FranklinGothic-Demi,Arial,Helvetica,sans-serif size=2>Activities and Composition of the Board</FONT></B><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The Board of Directors of the Fund consists of thirteen individuals,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>eleven of whom are not &#147;interested persons&#148; of the Fund as defined in</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the Investment Company Act of 1940 (the &#147;1940 Act&#148;) (the &#147;Independent</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Directors&#148;). The Directors are responsible for the oversight of the opera-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>tions of the Fund and perform the various duties imposed on the </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>directors of investment companies by the 1940 Act. The Independent</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Directors have retained independent legal counsel to assist them in con-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>nection with their duties. The Chairman of the Board is an Independent</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Director. The Board has established four standing committees: an Audit</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Committee, a Governance and Nominating Committee, a Compliance</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Committee and a Performance Oversight Committee.</FONT><BR>
<BR>
<B><FONT face=FranklinGothic-Demi,Arial,Helvetica,sans-serif size=2>Advisory Agreement and Subadvisory Agreement</FONT></B><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Upon the consummation of the combination of BlackRock, Inc.&#146;s invest-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>ment management business with Merrill Lynch &amp; Co., Inc.&#146;s investment</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>management business, including Merrill Lynch Investment Managers,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>L.P., and certain affiliates, the Fund entered into the Advisory Agreement</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>and the Subadvisory Agreement, each with an initial two-year term.</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Consistent with the 1940 Act, after the Advisory Agreement&#146;s and</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Subadvisory Agreement&#146;s respective initial two-year term, the Board is</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>required to consider the continuation of the Fund&#146;s Advisory Agreement</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>and Subadvisory Agreement on an annual basis. In connection with </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>this process, the Board assessed, among other things, the nature, scope</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>and quality of the services provided to the Fund by the personnel of</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>BlackRock and its affiliates, including investment advisory services,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>administrative services, secondary market support services, oversight </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of fund accounting and custody, and assistance in meeting legal and</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>regulatory requirements. The Board also received and assessed informa-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>tion regarding the services provided to the Fund by certain unaffiliated</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>service providers.</FONT></TD></TR></TABLE></P>
<P align=left>
<TABLE>
<TR>
     <TD noWrap><FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>Throughout the year, the Board also considered a range of information </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>in connection with its oversight of the services provided by BlackRock</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>and its affiliates. Among the matters the Board considered were: </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>(a) investment performance for one-, three- and five-year periods, as</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>applicable, against peer funds, as well as senior management and port-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>folio managers&#146; analysis of the reasons for underperformance, if applica-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>ble; (b) fees, including advisory, administration and other fees paid to</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>BlackRock and its affiliates by the Fund, as applicable; (c) Fund operat-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>ing expenses paid to third parties; (d) the resources devoted to and</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>compliance reports relating to the Fund&#146;s investment objective, policies</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>and restrictions; (e) the Fund&#146;s compliance with its Code of Ethics and</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>compliance policies and procedures; (f) the nature, cost and character</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of non-investment management services provided by BlackRock and its</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>affiliates; (g) BlackRock&#146;s and other service providers&#146; internal controls;</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>(h) BlackRock&#146;s implementation of the proxy voting guidelines approved</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>by the Board; (i) the use of brokerage commissions and spread and </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>execution quality; (j) valuation and liquidity procedures; and (k) reviews</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of BlackRock&#146;s business, including BlackRock&#146;s response to the increasing</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>scale of its business.</FONT><BR>
<BR>
<B><FONT face=FranklinGothic-Demi,Arial,Helvetica,sans-serif size=2>Board Considerations in Approving the Advisory</FONT></B><BR>
<B><FONT face=FranklinGothic-Demi,Arial,Helvetica,sans-serif size=2>Agreement and Subadvisory Agreement</FONT></B><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>To assist the Board in its evaluation of the Agreements, the Directors</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>received information from BlackRock in advance of the April 22, 2008</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>meeting which detailed, among other things, the organization, business</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>lines and capabilities of the Advisors, including: (a) the responsibilities</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of various departments and key personnel and biographical information</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>relating to key personnel; (b) financial statements for BlackRock; (c) the</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>advisory and/or administrative fees paid by the Fund to the Advisors,</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>including comparisons, compiled by Lipper, Inc. (&#147;Lipper&#148;), an independent</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>third party, with the management fees, which include advisory and</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>administration fees, of funds with similar investment objectives (&#147;Peers&#148;);</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>(d) the profitability of BlackRock and certain industry profitability analy-</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>ses for advisers to registered investment companies; (e) the expenses </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of BlackRock in providing various services; (f) non-investment advisory</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>reimbursements, if applicable, and &#147;fallout&#148; benefits to BlackRock; (g)</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>economies of scale, if any, generated through the Advisors&#146; management</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of all of the BlackRock closed-end funds (the &#147;Fund Complex&#148;); (h) the</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>expenses of the Fund, including comparisons of the Fund&#146;s expense</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>ratios (both before and after any fee waivers) with the expense ratios </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>of its Peers; (i) an internal comparison of management fees classified </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>by Lipper, if applicable; and (j) the Fund&#146;s performance for the past </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>one-, three- and five-year periods, as applicable, as well as the Fund&#146;s</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>performance compared to its Peers.</FONT><BR>
<BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>The Board also considered other matters it deemed important to </FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>the approval process, where applicable, such as payments made to</FONT><BR>
<FONT face=FranklinGothic-BookCnd,Arial,Helvetica,sans-serif size=2>BlackRock or its affiliates relating to the distribution of Fund shares,</FONT></TD></TR></TABLE></P>
<P align=left><FONT face=FranklinGothic-Book,Arial,Helvetica,sans-serif size=1>14 BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JUNE 30, 2008</FONT></P>
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<FONT color="#0035c4" size=4 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">Disclosure of Investment Advisory Agreement and Subadvisory Agreement (continued)</FONT></P>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">services related to the valuation and pricing of Fund portfolio holdings,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">allocation of Fund brokerage fees (including the related benefits </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to BlackRock of &#147;soft dollars&#148;) and direct and indirect benefits to</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BlackRock and its affiliates from their relationship with the Fund.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In addition to the foregoing materials, independent legal counsel to the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Independent Directors provided a legal memorandum outlining, among</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">other things, the duties of the Board under the 1940 Act, as well as the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">general principles of relevant law in reviewing and approving advisory</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">contracts, the requirements of the 1940 Act in such matters, an adviser&#146;s</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">fiduciary duty with respect to advisory agreements and compensation,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">and the standards used by courts in determining whether investment</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">company boards of directors have fulfilled their duties and the factors </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to be considered by boards in voting on advisory agreements.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Independent Directors reviewed this information and discussed it</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">with independent legal counsel prior to the meeting on April 22, 2008.</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">At the Board meeting on April 22, 2008, BlackRock made a presentation</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to and responded to questions from the Board. Following the meeting </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">on April 22, 2008, the Board presented BlackRock with questions and</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">requests for additional information. BlackRock responded to these</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">requests with additional written materials provided to the Directors prior</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to the meetings on May 29 and 30, 2008. At the Board meetings on</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">May 29 and 30, 2008, BlackRock responded to further questions from</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Board. In connection with BlackRock&#146;s presentations, the Board </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">considered each Agreement and, in consultation with independent legal</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">counsel, reviewed the factors set out in judicial decisions and Securities</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">and Exchange Commission (&#147;SEC&#148;) statements relating to the renewal </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of the Agreements.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-Demi,Arial,Helvetica,sans-serif">Matters Considered by the Board</FONT></B><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In connection with its deliberations with respect to the Agreements,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Board considered all factors it believed relevant with respect to the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund, including the following: the nature, extent and quality of the services</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">provided by the Advisors; the investment performance of the Fund; the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">costs of the services to be provided and profits to be realized by the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Advisors and their affiliates from their relationship with the Fund; the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">extent to which economies of scale would be realized as the Fund</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Complex grows; and whether BlackRock realizes other benefits from </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">its relationship with the Fund.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">A. Nature, Extent and Quality of the Services: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In evaluating the nature,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">extent and quality of the Advisors&#146; services, the Board reviewed informa-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">tion concerning the types of services that the Advisors provide and are</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">expected to provide to the Fund, narrative and statistical information</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">concerning the Fund&#146;s performance record and how such performance</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">compares to the Fund&#146;s Peers, information describing BlackRock&#146;s organ-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ization and its various departments, the experience and responsibilities </FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of key personnel and available resources. The Board noted the willingness</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of the personnel of BlackRock to engage in open, candid discussions with</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Board. The Board further considered the quality of the Advisors&#146; invest-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ment process in making portfolio management decisions.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In addition to advisory services, the Directors considered the quality of </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the administrative and non-investment advisory services provided to the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund. The Advisors and their affiliates provided the Fund with such admin-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">istrative and other services, as applicable (in addition to any such services</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">provided by others for the Fund), and officers and other personnel as are</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">necessary for the operations of the Fund. In addition to investment man-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">agement services, the Advisors and their affiliates provided the Fund with</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">services such as: preparing shareholder reports and communications,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">including annual and semi-annual financial statements and the Fund&#146;s</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">website; communications with analysts to support secondary market trad-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ing; assisting with daily accounting and pricing; preparing periodic filings</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">with regulators and stock exchanges; overseeing and coordinating the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">activities of other service providers; administering and organizing Board</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">meetings and preparing the Board materials for such meetings; providing</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">legal and compliance support (such as helping to prepare proxy state-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ments and responding to regulatory inquiries); and performing other Fund</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">administrative tasks necessary for the operation of the Fund (such as </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">tax reporting and fulfilling regulatory filing requirements). The Board consid-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ered the Advisors&#146; policies and procedures for assuring compliance with</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">applicable laws and regulations.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">B. The Investment Performance of the Fund and BlackRock: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">As previously</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">noted, the Board received performance information regarding the Fund and</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">its Peers. Among other things, the Board received materials reflecting the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund&#146;s historic performance and the Fund&#146;s performance compared to its</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Peers. More specifically, the Fund&#146;s one-, three- and five-year total returns</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">(as applicable) were evaluated relative to its Peers (including the Peers&#146;</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">median performance).</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Board reviewed a narrative and statistical analysis of the Lipper data</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">that was prepared by BlackRock, which analyzed various factors that affect</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Lipper rankings.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Board noted that in general the Fund performed better than its Peers</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">in that the Fund&#146;s performance was at or above the median in at least two</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of the one-year, three-year and since inception periods reported.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">After considering this information, the Boards concluded that the perform-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ance of the Fund, in light of and after considering the other facts and </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">circumstances applicable to the Fund, supports a conclusion that the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund&#146;s Agreements should be renewed.</FONT></TD></TR></TABLE>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC.</FONT></P>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">JUNE 30, 2008</FONT></TD></TR></TABLE>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">15</FONT></TD></TR></TABLE>
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<FONT color="#0035c4" size=4 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">Disclosure of Investment Advisory Agreement and Subadvisory Agreement (continued)</FONT></P>
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<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">C. Consideration of the Advisory Fees and the Cost of the Services </FONT></B><BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">and Profits to be Realized by BlackRock and its Affiliates from their</FONT></B><BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Relationship with the Fund: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In evaluating the management fees and</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">expenses that a Fund is expected to bear, the Board considered the </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund&#146;s current management fee structure and the Fund&#146;s expense ratios </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">in absolute terms as well as relative to the fees and expense ratios of its</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">applicable Peers. The Board, among other things, reviewed comparisons </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of the Fund&#146;s gross management fees before and after any applicable</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">reimbursements and fee waivers and total expense ratios before and</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">after any applicable waivers with those of applicable Peers. The Board</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">also reviewed a narrative analysis of the Peer rankings prepared by</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Lipper and summarized by BlackRock at the request of the Board. This</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">summary placed the Peer rankings into context by analyzing various </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">factors that affect these comparisons.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Board noted that the Fund paid contractual management fees lower</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">than or equal to the median contractual fees paid by its Peers. This com-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">parison was made without giving effect to any expense reimbursements</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">or fee waivers.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Board also compared the management fees charged and services</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">provided by the Advisors to closed-end funds in general versus other</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">types of clients (such as open-end investment companies and separately</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">managed institutional accounts) in similar investment categories. The</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Board noted certain differences in services provided and costs incurred</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">by the Advisor with respect to closed-end funds compared to these other</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">types of clients and the reasons for such differences.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In connection with the Board&#146;s consideration of the fees and expense</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">information, the Board reviewed the considerable investment manage-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ment experience of the Advisors and considered the high level of invest-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ment management, administrative and other services provided by the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Advisors. In light of these factors and the other facts and circumstances</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">applicable to the Fund, the Board concluded that the fees paid and </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">level of expenses incurred by the Fund under its Agreements support a</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">conclusion that the Fund&#146;s Agreements should be renewed.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">D. Profitability of BlackRock: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Board also considered BlackRock&#146;s</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">profitability in conjunction with its review of fees. The Board reviewed</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BlackRock&#146;s profitability with respect to the Fund Complex and other</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">fund complexes managed by the Advisors. In reviewing profitability, the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Board recognized that one of the most difficult issues in determining</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">profitability is establishing a method of allocating expenses. The Board</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">also reviewed BlackRock&#146;s assumptions and methodology of allocating</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">expenses, noting the inherent limitations in allocating costs among </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">various advisory products. The Board also recognized that individual </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">fund or product line profitability of other advisors is generally not </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">publicly available.</FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Board recognized that profitability may be affected by numerous </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">factors including, among other things, the types of funds managed,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">expense allocations and business mix, and therefore comparability of</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">profitability is somewhat limited. Nevertheless, to the extent available,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Board considered BlackRock&#146;s operating margin compared to the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">operating margin estimated by BlackRock for a leading investment man-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">agement firm whose operations consist primarily of advising closed-end</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">funds. The comparison indicated that BlackRock&#146;s operating margin was</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">approximately the same as the operating margin of such firm.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In evaluating the reasonableness of the Advisors&#146; compensation, the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Board also considered any other revenues paid to the Advisors, including</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">partial reimbursements paid to the Advisors for certain non-investment</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">advisory services, if applicable. The Board noted that these payments</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">were less than the Advisors&#146; costs for providing these services. The Board</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">also considered indirect benefits (such as soft dollar arrangements) that</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Advisors and their affiliates are expected to receive which are attrib-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">utable to their management of the Fund.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Board concluded that BlackRock&#146;s profitability, in light of all the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">other facts and circumstances applicable to the Fund, supports a </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">conclusion that the Fund&#146;s Agreements should be renewed.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">E. Economies of Scale: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In reviewing the Fund&#146;s fees and expenses,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Board examined the potential benefits of economies of scale, and</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">whether any economies of scale should be reflected in the Fund&#146;s fee</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">structure, for example through the use of breakpoints for the Fund or the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund Complex. In this regard, the Board reviewed information provided</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">by BlackRock, noting that most closed-end fund complexes do not have</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">fund-level breakpoints because closed-end funds generally do not expe-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">rience substantial growth after their initial public offering and each fund</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">is managed independently consistent with its own investment objectives.</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Board noted that only three closed-end funds in the Fund Complex</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">have breakpoints in their fee structures. Information provided by Lipper</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">also revealed that only one closed-end fund complex used a complex-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">level breakpoint structure. The Board found, based on its review of </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">comparable funds, that the Fund&#146;s management fee is appropriate in</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">light of the scale of the Fund.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">F. Other Factors: </FONT></B><FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In evaluating fees, the Board also considered indirect</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">benefits or profits the Advisors or their affiliates may receive as a result</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of their relationships with the Fund (&#147;fall-out benefits&#148;). The Directors,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">including the Independent Directors, considered the intangible benefits</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">that accrue to the Advisors and their affiliates by virtue of their relation-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ships with the Fund, including potential benefits accruing to the Advisors</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">and their affiliates as a result of participating in offerings of the Fund&#146;s</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">shares, potentially stronger relationships with members of the broker-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">dealer community, increased name recognition of the Advisors and </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">their affiliates, enhanced sales of other investment funds and products</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">sponsored by the Advisors and their affiliates and increased assets </FONT></TD></TR></TABLE>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">16 BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JUNE 30, 2008</FONT></P>

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<FONT color="#0035c4" size=4 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">Disclosure of Investment Advisory Agreement and Subadvisory Agreement (concluded)</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">under management which may increase the benefits realized by the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Advisors from soft dollar arrangements with broker-dealers. The Board</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">also considered the unquantifiable nature of these potential benefits.</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-Demi,Arial,Helvetica,sans-serif">Conclusion with Respect to the Agreements</FONT></B><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In reviewing the Agreements, the Directors did not identify any single </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">factor discussed above as all-important or controlling and different</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Directors may have attributed different weights to the various factors</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">considered. The Directors, including the Independent Directors, unani-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">mously determined that each of the factors described above, in light </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of all the other factors and all of the facts and circumstances applicable</FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to the Fund, was acceptable for the Fund and supported the Directors&#146;</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">conclusion that the terms of each Agreement were fair and reasonable,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">that the Fund&#146;s fees are reasonable in light of the services provided to</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Fund and that each Agreement should be approved.</FONT></TD></TR></TABLE>
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<FONT color="#0035c4" size=4 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">Officers and Directors</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Richard E. Cavanagh, Chairman of the Board and Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Karen . Robards, Vice Chair of the Board, Chair of the </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Audit Committee and Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">G. Nicholas Beckwith, III, Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Richard S. Davis, Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Kent Dixon, Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Frank J. Fabozzi, Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Kathleen F. Feldstein, Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">James T. Flynn, Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Henry Gabbay, Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Jerrold B. Harris, Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">R. Glenn Hubbard, Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">W. Carl Kester, Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Robert S. Salomon, Jr., Director</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Donald C. Burke, Fund President and Chief Executive Officer</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Anne F. Ackerley, Vice President</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Neal J. Andrews, Chief Financial Officer</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Jay M. Fife, Treasurer</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Brian . Kindelan, Chief Compliance Officer of the Fund</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Howard Surloff, Secretary</FONT></TD></TR></TABLE>
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<B><FONT size=2 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Custodian</FONT></B><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Brown Brothers</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Harriman &amp; Co.</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Boston, MA 02109</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Transfer Agent</FONT></B><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BNY Mellon Shareowner Services</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Jersey City, NJ 07310</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Accounting Agent</FONT></B><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">State Street Bank and Trust Company</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Princeton, NJ 08540</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Independent Registered Public Accounting Firm</FONT></B><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Deloitte &amp; Touche </FONT><FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">LLP</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Princeton, NJ 08540</FONT><BR>
<BR>
<B><FONT size=2 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Legal Counsel</FONT></B><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Skadden, Arps, Slate, Meagher &amp; Flom </FONT><FONT size=1 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">LLP</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">New York, NY 10036</FONT></TD></TR></TABLE>
</P>
<P align="left">
<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC.</FONT></P>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">JUNE 30, 2008</FONT></TD></TR></TABLE>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">17</FONT></TD></TR></TABLE>
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<FONT color="#0035c4" size=4 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">Additional Information</FONT></P>
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<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Managed Distribution Policy</FONT></B></P>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Fund has adopted a policy of paying regular distributions on its</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Common Stock (the &#147;Managed Distribution Policy&#148;). The Board has ini-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">tially determined to pay quarterly distributions at an annualized rate of</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">6% of the initial public offering price per share (&#36;0.30 per share, per</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">quarter). The Board has determined to pay additional distributions on an</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">annual basis equal to any income earned by the Fund in excess of the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">quarterly distributions as may be necessary to distribute substantially all</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">of the Fund&#146;s net investment company taxable income for that year.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Fund generally is not permitted to distribute net realized long-term</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">capital gains more than once per year without exemptive relief from the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Securities and Exchange Commission. As a result, the Fund has applied</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">for an exemptive order that will permit the Fund to make periodic </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">distributions of realized long-term capital gains to its shareholders. Until</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">such time, if any, as the exemptive relief is granted, the Fund intends to</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">make distributions from its net investment income on a quarterly basis</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">and from its net realized long-term capital gains, if any, on an annual</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">basis. If such exemptive relief is granted, the Fund intends to make dis-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">tributions from its net investment income and its realized long-term capi-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">tal gains, if any, on a quarterly basis.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">If the total distributions paid by the Fund to its shareholders for any cal-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">endar year exceed the Fund&#146;s net investment company taxable income</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">and net realized capital gain for that year, the excess will generally be</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">treated as a tax-free return of capital up to the amount of a sharehold-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">er&#146;s tax basis in his or her stock. Any distributions that constitute tax-free</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">return of capital will reduce a shareholder&#146;s tax basis in his or her stock.</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">In effect, a return of capital is the return of a shareholder&#146;s investment in</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Fund and will result in a corresponding decline in the Fund&#146;s net</FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">asset value. Return of capital distributions also may have the effect of</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">increasing the Fund&#146;s operating expense ratio. Any amounts distributed</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to a shareholder in excess of such shareholder&#146;s tax basis in his or her</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">stock will generally be taxable to the shareholder as capital gain.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Fund currently expects that the amount of distributions made under</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Managed Distribution Policy generally will be independent of, and</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">not contingent upon, the Fund&#146;s performance in any of the first three</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">quarters of the Fund&#146;s fiscal year. Distribution rates under the Managed</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Distribution Policy may be increased in the Fund&#146;s fourth fiscal quarter </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">in light of the Fund&#146;s performance for the fiscal year and to enable the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund to comply with the distribution requirements applicable to regu-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">lated investment companies. It also is currently expected that the </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Fund&#146;s investment portfolio initially will not produce sufficient dividend</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">and interest income to fully fund distributions under the Managed</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Distribution Policy. Consequently, if the Fund does not realize sufficient</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">short-term capital gains and long-term capital gains to make up any</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">shortfall, distributions to the Fund&#146;s Common Stock shareholders will</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">include returns of capital. Prior to receipt of the above-referenced</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">exemptive order, long-term capital gains will be available to make </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">up any shortfall in funding distributions only on an annual basis, thereby</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">increasing the likelihood that distributions will include returns of capital</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to shareholders. The Fund is not required to maintain the Managed</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Distribution Policy and such policy (including the amount of the </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">quarterly distribution) may be modified or terminated at any time </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">without notice. Any such modification or termination of the Managed</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Distribution Policy may have an adverse effect on the market price of </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Common Stock.</FONT></TD></TR></TABLE>
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<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">BlackRock Privacy Principles</FONT></B></P>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BlackRock is committed to maintaining the privacy of its current and </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">former fund investors and individual clients (collectively, &#147;Clients&#148;) and </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to safeguarding their non-public personal information. The following infor-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">mation is provided to help you understand what personal information</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BlackRock collects, how we protect that information and why in certain</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">cases we share such information with select parties.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">If you are located in a jurisdiction where specific laws, rules or regulations</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">require BlackRock to provide you with additional or different privacy-related</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">rights beyond what is set forth below, then BlackRock will comply with</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">those specific laws, rules or regulations.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BlackRock obtains or verifies personal non-public information from and</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">about you from different sources, including the following: (i) information</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">we receive from you or, if applicable, your financial intermediary, on appli-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">cations, forms or other documents; (ii) information about your trans-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">actions with us, our affiliates, or others; (iii) information we receive from </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">a consumer reporting agency; and (iv) from visits to our websites.</FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BlackRock does not sell or disclose to non-affiliated third parties any non-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">public personal information about its Clients, except as permitted by law </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">or as is necessary to respond to regulatory requests or to service Client</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">accounts. These non-affiliated third parties are required to protect the </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">confidentiality and security of this information and to use it only for its</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">intended purpose.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">We may share information with our affiliates to service your account or to</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">provide you with information about other BlackRock products or services</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">that may be of interest to you. In addition, BlackRock restricts access </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to nonpublic personal information about its Clients to those BlackRock</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">employees with a legitimate business need for the information. BlackRock</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">maintains physical, electronic and procedural safeguards that are designed</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to protect the non-public personal information of its Clients, including pro-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">cedures relating to the proper storage and disposal of such information.</FONT></TD></TR></TABLE>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">18 BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC. JUNE 30, 2008</FONT></P>

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<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Availability of Quarterly Schedule of Investments</FONT></B><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Fund files its complete schedule of portfolio holdings with the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Securities and Exchange Commission (&#147;SEC&#148;) for the first and third quar-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">ters of each fiscal year on Form N-Q. The Fund&#146;s Forms N-Q are available</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">on the SEC&#146;s website at http://www.sec.gov. The Fund&#146;s Forms N-Q may</FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">also be reviewed and copied at the SEC&#146;s Public Reference Room</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">in Washington, DC. Information on the operation of the Public Reference</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Room may be obtained by calling (800) SEC-0330. The Fund&#146;s Forms</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">N-Q may also be obtained upon request and without charge by calling</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">(800) 441-7762.</FONT></TD></TR></TABLE>
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<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Electronic Delivery</FONT></B><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Electronic copies of most financial reports are available on the Fund&#146;s</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">website. Shareholders can sign up for e-mail notifications of quarterly</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">statements, annual and semi-annual reports and prospectuses by</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">enrolling in the Fund&#146;s electronic delivery program.</FONT></TD></TR></TABLE>
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<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Shareholders Who Hold Accounts with Investment Advisors, Banks or</FONT></B><BR>
<B><FONT size=2 face="FranklinGothic-MedCnd,Arial,Helvetica,sans-serif">Brokerages:</FONT></B><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Please contact your financial advisor. Please note that not all investment</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">advisers, banks or brokerages may offer this service.</FONT></TD></TR></TABLE>
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<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">General Information</FONT></B><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Fund will mail only one copy of shareholder documents, including</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">annual and semi-annual reports and proxy statements, to shareholders </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">with multiple accounts at the same address. This practice is commonly</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">called &#147;householding&#148; and it is intended to reduce expenses and elimi-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">nate duplicate mailings of shareholder documents. Mailings of your</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">shareholder documents may be householded indefinitely unless you</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">instruct us otherwise. If you do not want the mailing of these documents</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to be combined with those for other members of your household, please</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">contact the Funds at (800) 441-7762.</FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Quarterly performance, semi-annual and annual reports and other </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">information regarding the Fund may be found on BlackRock&#146;s website,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">which can be accessed at http://www.blackrock.com. This reference </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to BlackRock&#146;s website is intended to allow investors public access to</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">information regarding the Fund and does not, and is not intended to,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">incorporate BlackRock&#146;s website into this report.</FONT></TD></TR></TABLE>
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<B><FONT color="#0035c4" size=1 face="FranklinGothic-DemiCnd,Arial,Helvetica,sans-serif">Proxy Voting Policy</FONT></B><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">The Board has delegated the voting of proxies for Fund securities to the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Advisor pursuant to the Advisor&#146;s proxy voting guidelines. Under these</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">guidelines, the Advisor will vote proxies related to Fund securities in the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">best interests of the Fund and its stockholders. From time to time, a vote</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">may present a conflict between the interests of the Fund&#146;s stockholders,</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">on the one hand, and those of the Advisor, or any affiliated person of </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the Fund or the Advisor, on the other. In such event, provided that the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Advisor&#146;s Equity Investment Policy Oversight Committee, or a sub-commit-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">tee thereof (the &#147;Committee&#148;) is aware of the real or potential conflict or</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">material non-routine matter and if the Committee does not reasonably </FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">believe it is able to follow its general voting guidelines (or if the particular</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">proxy matter is not addressed in the guidelines) and vote impartially, the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Committee may retain an independent fiduciary to advise the Committee</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">on how to vote or to cast votes on behalf of the Advisor&#146;s clients. If the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Advisor determines not to retain an independent fiduciary, or does not</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">desire to follow the advice of such independent fiduciary, the Committee</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">shall determine how to vote the proxy after consulting with the Advisor&#146;s</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Portfolio Management Group and/or the Advisor&#146;s Legal and Compliance</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Department and concluding that the vote cast is in its client&#146;s best inter-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">est notwithstanding the conflict.</FONT></TD></TR></TABLE>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">BLACKROCK ENHANCED CAPITAL AND INCOME FUND, INC.</FONT></P>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">JUNE 30, 2008</FONT></TD></TR></TABLE>
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<FONT size=1 face="FranklinGothic-Book,Arial,Helvetica,sans-serif">19</FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">This report is transmitted to shareholders only. It is not a prospec-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">tus. Past performance results shown in this report should not be</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">considered a representation of future performance. The Fund may</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">leverage its Common Stock, which creates risk for Common Stock</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">shareholders, including the likelihood of greater volatility of net</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">asset value and market price of Common Stock shares, and the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">risk that fluctuations in short-term interest rates may reduce the</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Common Stock&#146;s yield. Statements and other information herein</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">are as dated and are subject to change.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">A description of the policies and procedures that the Fund uses </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">to determine how to vote proxies relating to portfolio securities </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">is available (1) without charge, upon request, by calling toll-</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">free (800) 441-7762; (2) at www.blackrock.com; and </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">(3) on the Securities and Exchange Commission&#146;s website at</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">http://www.sec.gov. Information about how the Fund voted </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">proxies relating to securities held in the Fund&#146;s portfolio during </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">the most recent 12-month period ended June 30 is available </FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">upon request and without charge (1) at www.blackrock.com or by</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">calling (800) 441-7762 and (2) on the Securities and Exchange</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Commission&#146;s website at http://www.sec.gov.</FONT><BR>
<BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">BlackRock Enhanced Capital and Income Fund, Inc.</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">100 Bellevue Parkway</FONT><BR>
<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">Wilmington, DE 19809</FONT></TD></TR></TABLE>
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<FONT size=2 face="FranklinGothic-BookCnd,Arial,Helvetica,sans-serif">#ECI-6/08</FONT></TD></TR></TABLE>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 2 &#150; Code of Ethics &#150; Not Applicable to this semi-annual report</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 3 &#150; Audit Committee Financial Expert &#150; Not Applicable to this semi-annual report</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 4 &#150; Principal Accountant Fees and Services &#150; Not Applicable to this semi-annual report</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 5 &#150; Audit Committee of Listed Registrants &#150; Not Applicable to this semi-annual report</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 6 &#150; Investments</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(a) The registrant&#146;s Schedule of Investments is included as part of the Report to </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Stockholders filed under Item 1 of this form.</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">(b) Not Applicable due to no such divestments during the semi-annual period covered since </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">the previous Form N-CSR filing.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 7 &#150; Disclosure of Proxy Voting Policies and Procedures for Closed-End Management </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Investment Companies &#150; Not Applicable to this semi-annual report</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 8 &#150; Portfolio Managers of Closed-End Management Investment Companies &#150; Not Applicable to </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">this semi-annual report</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 9 &#150; Purchases of Equity Securities by Closed-End Management Investment Company and </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Affiliated Purchasers &#150; Not Applicable</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 10 &#150; Submission of Matters to a Vote of Security Holders &#150; The registrant&#146;s Nominating and </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Governance Committee will consider nominees to the board of directors recommended by </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">shareholders when a vacancy becomes available. Shareholders who wish to recommend a </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">nominee should send nominations which include biographical information and set forth the </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">qualifications of the proposed nominee to the registrant&#146;s Secretary. There have been no </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">material changes to these procedures.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 11 &#150; Controls and Procedures</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">11(a) &#150; The registrant&#146;s principal executive and principal financial officers or persons performing </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">similar functions have concluded that the registrant&#146;s disclosure controls and procedures (as </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">&#147;1940 Act&#148;)) are effective as of a date within 90 days of the filing of this report based on the </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">11(b) &#150; There were no changes in the registrant&#146;s internal control over financial reporting (as </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">of the period covered by this report that have materially affected, or are reasonably likely to </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">materially affect, the registrant&#146;s internal control over financial reporting.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Item 12 &#150; Exhibits attached hereto</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">12(a)(1) &#150; Code of Ethics &#150; Not Applicable to this semi-annual report</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">12(a)(2) &#150; Certifications &#150; Attached hereto</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">12(a)(3) &#150; Not Applicable</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">12(b) &#150; Certifications &#150; Attached hereto</FONT></TD></TR></TABLE>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">the undersigned, thereunto duly authorized.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">BlackRock Enhanced Capital and Income Fund, Inc.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">By: </FONT><U><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">/s/ Donald C. Burke</FONT></U><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Donald C. Burke</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Chief Executive Officer of</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">BlackRock Enhanced Capital and Income Fund, Inc.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date: August 22, 2008</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Company Act of 1940, this report has been signed below by the following persons on behalf </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">of the registrant and in the capacities and on the dates indicated.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">By: </FONT><U><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">/s/ Donald C. Burke</FONT></U><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Donald C. Burke</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Chief Executive Officer (principal executive officer) of</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">BlackRock Enhanced Capital and Income Fund, Inc.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date: August 22, 2008</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">By: </FONT><U><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">/s/ Neal J. Andrews</FONT></U><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Neal J. Andrews</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Chief Financial Officer (principal financial officer) of</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">BlackRock Enhanced Capital and Income Fund, Inc.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date: August 22, 2008</FONT></TD></TR></TABLE>
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<DESCRIPTION>CERTIFICATION
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<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">EX-99. CERT</FONT></B><BR>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND SECTION 302 OF </FONT></B><BR>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">THE SARBANES-OXLEY ACT OF 2002</FONT></B><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">I, Donald C. Burke, Chief Executive Officer (principal executive officer) of BlackRock Enhanced Capital and Income </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Fund, Inc., certify that:</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1. I have reviewed this report on Form N-CSR of BlackRock Enhanced Capital and Income Fund, Inc.;</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">material fact necessary to make the statements made, in light of the circumstances under which such statements were made, </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">not misleading with respect to the period covered by this report; </FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">3. Based on my knowledge, the financial statements, and other financial information included in this report fairly </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">in this report;</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">designed under our supervision, to ensure that material information relating to the registrant, including its</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">which this report is being prepared;</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">b) designed such internal control over financial reporting, or caused such internal control over financial </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">financial reporting and the preparation of financial statements for external purposes in accordance with generally </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">accepted accounting principles;</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">days prior to the filing date of this report, based on such evaluation; and</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">d) disclosed in this report any change in the registrant's internal control over financial reporting that </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">reasonably likely to materially affect, the registrant's internal control over financial reporting; and</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committees </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">of the registrant's board of directors (or persons performing the equivalent functions):</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">a) all significant deficiencies and material weaknesses in the design or operation of internal control over </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">summarize, and report financial information; and</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">b) any fraud, whether or not material, that involves management or other employees who have a significant </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">role in the registrant's internal control over financial reporting.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date: August 22, 2008</FONT><BR>
<BR>
<I><U><FONT size=2 face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">/s/</FONT></U></I><U><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif"> Donald C. Burke</FONT></U><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Donald C. Burke</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Chief Executive Officer (principal executive officer) of </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">BlackRock Enhanced Capital and Income Fund, Inc.</FONT><BR>
<BR>
<FONT size=2 face="Trebuchet MS,Arial,Helvetica,sans-serif">1</FONT></TD></TR></TABLE>
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<B><FONT size=2 face="Arial-BoldMT,Arial,Helvetica,sans-serif">EX-99. CERT</FONT></B><BR>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">CERTIFICATION PURSUANT TO RULE 30a-2(a) UNDER THE 1940 ACT AND </FONT></B><BR>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</FONT></B><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">I, Neal J. Andrews, Chief Financial Officer (principal financial officer) of BlackRock Enhanced Capital </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">and Income Fund, Inc., certify that:</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1. I have reviewed this report on Form N-CSR of BlackRock Enhanced Capital and Income Fund, </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Inc.;</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">2. Based on my knowledge, this report does not contain any untrue statement of a material fact or </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">omit to state a material fact necessary to make the statements made, in light of the circumstances under </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">which such statements were made, not misleading with respect to the period covered by this report; </FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">3. Based on my knowledge, the financial statements, and other financial information included in this </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">report fairly present in all material respects the financial condition, results of operations, changes in net </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">registrant as of, and for, the periods presented in this report;</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Company Act of 1940) for the registrant and have:</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">a) designed such disclosure controls and procedures, or caused such disclosure controls and </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">procedures to be designed under our supervision, to ensure that material information relating to the </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">registrant, including its consolidated subsidiaries, is made known to us by others within those </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">entities, particularly during the period in which this report is being prepared;</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">b) designed such internal control over financial reporting, or caused such internal control </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">over financial reporting to be designed under our supervision, to provide reasonable assurance </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">regarding the reliability of financial reporting and the preparation of financial statements for </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">external purposes in accordance with generally accepted accounting principles;</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">c) evaluated the effectiveness of the registrant's disclosure controls and procedures and </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">presented in this report our conclusions about the effectiveness of the disclosure controls and </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">procedures, as of a date within 90 days prior to the filing date of this report, based on such </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">evaluation; and</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">d) disclosed in this report any change in the registrant's internal control over financial </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">reporting that occurred during the second fiscal quarter of the period covered by this report that </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">has materially affected, or is reasonably likely to materially affect, the registrant's internal control </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">over financial reporting; and</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">audit committees of the registrant's board of directors (or persons performing the equivalent functions):</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">a) all significant deficiencies and material weaknesses in the design or operation of internal </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">control over financial reporting which are reasonably likely to adversely affect the registrant's</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">ability to record, process, summarize, and report financial information; and</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">b) any fraud, whether or not material, that involves management or other employees who </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">have a significant role in the registrant's internal control over financial reporting.</FONT><BR>
<BR>
<FONT size=2 face="Trebuchet MS,Arial,Helvetica,sans-serif">2</FONT></TD></TR></TABLE>
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date: August 22, 2008</FONT><BR>
<BR>
<I><U><FONT size=2 face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">/s/</FONT></U></I><U><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif"> Neal J. Andrews</FONT></U><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Neal J. Andrews</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Chief Financial Officer (principal financial officer) of</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">BlackRock Enhanced Capital and Income Fund, Inc.</FONT></TD></TR></TABLE>
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<TYPE>EX-99.906 CERT
<SEQUENCE>3
<FILENAME>cllsec906.htm
<DESCRIPTION>CERTIFICATION
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<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Exhibit 99.1350CERT</FONT><BR>
<BR>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Certification Pursuant to Rule 30a-2(b) under the 1940 Act and </FONT></B><BR>
<B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">Section 906 of the Sarbanes Oxley Act</FONT></B><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Pursuant to 18 U.S.C. &#167; 1350, the undersigned officer of BlackRock Enhanced Capital and Income Fund, Inc. (the </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">&#147;registrant&#148;), hereby certifies, to the best of his knowledge, that the registrant's Report on Form N-CSR for the period ended </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">June 30, 2008, (the &#147;Report&#148;) fully complies with the requirements of Section 13a of the Securities Exchange Act of 1934, </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">and results of operations of the registrant.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date: August 22, 2008</FONT><BR>
<BR>
<I><U><FONT size=2 face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">/s/</FONT></U></I><U><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif"> Donald C. Burke</FONT></U><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Donald C. Burke</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Chief Executive Officer (principal executive officer) of</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">BlackRock Enhanced Capital and Income Fund, Inc.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Pursuant to 18 U.S.C. &#167; 1350, the undersigned officer of BlackRock Enhanced Capital and Income Fund, Inc. (the </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">&#147;registrant&#148;), hereby certifies, to the best of his knowledge, that the registrant's Report on Form N-CSR for the period ended </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">June 30, 2008, (the &#147;Report&#148;) fully complies with the requirements of Section 13a of the Securities Exchange Act of 1934, </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">and results of operations of the registrant.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Date: August 22, 2008</FONT><BR>
<BR>
<I><FONT size=2 face="TimesNewRomanPS-ItalicMT,Times New Roman,Times,serif">/s/</FONT></I><FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif"> Neal J. Andrews</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Neal J. Andrews</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Chief Financial Officer (principal financial officer) of</FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">BlackRock Enhanced Capital and Income Fund, Inc.</FONT><BR>
<BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">This certification is being furnished pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended, </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">and 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with the Securities and Exchange </FONT><BR>
<FONT size=2 face="TimesNewRomanPSMT,Times New Roman,Times,serif">Commission</FONT><B><FONT size=2 face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif">.</FONT></B><BR>
<BR>
<FONT size=2 face="Trebuchet MS,Arial,Helvetica,sans-serif">1</FONT></TD></TR></TABLE>
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