Quarterly Report - June 30, 2009

July 15, 2009

The Fund’s improved performance reflected a number of factors, including; (1) subsector diversification (both long and/or short) in the energy portfolio, (2) early participation, and overweighting, of major companies involved in unconventional natural gas shale plays such as Petrohawk, Southwestern Energy, Range Resources and XTO Energy, (3) timely overweighting of selected companies in the oil service and Master Limited Partnerships (MLPs) sectors and (4) use of hedging investment vehicles, (oil and gas indices) more aggressively to offset increased volatility.

Our investment approach continues to be based on our belief that overall energy supply will begin to show tightening before year-end which should accelerate in 2010 as the impact of a 56% reduction in the number of drilling rigs and an anticipated economic recovery begins to gain traction. As such, while stock corrections are expected, we plan to take advantage of opportunities when they occur because our longer term bias is positive on commodity prices and our “energy chain” approach allows us to offset a decline in one sub-sector with an increase in another. This is occurring presently as we write this letter with the high dividend yielding MLPs outperforming other energy groups. MLPs represent the largest current asset allocation percentage in the Fund’s portfolio.

In conclusion, we expect continued near-term volatility, but remain positive on the intermediate and longer-term overall energy outlook as the economy strengthens. Therefore, as value investors, we plan to view shorter-term consolidations, more often than not, as opportunities.

Certain statements contained herein may contain "forward-looking statements" within the meaning of the Private Securities and Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such factors include, among others, risks and uncertainties associated with the timing and costs of energy sector production, the demand for and prices of oil/gas products, the timing and amount of capital spending in the nation and world wide, and general economic factors. This report is not a recommendation to either buy or sell any securities mentioned.

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About ELCO Management, LLC
Established in 1995 and based in New York, ELCO Management (www.elcomanagement.com) offers investment solutions to high net worth individuals and institutions. ELCO also manages two highly specialized energy funds: the ELCO Energy Fund, L.P. and the ELCO Select Fund L.P.