2007 Year-End Note

We believe the current macro energy related environment should bode well for the overall energy space. We continue to benefit from ELCO’s portfolio approach, which emphasizes the “energy chain” and our belief that the present energy cycle should extend over a longer period than in the past because of increasing global energy demand and tightening supply. Countries such as China and India, in particular, are the major drivers behind the ongoing growth in energy demand. Given this scenario, we remain very bullish about the Fund’s outlook compared with other sectors of the economy, which is showing clear signs of slowing. This applies not only to oil and gas related industries, but also electric power and infrastructure. However, over the short term, investment performance could be impacted by many factors, including fundamental and psychological.

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.