Calvert Global Alternative Energy Fund
Calvert Global Alternative Energy Fund (Class A shares at NAV)
returned -3.92% during the quarter. The Fund underperformed its
benchmark, the Ardour Global Index, which returned -0.47% over
the same period. Sector selection was the primary factor behind the
Fund’s underperformance of the benchmark.
In 2009, October’s announcements of third-quarter corporate earnings were
by and large ahead of expectations for the broad market, driven primarily by
cost-cutting initiatives. While third-quarter earnings reports for the alternative
energy sector generally came in ahead of expectations, there were some higher-
Jens Peers profile companies that disappointed the market either through an earnings miss
Portfolio Manager, KBC Asset or over 2010 earnings guidance.
Management International Ltd.
During the months of November and December, the alternative energy sector
benefited from the improving global economic environment as well as the
continued supportive monetary stance taken by global central bank policymakers.
However, credit remained tight, unemployment was still rising, and there was no
clear sign of a pick-up in consumer spending in the fourth quarter.
On the positive side, economic data in the United States, Europe, and Asia were at
overall levels that the markets viewed positively as it became apparent that the
historical fund performance
Average Annual Total Returns as of 12/31/2009. Inception Date 5/31/2007.
Calvert global alternative SinCe
energy Fund Qtr ytd 1yr 3yrS 5yrS 10yrS inCeption
a shares at naV -3.92% 23.04% 23.04% n/a n/a n/a -14.36%
a shares max load of 4.75% -8.48 17.15 17.15 n/a n/a n/a -15.96
Ardour Global Index -0.47 23.34 23.34 N/A N/A N/A -14.24
Source: Calvert Performance Analytics
Gross expense ratio: 2.23%. Net expense ratio: 1.85%. Performance data quoted already
reflects deduction of fund operating expenses. Net expense ratio reflects contractual fee
waiver and/or expense reimbursement through January 31, 2010.
The performance data quoted represents past performance, which does not guarantee
future results. The investment return and principal value of an investment will fluctuate so
that an investor’s shares, when redeemed, may be worth more or less than their original
cost. Current performance may be higher or lower than the performance data quoted.
Indexes reflect no deductions for fees or expenses. An investor cannot invest directly in
an index. Visit www.calvert.com to obtain performance data current to the most recent
May Lose Value. Not FDIC Insured. Not a Deposit. No Bank Guarantee. Not NCUA/NCUSIF Insured. No Credit Union Guarantee.
global economy had emerged from a recession. This formed rose following the publication of its twice-yearly update on
the basis for a continued preference for asset classes with the platinum markets. The review confirmed stronger than
relatively more risk, namely equities. expected 2009 demand and an improved outlook for 2010.
Shares of Ceramic Fuel Cells fell in the fourth quarter following
In December, the Chinese government introduced a a meteoric rise in their price since the company’s offering of
new law to boost the use of renewable energy. The new new shares in early March. News about the stock has been
law requires power grid operators to buy all electricity positive, and we expect it to trade higher from here.
produced by renewable energy generators, which should
boost the overall proportion of China’s energy that comes In addition, the Fund had more exposure to the poorly
from renewable sources. performing Utilities sector than the Index. This more
defensive sector lagged the broad market during the
The U.N. Climate Change Conference was held in quarter. Among the negative contributors in Utilities was
Copenhagen in December 2009. The summit was largely FPL Group, the largest wind-farm operator in the United
a disappointment, but it did represent a small step in the States, which lowered its earnings expectations for 2009
right direction. It resulted in Brazil, China, India, South due to poor wind resources in the quarter.
Africa, and the United States drafting the Copenhagen
Accord. While not legally binding, the Accord does endorse In contrast, stock selection made an overall positive
the continuation of the Kyoto Protocol, which ends in 2012. contribution to the Fund’s performance relative to the
benchmark. The largest positive contribution in the Wind
Portfolio Review sector came from the Fund’s relative underweight to Vestas
Wind Systems. This stock carries a weight of more than 9%
The Fund’s long-term strategic weightings for the in the Index. Despite positive third-quarter earnings, Vestas
renewable energy sectors remained unchanged during disappointed the market as a result of order backlogs for all
the quarter. Our most significant tactical decision for the turbine manufacturers.
quarter was the continuation of the overweight position
in the Wind sector. Within the sector, our preference was Outlook
for wind farm developers with high exposure to the U.S.
market, such as Iberdrola Renovables and EDP Renovavies. We expect a continuation of the global economic and market
recovery in 2010, but we also foresee a number of challenges
At the start of the quarter, we had continued to along the way. Government and central bank emergency
underweight the Solar sector on expectations that policies in the form of monetary and fiscal stimulus measures
slower capacity growth in the first quarter of 2010 could continue to support the world economy. Governments will
potentially lead to further drops in module prices. However, only look to unwind these measures when it becomes clear
during November we increased our weighting as visibility that the recovery is sustainable—this will require clear signs
improved for the first half of 2010. Comments from leading of top-line growth and employment creation. As a result,
cell and module manufacturers confirmed the strong these emergency measures are likely to stay in place for the
demand from Germany in the fourth quarter as well as first half of 2010, resulting in positive economic growth and
the first quarter of 2010. The Fund’s top holdings in the ultimately gains from equities. This positive macroeconomic
Solar sector included MEMC and Wacker Chemie. We also backdrop will provide strong support for companies active in
maintained the Fund’s overweight to the Wind sector on the alternative energy industry.
expectations that it would benefit from the cash grant
program in the United States. We expect various countries to make regulatory decisions
over the coming months that should also prove to be
The Fund’s underperformance of the benchmark during positive for companies involved in alternative energy. In
the quarter stemmed primarily from its sector allocations. China, there may be news of a federal feed-in-tarriff for the
Relative to the Index, the Fund had an underweight to the Solar sector, while in Germany changes to the current feed-
Energy Efficiency sector, which was the top-performing in-tarriff is under discussion. Meanwhile, we are hopeful
sector in the Index for the quarter. that the United States will pass a climate change bill with a
renewables portfolio standard.
In addition, the Fund was overweight the Fuel Cells sector,
which was the weakest-performing sector in the Index for We continue to believe that the fundamentals of the Wind
the quarter. However, the Fund did benefit from positive sector are the most favorable of any alternative energy
stock selection within Fuel Cells. Shares of Johnson Matthey sector. While the pace of a pick-up in new orders has
been slower than anticipated, we believe that an end-
market recovery is under way. In December, the Spanish
government announced the renewable energy projects that
have been approved. This government notification should
unlock turbine order and shipment flow in Spain, which has
been largely frozen since May. Similarly, legislation put in
place in the United States and China in 2009 should support
wind farm development in both of these countries in
2010. We have increased our exposure to the two leading
wind turbine manufacturers—Vestas Wind Systems and
Gamesa—as we believe these are a good way to benefit
from the improving wind industry.
Overall, we remain focused on the long-term winners, low-
cost producers, and companies with proven technologies in
alternative energy. n
This commentary represents the opinions of its author as of 12/31/09, and may change based on market and other conditions. The author’s opinions are not intended to forecast future
events, guarantee future results, or serve as investment advice.
As of December 31, 2009, Calvert Global Alternative Energy Fund’s holdings included. Iberdrola Renovables (5.92% of the Portfolio), EDP Ren-
ovavies (3.91%), MEMC (3.61%), Wacker Chemie (4.12%), Johnson Matthey (2.19%), FPL Group (4.92%), Vestas Wind Systems (4.95%), and Gamesa
(4.29%). Calvert may or may not still invest in, and is not recommending any action on, companies listed. For the most recently available infor-
mation on individual holdings in each Calvert sustainable and responsible equity fund, visit www.calvert.com.
Calvert Global Alternative Energy Fund is subject to the risk that stocks that comprise the energy sector may decline in value, and the risk that
prices of energy (including traditional sources such as oil, gas, or electricity) or alternative energy may decline. The stock markets in which the
Fund invests may also experience periods of volatility and instability. In addition, shares of the companies involved in the energy industry have
been more volatile than shares of companies operating in other, more established industries. Consequently, the Fund may tend to be more
volatile than other mutual funds. Lastly, foreign investments involve greater risks than U.S. investments, including political and economic risks
and the risk of currency fluctuations.
For more information on any Calvert fund, please contact your financial advisor, call Calvert at 800.368.2748, or visit www.calvert.com for a free
prospectus. An institutional investor should call Calvert at 800.327.2109. An investor should consider the investment objectives, risks, charges and
expenses of an investment carefully before investing. The prospectus contains this and other information. Read it carefully before you invest or
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