Calvert Global Energy Solutions Fund

Transcription

1 CGAEX CAEIX Q Calvert Global Energy Solutions Fund Your Portfolio Management Team Calvert Research (Advisor) Christopher Madden, CFA 2016 Jade Huang 2016 Thomas Seto 2016 Calvert s Approach to Responsible Investing Who We Are Calvert Research is a recognized leader in Responsible Investing. Our mission is to deliver superior long term performance to our clients and to enable them to achieve positive impact. What We Offer Serving financial advisors and their clients, as well as a wide array of institutional investors, Calvert s investment strategies feature integrated environmental, social, and governance (ESG) research and corporate engagement. The Fund employs a passive management strategy designed to track, as closely as possible, the performance of the Calvert Global Energy Research Index. The Fund uses a replication method, investing in the common stock of each company in the Index in about the same proportion as represented in the Index itself. The Index universe consists of companies that satisfy minimum market capitalization and liquidity thresholds and are significantly involved in business activities in the sustainable energy solutions sector that are consistent with the Calvert Principles for Responsible Investment. Key Takeaways Global equities plunged worldwide in a volatile fourth quarter, as investors grew wary of a slowing global economy, a steep drop in oil prices, and geopolitical concerns. Against this backdrop, the benchmark MSCI All Country World Index returned 12.75%, slightly outpacing Calvert Global Energy Solutions Fund. Energy technology investments detracted from performance, while renewables energy producers kept pace with the market. Market Overview Stock markets worldwide plunged in the final quarter of 2018 amid signs of a slowing global economy accompanied by worrisome political uncertainties. After a lengthy upswing, U.S. equities reversed course at the outset of the three month period. Fears of a global trade war from President Trump s imposition of broad new import tariffs came to life, as retaliatory actions by China and other countries adversely impacted U.S. companies overseas business. Global stock markets, which had already begun to weaken, accelerated their fall in the final three months of A range of political uncertainties from the November U.S. midterm elections to the fate of Britain s planned Brexit from the European Union, weighed heavily on global stocks. Despite the stock market pullback, U.S. economic data remained largely positive during the period, prompting the U.S. Federal Reserve (Fed) to raise its benchmark interest rate in December for the fourth time in Investors were briefly cheered when the Fed indicated it might reconsider plans to continue interest rate hikes in Despite a partial rebound in the final days of the period, the U.S. stock market s December plunge was its worst monthly loss since the 2008 financial crisis. Investor malaise was reflected in stock indexes globally in the final quarter of In the U.S., the Dow Jones Industrial Average fell 11.31%, while the broader S&P 500 Index dropped 13.52%. The technology laden Nasdaq Index plunged 17.54%. Globally, the MSCI EAFE Index declined 12.54% in the quarter. Large cap stocks outperformed their small cap counterparts during the quarter. In terms of investing style, value stocks topped growth stocks in both the large cap and small cap categories. Market Benchmarks Quarter ended 12/31/2018 MAJOR GLOBAL EQUITY INDICES VALUE CORE GROWTH S&P % 13.52% 14.71% Russell % 13.82% 15.89% Russell % 20.20% 21.65% MSCI EAFE 11.70% 12.54% 13.33% MSCI Emerging Markets 6.75% 7.47% 8.22% Source: S&P, Russell, MSCI Past performance is no guarantee of future results. Index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. Not FDIC Insured Not Bank Guaranteed May Lose Value Explore our full spectrum of strategies at eatonvance.com.

2 2 Calvert Global Energy Solutions Fund Q Performance Review For the fourth quarter of 2018, Calvert Global Energy Solutions Fund (the Fund) underperformed the benchmark MSCI All Country World Index (the Index), which returned 12.75%. The Fund performed largely in line with Calvert Global Energy Research Index, gross of fees, as expected. On a regional basis, the Fund s below Index exposure to the U.S. was beneficial, while an over Index exposure to Asia was a driving detractor. Specific holdings within the Fund s energy technology and leader/solution providers sectors drove underperformance relative to the Index during the quarter. In contrast, specific companies within the energy producers sector significantly outpaced the overall market. Contributors Vestas Wind Systems and Falck Renewables both had strong quarters, delivering financial results that exceeded consensus expectations. Vestas upgraded its cash flow projections for 2018, driven by strong order intakes. Falck beat earnings and revenue consensus estimates and raised both its dividend and 2019 guidance based on strong demand. The two companies were the top contributors within the energy producers sector. Tesla also released a strong third quarter earnings report, with revenue and earnings far exceeding consensus estimates. Fourth quarter production grew 8% more than the all time high from the prior quarter, pushing the stock s price 25% higher over the quarter. Being a sector focused Fund, the Fund does not invest in many of the top names of the broad market Index, such as large U.S. technology companies Apple and Amazon. During the quarter, the Fund benefited from avoiding these names, as their stock prices dropped by 30% and 25%, respectively. Detractors Maxwell Technologies is a leading designer, manufacturer and marketer of energy storage and power delivery systems. Maxwell struggled during the quarter as it continued transitioning its business away from its high voltage segments to focus more on its core business areas of energy storage and transportation. Metsa Board Corporation, a leading European producer of pulp and paperboard products, lowered its guidance for the quarter due to weakness in the key Chinese pulp market. Metsa is held in the Fund as a leader/solution provider for its use of renewable energy in its pulp and paper manufacturing process, which is typically extremely energy intensive. The Fund s holdings in Asia detracted as China showed signs of a slowing economy and negative impacts from the trade war with the U.S. Portfolio Characteristics as of 12/31/2018 Fund Benchmark Weighted Average Market Cap ($B) Number of Holdings Price/Earnings (LTM) 13.2x 14.8x Price/Earnings (NTM) 11.9x 13.2x Price/Book 1.6x 2.0x Historic EPS Growth (3yr) 19.2% 12.4% ROA 5.2% 7.3% LT Debt/Capital 34.0% 35.8% Sector Weightings (%) 1 Sector Fund Energy Efficiency 25.88% Energy Producer 28.15% Energy Technology 20.80% Leader/Solution Providers 25.14% Cash 0.03%

3 3 Calvert Global Energy Solutions Fund Q Top 10 Holdings (%) 1, 2 Fund Infineon Technologies AG 1.04 Samsung SDI Co Ltd 1.00 Enel SpA 0.98 Delta Electronics Inc 0.90 Umicore SA 0.90 Siemens AG 0.89 EnerSys 0.84 ANDRITZ AG 0.84 Vestas Wind Systems A/S 0.82 Universal Display Corp 0.81 Regions 1,2 Region Portfolio MSCI ACWI Index Difference Europe 41.39% 19.87% 21.52% North America 32.99% 57.10% 24.11% Asia/Pacific 24.51% 20.32% 4.19% Latin America/Caribbean 0.58% 1.50% 0.92% Africa 0.50% 0.79% 0.29% Cash & Other Assets 0.03% 0.00% 0.03% Middle East 0.41% 0.41% Market Outlook Investment in renewable energy sources, both in the U.S. and internationally, has begun to slow as governments and utilities have diverted resources to invest in much need infrastructure grid repairs. This trend, combined with an increased supply of solar panels, has caused downward pressure on renewable energy prices. Supply is outpacing demand and tariffs are putting pressure on the margins. Long term, we believe the increase in capacity and lower pricing should level out, and as new investment in energy production returns, solar and other renewables will be price competitive. Emerging market and developing nations have recently slowed the pace of their investment in renewables. In developed economies, the use of coal continues to decline but is being offset by an increase in oil and natural gas production. As countries genuinely start to develop polices around their commitments to limit global warming to less than 2 degrees Celsius, a steep investment in low carbon energy systems is necessary. In our view, the continuing decline of renewable energy prices and the increased demand for less carbon intense sources is a strong long term investment. We are beginning to see the transportation industry evolve more rapidly toward cleaner modes of transport for both cargo and people. More automotive industry companies are entering the electric vehicle space, including Porsche and Audi. We are seeing a rapid change in cargo trucks, and a race to supply the trucking industry with electric vehicles from both electric vehicle manufacturers to traditional trucking manufacturers. Shipping companies continue to add alternative fuel vehicles to their fleets, as well making a big push toward using electric vehicles. The uncertainty related to escalating trade restrictions and trade war, as well as geopolitical tensions, poses an increasing risk to growth globally. The Fund is positioned to benefit from long term investment trends within the global energy system as it moves from largely fossil fuel based to a broader spectrum of energy suppliers. We believe the current slowdown in renewable energy spending is likely to be short lived as significant investment in renewables is still essential to address our worldwide energy challenges. Investing in the creation and delivery of clean energy as well as developing energy efficient systems and products to reduce energy consumption is vital. The diversified nature of the Fund, which seeks to invest not only in direct energy suppliers, such as utilities, solar and wind but also in companies developing energy efficient technologies and demonstrating leadership in reducing their carbon footprint provides investors with significant long term growth opportunities.

4 4 Calvert Global Energy Solutions Fund Q % Average Annual Returns (as of 12/31/2018) Q4 YTD 1 Year 3 Years 5 Years 10 Years A Shares at NAV I Shares at NAV A Shares w/max 4.75% Sales Charge Benchmark Benchmark Benchmark Benchmark Benchmark 1:MSCI ACWI Index Benchmark 2:Calvert Global Energy Research Spliced Benchmark Benchmark 3:Ardour Global Alternative Energy Index Benchmark 4:Calvert Global Energy Research Index Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance is for the stated time period only; due to market volatility, the Fund s current performance may be lower or higher than quoted. For the Fund s performance as of the most recent month end, please refer to eatonvance.com. Returns are historical and are calculated by determining the percentage change in net asset value (NAV) with all distributions reinvested. Returns for other classes of shares offered by the Fund are different. Performance less than or equal to one year is cumulative. Effective October 4, 2016, the Calvert Global Energy Solutions Fund changed its investment objective and principal investment strategies to track the Calvert Global Energy Research Index and implement the Calvert Principles for Responsible Investment. Prior to October 4, 2016, the Fund employed an active management strategy. Performance prior to October 4, 2016 reflects the Fund s performance under its former investment objective and policies. In connection with such changes, the Fund changed its secondary benchmark from Ardour Global Alternative Energy Index to Calvert Global Energy Research Index because the investment adviser believes it is a more appropriate secondary benchmark for the Fund. Performance prior to December 31, 2016 reflects the performance of the Fund s former adviser, Calvert Investment Management, Inc. The minimum investment is $1,000 for A Shares and $250,000 for I Shares. Minimums may be waived in certain situations. Please see the prospectus for additional information. Fund Facts 05/31/2007 Class A Expense Ratio 3 Gross: 1.89% Net: 1.28% Class I Expense Ratio 3 Gross: 1.61% Net: 0.93%

5 5 Calvert Global Energy Solutions Fund Q Portfolio characteristics exclude 3 securities in Calvert s High Impact Investments program, which represented 2.724% of the portfolio as of 12/31/2018. High Social Impact Investments are investments that, in the Adviser s opinion, offer the opportunity for significant sustainability and social impact. These investments are generally illiquid and involve high risks. See the Fund s prospectus for details and calvert.com for a complete list of Fund holdings. Index Definitions: MSCI All Country World Index is an unmanaged free float adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. S&P 500 Index is an unmanaged index of large cap stocks commonly used as a measure of U.S. stock market performance. Russell 1000 Value Index is an unmanaged index of U.S. large cap value stocks. Russell 1000 Index is an unmanaged index of 1,000 U.S. large cap stocks. Russell 1000 Growth Index is an unmanaged index of U.S. large cap growth stocks. Russell 2000 Value Index is an unmanaged index of U.S. small cap value stocks. Russell 2000 Index is an unmanaged index of 2,000 U.S. small cap stocks. Russell 2000 Growth Index is an unmanaged index of U.S. small cap growth stocks. MSCI EAFE Index is an unmanaged index of equities in the developed markets, excluding the U.S. and Canada. MSCI Emerging Markets Index is an unmanaged index of emerging markets common stocks. MSCI indexes are net of foreign withholding taxes. Source: MSCI. MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder. Dow Jones Industrial Average is a price weighted average of 30 blue chip stocks that are generally the leaders in their industry. NASDAQ Composite Index is a market capitalization weighted index of all domestic and international securities listed on NASDAQ. Source: Nasdaq, Inc. The information is provided by Nasdaq (with its affiliates, are referred to as the Corporations ) and Nasdaq s third party licensors on an as is basis and the Corporations make no guarantees and bear no liability of any kind with respect to the information or the Fund. Ardour Global Alternative Energy Index measures the performance of stocks engaged in the field of alternative energy including solar, bioenergy, wind, hydro, and geothermal power sources. The Calvert Global Energy Research Index includes stocks of companies that manage energy in a sustainable manner or are facilitating the move to a more sustainable economy. The Calvert Global Energy Research Spliced Benchmark is comprised of the Ardour Global Alternative Energy Index prior to October 4, 2016 and Calvert Global Energy Research Index thereafter. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index. Historical performance of the index illustrates market trends and does not represent the past or future performance of the fund. 1 Percent of total net assets. Top 10 Holdings excludes cash and equivalents. Percentages may not total 100% due to rounding. 2 Portfolio profile subject to change due to active management. 3 Source: Fund prospectus. Net expense ratio reflects a contractual expense reimbursement that continues through 1/31/19. Without the reimbursement, if applicable, performance would have been lower. The views expressed in this report are those of portfolio manager(s) and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. This commentary may contain statements that are not historical facts, referred to as forward looking statements. The Fund s actual future results may differ significantly from those stated in any forward looking statement, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of Fund shares, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in the Fund s filings with the Securities and Exchange Commission. About Risk: The value of investments held by the Fund may increase or decrease in response to economic, and financial events (whether real, expected or perceived) in the U.S. and global markets. The Fund s performance may not match or correlate to that of its Index, either on a daily or aggregate basis due to factors such as Fund expenses, imperfect correlation, rounding of share prices, changes to the composition of the Index, regulatory policies, high portfolio turnover and the use of leverage (if any). The Fund expects to hold the common stock of each company in the index it is designed to track, regardless of market conditions or individual investment performance, which could cause the Fund to underperform funds that employ an active strategy. Because the Fund concentrates its investments in companies in the sustainable energy solutions industry, the value of Fund shares may fluctuate more than that of a more broadly diversified fund. The value of equity securities is sensitive to stock market volatility. Investments in foreign instruments or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical, currency exchange rates or other conditions. Smaller companies are generally subject to greater price fluctuations, limited liquidity, higher transaction costs and higher investment risk than larger, more established companies. Investing primarily in responsible investments carries the risk that, under certain market conditions, the Fund may underperform funds that do not utilize a responsible investment strategy. No fund is a complete investment program and you may lose money investing in a fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description. Calvert funds are available at NAV for RIAs and Wrap Programs. Not all share classes are available to all investors. See a fund s prospectus for details. For more information on any Calvert fund, please contact your financial advisor or visit calvert.com for a free summary prospectus and/ or prospectus. An investor should consider the investment objectives, risks, charges, and expenses of an investment carefully before investing. The summary prospectus and prospectus contain this and other information. Read them carefully before you invest or send money Eaton Vance Distributors, Inc. Member FINRA/SIPC Two International Place, Boston, MA eatonvance.com