To sustain global economic development, the world needs more and more energy. But the increasing demand for energy cannot be met by fossil fuels alone. Alternative energy will be an important part of the solution to filling the gap between supply and demand.
An Attractive History
Alternative Energy has proven to be an attractive investment opportunity based on past performance as illustrated in the following chart. Alternative Energy stocks, represented by Ardour Composite Global Alternative Energy IndexSM, have significantly outperformed the broad-based global stock market, represented by the MSCI World Index, and the U.S. stock market, represented by the S&P 500, based on cumulative returns over the period since the Ardour index was conceived in December 31, 1999. In fact, as of March 31, 2007, Alternative Energy stocks generated a cumulative return of 30.14%, compared with 22.77% for the global stock market and just 8.88% for U.S. stocks since December 31, 1999.
Performance data shown represents past performance, which does not guarantee future results. Index performance does not represent fund performance. A fund may perform significantly differently. It is not possible to invest directly in an index. Indices are unmanaged and do not reflect payment of advisory fees or other expenses associated with an investment in a fund. Ardour Global Composite IndexSM is a capitalization weighted, float adjusted equity index designed to serve as an equity benchmark for globally traded stocks principally engaged in the field of alternative energy technologies, including renewable energy, alternative fuels and related enabling technologies. Sources: Ardour Global Indexes, Zephyr.
A Bright Future
Given the increasing demand for alternative energies in the marketplace, we believe the sector’s outlook is strong. As shown in the following chart, annual revenue for four key clean-energy technologies increased nearly 39% this past year alone—from $40 billion in 2005 to $55 billion in 2006. Based on an analysis by the researchers at Clean Edge, collectively these four clean-energy technologies are projected to quadruple revenue to more than $226.5 billion within a decade.
Revenues
An increase in clean energy revenue growth does not necessarily indicate positive investment results for a fund investing in energy or alternative energy. The energy and alternative energy sectors can be volatile. Investment involves risk, including possible loss of principal.
A Word of Caution
While we are very optimistic about the prospects for the alternative energy sector, we suggest that you keep in mind certain risks. The alternative energy sector can be significantly affected by obsolescence of existing technology, short product life cycles, falling prices and profits, competition from new market entrants and general economic conditions. The sector can also be significantly affected by fluctuations in energy prices and supply and demand of alternative energy fuels, energy conservation, the success of exploration projects and tax and other government regulations and policies. In addition, shares of the companies involved in the alternative energy sector have been more volatile than shares of companies operating in other more established sectors or industries.
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Calvert mutual funds are underwritten and distributed by Calvert Distributors, Inc., a member of FINRA and subsidiary of Calvert Group, Ltd., #6981 (12/07)