Value Presentation

Calvert Adds Value : Calvert Adds Value Calvert Small Cap Value Fund Calvert Mid Cap Value Fund


New Funds’ Portfolio Management : New Funds’ Portfolio Management Calvert sub-advisor is Channing Capital Management, LLC (CCM), co-founded by Eric McKissack – former manager of Ariel Appreciation Fund. Uses an intrinsic value investment strategy that emphasizes a company’s low market price relative to its fair market value.


Calvert’s Double Diligence Process : Financial Review Corporate Integrity Analysis Calvert’s Double Diligence Process + A company must meet both standards to be selected for investment.


What is the ideal asset mix? : Highest Return Lowest Return What is the ideal asset mix? Source: Lipper 1998 1994 1995 1996 1997 1999 2000 2001 2002 2003 BONDS SMALL GROWTH INTL SMALL GROWTH SMALL VALUE INTL BONDS INTL BONDS LARGE GROWTH BONDS SMALL GROWTH BONDS INTL BONDS SMALL GROWTH LARGE VALUE INTL LARGE VALUE BONDS SMALL GROWTH SMALL VALUE INTL Russell 2000 Grow IX Tr LARGE VALUE INTL LARGE VALUE SMALL VALUE SMALL GROWTH LARGE VALUE SMALL VALUE BONDS LARGE GROWTH INTL SMALL VALUE LARGE VALUE LARGE GROWTH SMALL GROWTH BONDS SMALL VALUE SMALL GROWTH LARGE GROWTH INTL


Why Value? Why Now? : Why Value? Why Now? Demand. Small-cap value assets have risen from $23B in December 2000 to $68B as of August 2004. Supply. In September 2004, 43% of high-performing small-cap value funds were closed to new investors – including all of Morningstar’s “Analyst Picks” in this category. Source: Morningstar®, SimFunds


Types of Value Investing : Types of Value Investing Deep Value Evaluates firm’s book value and price/earnings ratio. Company often has major operational problems. Intrinsic Value


Intrinsic Value : Intrinsic Value Buying stocks that are selling at a significant discount relative to fair market, or intrinsic, value. Channing also assesses book value and P/E ratio, but uses additional metrics to identify traits of higher quality companies.


Intrinsic Value – CCM’s Approach : Intrinsic Value – CCM’s Approach Three key measures: Acquisition Price Sum-of-the-Parts Discounted Cash Flow


Intrinsic Value – CCM’s Approach : Intrinsic Value – CCM’s Approach Rouse Companies (NYSE: RCE) CCM Buy: $41-$42 a share Wall Street Target: $52-$54 a share CCM Target: $60 a share Rouse expected to be acquired for $67.50 a share Channing’s expected return: 50+%


Calvert & Channing Capital : Calvert & Channing Capital A Winning Combination for Value Funds


Calvert Basic Six Process : Calvert Basic Six Process Investment philosophy aligned with fund objective Proven ability to produce superior returns Stable and well-structured investment process Perceived high-quality firm Commitment to the partnership Strong reputation and marketability


Calvert Sub-Advisor: Channing Capital Management : Calvert Sub-Advisor: Channing Capital Management Investment team has 42+ years experience, including:


Investment Process : Investment Process 1,200 150 Narrows prospects to 150 Channing starts with about 1,200 potential companies Finally, 35-40 equities will be chosen for investment in each fund 35−40 Potential Companies for Investment


Investment Selection – Part One : Consider Buying Here Investment Selection – Part One Investment Approach Channing Capital Management, LLC OVERVALUED UNDERVALUED Low Expectations High Expectations Wall Street Favorites Negative Surprise Higher Estimate Revision Lower Earnings Estimate Channing Exit Strategy Channing Identify Candidates Positive Surprise Out-of-Favor Channing Investment Candidates


Investment Selection – Part Two : Investment Selection – Part Two Identify significantly underpriced stocks Analyze fundamentals for demonstrated financial strength Conduct proprietary, hands-on research Select those with sustainable competitive advantages Assess firm’s corporate integrity


Hands-On Research : Hands-On Research “We don’t just crunch the numbers. We usually make on-site visits to the firm, meet with its suppliers and customers, and even try to speak with a company's competitors and former employees. We want to see that the bigger picture supports what the numbers are telling us.” — Eric McKissack, CFA


Calvert: Corporate Integrity Criteria : Calvert: Corporate Integrity Criteria The company must act responsibly in seven areas: Product safety & impact Governance and ethics International operations & human rights The environment Indigenous peoples’ rights Workplace issues Community relations


Corporate Responsibility Matters : Corporate Responsibility Matters According to Morgan Stanley, companies with highest social and environmental ratings outperformed companies with the lowest ratings by 23.4%. (Source: Morgan Stanley Capital International as cited in Morgan Stanley Study Correlates Sustainability with Financial Outperformance, Socialfunds.com, 12/2003. )


Sell Strategy : Consider Selling Here Sell Strategy Investment Approach OVERVALUED UNDERVALUED Low Expectations High Expectations Wall Street Favorites Negative Surprise Higher Estimate Revision Lower Earnings Estimate Channing Exit Strategy Channing Identify Candidates Positive Surprise Out-of-Favor Channing Investment Candidates Channing Capital Management, LLC


Managing Risk : Managing Risk Positive financial and balance sheet criteria Adequate diversification of equities – including maximum position size & sector exposure Consistent buy/sell discipline


Calvert Small Cap Value Fund : CUSIP: 13161P508 TICKER: CCVAX Market Cap: $2 Billion and Under Benchmark: Russell 2000 Value Index Lipper Category: Small Cap Value Calvert Small Cap Value Fund Representative Holdings:


Calvert Mid Cap Value Fund : CUSIP: 13161P607 TICKER: CMVAX Market Cap: $300MM to $15B Benchmark: Russell Mid-Cap Value Index Lipper Category: Mid Cap Value Calvert Mid Cap Value Fund Representative Holdings:


Calvert Value Funds:Timely Opportunities : Calvert Value Funds: Timely Opportunities Demand for value funds continues to increase, while supply in smaller capitalization categories decreasing. Two new Calvert funds: the opportunity to invest with a well-known sub-advisor with expertise in small and mid-cap arena. Value Blend Growth Large Medium Small OPEN FOR INVESTMENT OPEN FOR INVESTMENT OPEN FOR INVESTMENT


Investment Risk : Investment Risk These Funds may own less than 60 securities, so the Funds' risk is increased because each investment has a greater impact on the Fund's performance. In addition, investing in small-cap and mid-cap stocks involves a higher degree of risk due to the volatility of the investments. In addition, you could lose money on your investment in the Funds, or the Funds could underperform or any of the following reasons: a) the stock market goes down, b) the individual stocks in the Fund do not perform as well as expected, and/or c) the Funds’ portfolio management practices might not work to achieve their desired results. Calvert funds are available at NAV for RIAs and Wrap Programs. Calvert mutual funds are underwritten and distributed by Calvert Distributors, Inc., member NASD, a subsidiary of Calvert Group, Ltd. #5157 (9/04)


Build Your Business with Integrity, Quality & Performance  : For more information on any Calvert fund, please call Calvert at 800.368.2750 for a free prospectus. 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 send money. 800.368.2750 www.calvert.com We have these tools to help you build your business: Build Your Business with Integrity, Quality & Performance