Socially Responsible Investing (SRI) is an investment strategy that

integrates social or environmental criteria into financial analysis.

With approximately $2.29 trillion in assets in the US today1, SRI is catching

on with many individual and institutional investors who seek to:

• Align their investment portfolio with their personal values by avoiding companies that do
not meet certain standards.
• Encourage improved corporate social and environmental performance through an active
investment strategy.
• Identify companies with better long-term financial performance through the analysis of
social and environmental factors.

SRI was first formally practiced by religious investors who, nearly 100 years
ago, avoided companies involved in tobacco, alcohol, and gambling. More
recently, however, SRI has evolved beyond such simple avoidance
screening to include the following four aspects:
1) Social Research - Examining the social and environmental records of
companies to determine which companies to include or exclude in an
investment portfolio. Most social investors have certain set criteria they use
to identify which companies "make the grade." Increasingly, social research
is seen as a way to identify companies with better management and lower
risk. For example, Calvert's unique Double Diligence® research process
combines a rigorous review of financial performance with a thorough
assessment of corporate integrity. Only when a company meets our
standards for both do we invest.
2) Shareholder Advocacy - Using your position as an owner in a
company to actively encourage a company to improve. Shareholder
advocacy can take many forms, from something as simple as a phone call
or letter-writing to filing a formal shareholder resolution calling for a
company to take a particular action (which can ultimately come to a vote in
front of all shareholders). Advocacy also includes proxy voting, or simply
casting your vote as a company shareholder.
3) Social Venture Capital - Seeking out early-stage investments in
companies that have identified profitable ways to meet societal needs (such
as alternative energy companies), before they are publicly traded. This
early-stage investing can help these companies secure necessary funding to
grow and often leads to healthy returns for shareholders.
4) Community Investing - Channeling affordable credit to communities
underserved by traditional credit markets to create jobs, build homes, and
finance community facilities. Investors often accept slightly below-market
rates of return to encourage investment that can build or rebuild
communities.
1
2005 Report on Socially Responsible Investing Trends in the US. The Social Investment Forum,
2005, p. iv.
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Offering preeminent research of corporate social and environmental performance, Calvert'
Social Research Department adds another dimension to our portfolio management expertis
includes specialists on the environment, labor, international human rights, community rela
defense.

Research Methodology
Calvert's social investment research analysts gather information from both government an
government sources. Typically, Calvert's social research methodology falls under three bro

• Conducting an industry review: Placing a company's practice within an industry peer-group analysis. Occasion
create our own industry peer groups for analytical purposes.
• Analyzing company-specific practices: Reviewing all social and environmental materials and networking with
of organizations.
• Reviewing country context: Reviewing the political, economic, and social environment of the countries in whic
is domiciled and has operations.

Calvert social research regularly seeks input from a variety of expert advisors to help infor
research process. For example, we convene symposia to address particular topics, such as
sustainable electricity, biotechnology, high technology, and the World Bank.
In-House Expertise
Calvert has one of the largest teams of social investment research analysts in the US. Eac
specializes by social issue and by sector. Calvert's 14 analysts have a combined total of m
100 years' experience in social issue analysis and advocacy. They have competence in 15
(English, Hebrew, Spanish, French, Vietnamese, Indonesian, Japanese, Hindi, Bengali, Pun
Urdu, Portuguese, Serbian, Croatian, and American Sign Language) and collectively hold 1
postgraduate degrees. In addition to evaluating companies for inclusion in the Calvert por
the analysts are also active in encouraging companies to improve through our shareholder
strategies.
Calvert has also created a new position of Chief Social Investment Strategist, filled by our
head of social research Dr. Julie Gorte, to study the relationship of social, environmental, a
governance factors to financial performance in order to provide even greater value and inv
insight to Calvert investment portfolios.
Staff Biographies
Bennett Freeman, Senior Vice President for Social Research and Policy. University
Oxford, MA in Modern History; University of California at Berkeley, AB in History.
Mr. Freeman manages Calvert's Social Research Department and directs its research and
work. From 2003 until early 2006, he led Burson-Marsteller's Global Corporate Responsib
practice advising multinationals on policy development, stakeholder engagement and
communications strategies related to human rights, labor rights and sustainable developm
During the Clinton Administration he served in three positions as a political appointee in th
Department, most recently as Deputy Assistant Secretary for Democracy, Human Rights a
Investment Philosophy
In today's rapidly changing global economy, we believe that a company
must have a strong management team with a long-term view in order to be
successful. In fact, there is evidence that socially and environmentally
responsible business practices contribute to long-term success.* Calvert
believes companies that operate with integrity toward their employees,
their communities, and the environment are better positioned for success.

Investment Process
The investment process for Calvert funds begins with careful selection of
experienced portfolio managers whose investment philosophy and style
complement Calvert's and who are recognized experts in their area of
investment expertise.

In evaluating prospective investments for our funds, Calvert employs two

layers of analysis, which we refer to as our Double Diligence® research
process. Our unique research process has two integral components: a
rigorous review of financial performance plus a thorough assessment of
corporate integrity. Only when a company meets our standards for both do
we invest.

Companies initially are qualified based on in-depth financial analysis by our

portfolio managers. As our portfolio managers are identifying financially
attractive opportunities, Calvert's social research analysts help identify
companies with strong management and solid long-term prospects. The
analysts' chief criteria are how these companies treat the environment,
their employees, their communities, and the safety of their products. If a
company fails to meet any of Calvert's basic social criteria, it is ineligible for
investment. If a company satisfies the Fund's criteria but demonstrates
room for improvement, we may invest in it and raise our concerns in a
dialogue with company management.

Ultimately, our portfolio managers select only those investments that have
met our rigorous financial and social criteria. However, the selection of an
investment does not constitute endorsement, nor does the absence of an
investment necessarily reflect a failure to satisfy a fund's social criteria.

Calvert offers a full and diverse family of funds that invest in socially
responsible companies and employ our Double Diligence® research process.
 Tools and Resources
Calvert Resolution Filing
Shareholder advocacy means using your position as History
an owner in a company to push for improved
corporate performance. At Calvert, our social Calvert Proxy Voting
investment research analysts regularly engage in Guidelines
shareholder advocacy work, such as dialogue with Proxy Voting Decisions
company executives, proxy voting, and filing Tool
shareholder resolutions.

Dialogue with company executives and managers. We regularly

initiate conversations with management as part of our social research
process. After we've become a shareholder, we continue our dialogue with
management through phone calls, letters, and meetings. Through our
interactions, we learn about management's successes and challenges and
try to press for improvement in specific areas of concern.

Proxy voting. As company shareholders, Calvert votes on issues of

corporate governance and social responsibility at annual stockholder
meetings. We take our responsibility seriously and vote each proxy in a
manner consistent with the financial and social objectives of our Funds, in
support of most social shareholder resolutions. Calvert's Proxy Voting
Guidelines integrate corporate governance and corporate social
responsibility into what Calvert calls a "sustainable governance" model that
it is willingly sharing with other mutual fund companies. The guidelines are
available here. Our proxy votes are disclosed here.

Shareholder resolutions. A shareholder with $2,000 of company stock,

held for one year, can file a resolution calling for a company to take a
particular action, such as changing a company policy. If not settled
beforehand, these resolutions may come to a vote in front of all
shareholders at the company's annual meeting. In 1986, Calvert Social
Investment Fund (CSIF) became the first mutual fund to file a shareholder
resolution - with the Angelica Corporation on labor/management issues.

Today, Calvert funds continue to propose shareholder resolutions on a

variety of issues that concern us. We generally file shareholder resolutions
when our dialogue with corporate managers is unsuccessful in persuading a
company to take action. In most cases, our efforts have led to negotiated
settlements with mutually beneficial results for shareholders and
companies. Calvert filed 26 resolutions for 2005 shareholder meetings and
16 resolutions thus far for 2006 meetings. In 2005, we successfully
resolved 21 shareholder resolutions in the areas of climate change,
executive compensation and political contributions, and Board and
employee diversity.

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Special Equities: Venture Capital Investments in Innovative,

Forward-Thinking Companies

In both the Calvert Social Investment Fund (CSIF) Balanced and

Equity portfolios, as well as the Calvert World Values International Equity
Fund, we allocate a small portion of the assets for early, direct investments
in companies run by visionary entrepreneurs who have identified profitable
ways of addressing society's needs. As of March 2006, these three funds
had $20.4 million in special equities investments.1

The Calvert Special Equities Program invests in higher-risk, socially and

environmentally responsible enterprises. These companies provide market-
based solutions to some of the more difficult social, environmental, and
health problems facing society today. We hope these long-term venture
capital investments will generate a greater return not only for our investors
but for future generations as well.

Since 1992, Calvert has invested in many young enterprises through this
unique venture capital program. The Special Equities' portfolio holdings are
subject to change at any time based on the decisions of portfolio
management. Sample holdings as of March 31, 2006 include the following:

Powerspan
www.powerspan.com
Powerspan Corp. was founded in March 1994 as Zero Emissions Technology
Inc. Powerspan initially developed and manufactured proprietary
modifications, called Arc Snubber® filters, for power plants fueled by coal.
This product decreases particulate air emissions for a nominal cost. The Arc
Snubber filters are in service at a number of power generators including
Allegheny Power, Cinergy, Mirant, Orion Power, and TransAlta Utilities.
Recognizing the growing challenge of providing clean, competitive
power from existing generating plants, Powerspan next developed a cost-
effective multi-pollutant control technology for coal-fired power plants. The
patented technology, called Electro-Catalytic Oxidation (ECO), provides the
functionality of four separate control technologies (for nitrogen oxides,
sulfur dioxide, particulate matter, mercury, and other air toxics emissions)
in a single integrated system at costs well below alternative technologies.
The first ECO installation was done at FirstEnergy's R.E. Burger Plant in
Ohio and FirstEnergy is now installing a 215-MW ECO unit at their Bay
Shore Plant in Oregon, Ohio.

Smarthinking.com
www.smarthinking.com
Smarthinking.com works with schools, colleges, universities, and textbook
publishers to provide online academic support to students. The company's
on-line tutoring services, with live tutors, allows smaller community
colleges with fewer resources to provide full tutoring support for their
students. School book publishers can provide a few hours of tutoring along
with a new textbook to help students learn the material. Smarthinking has
partnerships with over 500 school clients and businesses.

The company's new Bridge2College program assists colleges in attracting

and retaining
students by providing early-intervention academic assistance in math and
writing. According to Smarthinking, as many as 53% of incoming college
students need remedial coursework and only 60% of students graduate
within six years of enrollment. Early intervention through programs such as
Bridge2College can help ensure that students stay the course.

As of 3/31/06, Powerspan represented 0.07% of Calvert World Values International Equity Fund.

As of 3/31/06, Smarthinking.com represented 0.03% of CSIF Balanced Portfolio and 0.03% of

Calvert World Values International Equity Fund.

1
At 3/31/06, Calvert Social Investment Fund (CSIF) Balanced had 2.15%, Calvert Social
Investment Fund (CSIF) Equity had 0.09%, and Calvert World Values International Equity Fund
had 1.29% of assets invested in this program.

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