PERSPECTIVES M A Y

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A Bright Future for Alternative Energy

In this paper, we discuss the following five trends that, we believe, will help propel longer-term growth in the alternative energy sector:

n The rising global energy demandn A scarcity of accessible oiln The growing investment in new energy technologiesn Climate changen A changing regulatory landscape

Read on to learn more about alternative energy, the developments we see across the various segments of the sector—wind, solar, biofuels, geothermal, hydropower, fuel cells, and energy conservation—and where we see opportunity for growth in coming years.

THE CURRENT ENVIRONMENT: FACING THE FINANCIAL CRISISThe onset of the global financial crisis and economic recession hit alternative energy companies particularly hard, as have lower crude oil prices and a prolonged “flight to quality.” Investors favored less-risky assets, including near-zero-rate U.S. Treasury bills, and shunned higher volatility sectors and asset classes, including growth stocks, emerging markets equities—and many alternative energy stocks that fall into the high-beta camp. In addition, the global credit freeze created a difficult operating environment for these young growth companies heavily reliant on project financing.

On the positive side, “green investments” are a key component of the massive global fiscal policy response to the present economic crisis. Major stimulus programs in the United States, China, the European Union, and the United Kingdom all feature green initiatives that target energy efficient transportation, construction, waste water treatment, electricity grid infrastructure, and renewable energy.

Despite the emergence of a highly favorable policy environment for alternative en-ergy and attractive long-term supply and demand fundamentals, alternative energy stocks currently remain challenged—along with most other global equity markets. This reflects continued concern about prospects for the overall equity market and skepticism regarding the timing and pace of the impending global economic recov-ery. Nevertheless, we see tremendous growth opportunity in this dynamic sector as political, social, and economic forces are aligning to create a more favorable business landscape for these companies.

May Lose Value. Not FDIC Insured. Not a Deposit. No Bank Guarantee. Not NCUA/NCUSIF Insured. No Credit Union Guarantee.

Executive SummaryIn these uncertain times, alternative energy companies—like most companies—have encountered significant challenges. A massive sell-off, frozen credit markets, and an investor aversion to risk have conspired to inhibit growth among these relatively smaller companies recently. Nevertheless, we see tremendous growth op-portunity in this dynamic sector as political, social, and economic forces are aligning to create a more favorable business landscape.

Jens Peers Portfolio Manager, KBC Asset Management International, Ltd.

Paul Hilton Director, Advanced Equities Research, Calvert

Lily Donge Senior Sustainability Analyst/Manager, Environment and Climate Change, Calvert

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THE FIVE KEy DRIVERS OF GROwTH FOR THE ALTERNATIVE ENERGy SECTORIn just the last several years, alternative energy has emerged as a definable economic sector and from an investment perspec-tive, a distinct asset class. The term generally encompasses companies involved in developing technologies that reduce reliance on traditional fossil fuels, such as coal, oil, and natu-ral gas. That includes companies involved with 1) new energy sources, such as wind, solar, bioenergy, geothermal, wave/tidal power, and small-scale hydro; 2) conservation and efficiency technologies, such as energy-efficient lighting, and efficient engines; and 3) storage mechanisms, including fuel cells, hy-drogen generation, and storage batteries.

Prior to the financial crisis, revenue growth among alternative energy companies was thriving. As reported in Clean Edge’s Clean Energy Trends 2009, global revenues for solar photo-voltaics, wind power, and biofuels grew from $75.8 billion in

2007 to $115.9 billion in 2008. At the same time, new global investments in energy technologies, including venture capital, project finance, public markets, and research and develop-ment, increased by 4.7% from $148.4 billion in 2007 to $155.4 billion in 2008, as tallied by New Energy Finance.

Today, momentum for global strategic action to reduce carbon emissions has accelerated, with a huge assist from the elec-tion of U.S. President Barack Obama. His administration has enumerated the inter-connected benefits of reinvigorating the economy while also building the base for a clean energy society. The proposed 10-year $150 billion “green” stimulus plan emphasizes improving residential and automobile energy efficiency, modernizing federal buildings, and enhancing the power grid. The American Recovery and Reinvestment Act, signed into law in February, 2009, includes more than $70 bil-lion in spending for renewables and tax credits for a variety of clean-energy initiatives.

Looking forward, we expect growth in the alternative energy sector to be driven by the following five key determinants of supply and demand:

n rising global energy demandn scarcity of accessible oiln growing investment in new energy technologiesn climate changen a changing regulatory landscape

Global revenues for solar photo- voltaics, wind power, and biofuels

grew from $75.8 billion in 2007 to $115.9 billion in 2008.

Between 2005 and 2030, global energy demand is projected to increase by 50%—with more than 80% of that demand coming from emerging economies, namely China and India.

The Organisation for Economic Cooperation and Development (OECD) is comprised of economically developed countries, including the United States, European countries, Australia, and Canada. It promotes economic and social welfare throughout the OECD area.Source: Energy Information Administration (EIA), International Energy Annual 2005 (June-October 2007), http://www. eia.doe.gov/iea. Note: Totals may not equal sum of components due to independent rounding. Projections: EIA, World Energy Projections Plus (2008).

projected increase in world marketed energy consumption by region from 2005 - 2030 (Quadrillion British Thermal Units)

Region 2005 2010 2015 2020 2025 2030

OECD 240.9 249.7 260.5 269.0 277.6 285.9

North America 121.3 126.4 132.3 137.8 143.4 148.9

Europe 81.4 83.9 88.5 86.8 90.4 92.0

Asia 38.2 39.3 41.4 42.7 43.7 44.9

Europe and Eurasia 50.7 55.1 59.5 63.3 66.0 69.1

Asia 109.9 137.1 164.2 189.4 215.3 240.8

Middle East 22.9 26.4 29.5 32.6 34.7 36.8

Africa 14.4 16.5 18.9 20.9 22.5 23.9

Central and South America 23.4 27.7 30.5 33.2 35.7 38.3

Non-OECD 221.3 262.8 302.5 339.4 374.2 408.8

AverageAnnualPercentChange2005-2030

0.7

0.8

0.5

0.7

1.2

3.2

1.9

2.0

2.0

2.0

2.5

TotalWorld 462.2 512.5 563.0 608.4 651.8 694.7 1.6

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RISING GLObAL ENERGy DEMAND Even with the synchronized global recession, world popula-tion growth and rising global living standards are expected to translate into significantly higher global demand for energy. The world’s population doubled from 3 billion to 6 billion in the 40-year period from 1959 to 1999, and it is expected to approach 9 billion by 2042.1 Meanwhile, demand for energy is growing exponentially, particularly as emerging economies strive to raise the living standards of their people. As noted in the table on page 2, the Energy Information Administration (EIA) predicts that global primary energy demand will rise 50% between now and 2030, with more than 80% of the incremen-tal demand coming from developing countries.

China alone is expected to account for approximately 30% of the increase in energy demand over the next 20 to 25 years. By 2010, the country is forecast to have 90 times the number of cars it had in 1990, and as early as 2030, China could have more cars than the United States.2

SCARCITy OF ACCESSIbLE OIL While the recent decline in oil prices may have dampened the sense of urgency over diminished supplies, the scarcity of ac-cessible oil has meant rising fuel shortages worldwide, as key oil producing countries are at or near production capacity, and easy-to-reach natural gas supplies have declined. Some speculate that despite development of more sophisticated ex-traction technologies, we may be approaching the point where total oil production volumes globally are in decline, a concept known as “peak oil.” Indeed, already 54 of the largest 65 oil-producing countries have begun to experience a decline in oil production.3

Global supply constraints—from production to refining—suggest fossil fuel prices will rise over time. Costlier oil makes more expensive methods of oil production more viable but

also makes the development of biofuels and advances in trans-portation technologies, such as those used in hybrid vehicles, more attractive. In a long-term environment of rising and volatile energy prices, we expect companies increasingly to diversify their energy portfolios.

GROwING INVESTMENT IN NEw ENERGy TECHNOLOGIES New alternative energy technologies and sources are likely to play a growing role in bridging the energy supply-demand gap. Increased investment in new technology would help drive down the costs of competing energy alternatives, such as solar, wind, biofuel, and hydrogen sources. Already, wind turbines can be cost competitive with coal and gas production.

Of the total venture capital investment in the United States in 2008, 11.8% was related to energy technologies, up from just 0.6% in 2000.4 Based on these trends, a growing number of investors and analysts see alternative energy as opening up a new horizon for long-term investment.

Spurred by mounting public concern, renewed interest, and stimulus funding for energy infrastructure and research and development, the pace of innovation within the alternative energy sector is likely to accelerate. Longer term, alternative energy technologies will almost inevitably be an increasingly significant contributor to solutions to global energy problems.

Technologies that make the grid even 5% more efficient would allow savings equal to the elimination of

GHG emissions from 53 million cars.

$0 $50 $100 $150 $200 $250 $300 $350

2008

2018

(In Billions)

Projected Revenue Growth 2008 – 2018

Markets for three clean energy technologies are projected to climb substantially in coming years.

clean energy projected revenue growth from 2008 - 2018 ($U.S. Billions)

Source: Clean Edge, 2009

Together, revenue from these technologies is projected to reach $325.1 billion within a decade. Keep in mind, however, that 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.

Biofuels$34.8

$105.4

$51.4

$139.1

$325.1

$29.6

$80.6

$115.9

WindPower

SolarPower

TOTAL

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A central objective of programs that harness technology for clean energy involves transforming the existing infrastructure into a “smart grid.” A smart grid allows renewable energy to be channeled efficiently within communities and brings power generation closer to users. The shorter the distance from generation to consumption, the more efficient, economical, and clean the process can be. Smart grids also enhance energy efficiency by helping households and other consumers to man-age their electricity by giving consumers better information about the costs of using power during peak and non-peak periods. Experts estimate that making the grid even 5% more efficient would mean savings equal to the elimination of greenhouse gas (GHG) emissions from 53 million cars.5

CLIMATE CHANGE Today, there is broad scientific consensus and corresponding public concern about the potentially catastrophic impact of cli-mate change. The Intergovernmental Panel on Climate Change (IPCC) has clearly established that the earth is warming and human activity is accelerating this trend at an alarming rate. According to the National Center for Atmospheric Research, greenhouse gas concentrations in the atmosphere are now higher than at any time in the last 750,000 years.6 Based on current projections, the IPCC projects a potential increase of temperatures over the next 100 years of between 2 and 11.5° F (1.1 and 6.4° C).7 This is hugely significant, since over the last 10,000 years there has not been a change of more than 1.8° F (1.0° C).8 The projected magnitude of warming could mean a rise in sea levels, increased flooding, disruption of vari-ous ecosystems and agricultural zones, and changes in pest infestation and disease patterns.

Business Risks RecognizedThe imperative to slow the rate of climate change already has imposed some risks on corporations. Investors increasingly are interested in how companies are managing the impact of their energy usage and carbon footprint. The Investor Network on Climate Risk, which is a coalition of institutional investors pushing for companies to address climate risk, has grown from 10 investors managing $600 billion in assets to more than 70 investors managing more than $7 trillion in assets. It has persuaded some two dozen Fortune 500 companies, including leading oil, automobile, and insurance companies, to improve their climate policies, practices, and disclosure.9

In the first quarter of 2009, The Carbon Disclosure Project—a project sponsored by Calvert and HM Consulate General (of the British Government) and written by global consulting firm Mercer—released its findings. The goal of the global survey was

to understand investors’ use of climate risk data. The research found that information that companies provided to CDP on emissions reduction targets, as well as corporate strategies to deal with the climate change, was factored into investment and asset allocation decisions at 75% of the investment firms surveyed. This sends a clear signal that investors surveyed take climate change issues seriously and are gaining sophistication in assessing the related impacts on their portfolios.

CHANGING REGULATORy LANDSCApE While green economy sentiment and policy changes favoring renewable energy are taking hold in the United States, these issues are already high on the international policy agenda. The European Union (E.U.) continues to play a leadership role, re-cently affirming its 2020 targets calling for a 20% reduction in carbon emissions and for a fifth of its energy consumption to come from renewable energy sources. Additionally, the United Kingdom plans to reduce emissions by 26% in 2020 and 80% by 2050. Among developing nations, China, in a 2008 year-end report, reiterated its commitment to improving energy effi-ciency and expanding the use of renewables.

We anticipate that new regulations under consideration designed to combat climate change and reduce reliance on for-eign oil will dramatically alter the energy landscape and help make alternative energy significantly more competitive in the period ahead. Recent actions include: United Statesn States are leading the way in setting vehicle greenhouse gas

emissions standards. The state clean car standards require an approximate 30% reduction in emissions from new ve-hicles by 2016. To date, 18 states have adopted, or are in the process of adopting, these standards.

n By the end of March 2009, 28 states had signed into law a Renewable Portfolio Standard (RPS) that sets a specific, legally-binding target for renewable energy production in each state.

n The American Recovery and Reinvestment Act of 2009 ear-marked $11 billion for smart grid updates, $4.5 billion for energy-efficiency improvements to federal buildings, and $500 million for green jobs programs through the Workforce Investment Act, among other programs to promote renew-ables. The Act includes provisions for $13 billion to extend by three years the placed-in-service date for renewable energy investments and an additional $1.6 billion for clean energy bonds.

n The Administration supports an economy-wide, cap-and-trade program to reduce greenhouse gas emissions 80% by 2050.

n It also supports the goal to ensure 10% of U.S. electricity comes from renewable sources by 2012 and 25% by 2025.

n In March 2009, the Environmental Protection Agency (EPA) found that carbon dioxide is a danger to public health, a step that could trigger management and disclosure of emissions of greenhouse gases across the economy. The so-called en-dangerment finding could clear the way for the EPA to use the Clean Air Act to control emissions of greenhouse gases.

The Investor Network on Climate Risk has grown from 10 investors

managing $600 billion in assets to more than 70 investors managing

more than $7 trillion in assets.

continued on page 6 >>

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Wind — Wind is one of the most cost-competitive, technologically mature, and scalable renewable energy sources available. In many cases, wind energy already is close to cost competi-tive when compared to new start-up coal and gas plants. New capital expenditures for wind installation are projected to grow from $51.4 billion in 2008 to $139.1 billion in 2018. In 2007, global wind power installations reached a record 27,000 megawatt (MW), including more than 8,000 MW of capacity added in the United States. This amounted to more than 40% of the country’s total new electricity generating capacity brought online in 2008–putting the United States ahead of Germany as the world’s leading generator of wind energy.10

Solar — Solar technology is advancing at one of the fastest rates in the renewable energy sector and may reach grid parity by 2012 in sunny regions of the world. Yet solar power installations currently account for less than 0.1% of total power generation capacity worldwide. Germany, Japan, and the United States are the three largest solar markets, accounting for 78% of the total market. Solar photovoltaics (PV), including modules, system components and installation, are projected to grow from a $29.6 billion industry in 2008 to $80.6 billion by 2018, according to Clean Edge.11 Annual installations worldwide reached more than 4 gigawatt (GW) in 2008, a fourfold increase from four years earlier, when the solar PV market first reached the gigawatt milestone.

Biofuels — Biofuels are currently the only renewable alternative to tra-ditional transportation fuels. Biofuels include ethanol, which is derived from starch-based plants such as corn, wheat or sugar, and biodiesel, which can be derived from vegetable oils, algae, or animal fats. In the United States, the Energy Independence and Security Act of 2007 increased the Renewable Fuel Standard (RFS) target to a minimum usage of 35 billion gallons of biofuels by 2020, and enacted an ethanol blending excise tax credit of $0.51 per gallon to support the industry. The European Union promotes the use of biofuels through its usage target of 5.75% of all fuel by 2010.

Geothermal — Geothermal energy stems from the earth’s natural heat. Unlike wind or solar, geothermal power is available throughout the day, regardless of weather conditions. The most efficient modern geothermal facilities can produce electricity at wholesale prices and

be competitive with traditional fossil fuels. The sector is highly capital intensive, but benefits from low operating costs since generating the

power requires no purchased fuel and is not subject to varying fuel costs.

Ocean — Ocean, or wave power, is an emerging power generation technology not yet deployed commercially on a meaningful level. However, it has great potential, because abundant wave power resources are available globally. According to the U.S. Department of Energy, wave power could produce 40MW to 70MW of power per kilometer along the western U.S. coastline.

Still, further cost and technological improvements are needed for large-scale applications.

Hydropower — Hydropower is a long-established technology that uses turbines to generate energy from water flow. The advantages of hydro- power include minimal pollution levels, good reliability compared with

other renewables, low operating costs, and cost competitiveness with fossil-fuel power genera-tion. Disadvantages of hydropower include very high initial capital costs, as well as significant environmental and social concerns about the construction and operation of large dams.

Fuel Cells — Many fuel cell products are still in the testing and development phase, although large research and development funding is be-ing devoted to the industry. Fuel cells generate

electricity from an electrochemical reaction in which air and fuels, such as hydrogen, combine to form energy, producing a byproduct of pure water. There are many different types of fuel cells for various applica-tions, ranging from large-scale stationary power to portable (lap-top computers, cell phones) and automotive applications. Fuel cell-powered vehicles are the furthest from commercialization due to cost.

Efficiency/Conservation — Energy conservation technologies mainly involve developing more efficient machinery, lighting, building techniques, materials, superconducting techniques for transportation of energy, and improvements in energy storage and thermal efficiency. According to the American Council for an Energy Efficient Economy (ACEEE), investment in efficiency retrofits and new construction could grow to $700 billion annually by 2030.12 Energy efficiency may be the most compelling solution to reducing GHG emissions while generating cost savings and supporting jobs.

developments in alternative energy

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WIND ENERGY: Iberdrola Renovables (IBR)Iberdrola is the largest global wind farm operator and market leader within this mature and scalable renewable energy sector. It is the number one operator in the United Kingdom and the number two operator in the United States. No other company boasts as much experience in installing, designing, and managing wind farms. To date, the company, which went public in 2007, has delivered on its growth forecasts, and in our view, will ex-pand more rapidly than any other wind farm operator. Given its strong track record, IBR’s profit margins should remain strong. The recent extension of the U.S. Production Tax Credit reinforces opportunities for IBR in the United States.

SOLAR: MEMC Electronic Materials (WFR)MEMC produces silicon wafers. Its products are used in computers, telecommunica-tions equipment, automobiles, consumer electronics products, industrial automation and control systems, as well as analytical and defense systems. MEMC is vertically inte-grated, producing silicon, ingots, and wafers. Roughly 50% of the company’s sales is from the semiconductor industry. The remaining 50% is generated from solar sales.

ENERGY EFFICIENCY: Itron Inc. (ITRI)Itron is a global supplier of wireless data acquisition and communication products for electric, gas, and water utilities. Its software for automating meter data collection permits utilities to enhance both resource manage-ment and conservation and to develop customer rate structures that encourage conservation. Itron’s automatic meter reading (AMR) systems, handheld meter reading computers, and meter data acquisition and analysis software help utilities work with their customers to reduce loads during peak usage times. Such “smart meters” enable customers to better manage their energy usage and costs while also improving system reliability.

As of April 30, 2009, Iberdrola Renovables represented 6.4% of the net assets of Calvert Global Alternative Energy Fund. MEMC Electronic Materials represented 2.7% of Calvert Global Alternative Energy Fund and 0.07% of Calvert Social Index Fund. Itron represented 1.9% of the net assets of Calvert Global Alternative Energy Fund, 2.0% of Calvert Global Water Fund, 2.6% of Calvert Capital Accumulation Fund, and 0.03% of Calvert Social Index Fund.

Internationaln Some 184 countries have ratified the Kyoto Protocol which

is set to expire after 2012. The Protocol requires countries in the European Union and 36 other industrialized countries, which represent 55% of global emissions, to reduce green-house gas emissions by 5.2% from 1990 levels through a cap-and-trade system. The United States is the only hold-out among developed countries. India and China have ratified the Protocol but are not required to reduce carbon emissions under the present agreement.

n 2009 will be a crucial year in international efforts to address climate change, culminating in the United Nations Climate Change Conference in Copenhagen December 7-18. The agenda for this conference will help provide a post-Kyoto framework. Establishment of international greenhouse gas emissions reduction targets that are consistent with the sci-entific consensus—specifically with the recommendation by the IPCC—would be a critical step.

n The European Union has adopted a goal of generating

20% of its total power from renewable sources by 2020, and of reducing greenhouse gas emissions by 20% by the same date. In addition, new legislation has been introduced calling for the E.U. to reduce greenhouse gas emissions to 20% below 1990 levels. Driven partly by attractive govern-ment incentives, Spain and Germany are home to solar and wind companies that can claim some of the largest global market shares.

n Although China has not established a climate change policy, the country has made policy commitments to water and infrastructure management. China has not set specific domestic targets for controlling greenhouse gas emissions, but it has set energy efficiency goals that officials say show the government’s commitment to tackling CO

2 emissions. A

2006-10 plan aims to reduce energy consumption per unit of gross domestic product by 20%. China also is addressing global warming through vehicle emissions. The country has said it wants to raise its annual production capacity of alter-native energy vehicles to 500,000 cars and buses by the end of 2011, from 2,100 in 2008.

CALVERT’S pOLICy pRIORITIES: bUILDING MOMENTUM FOR CLIMATE CHANGE SOLUTIONSAt a time when growing worldwide demand for energy is straining traditional energy resources globally, the potential of alternative energy solutions to alleviate shortages, address pressing climate change issues, and reduce dependency on unstable external fuel supplies has become increasingly ap-parent to the public and the scientific community. At the same

This will be a crucial year in inter-national efforts to address climate change, culminating in the United

Nations Climate Change Conference in Copenhagen in December 2009.

examples of alternative energy companies

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time, there is growing appreciation of the damaging impact of climate change on companies, industries, and whole econo-mies, as well. Spurred by the strong fundamental drivers cited in this paper, we can imagine the emergence of a new era of opportunity for the alternative energy sector.

In addition to offering investments designed to provide solutions to pressing climate change issues, Calvert remains active on the policy level. In November 2007, Calvert, in part-nership with Ceres, a national environmental coalition, led institutional investors managing $1.4 trillion in assets in urg-ing Congress to implement strong national regulatory action on climate change.

Calvert’s policy priorities include support for the following:

n Enactment of cap-and-trade legislation that would put a price on carbon. This also would benefit renewable energy because of its zero-carbon generation.

n Assumption of a strong leadership role by the United States at the United Nations Climate Change Conference in Copenhagen in December convening to establish a strong post-Kyoto framework.

n Establishment of a national standard for renewable energy requiring utilities to generate at least 25% of their electricity from renewable sources by 2025—a standard that can only be met through the use of renewable energy sources, not energy efficiency.

n Implementation of measures to reduce dependence on pol-luting energy sources, including: 1) adoption of an energy efficiency resource standard (EERS); 2) development of a na-tional smart grid that facilitates efficiency; and 3) increased transmission of electricity generated by renewables.

CONCLUSION For the nascent alternative energy sector, 2009 is shaping up as the year when the political, social, and economic forces are aligned for positive change. Even amid a crippling global fi-nancial and economic downturn, governments worldwide are affirming—even strengthening—commitments to curb car-bon emissions. This suggests that the need to address climate change has crossed a threshold whereby a return to the old ways is no longer possible.

From an investment perspective, we believe this development, along with the five key drivers discussed herein, build a case for considering alternative energy stocks as part of an invest-ment portfolio’s equity allocation. Including alternative energy companies can enhance overall portfolio returns by providing investors with access to a new, potentially high-growth set of companies.

On balance, while alternative energy stocks represent higher return potential, they also involve higher risk potential. Navigating the companies in this relatively young sector should be done with the help of investment professionals skilled in assessing the financial strength, competitive ad-vantages, supply-demand fundamentals, and future growth prospects of these unique companies. We tend to favor com-panies that we consider to be long-term winners, low-cost producers, and companies with proven technologies.

With alternative energy stock prices driven to attractive levels due to the market correction, and the implementation of a range of green initiatives underway, we consider this a good time to consider adding alternative energy exposure. We ex-pect the fact that climate change will be an integral part of global public policy stimulus measures to be an important catalyst for the alternative energy sector in 2009. n

Alternative energy is a sub-set of clean technology. While alternative energy includes efficiency, energy production, and energy storage, “clean tech” refers to a broader set of technologies that addresses the management of natural resources and waste. Examples include water treatment and distribution, recycling, and waste minimization.

alternative energy vs. clean tech

A Word About the Risks. 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 of energy 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.

Calvert Global Alternative Energy Fund (CGAEX) is an all-market-cap, alternative energy sector mutual fund that invests in a globally diverse selection of companies. For ongoing updates about the alternative energy sector and the Global Alternative Energy Fund, please visit us online at www.calvert.com.

A UNIFI CompanySM

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 send money. Calvert funds are available at NAV for RIAs and Wrap Programs. Not all funds available at all firms.Calvert mutual funds are underwritten and distributed by Calvert Distributors, Inc., member FINRA, subsidiary of Calvert Group, Ltd., 4550 Montgomery Avenue, Suite 1000N, Bethesda, MD 20814 #9036-200905

1. U.S. Census Bureau, http://www.census.gov/ipc/www/idb/worldpopinfo.html

2. Institute for the Analysis of Global Security, “Fueling the Dragon: China’s Race into the Oil Market,” by Gal Luft, http://www.iags.org/china.htm

3. Association for the Study of Peak Oil&Gas, “The Oil Supply Tsunami Alert,” by Kjell Aleklett, http://www.peakoil.net/Oil_tsunami.html

4. Clean Energy Trends 2009, March 2009, CleanEdge

5. Department of Energy, “The Smart Grid: An Introduction,” http://www.oe.energy.gov/smartgrid.htm

6. National Center for Atmospheric Research, Climate and Global Dynamics Research, Modeling and Attribution of Observed Climate Change, http://www.cgd.ucar.edu/research/climate/attribution.html

7. Union of Concerned Scientists, http://www.ucsusa.org/global_warming/science/ipcc-highlights1.html

8. Union of Concerned Scientists, http://www.ucsusa.org/global_warming/science_and_impacts/science/global-warming-faq.html

9. Calvert is a member of The Investor Network on Climate Risk.

10. Clean Energy Trends 2009, March 2009, CleanEdge, http://www.cleanedge.com/reports/reports-trends2009.php

11. Clean Energy Trends 2009, March 2009, CleanEdge, http://www.cleanedge.com/reports/reports-trends2009.php

12. ACEEE, “The Size of the U.S. Energy Efficient Market: Generating a More Complete Picture,” May 2008, http://www.aceee.org/pubs/e083.htm

This commentary represents the opinions of its authors as of May 20, 2009, and may change based on market and other conditions. Their opinions are not intended to forecast future events, guarantee future results, or serve as investment advice. This commentary is provided for informational purposes only. Any statistics in it have been obtained from sources believed to be reliable, but the accuracy of this information cannot be guaranteed.

environmental benefits statement of using post-consumer waste fiber vs. virgin fiber

trees water energy solid waste greenhouse gases

15 6,423 11 711 1,403fully grown gallons million Btu pounds pounds

Calculations based on research by Environmental Defense Fund and other members of the Paper Task Force.

www.newleafpaper.com

Calvert saved the following resources by using New Leaf Imagination, made with 100% recycled fiber and 100% post-consumer waste, processed chlorine free, and manufactured with electricity that is offset with Green-e® certified renewable energy certificates: