View

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

© 2009 Calvert Group, Ltd.For Representative or Broker/Dealer Use Only. Not For Use With Clients.

Are We There Yet?What’s Next for the Economy and the Market Richard England, CFA | Lead Portfolio Manager, CSIF Equity Portfolio | Managing Director, Growth Equities | Atlanta Capital Management Co., LLC

2© 2009 Calvert Group, Ltd. For Representative or Broker/Dealer Use Only. Not For Use With Clients.

AGENDA

Update on CSIF Equity Portfolio

Is the market rise justified?

Where do we go from here?

Q & A


UPDATE CSIF Equity Portfolio


A SUCCESSFUL PARTNERSHIP SINCE 1998

+


ATLANTA CAPITAL MANAGEMENT CO., LLC$7.3B Assets Under Management*

• Investment counseling is our sole business• Majority-owned by Eaton Vance

Focused

• Serving the institutional marketplace for over 40 yearsSeasoned

• Value added generated from bottom-up, fundamental research

• Proven discipline based on high quality, sustainable growth investing

Disciplined

*As of September 30, 2009


WHAT DOES A HIGH QUALITY COMPANY LOOK LIKE?

Low Quality High Quality

End market sensitive toeconomy changes

End market is moderately affected by economy

Cash flows variable comparedto net income

Cash flow usually greater than net income

Profit margins average or worse vs. peers Tend to have industry-leading margins

Returns on equity & capital averageor worse vs. peers

Tend to have industry-leading returns on equity & capital

Typically carry greater than average levels of debt

Below average debt.Many have no net debt

Earnings growth is volatile Above average stabilityof earnings growth


SOCIALLY RESPONSIBLE = HIGH QUALITY?

ACM High Quality

UNIVERSE FOR CSIF EQUITY

PORTFOLIO

Calvert Pass

Note: 80-85% Overlap as cited by ACM, LLC


Calvert Asset Management Company, Inc.Reviews/monitors managers and supervises integration of environmental, social and governance research (ESG)

Calvert ESG Process Select companies that

meet Calvert’s ESG criteria

Identify companies with good mgmt

Seek companies with lower risk

Atlanta Capital Stock-Selection Process High quality universe Fundamental

research Attractive valuation Positive risk/reward

CSIF Equity

PortfolioUniverse

DOUBLE DILIGENCE®

Current and future portfolio holdings are subject to market risk.


CSIEX: STRONG UP MARKET AND DOWN MARKET CAPTURE RATES

Performance Compared to the S&P 500 Index

114.1%

100%

October 1, 1998 – September 30, 2009UP MARKET CAPTURE* DOWN MARKET CAPTURE*

Under current sub-advisor ACM, LLC, in quarters when the S&P 500 index had positive return, portfolio captured 114.1% of “up” market appreciation.

Under current sub-advisor ACM, LLC, in quarters when the S&P 500 index had negative return, portfolio captured 84.6% of “down” market depreciation. 84.6%

100%

*Based on quarterly returns at net asset value. Performance during certain periods reflects strong stock market performance that is not typical and may not be repeated. Indexes are unmanaged and it is not possible to directly invest in an index. Source: Zephyr.

The performance data quoted represents past performance, which does not guarantee future results.

CSIF Equity Portfolio

S&P 500 Index


STOCK MARKET Is this year’s rise justified?


HAVE WE COME TOO FAR TOO FAST?

S & P 500 Year to Date (Daily Performance as of 10/21/2009)

Source: Baseline. Data as of 10/22/2009.

666

666

1092


MAYBE NOT

Source: Bank of America - Merrill Lynch Global Research US Equity Strategy, Bloomberg, Standard & Poor’s, September 2009.

Share of market downturn recovered after the trough

0%

20%

40%

60%

80%

100%

120%

1m 3m 6m 12m 24m

Hist. Median* Since recent trough

S&P 500

*Historical median created by reviewing 19 market troughs of S&P 500 from June 1932 through October 2002. Performance data quoted represents past performance, which does not guarantee future results.


MAYBE NOT

Helping to support this market’s rise Credit markets under repair More good economic news than bad Corporate earnings recovering


CREDIT MARKETS BACK FROM THE BRINK

Yield to Maturity

ML High Yield Corporate Index (BB Rated) ML Investment Grade Corporate Index (A-AAA Rated)

5-Year U.S. Treasury Note

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

D-9

9

J-0

0

D-0

0

J-0

1

D-0

1

J-0

2

D-0

2

J-0

3

D-0

3

J-0

4

D-0

4

J-0

5

D-0

5

J-0

6

D-0

6

J-0

7

D-0

7

J-0

8

D-0

8

J-0

9

Lehman Fails

September 2008

Flight –to-Quality Mid 2007-2008

The Crisis Begins Summer 2007

Crisis Climax! Year-End 2008

Healing process begins in 2009.

Increased appetite for risk as investors

anticipate economic recovery. Credit spreads narrow.

Source: Atlanta Capital Fixed Income Group.

S-0

9


EMPLOYMENT: A CLEAR DOWNTURN IN INITIAL UNEMPLOYMENT CLAIMS

U.S. initial claims for unemployment insurance

Source: U.S. Department of Labor, August 2009. Grey bar = recession

(000s of persons – 4 week avg.)

700

600

500

400

300

200

700

600

500

400

300

200’85 ’86 ‘87 ‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09


ISM Manufacturing: PMI Composite Index

LOOKS LIKE A REBOUND IN MANUFACTURING LIES AHEAD

Source: Haver Analytics, Institute for Supply Management, October 2009.

050095908580

70

60

50

40

30

20

70

60

50

40

30

20

ISM Manufacturing: PMI Composite Index*

Seasonally Adjusted, 50+ = Increasing

Grey bar = recession


FIRST CALL EARNINGS REVISIONS ARE UPWARD

70%

60%

50%

40%

30%

20%

10%1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

First Call Earnings Revisions UpS.A. by ISI 13 Wk. Avg. Sep 21 52.4%

Latest Reading 66.8%

Source: First Call as cited by ISI Group, August 25, 2009.

Gray bar = recession


WHERE DO WE GO FROM HERE

Economy

Stock Market


A WEAK RECOVERY? NOT ACCORDING TO HISTORY

REGRESSION

Y = 2.3 - 1.6*X R 2 = 64%

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

-4.0-3.5-3.0-2.5-2.0-1.5-1.0-0.50.0

Decline in real GDP during recession (%)

Inc

rea

se

in

re

al

gd

p d

uri

ng

fir

st

ye

ar

of

rec

ov

ery

(%

)

2001

1970 1990

19601953

1982

19741957

2008 e

Source: ISI Group, August 2009


After financial crisis began, massive inflows ($1.25 trn) into money market funds until equity market bottomed in March

Sizable outflows ($450 bn) since then which have primarily benefited bond funds

Source : ICI, Deutsche Bank

Cumulative flows into mutual funds (from Jun 2007)

-300

-200

-100

0

100

200

300

400

Jun

-07

Au

g-0

7

Oct

-07

Dec-

07

Feb

-08

Ap

r-0

8

Jun

-08

Au

g-0

8

Oct

-08

Dec-

08

Feb

-09

Ap

r-0

9

Jun

-09

Au

g-0

9Eq

uit

y a

nd

Bon

d f

un

ds (

$ b

n)

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1300

Mon

ey M

kt

fun

ds (

$ b

n)

Bonds (lhs)Equity (lhs)Money market (rhs)

$1.25 trillion of inflows to money market funds before the market bottoms (right scale)

Bonds seeing strong inflows (lhs)

Equity funds seeing negligible inflows (lhs)

AND THERE’S PLENTY OF FUEL TO PUSH THE MARKET HIGHER


(30)

(20)

(10)

0

10

20

30

40

50

60

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

LOW-QUALITY STOCKS HAVE OUTPERFORMED YEAR-TO- DATE. CAN THIS CONTINUE?

Relative Annual Returns of Non-Investment Grade Stocks

(1991- end Sept 2009)

Based on S&P Senior Debt Rating S&P 1500 forms dataset. Equally-weighted dataset is divided between companies with non-investment grade debt and companies with investment grade or no debt. This index shows relative year-over-year returns on a monthly basis.

Source: FactSet, Analysis by Sanford C. Bernstein, October 2009.


GROWTH VS. VALUE: A VERY SMALL PREMIUM FOR GROWTH

S&P 500: Average P/E by Long Term Growth Estimate Quintile

Source: Thomson Financial, Morgan Stanley Research

0

5

10

15

20

25

30

35

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Highest Growth Companies

Lowest Growth Companies

Valuation Convergence


35%30%25%20%15%10%5%0%

-5%-10%-15%-20%

Tech now much worse than these 3 recessions

Tech nearly at ‘01-’02 lows

Avg= 10.4%

Tech investment now approaching ‘01-’02 bubble lows

U.S. I.T. Investment, % change, Year over Year

75 76 77 78 80 81 82 83 85 86 87 88 90 91 92 93 95 96 97 98 00 01 02 03 05 06 07 08

Source: Commerce ISI Analysis Current $, Seasonable Adjusted Annual Rate. I.T. includes: Computers, Software, Comm. Equipment.

Shaded areas = recession

TECHNOLOGY LOOKS WELL POSITIONED TO GROW


AND HIGH-QUALITY TECH STILL LOOKS CHEAP

Technology Stocks:Relative Forward P/E: High ROE Stocks Versus S&P 500

1985 Through End-September, 2009

(40%)

(20%)

0%

20%

40%

60%

80%

100%

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

Source: Analysis by Sanford C. Bernstein, October 2009.


AND TECHNOLOGY COMPANIES ARE CASH RICH

Cash-to-Market Cap: Technology Sector vs. Large Cap excluding Financials

Through September 2009

0%

5%

10%

15%

20%

25%

64 67 70 73 76 79 82 85 88 91 94 97 00 03 06

MarketTechnology



LIQUID BALANCE SHEETS ADD SOME STABILITY IN CHALLENGING TIMES

Source: Bernstein analysis

S&P 500 : Percentage of Stocks By Sector with Negative Net Debt by Sector

As of August 31, 200975%

41%

31% 28% 27%22%

18%11% 10% 9% 3%

0% 0% 0%0%

20%

40%

60%

80%

Tech

nolo

gy

Hea

lthca

re

Pro

duct

s

Con

sum

er

Cyc

lical

s

Hea

lthca

re S

ervi

ces

S&

P 5

00

Tran

spor

ts

Def

ense

Cap

ital

Equ

ipm

ent

Ene

rgy

Com

mod

ities

Con

sum

er

Sta

ples

Util

ities

Aut

os &

Hou

sing

Tele

com

ms


SIMILARLY, HIGH QUALITY HEALTH CARE PRODUCT COMPANIES ARE ATTRACTIVELY VALUED

Healthcare Products:Relative Forward P/E: High ROE Stocks Versus S&P 500

1985 Through End-September, 2009

(20%)

(10%)

0%

10%

20%

30%

40%

50%

60%

70%

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09



Disclosure

For more information on any Calvert mutual fund, please call Calvert 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.

Financial Advisors: 800.368.2750

Institutional Investors: 800.327.2109

www.calvert.com

Calvert mutual funds are underwritten and distributed by Calvert Distributors, Inc.,

member FINRA, a subsidiary of Calvert Group, Ltd. 9479-200910


Large-cap companies may be unable to respond quickly to new competitive challenges,

such as changes in technology, and also may not be able to attain the high growth rate of

successful smaller companies, especially during periods of economic expansion.

Investment in mutual funds involves risk, including possible loss of principal invested.

You could lose money on your investment in CSIF Equity Portfolio or the Fund could

underperform because of the following risks: the stock market may decline; the individual

stocks or bonds in the Fund may not perform as well as expected; and/or the Fund’s

portfolio management practices may not work to achieve their desired result.

Disclosure

Investment Risks


APPENDIX


WILL IT BE ANOTHER JOBLESS RECOVERY?

U.S. initial claims for unemployment insurance (000s of persons - 4 week avg.)

Source: U.S. Department of Labor, August 2009. Dates on bottom axis refer to gold line. The chart is indexed to identify point of convergence in claims among three time periods.

670

640

610

580

550

520

490

460

430

400

370N D J F M A M J J A S O N D J F M A M2008 2009 2010

Sep 26, 2009

1991 & 2001 Avg

1983


NEW HOME CONSTRUCTION HAS BEEN LOWER THAN LOW

U.S. Single-unit housing starts

1.8

1.6

1.4

1.2

1.0

.8

.6

.4

.21998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

U.S. New House SalesJul 433,000

U.S. Single-Unit Housing StartsJul 490,000

Source: ISI Group, August 2009.


WE’RE A CONSUMER ECONOMY

Personal Consumption Expenditures as a % of GDP: 1947 to Present72%

70%

68%

66%

64%

62%

60%

47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09

Source: Bureau of Economic Analysis, August 2009


GLOBAL OIL DEMAND INCREASING IN NON-OECD COUNTRIES

0

10

20

30

40

50%

1965 1975 1985 1995 2005 2008

Non-OECD consumption as a % of global demand

25.7%29.7%

37.3% 36.2%40.4%

44.0%

Source: BP Statistical Review of World Energy June 2009 (date of most recent report) as cited by Atlanta Capital Management, LLC.


THE CONSUMER DEBT MOUNTAIN HAS BEGUN TO SHRINK

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Jan-

94

Dec

-94

Nov

-95

Oct

-96

Sep

-97

Aug

-98

Jul-9

9

Jun-

00

Ma

y-0

1

Apr

-02

Ma

r-0

3

Fe

b-0

4

Jan-

05

Dec

-05

Nov

-06

Oct

-07

Sep

-08

Aug

-09 100

200

300

400

500

600

700

800

900

1,000

($ b

illio

ns)

Revolving Consumer Debt Outstanding (Right Hand Scale)Y-o-Y Growth (Left Hand Sale)

Source: ISI Group, September 2009.


WEAK DOLLAR NOT SIGNALING HIGHER INFLATION: ONE INDICATOR

Dollar vs US 10-Yr Treasury Yield

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-0965

70

75

80

85

90

95

10yr

Dollar



WEAK DOLLAR NOT SIGNALING HIGHER INFLATION: ANOTHER INDICATOR

Dollar vs 5yr Forward 5yr TIPS Spread

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-0965

70

75

80

85

90

955x5

Dollar


© 2009 Calvert Group, Ltd.

www.calvert.comFinancial Advisors

800.368.2750

Institutional Investors

800.327.2109

For Representative or Broker/Dealer Use Only. Not For Use With Clients.

Documents

View