<PAGE>
CALVERT
FIRST
GOVERNMENT
MONEY MARKET
FUND
SEMI-ANNUAL
REPORT
JUNE 30, 1996
INVESTING with VISION/TM/ [LOGO--CALVERT GROUP] A member of The Acacia Group/R/
<PAGE>
CALVERT FIRST GOVERNMENT
MONEY MARKET FUND
Dear Investor:
Interest rates moved a bit higher during the first six months of 1996. The
nation's economy continued to expand slowly, with Gross Domestic Product
increasing by an annualized 2.5%, but investors feared that stronger growth and
possibly higher inflation were on the horizon.
The rise in rates did not stall the stock market's advance. The Standard &
Poor's 500 Stock Index, a grouping of mostly large-company stocks, turned in a
six-month gain of 10.10%.
In general, money market yields were slightly below their levels of six
months ago. Intermediate- and longer-term fixed-income investments, on average,
reported flat to negative returns as the rise in rates pushed bond prices lower.
Fund Performance and Strategy Review
The First Government Money Market Fund's yield on June 30, 1996 was roughly
in line with its level at the close of 1995.
During the first part of this year, the Federal Reserve maintained its easy
monetary policy and money market rates continued to trend lower. Late in
January, the Fed lowered its target for the Federal funds and discount rates.
Investors believed that this was probably the last in a series of rate cuts and
money market rates moved slightly higher during the remainder of this reporting
period. We shortened the Fund's maturity during the six months ended June 30 so
that we would be able to reinvest the proceeds from maturing securities in
higher yielding securities as quickly as possible. The Fund's weighted average
maturity was 44 days at the close of this reporting period, compared to 63 days
at the beginning.
COMPOUND DIVIDEND YIELD
[GRAPH APPEARS HERE]
Six Months Six Months
Ended Ended
12/31/95 6/30/96
---------- ----------
First Gov't Money Market Portfolio.... 2.50% 2.33%
Lipper Money Market Funds Average..... 2.61% 2.35%
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT FIRST GOV'T. MONEY MARKET FUND - 1
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OUTLOOK
We anticipate continued modest economic growth. Gross Domestic Product will
likely continue to expand at an annualized rate of 2.5% or a bit higher for the
remainder of the year. This could be slightly above the Federal Reserve's
target growth rate, but not so much so that we would expect rates to move
dramatically higher.
Investors in the First Government Fund may not benefit from soaring yields;
however, this Fund remains an ideal choice for those looking to earn a
competitive level of income while maintaining a stable principal value.
Sincerely,
/s/ David Rochat
- ---------------------
David Rochat
Senior Vice President
July 31, 1996
2 - CALVERT FIRST GOV'T. MONEY MARKET FUND SEMI-ANNUAL REPORT (UNAUDITED)
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PORTFOLIO STATISTICS
WEIGHTED AVERAGE MATURITY
12/31/95 6/30/96
-------------------------
63 days 44 days
AVERAGE ANNUAL TOTAL RETURNS
for periods ended 6/30/96
One Year 4.89%
Five Year 3.98%
Ten Year 5.47%
Since Inception (12/76) 7.74%
HYPOTHETICAL PERFORMANCE
Change in value of a hypothetical $10,000 investment.
[GRAPH APPEARS HERE]
7/1/86 6/96
------- -------
$10,000 = $17,024
RATINGS BREAKDOWN
The Fund invests solely in debt obligations issued or guaranteed by the United
States, its agencies or instrumentalities, assignments of interest in such
obligations, and commitments to purchase such obligations ("U.S. Government-
backed obligations"). The Fund may invest in U.S. Government-backed obligations
subject to repurchase agreements with the recognized securities dealers and
banks.
Total returns assume reinvestment of dividends. Past performance is no guarantee
of future results.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT FIRST GOV'T. MONEY MARKET FUND - 3
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STATEMENT OF NET ASSETS
JUNE 30, 1996
<TABLE>
<CAPTION>
U.S. Government Principal
Agency Obligations - 57.1% Amount Value
==============================================================================================
<S> <C> <C>
Federal Farm Credit Bank, Discount Note:
9/9/96........................................................... $ 5,000,000 $ 4,949,931
Federal Home Loan Bank, Discount Notes:
7/2/96........................................................... 10,000,000 9,998,542
7/9/96........................................................... 5,000,000 4,994,600
7/17/96.......................................................... 5,000,000 4,988,488
10/28/96......................................................... 4,000,000 3,929,393
11/26/96......................................................... 3,000,000 2,934,880
12/13/96......................................................... 3,000,000 2,925,613
12/23/96......................................................... 2,000,000 1,947,500
2/3/97........................................................... 2,000,000 1,934,538
Federal Home Loan Mortgage Corporation, Discount Notes:
7/22/96.......................................................... 7,000,000 6,978,869
8/19/96.......................................................... 5,000,000 4,964,543
9/4/96........................................................... 2,065,000 2,045,090
9/6/96........................................................... 5,000,000 4,951,053
9/16/96.......................................................... 9,000,000 8,897,258
Federal National Mortgage Association, Discount Notes:
7/23/96.......................................................... 3,000,000 2,990,467
7/24/96.......................................................... 11,295,000 11,259,147
7/30/96.......................................................... 5,000,000 4,979,378
7/31/96.......................................................... 5,000,000 4,977,833
8/9/96........................................................... 8,000,000 7,955,096
8/15/96.......................................................... 3,000,000 2,980,425
8/16/96.......................................................... 9,000,000 8,945,145
8/29/96.......................................................... 2,150,000 2,133,157
8/30/96.......................................................... 5,000,000 4,955,917
9/12/96.......................................................... 8,000,000 7,914,063
9/18/96.......................................................... 5,000,000 4,941,463
9/26/96.......................................................... 3,000,000 2,962,518
9/27/96.......................................................... 5,360,000 5,289,903
10/28/96......................................................... 5,000,000 4,915,213
Student Loan Marketing Association, Variable Rate:
2/14/97.......................................................... 475,000 474,935
-----------
Total U.S. Government Agency Obligations (Cost $144,114,958)..... 144,114,958
-----------
Depository Receipts for U.S. Government
Guaranteed Loans - 10.9% (+)
==============================================================================================
Colson Services Corporation Loan Sets (*):........................
9.34375%, 1/13/98-4/11/98........................................ 38,480 38,577
8.50%, 8/10/99................................................... 74,868 76,422
8.34375%, 1/17/10................................................ 109,624 114,688
8.25%, 2/4/12.................................................... 518,780 531,047
8.09375%, 1/3/97-3/12/00......................................... 286,729 287,775
8.00%, 6/2/97-5/11/12............................................ 361,239 374,543
8.00%, 4/28/97-4/1/12............................................ 315,036 322,697
</TABLE>
4-CALVERT FIRST GOV'T. MONEY MARKET FUND SEMI-ANNUAL REPORT (UNAUDITED)
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<TABLE>
<CAPTION>
DEPOSITORY RECEIPTS FOR U.S. PRINCIPAL
GOVERNMENT GUARANTEED LOANS (CONT'D) AMOUNT VALUE
=================================================================================================================
<S> <C> <C>
7.34375%, 1/11/00-7/20/00........................................................... $ 16,995 $ 16,995
7.25%, 6/10/03-3/23/12.............................................................. 2,454,896 2,488,827
7.125%, 8/17/01-9/9/06.............................................................. 250,010 252,502
7.125%, 3/12/05-5/29/12............................................................. 2,300,127 2,305,084
7.00%, 8/1/10-1/22/11............................................................... 1,152,146 1,153,572
7.00%, 3/19/11-8/10/12.............................................................. 11,779,555 11,807,351
7.00%, 10/30/01-9/2/12.............................................................. 4,960,767 4,972,112
6.84375%, 12/22/97-4/26/09.......................................................... 1,187,231 1,192,203
7.09375%, 10/1/96-7/26/10........................................................... 1,419,759 1,421,404
6.59375%, 4/21/98-5/18/02........................................................... 125,255 125,420
------------
Total Depository Receipts for U.S. Government Guaranteed Loans
(Cost $27,481,219)................................................................ 27,481,219
------------
U.S. TREASURY ISSUES - 7.8%
=================================================================================================================
U.S. Treasury Bills, 8/22/96......................................................... 10,000,000 9,931,533
U.S. Treasury Bills, 11/14/96........................................................ 10,000,000 9,815,739
------------
Total U.S. Treasury Issues (Cost $19,747,272)....................................... 19,747,272
------------
VARIABLE RATE LOANS GUARANTEED
BY AGENCIES OF THE U.S. GOVERNMENT - 1.6% (+)
=================================================================================================================
Loan pools:..........................................................................
9.125%, 6/25/98.................................................................... 36,743 42,716
8.34375%, 3/30/99.................................................................. 44,695 44,695
7.375%, 7/15/08 - 3/25/10.......................................................... 267,353 267,061
7.125%, 9/25/98.................................................................... 187,847 188,520
6.75%, 8/15/12..................................................................... 2,211,456 2,178,431
6.00%, 3/1/07...................................................................... 1,350,645 1,320,112
------------
Total Variable Rate Loans Guaranteed by Agencies of the
U.S. Government (Cost $4,041,535)................................................. 4,041,535
------------
REPURCHASE AGREEMENTS, FOR DELIVERY AT COST,
COLLATERALIZED BY SECURITIES ISSUED OR
GUARANTEED BY THE U.S. GOVERNMENT - 22.2%
=================================================================================================================
Paine Webber, Inc.: dated 6/25/96, due 7/2/96 ($10,272,042 GNMA
Pool, 7/15/23)...................................................................... 10,000,000 10,000,000
Paine Webber, Inc.: dated 6/19/96, due 7/3/96 ($15,369,393 GNMA
Pool, 11/15/23)..................................................................... 15,000,000 15,000,000
Paine Webber, Inc.: dated 6/26/96, due 7/3/96 ($15,420,184 FNMA
Bond, 4/1/09)....................................................................... 15,000,000 15,000,000
UBS Securities, Inc.: dated 6/28/96, due 7/1/96 ($16,796,671 FHLMC
Bond, 12/1/23)...................................................................... 15,900,000 15,900,000
------------
Total Repurchase Agreements (Cost $55,900,000)...................................... 55,900,000
------------
TOTAL INVESTMENTS (Cost $251,284,984) - 99.6%..................................... 251,284,984
Other assets and liabilities, net - 0.4%.......................................... 1,137,404
------------
NET ASSETS - 100%................................................................. $252,422,388
============
</TABLE>
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT FIRST GOV'T. MONEY MARKET FUND - 5
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<TABLE>
<CAPTION>
Net Assets Consist of: Value
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Paid-in capital applicable to 252,923,511 outstanding shares
of beneficial interest, unlimited number of no par shares authorized............... $252,676,824
Undistributed net investment income (loss)........................................... 15,157
Accumulated net realized gain (loss) on investments.................................. (269,593)
------------
Net Assets....................................................................... $252,422,388
============
Net Asset Value Per Share........................................................ $1.00
============
</TABLE>
(+) Represents rates in effect at June 30, 1996, after regularly scheduled
adjustments on such date. Interest rates adjust monthly and quarterly,
generally at the beginning of the month or calendar quarter, or
semiannually based on prime plus contracted adjustments. As of June 30,
1996, the prime interest rate was 8.25%.
(*) Colson Services Corporation is the custodian, collection, and transfer
agent for certain of the Fund's U.S. Government guaranteed variable rate
loans. Each depository receipt pertains to a set, grouped by interest rate,
of these loans.
See notes to financial statements.
6 - CALVERT FIRST GOV'T. MONEY MARKET FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
================================================================================
<S> <C>
Investment Income
Interest income.................................................. $6,833,687
----------
Expenses
Investment advisory fee.......................................... 617,031
Transfer agency fees and expenses................................ 314,571
Trustees' fees and expenses...................................... 10,432
Custodian fees................................................... 14,843
Registration fees................................................ 43,779
Reports to shareholders.......................................... 60,829
Professional fees................................................ 25,926
Miscellaneous.................................................... 38,978
----------
Total expenses................................................ 1,126,389
Fees paid indirectly.......................................... (14,843)
----------
Net expenses............................................. 1,111,546
----------
NET INVESTMENT INCOME................................ 5,722,141
----------
REALIZED GAIN (LOSS) ON INVESTMENTS
================================================================================
Net realized gain (loss)........................................... 19,973
----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................................ $5,742,114
==========
</TABLE>
See notes to financial statements.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT FIRST GOV'T. MONEY MARKET FUND - 7
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Year Ended
Ended December 31,
Increase (Decrease) in Net Assets June 30, 1996 1995
- ------------------------------------------------------------------------------------------------
Operations
<S> <C> <C>
Net investment income........................................... $ 5,722,141 $ 11,927,149
Net realized gain (loss)........................................ 19,973 26,318
------------- -------------
Increase (Decrease) in Net Assets
Resulting from Operations..................................... 5,742,114 11,953,467
------------- -------------
Distributions to shareholders from
Net investment income........................................... (5,707,535) (12,034,495)
------------- -------------
Capital share transactions
Shares sold..................................................... 208,156,723 353,189,418
Reinvestment of distributions................................... 5,465,705 11,826,953
Shares redeemed................................................. (202,384,252) (353,969,141)
------------- -------------
Total capital share transactions................................. 11,238,176 11,047,230
------------- -------------
Total Increase (Decrease) in Net Assets.......................... 11,272,755 10,966,202
Net Assets
- ------------------------------------------------------------------------------------------------
Beginning of period.............................................. 241,149,633 230,183,431
------------- -------------
End of period (including undistributed net investment income of
$15,157 and $551, respectively)................................. $ 252,422,388 $ 241,149,633
============= =============
Capital Share Activity
- ------------------------------------------------------------------------------------------------
Shares sold...................................................... 208,156,723 353,189,418
Reinvestment of distributions.................................... 5,465,705 11,826,953
Shares redeemed.................................................. (202,384,252) (353,969,141)
------------- -------------
11,238,176 11,047,230
============= =============
</TABLE>
See notes to financial statements.
8 - CALVERT FIRST GOV'T MONEY MARKET FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE A-SIGNIFICANT ACCOUNTING POLICIES
General: The Calvert First Government Money Market Fund (the "Fund"), a series
of First Variable Rate Fund for Government Income, is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The operations of each series are accounted for separately. The Fund
offers shares of beneficial interest to the public with no sales charge.
Security Valuation: Securities are valued at amortized cost which approximates
market.
Repurchase Agreements: The Fund may enter into repurchase agreements with
recognized financial institutions or registered broker/dealers and, in all
instances, holds underlying securities with a value exceeding the total
repurchase price, including accrued interest.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Interest income, accretion of discount and amortization
of premium are recorded on an accrual basis.
Distributions to Shareholders: Distributions to shareholders are recorded by
the Fund on ex-dividend date. Dividends from net investment income are accrued
daily and paid monthly. Distributions from net realized capital gains, if any,
are paid at least annually. Distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles; accordingly, periodic reclassifications are made within the Fund's
capital accounts to reflect income and gains available for distribution under
income tax regulations.
Expense Offset Arrangements: The Fund has an arrangement with its custodian
bank whereby the custodian's fees are paid indirectly by credits earned on the
Fund's cash on deposit with the bank. Such deposit arrangement is an alternative
to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required
since the Fund intends to continue to qualify as a regulated investment company
under the Internal Revenue Code and to distribute substantially all of its
earnings.
NOTE B-RELATED PARTY TRANSACTIONS
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Trustees of the Fund.
For its services, the Advisor receives a monthly fee based on the following
annual rates of average daily net assets: .50% on the first $500 million, .45%
on the next $400 million, .40% on the next $400 million, .35% on the next $700
million and .30% on the excess of $2 billion.
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT FIRST GOV'T. MONEY MARKET FUND-9
<PAGE>
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor and
principal underwriter for the Fund.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Fund.
Each Trustee who is not affiliated with the Advisor receives an annual fee of
$20,250 plus up to $1,200 for each Board and Committee meeting attended.
Trustee's fees are allocated to each of the funds served.
NOTE C-INVESTMENT ACTIVITY
The cost of investments owned at June 30, 1996 was substantially the same for
federal income tax and financial reporting purposes. Net realized capital loss
carryforwards, for federal income tax purposes, of $289,566 at December 31, 1995
may be utilized to offset current and future capital gains until expiration
through 2001.
10-CALVERT FIRST GOV'T. MONEY MARKET FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Periods Ended
---------------------------------
June 30, December 31,
1996 1995 1994
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning............ $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Income from investment operations
Net investment income............... .023 .051 .036
-------- -------- --------
Distributions from
Net investment income............... (.023) (.051) (.036)
-------- -------- --------
Net asset value, ending............... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return*......................... 2.33% 5.22% 3.66%
======== ======== ========
Ratios to average net assets:
Net investment income............... 4.64%(a) 5.04% 3.56%
======== ======== ========
Total expenses +.................... .91%(a) .89% --
======== ======== ========
Net expenses........................ .90%(a) .88% .81%
======== ======== ========
Net assets, ending (in thousands)..... $252,422 $241,150 $230,183
======== ======== ========
Number of shares outstanding, ending
(in thousands)...................... 252,924 241,685 230,618
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Years Ended
---------------------------------
December 31,
1993 1992 1991
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning............ $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Income from investment operations
Net investment income............... .027 .033 .055
-------- -------- --------
Distributions from
Net investment income............... (.027) (.033) (.055)
-------- -------- --------
Net asset value, ending............... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return*......................... 2.70% 3.40% 5.65%
======== ======== ========
Ratios to average net assets:
Net investment income............... 2.66% 3.30% 5.49%
======== ======== ========
Total expenses +.................... -- -- --
======== ======== ========
Net expenses........................ .81% .82% .82%
======== ======== ========
Net assets, ending (in thousands)..... $263,260 $314,999 $353,339
======== ======== ========
Number of shares outstanding, ending
(in thousands)...................... 263,930 315,667 353,851
======== ======== ========
</TABLE>
(a) Annualized
* Total return is not annualized for periods of less than one year.
+ Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses
SEMI-ANNUAL REPORT (UNAUDITED) CALVERT FIRST GOV'T MONEY MARKET FUND - 11
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THIS PAGE INTENTIONALLY LEFT BLANK
12 - CALVERT FIRST GOV'T. MONEY MARKET FUND SEMI-ANNUAL REPORT (UNAUDITED)
<PAGE>
To Open an Account:
-------------------
800-368-2748
Yields and Prices:
-------------------
Calvert Information Network
24 hours, 7 days a week
800-368-2745
Service for
Existing Account:
-------------------
Shareholders: 800-368-2745
Brokers: 800-368-2746
TDD for Hearing
Impaired:
-------------------
800-541-1524
Branch Office:
-------------------
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified
or Overnight Mail:
-------------------
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105
Web Site:
-------------------
Address: http://www.calvertgroup.com
Principal
Underwriter:
-------------------
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
This report is intended to provide fund information to shareholders. It is
not authorized for distribution to prospective investors unless preceded or
accompanied by a prospectus.
<PAGE>
INVESTING with VISION [LOGO--CALVERT GROUP] BULK RATE
A member of The Acacia Group U.S. POSTAGE
PAID
4550 Montgomery Avenue, Suite 1000N Permit No. 7470
Bethesda, Maryland 20814 Baltimore, MD
