<PAGE>
Calvert
First
Government
Money Market
Fund
Annual
Report
December 31, 1995
[LOGO--CALVERT GROUP]
<PAGE>
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Calvert Group
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Principal
Underwriter:
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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>
Annual Report-December 31, 1995
==========
CALVERT FIRST GOVERNMENT
MONEY MARKET FUND
Dear Investors:
The soft-landing theory became a reality during the twelve months ended
December 31, 1995. Gross Domestic Product (GDP) slowed to below 2% annualized,
based on estimates of fourth quarter data. The more sluggish pace of economic
growth kept inflation in check. Interest rates declined as the Federal Reserve
took steps to stimulate the economy during the last two quarters of 1995.
Market Summary
The stock and bond markets thrived in this economic climate. Investors poured
money into the stock market as companies continued to generate good earnings
despite the slowing economy. The Standard & Poor's 500/(R)/ Stock Index rose 34%
for the year. Bond investors benefited from a windfall of capital gains as
yields fell. Returns on bonds, generally expected to lag those on stocks, were
as high as 30% for long-term Treasuries. The average taxable money market fund
returned slightly over 5% for the year.
Performance and Strategy
After rising steeply throughout 1994, short-term interest rates fell in 1995.
The First Government Money Market Fund's dividend yield for the 12-month period
ending December 31, 1995 was above its year-ago level because the drop in rates
in 1995 did not push yields as low as they had been for much of 1994.
We took steps during the first half of the year to extend the Fund's weighted
average maturity and lock in the higher yields available on longer-term money
market issues. This proved beneficial for Fund performance, as short-term rates
continued to trend lower during the second half of the year. We continued to
select longer-term money markets during the later months of 1995. The Fund's
weighted average maturity at year-end was 63 days, up from 38 days one year ago.
Compound Dividend Yield
[GRAPH APPEARS HERE]
12 Months ---- 3.62%
Ended 12/31/94 ==== 3.53%
12 Months ---- 5.22%
Ended 12/31/95 ==== 5.25%
-- First Gov't Money Market Portfolio
== Lipper Money Market Funds Average
ANNUAL REPORT CALVERT FIRST GOVERNMENT MONEY MARKET FUND - 1
<PAGE>
Outlook
The remarkable and unprecedented turnaround that occurred in the fixed-income
markets over the past 24 months makes it difficult for us to assess the outlook
for 1996. We see no reason to expect a bear bond market, but investors in
longer-term fixed-income securities will probably not see returns as high as
those available in 1995. Continued corporate downsizing, cutbacks in federal
spending, weakened consumer psychology and the still sluggish housing market
will likely keep the economy soft. The Federal Reserve could respond with
additional rate cuts. We would not be surprised to see short-term rates fall
another 50 basis points by mid-year, with this action possibly occurring as
early as the first quarter. Money market yields are not likely to be generous,
but these securities continue to offer investors protection from recent
history's most volatile bond markets.
We appreciate your investment in the Calvert First Government Money Market
Fund.
Sincerely,
/s/ David Rochat
David Rochat
Senior Vice President
January 17, 1996
2 - CALVERT FIRST GOVERNMENT MONEY MARKET FUND ANNUAL REPORT
<PAGE>
Portfolio Statistics
==========
Weighted Average Maturity
6/30/95 12/31/95
- -----------------------------------------------------------------------
Calvert First Government
Money Market Fund 43 days 63 days
Average Annual Total Returns
for periods ended 12/31/95
One Year 5.22%
Five Year 4.12%
Ten Year 5.57%
Since Inception (12/76) 7.82%
Calvert First Government Money Market Fund
Change in value of a hypothetical $10,000 investment.
[GRAPH APPEARS HERE]
Total returns assume reinvestment of dividends.
Past performance is no guarantee of future results.
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.
ANNUAL REPORT CALVERT FIRST GOVERNMENT MONEY MARKET FUND - 3
<PAGE>
Report of Independent Accountants
==========
To the Board of Trustees of First Variable Rate Fund for Government Income and
Shareholders of Calvert First Government Money Market Fund:
We have audited the accompanying statement of net assets of Calvert First
Government Money Market Fund (one of the portfolios comprising the First
Variable Rate Fund for Government Income), as of December 31, 1995, and the
related statement of operations for the year then ended, and statement of
changes in net assets and financial highlights for each of the two years then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the preceding years were audited by
other auditors whose report dated January 31, 1994 expressed an unqualified
opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Calvert First Government Money Market Fund as of December 31, 1995, the results
of its operations for the year then ended, and the changes in its net assets and
financial highlights for each of the two years in the period then ended, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
February 9, 1996
4 - CALVERT FIRST GOVERNMENT MONEY MARKET FUND ANNUAL REPORT
<PAGE>
Calvert First Government
Money Market Fund
Statement of Net Assets
December 31, 1995
=========
<TABLE>
<CAPTION>
U.S. Government Agency Principal
Obligations (63.6%) Amount Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Farm Credit Bank, Discount Notes:
1/8/96.......................................................... $ 5,000,000 $ 4,994,624
4/15/96......................................................... 10,000,000 9,843,550
5/10/96......................................................... 3,500,000 3,432,129
Federal Home Loan Bank, Discount Notes:
1/16/96......................................................... 10,000,000 9,976,375
1/26/96......................................................... 3,645,000 3,630,977
1/29/96......................................................... 8,585,000 8,547,274
1/31/96......................................................... 10,000,000 9,954,167
3/4/96.......................................................... 5,000,000 4,951,962
3/21/96......................................................... 10,000,000 9,878,667
3/25/96......................................................... 5,000,000 4,936,067
4/15/96......................................................... 7,000,000 6,890,158
4/18/96......................................................... 3,500,000 3,443,510
Federal National Mortgage Association, Discount Notes:
1/29/96......................................................... 22,865,000 22,766,600
2/2/96.......................................................... 4,225,000 4,204,344
4/4/96.......................................................... 10,000,000 9,857,433
4/24/96......................................................... 4,500,000 4,423,145
4/30/96......................................................... 4,000,000 3,928,667
5/2/96.......................................................... 5,000,000 4,908,669
5/10/96......................................................... 5,000,000 4,902,861
5/22/96......................................................... 5,000,000 4,894,683
8/15/96......................................................... 3,000,000 2,901,255
8/30/96......................................................... 5,000,000 4,822,197
10/28/96........................................................ 5,000,000 4,785,538
Student Loan Marketing Association, Variable Rate, 2/14/97....... 475,000 474,883
------------
Total U.S. Government Agency Obligations (Cost $153,349,735) 153,349,735
------------
Depository Receipts for
U.S. Government Guaranteed
Loans (11.9%) (+)
- ---------------------------------------------------------------------------------------------
Colson Services Corporation Loan Sets (*):
Current interest rate 9.84375%, 1/13/98-4/11/98................. 59,114 59,389
Current interest rate 9.00%, 8/10/99............................ 84,317 86,375
Current interest rate 8.84375%, 1/17/10......................... 115,075 120,590
Current interest rate 8.75%, 3/6/96-2/4/12...................... 695,069 712,584
Current interest rate 8.59375%, 1/3/97-3/12/00.................. 335,854 337,301
Current interest rate 8.50%, 6/2/97-5/11/12..................... 371,356 385,835
Current interest rate 8.50%, 4/28/97-4/1/12..................... 346,502 355,956
Current interest rate 7.84375%, 1/11/00-7/20/00................. 33,719 33,719
</TABLE>
ANNUAL REPORT CALVERT FIRST GOVERNMENT MONEY MARKET FUND - 5
<PAGE>
Calvert First Government
Money Market Fund
Statement of Net Assets (Continued)
December 31, 1995
==========
<TABLE>
<CAPTION>
Depository Receipts for
U.S. Government Guaranteed Principal
Loans (Cont'd) Amount Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
Colson Services Corporation Loan Sets (Cont'd)
Current interest rate 7.75%, 6/10/03-3/23/12................ $ 2,722,222 $ 2,761,040
Current interest rate 7.625%, 8/17/01-9/9/06................ 258,819 261,639
Current interest rate 7.625%, 3/12/05-5/29/12............... 2,337,816 2,343,053
Current interest rate 7.50%, 8/1/10-2/11/11................. 1,170,289 1,171,790
Current interest rate 7.50%, 3/19/11-8/10/12................ 11,944,581 11,973,674
Current interest rate 7.50%, 10/30/01-9/2/12................ 5,106,513 5,118,783
Current interest rate 7.34375%, 12/22/97-4/26/09............ 1,270,970 1,276,686
Current interest rate 7.59375%, 10/1/96-7/26/10............. 1,509,803 1,511,678
Current interest rate 7.09375%, 4/21/98-5/18/02............. 149,542 149,767
-----------
Total Depository Receipts for U.S. Government Guaranteed
Loans (Cost $28,659,859)................................... 28,659,859
-----------
U.S. Treasury Issues (4.9%)
- --------------------------------------------------------------------------------------
U.S. Treasury Bills, 5/2/96.................................. 5,000,000 4,909,856
U.S. Treasury Notes, 5/15/96................................. 7,000,000 6,962,926
-----------
Total U.S. Treasury Issues (Cost $11,872,782).............. 11,872,782
-----------
Variable Rate Loans Guaranteed
by Agencies of the U.S. Government
(2.0%) (+)
- --------------------------------------------------------------------------------------
Loan pools:
Current interest rate, 9.625%, 6/25/96 - 6/25/98............ 43,584 53,148
Current interest rate, 8.84375%, 3/30/99.................... 46,351 46,351
Current interest rate, 7.875%, 6/30/08 - 3/25/10............ 285,362 285,052
Current interest rate, 7.625%, 9/25/98...................... 218,087 219,043
Current interest rate, 7.25%, 8/25/12....................... 2,831,070 2,797,007
Current interest rate, 7.00%, 10/20/01...................... 52,396 52,396
Current interest rate, 6.50%, 3/1/07........................ 1,488,645 1,456,176
-----------
Total Variable Rate Loans Guaranteed by Agencies of the
U.S. Government (Cost $4,909,173).......................... 4,909,173
-----------
</TABLE>
6 - CALVERT FIRST GOVERNMENT MONEY MARKET FUND ANNUAL REPORT
<PAGE>
Calvert First Government
Money Market Fund
Statement of Net Assets (Continued)
December 31, 1995
<TABLE>
<CAPTION>
Repurchase Agreements, for
Delivery at Cost, Collateralized
by Securities Issued or Principal
Guaranteed by the U.S. (17.3%) Amount Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Paine Webber, Inc.: dated 12/29/95, due 1/2/96 ($35,729,756
U.S. Treasury Bond, 5/15/07).................................... $ 35,000,000 $ 35,000,000
Donaldson, Lufkin & Jenrette Securities: dated 12/29/95,
due 1/2/96 ($6,798,186 U.S. Treasury Bond, 8/15/17)............. 6,700,000 6,700,000
------------
Total Repurchase Agreements (Cost $41,700,000)................. 41,700,000
------------
TOTAL INVESTMENTS (Cost $240,491,549) 99.7%................... 240,491,549
Other assets and liabilities, net 0.3%........................ 658,084
------------
NET ASSETS 100.0%............................................. $241,149,633
============
Net Assets Consist Of:
- -------------------------------------------------------------------------------------------------
Paid-in capital applicable to 241,685,337 outstanding shares
of beneficial interest, unlimited number of no par shares
authorized...................................................... $241,438,648
Undistributed net investment income.............................. 551
Accumulated net realized gain (loss) on investments.............. (289,566)
------------
Net Assets.................................................... $241,149,633
============
Net Asset Value Per Share..................................... $1.00
============
</TABLE>
(+) Represents rates in effect at December 31, 1995, 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 December 31, 1995, the prime interest
rate was 8.75%.
(*) 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.
ANNUAL REPORT CALVERT FIRST GOVERNMENT MONEY MARKET FUND - 7
<PAGE>
Calvert First Government
Money Market Fund
Statement of Operations
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Net Investment Income
- ---------------------------------------------------------------
<S> <C>
Investment Income
Interest income................................... $14,004,277
-----------
Expenses
Investment advisory fee........................... 1,182,171
Transfer agency fees and expenses................. 556,450
Trustees' fees and expenses....................... 20,486
Custodian fees.................................... 30,808
Registration fees................................. 53,422
Reports to shareholders........................... 194,004
Professional fees................................. 28,376
Miscellaneous..................................... 42,198
-----------
Total expenses................................... 2,107,915
Fees paid indirectly............................. (30,787)
-----------
Net expenses.................................... 2,077,128
-----------
Net Investment Income......................... 11,927,149
-----------
Realized Gain (Loss) on Investments
- ---------------------------------------------------------------
Net realized gain (loss).......................... 26,318
-----------
Increase (Decrease) in Net Assets
Resulting from Operations.................... $11,953,467
===========
</TABLE>
See notes to financial statements.
8 - CALVERT FIRST GOVERNMENT MONEY MARKET FUND ANNUAL REPORT
<PAGE>
Calvert First Government
Money Market Fund
Statements of Changes in Net Assets
==========
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income......................................... $ 11,927,149 $ 8,932,460
Net realized gain (loss) on investments....................... 26,318 224,143
------------- -------------
Increase (Decrease) in Net Assets
Resulting from Operations................................... 11,953,467 9,156,603
------------- -------------
Distributions to shareholders from
Net investment income......................................... (12,034,495) (8,920,960)
------------- -------------
Capital share transactions:
Shares sold................................................... 353,189,418 563,478,111
Reinvestment of distributions................................. 11,826,953 8,917,166
Shares redeemed............................................... (353,969,141) (605,707,185)
------------- -------------
Total capital share transactions............................... 11,047,230 (33,311,908)
------------- -------------
Total Increase (Decrease) in Net Assets........................ 10,966,202 (33,076,265)
Net Assets
- ----------------------------------------------------------------------------------------------
Beginning of year.............................................. 230,183,431 263,259,696
------------- -------------
End of year (including undistributed net investment income of
$551 and $107,897 for 1995 and 1994, respectively.)........... $ 241,149,633 $ 230,183,431
============= =============
</TABLE>
See notes to financial statements.
ANNUAL REPORT CALVERT FIRST GOVERNMENT MONEY MARKET FUND - 9
<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.
On September 28, 1995, the net assets of Calvert Money Management Plus (MMP)
Government Portfolio, approximately $8 million, were merged into the Fund in a
tax-free exchange, whereby shares of the Fund were issued to the former MMP
Government shareholders.
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.
10 - CALVERT FIRST GOVERNMENT MONEY MARKET FUND ANNUAL REPORT
<PAGE>
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.
Calvert Distributors, Inc. (the successor of Calvert Securities Corp. effective
April, 1995), both affiliates 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 December 31, 1995 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 year end may
be utilized to offset future capital gains until expiration through 2001.
Note D - Capital Shares
Transactions in shares of beneficial interest ("capital shares") were as
follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
Share Activity 1995 1994
- -------------------------------------------------------------------
<S> <C> <C>
Shares Sold........................... 353,189,418 563,478,111
Reinvestment of Distributions......... 11,826,953 8,917,166
Shares Redeemed....................... (353,969,141) (605,707,185)
------------ ------------
Net Share Activity................... 11,047,230 (33,311,908)
============ ============
</TABLE>
ANNUAL REPORT CALVERT FIRST GOVERNMENT MONEY MARKET FUND - 11
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1995 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year.............. $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Income from investment operations
Net investment income.......................... .051 .036 .027
-------- -------- --------
Distributions from
Net investment income.......................... (.051) (.036) (.027)
-------- -------- --------
Net asset value, end of year.................... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return.................................... 5.22% 3.66% 2.70%
======== ======== ========
Ratios to average net assets:
Net investment income.......................... 5.04% 3.56% 2.66%
======== ======== ========
Total expenses +............................... .89% -- --
======== ======== ========
Net expenses................................... .88% .81% .81%
======== ======== ========
Net assets, end of year (in thousands).......... $241,150 $230,183 $263,260
======== ======== ========
Number of shares outstanding at end
of year (in thousands)......................... 241,685 230,618 263,930
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1992 1991
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year............................... $ 1.00 $ 1.00
======== ========
Income from investment operations
Net investment income........................................... .033 .055
-------- --------
Distributions from
Net investment income........................................... (.033) (.055)
-------- --------
Net asset value, end of year..................................... $ 1.00 $ 1.00
======== ========
Total return..................................................... 3.40% 5.65%
======== ========
Ratios to average net assets:
Net investment income........................................... 3.30% 5.49%
======== ========
Total expenses +................................................ -- --
======== ========
Net expenses.................................................... .82% .82%
======== ========
Net assets, end of year (in thousands)........................... $314,999 $353,339
======== ========
Number of shares outstanding at end
of year (in thousands).......................................... 315,667 353,851
======== ========
</TABLE>
+ 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.
12 - CALVERT FIRST GOVERNMENT MONEY MARKET FUND ANNUAL REPORT
<PAGE>
[LOGO--CALVERT GROUP]
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
