A Special Notice to all
Calvert Group Shareholders
We're pleased to announce that on April 21, 1997, Barbara Krumsiek
joined Calvert Group as president and chief executive officer. Ms.
Krumsiek comes to Calvert Group from Alliance Capital Management,
where she served as senior vice president and managing director of
their mutual funds division. She has 20 years experience in mutual
fund management and marketing.
Ms. Krumsiek replaces former Calvert Group president, Clifton S.
Sorrell, who stepped down earlier this year after nearly 10 years in
the top post.
We look forward to Ms. Krumsiek leading the company into the next
century and bringing Calvert Group mutual funds to a growing number
of new investors. We welcome her to the Calvert Group family.
<PAGE>
CALVERT FIRST GOVERNMENT
MONEY MARKET FUND
Dear Investor:
The yield on the First Government Money Market Fund was
slightly ahead of the average yield for the 118 money market funds
tracked by Lipper Analytical Services, Inc.
Review of the Economy and Markets
[Line graph appears on side of text here]
Short-Term Rates
Weekly 1 year Treasury Bill - 5.5%
Weekly 3 Month Treasury Note - 5%
Federal Funds - 5%
The economy expanded at a robust pace for the first quarter
then appeared to moderate in the second quarter. In an attempt to
defuse inflationary pressures, the Federal Reserve adopted a slightly
more restrictive monetary policy. The Fed nudged its target for key
short-term rates higher in March, but left rates unchanged during the
second quarter.
Yields on taxable money market securities moved higher
during the first part of the year then reversed course in March. The
volatility was due to investors' changing forecasts for the next Fed
move. Bond yields also see-sawed. Most measures of the broad
stock market advanced, with the Standard & Poor's 500 Stock Index
returning 20.6% for the six months.
Portfolio Strategy
[Chart appears on side of text here]
ANNUALIZED TOTAL RETURN
6 Months Ended 12/31/96 6/30/97
First Gov't Money
Market Fund 4.87% 4.82%
Lipper Money Market
Funds Average 4.81% 4.79%
Source: Lipper Analytical Services, Inc.
[end of chart]
Expecting generally rising rates, we kept the Fund's
maturity near the short end of its target range so that we would have
the opportunity to reinvest the proceeds of maturing securities in
higher yielding issues. This strategy worked to our advantage through
March and again late in the second quarter.
<PAGE>
Outlook
Investors, market pundits and the Federal Reserve are
struggling to evaluate a mixed bag of economic indicators. The
Consumer Price Index (up 2.2% year-over-year) does not point to
surging inflation, but a number of other factors, including an
increase in housing starts and rising wages, can be used to make a
case for a strengthening economy. In addition, Congress' plan to
reduce the deficit while also pushing through a package of tax-cuts
is also being evaluated.
In light of the economy's perceived strength and the
possibility of a more stimulative fiscal policy, we expect the
Federal Reserve will take further steps to raise rates during 1997.
The resulting rise in rates would be good news for money market
investors, but likely would not be as well received by the stock and
bond markets.
Thank you for choosing the First Government Money Market
Fund.
Sincerely,
David Rochat Barbara Krumsiek
Senior Vice President President
July 21, 1997
<PAGE>
[Portfolio Statistics chart appears in center of page here]
PORTFOLIO STATISTICS
WEIGHTED AVERAGE MATURITY
12/31/96 6/30/97
45 days 36 days
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 6/30/97
One Year 4.78%
Five Year 4.06%
Ten Year 5.39%
Since Inception (12/76) 7.60%
HYPOTHETICAL PERFORMANCE
Change in value of a hypothetical $10,000 investment.
[line graph appears here]
7/1/87 6/97
$10,000 $16,901
[end of line graph]
Quality Structure of Portfolio
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 ot repurchase agreements with the recognized securities dealers and
banks.
Total returns assume reinvestment of dividends. Past performance is no
guarantee of future results.
[end of chart]
<PAGE>
<TABLE>
<S> <C> <C>
STATEMENT OF NET ASSETS
JUNE 30, 1997
U.S. Government Principal
Agency Obligations - 52.3% Amount Value
Federal Farm Credit Bank, Discount
Notes, 9/3/97 $4,290,000 $4,250,570
Federal Home Loan Bank, Discount Notes:
7/25/97 7,000,000 6,975,407
9/2/97 5,000,000 4,953,450
9/25/97 4,000,000 3,946,584
12/4/97 3,000,000 2,930,190
Federal Home Loan Mortgage Corporation,
Discount Notes:
7/3/97 10,000,000 9,996,989
8/27/97 6,562,000 6,505,272
9/16/97 5,000,000 4,941,929
Federal National Mortgage Association:
5.86%, 7/3/97 7,275,000 7,275,038
5.39%, 7/17/97 7,600,000 7,600,000
5.55%, 10/17/97 4,280,000 4,277,540
Federal National Mortgage Association,
Discount Notes:
7/10/97 10,000,000 9,986,538
7/17/97 5,000,000 4,987,800
7/18/97 5,000,000 4,987,014
7/22/97 4,000,000 3,987,073
7/29/97 10,000,000 9,957,378
8/5/97 6,000,000 5,967,683
8/14/97 6,000,000 5,961,207
9/5/97 5,000,000 4,949,675
9/29/97 10,000,000 9,863,750
10/20/97 4,000,000 3,930,440
Total U.S. Government Agency Obligations
(Cost $128,231,527) 128,231,527
Depository Receipts for U.S.
Government Guaranteed Loans - 9.7% (~)
Colson Services Corporation Loan Sets (*):
9.59375%, 1/13/98 13,745 13,743
8.75%, 8/10/99 54,304 55,045
8.59375%, 1/17/10 98,725 102,943
8.50%, 2/3/2-9/27/05 265,604 271,057
8.34375%, 2/28/00-3/12/00 209,113 209,598
8.25%, 6/1/07 58,730 60,639
8.25%, 8/1/00 36,798 37,474
7.50%, 6/5/09-3/23/12 2,211,154 2,239,774
7.375%, 2/25/02-9/9/06 226,948 228,786
7.325%, 3/12/05-5/29/12 2,137,942 2,142,183
7.25%, 8/1/10-1/22/11 836,199 837,160
7.25%, 3/19/11-8/10/12 11,161,037 11,185,677
7.25%, 10/30/01-9/2/12 4,368,724 4,377,700
7.09375%, 12/22/97-4/26/09 988,746 992,273
7.34375%, 10/1/98-7/26/10 1,007,953 1,008,954
6.84375%, 4/21/98-5/18/02 75,914 75,984
Total Depository Receipts for U.S.
Government Guaranteed Loans (Cost $23,838,990) 23,838,990
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Collateralized by Principal
U.S. Government Securities - 5.1% Amount Value
Audley Investments Opic Cops VRDN,
5.68%, 11/29/04 $8,000,000 $8,000,000
San Bernardino Public Safety Authority,
7.00%, 7/1/97 1,120,000 1,120,000
7.25%, 1/1/98 3,420,000 3,441,288
Total Collateralized by U.S. Government
Securities (Cost $12,561,288) 12,561,288
Escrowed in U.S. Treasury Obligations - 3.2%
Public Building Commission of Chicago,
Series 1996, 6.05%, 1/1/98 7,845,000 7,847,468
Total Escrowed in U.S. Treasury Obligations
(Cost $7,847,468) 7,847,468
Variable Rate Loans Guaranteed by Agencies
of the U.S. Government - 1.3% (~)
Loan pools:
8.59375%, 3/30/99 40,040 40,040
7.00%, 8/15/12 2,158,156 2,127,924
6.25%, 3/1/07 1,091,111 1,068,757
Total Variable Rate Loans Guaranteed by Agencies
f the U.S. Government (Cost $3,236,721) 3,236,721
Repurchase Agreements - 28.0%
Donaldson, Lufkin & Jenrette Securities, Inc.:
6.05%, dated 6/30/97, due 7/1/97 ($11,573,319
FHLMC, 6.63%, 3/20/00 and $18,010,842
FHLMC, 7.36%, 6/5/07) 28,700,000 28,700,000
UBS Securities, Inc.: 6.00%, dated 6/30/97,
due 7/1/97 ($30,707,233 FHLMC Pool #G00563,
7.00%, 10/1/26) 30,000,000 30,000,000
Paine Webber, Inc.: 5.50%, dated 6/18/97, due
7/9/97 ($10,261,560 FHLMC Pool #G00584, 7.00%,
11/1/26) 10,000,000 10,000,000
Total Repurchase Agreements (Cost $68,700,000) 68,700,000
TOTAL INVESTMENTS (Cost $244,415,994) - 99.6 244,415,994
Other assets and liabilities, net - 0.4% 1,046,468
Net Assets - 100.0% $245,462,462
Net Assets Consist of:
Paid-in capital applicable to 245,972,080
outstanding shares of beneficial interest,
unlimited number of no par shares authorized $245,725,392
Undistributed net investment income 59
Accumulated net realized gain (loss) on
investments (262,989)
Net Assets $245,462,462
Net Asset Value per Share $1.00
</TABLE>
(+) Represents rares in effect at June 30, 1997, after regularly scheduled
adjustments on such dae. Interest rates adjust monthly and quarterly,
generally at the beginning of the month or calendar quarter, or
semiannualy based on prime plus contracted adjustments. As of June 30,
1997, the prime interest rate was 8.50%.
(*) 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 statments.
<PAGE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
Net Investment Income
Investment Income
Interest income $6,787,758
Expenses
Investment advisory fee 603,895
Transfer agency fees and expenses 228,723
Trustees' fees and expenses 19,003
Custodian fees 15,803
Registration fees 19,813
Reports to shareholders 82,250
Professional fees 13,059
Miscellaneous 25,130
Total expenses 1,007,676
Fees paid indirectly (15,803)
Net expenses 991,873
Net Investment Income 5,795,885
Realized Gain (Loss) on Investments
Net realized gain (loss) 8,248
Increase (Decrease) in Net Assets
Resulting from Operations $5,804,133
See notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<S> <C> <C>
Six Months Year Ended
Ended December 31,
Increase (Decrease) in Net Assets June 30, 1997 1996
Operations
Net investment income $5,795,885 $11,620,255
Net realized gain (loss) 8,248 18,329
Increase (Decrease) in Net Assets
Resulting from Operations 5,804,133 11,638,584
Distributions to shareholders from
Net investment income (5,823,423) (11,593,209)
Capital share transactions
Shares sold 202,108,181 380,258,409
Reinvestment of distributions 5,654,143 11,294,463
Shares redeemed (201,700,181) (393,328,271)
Total capital share transactions 6,062,143 (1,775,399)
Total Increase (Decrease) in Net Assets 6,042,853 (1,730,024)
Net Assets
Beginning of period 239,419,609 241,149,633
End of period (including undistributed net
investment income of $59 and $27,597,
respectively) $245,462,462 $239,419,609
Capital Share Activity
Shares sold 202,108,181 380,258,409
Reinvestment of distributions 5,654,143 11,294,463
Shares redeemed (201,700,181) (393,328,271)
Net share activity 6,062,143 (1,775,399)
</TABLE>
<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.
Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
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.
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 received an
annual fee of $20,500 plus up to $1,500 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, 1997 was substantially the
same for federal income tax and financial reporting purposes. Net
realized capital loss carryforwards, for federal income tax purposes,
of $271,237 at December 31, 1996 may be utilized to offset current
and future capital gains until expiration through 2001.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<S> <C> <C> <C>
Periods Ended
June 30, December 31,
1997 1996 1995
Net asset value, beginning $1.00 $1.00 $1.00
Income from investment operations
Net investment income .024 .047 .051
Distributions from
Net investment income (.024) (.047) (.051)
Net asset value, ending $1.00 $1.00 $1.00
Total return* 2.41% 4.79% 5.22%
Ratios to average net assets:
Net investment income 4.80%(a) 4.69% 5.04%
Total expenses ~ .83%(a) .86% .89%
Net expenses .82%(a) .85% .88%
Net assets, ending (in thousands) $245,462 $239,420 $241,150
Number of shares outstanding,
ending (in thousands) 245,972 239,910 241,685
Years Ended
1994 1993 1992
Net asset value, beginning $1.00 $1.00 $1.00
Income from investment operations
Net investment income .036 .027 .033
Distributions from
Net investment income (.036) (.027) (.033)
Net asset value, ending $1.00 $1.00 $1.00
Total return 3.66% 2.70% 3.40%
Ratios to average net assets:
Net investment income 3.56% 2.66% 3.30%
Total expenses ~ - - -
Net expenses .81% .81% .82%
Net assets, ending (in thousands) $230,183 $263,260 $314,999
Number of shares outstanding,
ending (in thousands) 230,618 263,930 315,667
</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.
