<PAGE>
CGM
CAPITAL
DEVELOPMENT
FUND
136th Quarterly Report
June 30, 1995
A No-Load Fund
[CGM LOGO]
Investment Adviser
CAPITAL GROWTH MANAGEMENT
Limited Partnership
<PAGE>
TO OUR SHAREHOLDERS:
--------------------------------------------------------------------------------
CGM Capital Development Fund increased 13.9% during the second quarter of 1995
comparing favorably to a return of 9.5% for the unmanaged Standard & Poor's
500 Index. For the first six months of the year, CGM Capital Development Fund
rose 17.8% compared to an increase of 20.2% for the unmanaged S&P Index.
In the first quarter of 1995, evidence of a weakening economy appeared in the
auto and housing sectors. The trend continued throughout the second quarter
spreading to retail sales and cutting construction spending by 1.5% in May to
make the month the worst in four years for construction spending and the
second down month in a row. Signs of weakness also took their toll on consumer
confidence as measured by an index drop from 102 in April to 92.8 in May.
In its attempt to contain inflation, has the Federal Reserve Board engineered
the very first "soft landing" (slowdown without recession), or has it ushered
in a recession? Though the answer remains to be seen, we favor the soft
landing scenario. Lower interest rates will encourage consumer spending in the
months ahead. In fact, signs of an increase in consumer spending were already
evident in late June and employment gains were well above average. Personal
income should continue to rise and the weaker dollar might well stimulate
exports.
Interest rates on long-term government bonds have retraced more than 70% to
6.5% from 8.3% in the fall of 1994. We expect the decline in rates to carry
into 1996 as we experience a slow growth economy with no immediate threat of
higher inflation. In early July, the prospect of continuing low inflation
prompted the Federal Reserve Board to reduce the Federal Funds rate one
quarter of a percent to 5.75%.
While the diminished threat of inflation and weaker business activity helped
bring about lower interest rates for the bond market, the driving force behind
the equity market has been rising corporate profits. One year ago, the
estimate of earnings per share of the S&P Index was $27. The S&P Index was at
444, a price 16.5 times earnings. Today, after an increase of 23%, the S&P
Index has reached 544. However, the current earnings estimate of $34 prices
the market once again at roughly 16 times earnings.
CGM Capital Development Fund is positioned to capitalize on continued growth
in corporate earnings with major emphasis on technology, airlines and New York
City banks. The Fund's three largest holdings are Citicorp, Hewlett-Packard
Company and Chemical Banking Corp.
/s/Robert L. Kemp
----------------------------
Robert L. Kemp
President
July 10, 1995
<PAGE>
INVESTMENT PERFORMANCE
(unaudited)
--------------------------------------------------------------------------------
Total Return for Periods Ended June 30, 1995
CGM
CAPITAL
DEVELOPMENT S&P 500 THE FUND'S AVERAGE
FUND INDEX ANNUAL TOTAL RETURN
-------- ------- -------------------
10 Years ............................. +443.5% +292.5% +18.5%
5 Years .............................. +137.8 + 76.8 +18.9
1 Year ............................... + 7.1 + 26.0 + 7.1
3 Months ............................. + 13.9 + 9.5 --
The percentage figures for the Fund are based upon the beginning net asset
values of $22.34, $21.43, $23.51 and $21.29, respectively, and the June 30,
1995 net asset value of $24.25 per share assuming the reinvestment of income
dividends, capital gains and paid-in capital distributions during such
respective periods. The Standard & Poor's 500 Stock Index has also been
adjusted for the re-investment of income dividends during these periods.
Although the Standard & Poor's 500 Stock Index and the Fund are not directly
comparable, the Index is shown because it is widely used by investors to
measure unmanaged stock market performance. When viewing the Fund's
performance, one should keep in mind the Fund's investment objective and
policies, the characteristics and quality of its portfolio securities and the
periods selected.
The performance data contained in this report represent past performance,
which is no guarantee of future results. The investment return on, and the
principal value of, an investment in the Fund will fluctuate so that
investors' shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
--------------------------------------------
BOARD OF TRUSTEES
PETER O. BROWN
NICHOLAS J. GRANT
G. KENNETH HEEBNER
ROBERT L. KEMP
ROBERT B. KITTREDGE
LAURENS MACLURE
JAMES VAN DYKE QUEREAU, JR.
J. BAUR WHITTLESEY
OFFICERS
ROBERT L. KEMP, President
G. KENNETH HEEBNER, Vice President
LESLIE A. LAKE, Vice President and Secretary
KATHLEEN S. HAUGHTON, Vice President
MARTHA I. MAGUIRE, Vice President
W. DUGAL THOMAS, Vice President
MARY L. STONE, Assistant Vice President
FRANK N. STRAUSS, Treasurer
INVESTMENT ADVISER
CAPITAL GROWTH MANAGEMENT
LIMITED PARTNERSHIP
Boston, Massachusetts 02110
TRANSFER AND DIVIDEND PAYING
AGENT AND CUSTODIAN OF ASSETS
STATE STREET BANK AND TRUST COMPANY
Boston, Massachusetts 02102
SHAREHOLDER SERVICING AGENT
FOR STATE STREET BANK AND
TRUST COMPANY
BOSTON FINANCIAL DATA SERVICES, INC.
P.O. Box 8511
Boston, Massachusetts 02266-8511
<PAGE>
<TABLE>
<CAPTION>
CGM CAPITAL DEVELOPMENT FUND
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
25 YEAR INVESTMENT RECORD
DECEMBER 31, 1969 -- JUNE 30, 1995 (UNAUDITED)
--------------------------------------------------------------------------------------------------------------
IF YOU HAD PURCHASED ONE SHARE OF THE FUND ON DECEMBER 31, 1969
--------------------------------------------------------------------------------------------------------------
-- AND HAD TAKEN ALL DIVIDENDS OR -- HAD REINVESTED ALL DIVIDENDS AND CAPITAL
AND DISTRIBUTIONS IN CASH GAINS DISTRIBUTIONS IN ADDITIONAL SHARES
--------------------------------------------------------------------------------------------------------------
DURING THE YEAR
YOU WOULD HAVE RECEIVED WHICH WOULD REPRESENT
------------------------------ ---------------------------------
THE VALUE OF A CUMULATIVE
THE NET YOUR ORIGINAL CHANGE
ASSET VALUE PER SHARE PER SHARE INVESTMENT AN EXPRESSED
ON OF YOUR CAPITAL GAINS INCOME AT EACH ANNUAL AS AN INDEX WITH
DECEMBER SHARE WOULD DISTRIBUTIONS DIVIDENDS YEAR END TOTAL RETURN DECEMBER 31,
31 HAVE BEEN OF OF WOULD HAVE BEEN OF 1969 = 100.0
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1969 $11.41 -- -- 100.0
1970 10.45 $ 0.30 $0.22 $ 10.98 - 3.8 96.2
1971 12.55 -- 0.20 13.44 + 22.4 117.7
1972 14.63 -- 0.08 15.79 + 17.5 138.4
1973 12.69 -- 0.08 13.75 - 12.9 120.5
1974 7.78 0.37* 0.14 8.80 - 36.0 77.1
1975 9.35 -- 0.15 10.78 + 22.5 94.5
1976 10.98 -- 0.13 12.84 + 19.1 112.5
1977 10.74 -- 0.18 12.76 - 0.6 111.8
1978 13.05 -- 0.27 15.94 + 24.9 139.7
1979 16.20 -- 0.35 20.31 + 27.4 178.0
1980 20.50 1.65* 0.36 29.02 + 42.9 254.3
1981 17.34 3.38 0.36 30.32 + 4.5 265.8
1982 24.88 2.88 0.41 54.25 + 78.9 475.5
1983 25.21 2.50 0.47 62.71 + 15.6 549.6
1984 17.28 6.15 0.11 57.57 - 8.2 504.6
1985 25.02 -- 0.18 84.17 + 46.2 737.7
1986 23.12 7.46 0.16 108.07 + 28.4 947.2
1987 16.56 10.09 0.14 125.26 + 15.9 1097.8
1988 15.87 0.02 0.62 124.88 - 0.3 1094.5
1989 18.37 -- 0.34 147.23 + 17.9 1290.4
1990 18.53 -- 0.10 149.30 + 1.4 1308.5
1991 25.80 11.07* 0.06 297.25 + 99.1 2605.1
1992 27.43 2.68* 0.20 349.27 + 17.5 3061.0
1993 27.71 7.51 0.07 449.50 + 28.7 3939.6
1994 20.58 0.71 0.07 346.57 - 22.9 3037.4
1995(6/30) 24.25 -- -- 408.26 + 17.8** 3578.1
------ ----- -------
Totals $56.77 $5.45 +3478.1
--------------------------------------------------------------------------------------------------------------
*Includes $0.05, $0.15, $0.09, $0.02 and $0.02 per share distributed from paid-in capital.
**Total return for the six months ended June 30, 1995.
--------------------------------------------------------------------------------------------------------------
The performance data contained in this report represent past performance, which is no guarantee of future
results. The investment return on, and the principal value of, an investment in the Fund will fluctuate so that
investors' shares, when redeemed, may be worth more or less than their original cost.
</TABLE>
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
--------------------------------------------------------------------------------
INVESTMENTS AS OF JUNE 30, 1995
(unaudited)
COMMON STOCKS -- 100.3% OF TOTAL NET ASSETS
SHARES VALUE(a)
------ --------
AIRLINES -- 24.5%
AMR Corporation(b) ............................. 282,000 $ 21,044,250
Alaska Air Group, Inc.(b) ...................... 60,000 1,102,500
Continental Airlines, Inc.(b) .................. 232,000 5,829,000
Delta Air Lines, Inc. .......................... 359,000 26,476,250
Northwest Airlines Corporation(b) .............. 815,000 28,830,625
UAL Corporation(b) ............................. 200,500 28,120,125
------------
111,402,750
------------
ALUMINUM -- 5.3%
Aluminum Company of America ................... 479,000 24,009,875
------------
BANKS -- MONEY CENTER -- 13.6%
Chemical Banking Corporation .................. 637,000 30,098,250
Citicorp ...................................... 551,000 31,889,125
------------
61,987,375
------------
BASIC MATERIALS -- 1.1%
Praxair, Inc. ................................. 200,000 5,000,000
------------
BIOTECHNOLOGY -- 3.9%
Biochem Pharm, Inc. (b) ...................... 815,000 17,828,125
------------
COMPUTER SOFTWARE & SERVICES -- 1.6%
Microsoft Corporation (b) .................... 82,000 7,410,750
------------
ELECTRONIC & COMMUNICATION EQUIPMENT -- 2.9%
Nokia Corporation ADR ........................ 218,000 12,998,250
------------
ELECTRONIC COMPONENTS -- 9.9%
Intel Corporation ............................ 442,000 27,984,125
Micron Technology, Inc. ...................... 310,000 17,011,250
------------
44,995,375
------------
ENVIRONMENTAL SERVICES -- 10.4%
Potash Corporation of Saskatchewan, Inc. ..... 476,500 26,624,438
Vigoro Corporation ........................... 495,000 20,542,500
------------
47,166,938
------------
FINANCIAL SERVICES -- 0.6%
Advanta Corporation .......................... 75,000 2,831,250
------------
INSURANCE -- 3.4%
MGIC Investment Corporation .................. 333,000 15,609,375
------------
See accompanying notes to financial statements
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
--------------------------------------------------------------------------------
INVESTMENTS AS OF JUNE 30, 1995 (CONTINUED)
(unaudited)
COMMON STOCKS -- (CONTINUED)
SHARES VALUE(a)
------ --------
LIGHT CAPITAL GOODS -- 4.8%
Applied Materials, Inc.(b) ................... 255,000 $ 22,089,375
------------
MACHINERY -- 5.0%
AGCO Corporation ............................. 572,000 21,450,000
Case Corporation ............................. 40,000 1,190,000
------------
22,640,000
------------
MICROCOMPUTERS -- 6.9%
Hewlett-Packard Company ...................... 420,000 31,290,000
------------
PERIPHERALS -- 6.4%
Quantum Corporation (b) ...................... 145,000 3,316,875
Seagate Technology(b) ........................ 603,000 23,667,750
Western Digital Corporation(b) ............... 120,000 2,085,000
------------
29,069,625
------------
TOTAL COMMON STOCKS (Identified Cost
$380,287,277) ................................ 456,329,063
------------
FACE
AMOUNT
SHORT-TERM INVESTMENT -- 0.1% ------
Chevron Oil Finance Company, 5.90% 7/03/95
(Cost $500,000)................................ $500,000 500,000
------------
TOTAL INVESTMENTS -- 100.4% (Identified Cost
$380,787,277)(c) ............................. 456,829,063
Cash and Receivables ........................ 43,196,098
Liabilities ................................. (45,051,378)
------------
TOTAL NET ASSETS -- 100.0% ..................... $454,973,783
============
(a)See Note 1A.
(b)Non-income producing security.
(c)Federal Tax Information: At June 30, 1995 the net unrealized appreciation on
investments based on cost of $380,787,277 for Federal income tax purposes was
as follows:
Aggregate gross unrealized appreciation for all
investments in which there is an excess of value
over tax cost ............................................... $ 77,537,628
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value .................................................. (1,495,842)
-------------
Net unrealized appreciation ................................. $ 76,041,786
=============
See accompanying notes to financial statements
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
--------------------------------------------------------------------------------
STATEMENT OF
ASSETS AND LIABILITIES
June 30, 1995
(unaudited)
ASSETS
Investments at value (Identified cost -- $380,787,277) .......... $456,829,063
Cash ............................................................ 4,269
Receivable for:
Securities sold ................................... $42,832,139
Shares of the Fund sold ........................... 134,598
Dividends and interest ............................ 225,092 43,191,829
----------- ------------
500,025,161
-------------
LIABILITIES
Payable for:
Securities purchased .............................. $42,897,655
Shares of the Fund redeemed ....................... 1,860,938 44,758,593
----------- ------------
Accrued expenses:
Management fees ................................... 259,079
Trustees' fees .................................... 16,750
Accounting and Administration ..................... 4,583
Other expenses .................................... 12,373 292,785
----------- -----------
45,051,378
------------
NET ASSETS ....................................................... $454,973,783
============
Net Assets consist of:
Capital paid-in ................................................ $411,728,482
Undistributed net investment income ............................ 306,270
Accumulated net realized loss .................................. (33,102,755)
Unrealized appreciation on investments -- net .................. 76,041,786
-------------
NET ASSETS ....................................................... $454,973,783
============
Shares of beneficial interest outstanding, no par value ......... 18,765,660
============
Net asset value per share* ...................................... $24.25
============
*Shares of the Fund are sold and redeemed at net asset value
($454,973,783 / 18,765,660).
See accompanying notes to financial statements
<PAGE>
STATEMENT OF
OPERATIONS
Six Months Ended June 30, 1995
(unaudited)
INVESTMENT INCOME
Income
Dividends (net of withholding tax of $19,430) ............ $ 2,021,269
Interest ................................................. 33,373
--------------
2,054,642
--------------
Expenses
Management fees .......................................... 1,494,426
Trustees' fees ........................................... 32,250
Accounting and Administration ............................ 27,500
Custodian ................................................ 51,000
Transfer agent ........................................... 85,000
Audit and tax services ................................... 14,000
Legal .................................................... 19,200
Printing ................................................. 12,500
Registration ............................................. 12,000
Miscellaneous ............................................ 496
--------------
1,748,372
--------------
Net investment income .................................... 306,270
--------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Realized loss on investments -- net ....................... (32,645,781)
Unrealized appreciation -- net ............................ 102,144,962
--------------
Net gain on investments ................................... 69,499,181
--------------
NET INCREASE IN ASSETS FROM OPERATIONS ..................... $ 69,805,451
==============
See accompanying notes to financial statements
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
--------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
------------- -------------
FROM OPERATIONS
Net investment income ............ $ 306,270 $ 1,241,468
Net realized gain (loss) from
investments ..................... (32,645,781) 13,012,183
Unrealized appreciation
(depreciation) .................. 102,144,962 (137,179,697)
------------ -------------
Increase (decrease) in net
assets from operations ........ 69,805,451 (122,926,046)
------------ -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income ............ -- (1,262,367)
Net realized gain on investments . -- (13,037,525)
In excess of net realized gains on
investments ..................... -- (436,578)
------------ -------------
-- (14,736,470)
------------ -------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares ..... 12,186,458 55,247,909
Net asset value of shares issued
in connection with reinvestment of:
Dividends from net investment
income ........................ -- 1,162,785
Distributions from net realized
gain .......................... -- 11,841,641
Distributions in excess of net
realized gain on investments . -- 396,532
------------ -------------
12,186,458 68,648,867
Cost of shares redeemed .......... (28,694,296) (53,085,099)
------------ -------------
Increase (decrease) in net
assets derived from capital
share transactions ........... (16,507,838) 15,563,768
------------ -------------
Total increase (decrease) in net
assets ....................... 53,297,613 (122,098,748)
NET ASSETS
Beginning of period (including undis-
tributed net investment income
of $0 and $0, respectively)..... 401,676,170 523,774,918
------------ -------------
End of period (including undis-
tributed net investment income
of $306,270 and $0, respectively) $454,973,783 $ 401,676,170
============ =============
NUMBER OF SHARES OF THE FUND:
Issued from sale of shares ....... 568,741 2,092,085
Issued in connection with
reinvestment of:
Dividends from net investment
income ........................ -- 55,829
Distributions from net realized
gain .......................... -- 575,395
Distributions in excess of net
realized gain on investments .. -- 19,268
----------- ------------
568,741 2,742,577
Redeemed ....................... (1,321,030) (2,124,306)
----------- ------------
Net change ..................... (752,289) 618,271
======== =======
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
CGM CAPITAL DEVELOPMENT FUND
--------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1995 --------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
For a share of the Fund outstanding throughout each period:
Net asset value at the
beginning of period ..... $20.58 $27.71 $27.43 $25.80 $18.53 $18.37
-------- ------ ------ ------ ------ ------
Net investment income .... 0.02 0.07 0.07 0.19 0.03 0.09
Dividends from net
investment income ....... --- (0.07) (0.07) (0.20) (0.06) (0.10)
Net realized and
unrealized gain (loss)
on investments ......... 3.65 (6.42) 7.79 4.32 18.37 0.17
Distribution from net
realized gain .......... --- (0.69) (7.51) (2.66) (11.05) --
Distributions in excess of
net realized gain ...... --- (0.02) -- -- -- --
Distribution from paid-in
capital ................ --- -- -- (0.02) (0.02) --
-------- ------ ------ ------ ------ ------
Net increase (decrease) in
net asset value ........ 3.67 (7.13) 0.28 1.63 7.27 0.16
-------- ------ ------ ------ ------ ------
Net asset value at end of
period ................. $24.25 $20.58 $27.71 $27.43 $25.80 $18.53
====== ====== ====== ====== ====== ======
Total Return (%) ......... 17.8 -22.9 28.7 17.5 99.1 1.4
Ratios:
Operating expenses to
average net assets (%) . 0.85* 0.84 0.85 0.86 0.88 0.94
Net income to average net
assets (%) ............. 0.15* 0.25 0.23 0.79 0.21 0.40
Portfolio turnover (%) ... 302* 146 143 163 272 226
Net assets at end of
period (in thousands) .. 454,974 401,676 523,775 394,530 325,965 175,717
*Computed on an annualized basis.
See accompanying notes to financial statements
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
CGM CAPITAL DEVELOPMENT FUND
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 1995
(unaudited)
1. The Fund is organized as a Massachusetts business trust under the laws of
Massachusetts pursuant to an Agreement and Declaration of Trust. The Fund is
registered under the Investment Company Act of 1940 as a diversified, open- end
management investment company.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
A. SECURITY VALUATION -- Equity securities are valued on the basis of
valuations furnished by a pricing service, authorized by the Board of
Trustees, which service provides the last reported sale price for
securities listed on a national securities exchange or on the NASDAQ
national market system or, if no sale was reported and in the case of
over-the-counter securities not so listed, the last reported bid price.
Short-term investments having a maturity of sixty days or less are stated
at amortized cost, which approximates value.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed) and dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. Net gain or loss on
securities sold is determined on the identified cost basis.
C. FEDERAL INCOME TAXES -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies, and to distribute to its shareholders all of its
taxable income and net realized capital gains, within the prescribed time
period. Accordingly, no provision for federal income tax has been made.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions
are recorded by the Fund on the ex-dividend date. The classification of
income and capital gains distributions is determined in accordance with
income tax regulations. Permanent book and tax differences relating to
shareholder distributions will result in reclassifications to paid-in
capital and may affect net investment income per share. Undistributed net
investment income, accumulated net investment loss, or distributions in
excess of net investment income may include temporary book and tax
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(unaudited)
2. PURCHASES AND SALES OF SECURITIES -- For the period ended June 30, 1995,
purchases and sales of securities other than United States government
obligations and short-term investments aggregated $619,889,307 and
$629,228,575, respectively. There were no purchases or sales of United States
government obligations.
3. A. MANAGEMENT FEES -- During the period ended June 30, 1995, the Fund
incurred management fees of $1,494,426 paid, or payable to the Fund's
investment adviser, Capital Growth Management Limited Partnership
(CGM), certain officers and directors of which are also officers and
trustees of the Fund. The management agreement between the Fund and
CGM provides for a fee at the annual rate of 0.75% on the first $200
million of the Fund's average daily net assets, 0.70% of the next $300
million and 0.65% of such assets in excess of $500 million.
B. OTHER EXPENSES -- CGM performs certain administrative, accounting and
other services for the Fund. The expense of those services, which are
paid to CGM by the Fund, include the following:
(i) expenses for personnel performing bookkeeping, accounting,
internal auditing and financial reporting functions and clerical
functions relating to the Fund; (ii) expenses for services required in
connection with the preparation of registration statements and
prospectuses, shareholder reports and notices, proxy solicitation
material furnished to shareholders of the Fund or regulatory
authorities and reports and questionnaires for SEC compliance; and
(iii) registration, filing and other fees in connection with
requirements of regulatory authorities. The Accounting and
Administration expense of $27,500 is shown separately in the financial
statements.
C. TRUSTEES FEES AND EXPENSES -- The Fund does not pay any compensation
directly to its officers or to any trustees who are directors,
officers or employees of CGM, or any affiliate of CGM, (other than
registered investment companies). Each other trustee is compensated by
the Fund at the rate of $10,000 per year plus travel expenses for each
meeting attended. In addition, the Chairman of the Independent
Trustees Committee receives an annual retainer of $1,500.
<PAGE>
INVESTMENT ADVISER
CAPITAL GROWTH MANAGEMENT
LIMITED PARTNERSHIP
Boston, Massachusetts 02110
------------------------------------------------------------------------------
TELEPHONE NUMBERS
For information about:
[] Account Procedures and Status
[] Redemptions
[] Exchanges
Call 800-343-5678
[] New Account Procedures
[] Prospectuses
[] Performance
Call 800-345-4048
------------------------------------------------------------------------------
MAILING ADDRESSES
FOR EXISTING ACCOUNTS
Boston Financial Data Services
P.O. Box 8511
Boston, MA 02266-8511
FOR NEW ACCOUNT APPLICATIONS ONLY
The CGM Funds
P.O. Box 449
Boston, MA 02117-0449
------------------------------------------------------------------------------
This report has been prepared for the shareholders of the Fund and is not
authorized for distribution to current or prospective investors in the Fund
unless it is accompanied or preceded by a prospectus.
CQR2 Printed in U.S.A.
