<PAGE>
TO OUR SHAREHOLDERS:
- --------------------------------------------------------------------------------
CGM Capital Development Fund increased 16.1% during the second quarter of 1997
compared to the unmanaged Standard and Poor's 500 Stock Index which returned
17.4% for the same period. Over the first six months of the year, CGM Capital
Development Fund increased 18.6% while the S&P 500 returned 20.6%.
"Idyllic" is the word for the present combination of economic variables
influencing the securities markets. Increases in the Gross Domestic Product as
well as corporate profits, productivity and employment levels are significant.
Additionally the inflation rate, as reported by the Producer Price Index and the
Consumer Price Index, is moderate. Corporate profit margins are reaching 6% of
the Gross Domestic Product, a level not sustained since 1968.
While overall business activity is strong, retail sales and housing starts have
declined for three consecutive months to hold at bay an over-heating economy and
subsequent excesses. Though no tangible indication of a problem has emerged, the
tight labor market and potential for wage inflation remain a concern which
further expansion could exacerbate.
Taking its cue from the near-perfect economic picture and high corporate profit
levels, the equity market has placed generous valuations on many companies which
in turn, has sent the leading market averages to record highs, month after month
with only minor interruptions. Most historical market benchmarks have been
surpassed. Though prospects loom of increased market volatility and fewer
attractive securities from which to select, the long-term government bond is
back down to year-end 1996 levels at 6.6% after reaching 7.15% at March 31st.
Should long rates continue to fluctuate in this range, the market could remain
strong until such time as inflation strikes in earnest or the Federal Reserve
Board takes action in anticipation of the same.
CGM Capital Development Fund is positioned to capitalize on continuing growth in
corporate earnings with major emphasis on drug companies, retailing enterprises
and steel companies. The three largest holdings are Southdown, Inc., Warner
Lambert Company and Nokia Corporation.
/s/ Robert L. Kemp
Robert L. Kemp
President
July 7, 1997
<PAGE>
<TABLE>
CGM CAPITAL DEVELOPMENT FUND
- ---------------------------------------------------------------------------------------------------------
INVESTMENT PERFORMANCE
(unaudited)
- ---------------------------------------------------------------------------------------------------------
Total Return for Periods Ended June 30, 1997
<CAPTION>
CGM CAPITAL
DEVELOPMENT S&P 500 THE FUND'S AVERAGE
FUND INDEX ANNUAL TOTAL RETURN
------------- ----------- -----------------------
<C> <C> <C> <C>
10 Years ......................................... +419.4% +291.7% +17.9%
5 Years ......................................... +168.5 +146.3 +21.8
1 Year .......................................... + 30.2 + 34.7 +30.2
3 Months + 16.1 + 17.4 --
</TABLE>
The percentage figures for the Fund are based upon the beginning net asset
values of $27.83, $24.00, $31.91 and $29.72, respectively, and the June 30,
1997 net asset value of $34.50 per share assuming the reinvestment of income
dividends, capital gains and paid-in capital distributions during such
respective periods. The S&P 500 Stock Index has also been adjusted for the
reinvestment of income dividends during these periods. Although the S&P 500
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 the 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>
CGM CAPITAL DEVELOPMENT FUND
- --------------------------------------------------------------------------------
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>
CGM CAPITAL DEVELOPMENT FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
25 YEAR INVESTMENT RECORD
DECEMBER 31, 1971 -- JUNE 30, 1997 (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------------
IF YOU HAD PURCHASED ONE SHARE OF THE FUND ON DECEMBER 31, 1971
- ----------------------------------------------------------------------------------------------------------------------------------
-- 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 Distributions Year End Total Return December 31,
31 Have Been of of Would Have Been of 1971 = 100.0
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1971 $12.55 100.0
1972 14.63 -- $0.08 $ 14.75 + 17.5 117.5
1973 12.69 -- 0.08 12.85 - 12.9 102.3
1974 7.78 $ 0.37* 0.14 8.22 - 36.0 65.5
1975 9.35 -- 0.15 10.07 + 22.5 80.2
1976 10.98 -- 0.13 11.99 + 19.1 95.5
1977 10.74 -- 0.18 11.92 - 0.6 94.9
1978 13.05 -- 0.27 14.89 + 24.9 118.5
1979 16.20 -- 0.35 18.97 + 27.4 151.0
1980 20.50 1.65* 0.36 27.11 + 42.9 215.8
1981 17.34 3.38 0.36 28.33 + 4.5 225.5
1982 24.88 2.88 0.41 50.68 + 78.9 403.4
1983 25.21 2.50 0.47 58.59 + 15.6 466.3
1984 17.28 6.15 0.11 53.79 - 8.2 428.1
1985 25.02 -- 0.18 78.64 + 46.2 625.9
1986 23.12 7.46 0.16 100.97 + 28.4 803.7
1987 16.56 10.09 0.14 117.02 + 15.9 931.5
1988 15.87 0.02 0.62 116.67 - 0.3 928.7
1989 18.37 -- 0.34 137.55 + 17.9 1094.9
1990 18.53 -- 0.10 139.48 + 1.4 1110.2
1991 25.80 11.07* 0.06 277.70 + 99.1 2210.4
1992 27.43 2.68* 0.20 326.30 + 17.5 2597.2
1993 27.71 7.51 0.07 419.95 + 28.7 3342.6
1994 20.58 0.71 0.07 323.78 - 22.9 2577.1
1995 27.33 1.68 0.02 456.85 + 41.1 3636.3
1996 29.08 5.87 0.07 585.22 + 28.1 4658.1
1997(6/30) 34.50 -- -- 694.07 + 18.6 5524.5
------ ----- ------
Totals $64.02 $5.12 +5425.5
- ----------------------------------------------------------------------------------------------------------------------------------
*Includes $0.15, $0.09, $0.02 and $0.02 per share distributed from paid-in capital.
- ----------------------------------------------------------------------------------------------------------------------------------
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 the original cost.
</TABLE>
<PAGE>
<TABLE>
CGM CAPITAL DEVELOPMENT FUND
- ----------------------------------------------------------------------------------------------
INVESTMENTS AS OF JUNE 30, 1997
(unaudited)
COMMON STOCKS -- 99.8% OF TOTAL NET ASSETS
<CAPTION>
SHARES VALUE(a)
------ --------
<S> <C> <C>
BASIC MATERIALS -- 9.2%
Lone Star Industries, Inc. ................................. 295,000 $ 13,367,188
Medusa Corporation ......................................... 201,500 7,732,562
Southdown, Inc. ............................................ 1,057,000 46,111,625
------------
67,211,375
------------
BEVERAGES AND TOBACCO -- 5.2%
Philip Morris Companies, Inc. .............................. 860,000 38,162,500
------------
COMPUTER SOFTWARE AND SERVICES -- 7.0%
Compaq Computer Corporation (b) ............................ 155,000 15,383,750
Microsoft Corporation (b) .................................. 283,000 35,764,125
------------
51,147,875
------------
DRUGS -- 11.3%
Eli Lilly & Company ........................................ 345,000 37,712,813
Warner Lambert Company ..................................... 361,000 44,854,250
------------
82,567,063
------------
ELECTRONIC AND COMMUNICATION EQUIPMENT -- 5.4%
Nokia Corporation .......................................... 535,000 39,456,250
------------
HEAVY CAPITAL GOODS -- 3.9%
Paccar, Inc. ............................................... 614,000 28,512,625
------------
INSURANCE -- 7.6%
Frontier Insurance Group, Inc. ............................. 372,500 24,119,375
Mercury General Corporation ................................ 440,500 32,046,375
------------
56,165,750
------------
MACHINERY -- 5.0%
Navistar International Corporation, Inc.(b) ................ 2,127,500 36,699,375
------------
METALS AND MINING -- 6.6%
RMI Titanium Company(b) .................................... 340,000 9,265,000
Titanium Metals Corporation(b) ............................. 1,230,000 38,898,750
------------
48,163,750
------------
See accompanying notes to financial statements
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
- ----------------------------------------------------------------------------------------------
INVESTMENTS AS OF JUNE 30, 1997 (CONTINUED)
(unaudited)
COMMON STOCKS -- (CONTINUED)
SHARES VALUE(a)
------ --------
MISCELLANEOUS -- 13.9%
CB Commercial Real Estate Group(b) ......................... 505,000 $ 15,339,375
Consolidated Cigar Holdings, Inc.(b) ....................... 725,000 20,118,750
Ryanair Holdings PLC(b) .................................... 393,500 10,673,687
Standard Pacific Corporation ............................... 875,000 8,968,750
Swisher International Group(b) ............................. 485,000 8,366,250
Tubos de Acero de Mexico ADR(b)(c) ......................... 2,100,000 38,718,750
------------
102,185,562
------------
OFFSHORE DRILLING - 4.1%
Transocean Offshore, Inc. .................................. 413,000 29,994,125
------------
RETAIL -- 10.5%
Gucci Group ................................................ 425,000 27,359,375
Pier 1 Imports, Inc. ....................................... 1,245,000 32,992,500
Paul Harris Stores, Inc.(b) ................................ 975,000 16,331,250
------------
76,683,125
------------
STEEL -- 10.1%
AK Steel Holding Corporation ............................... 425,000 18,753,125
LTV Corporation ............................................ 2,400,000 34,200,000
National Steel Corporation(b) .............................. 1,240,000 20,847,500
------------
73,800,625
------------
TOTAL COMMON STOCKS (Identified Cost $618,834,320) ......................... 730,750,000
------------
TOTAL INVESTMENTS -- 99.8% (Identified Cost $618,834,320)(d) ............... 730,750,000
Cash and Receivables ....................................................... 7,912,286
Liabilities ................................................................ (6,222,312)
------------
TOTAL NET ASSETS -- 100.0% ................................................. $732,439,974
============
(a) See Note 1A.
(b) Non-income producing security.
(c) An American Depository Receipt (ADR) is a certificate issued by a U.S. bank representing
the right to receive securities of the foreign issuer described. The values of ADRs are
significantly influenced by trading on exchanges not located in the United States or
Canada.
(d) Federal Tax Information: At June 30, 1997 the net unrealized appreciation on investments
based on cost of $618,834,320 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 ............................. $115,252,744
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value ............................. (3,337,064)
------------
Net unrealized appreciation ........................................... $111,915,680
============
See accompanying notes to financial statements
</TABLE>
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
- ------------------------------------------------------------------------------
STATEMENT OF
ASSETS AND LIABILITIES
June 30, 1997
(unaudited)
ASSETS
Investments at value (Identified cost
-- $618,834,320) ....................................... $730,750,000
------------
Receivable for:
Securities sold ......................... $7,979,976
Shares of the Fund sold ................. 34,525
Dividends and interest .................. 529,885 8,544,386
---------- ------------
739,294,386
------------
LIABILITIES
Payable for:
Securities purchased .................... $5,084,475
Shares of the Fund redeemed ............. 442,818 5,527,293
----------
Accrued expenses:
Management fees ......................... 581,560
Trustees' fees .......................... 14,890
Accounting and Administration ........... 5,000
Other expenses .......................... 93,569 695,019
----------
Payable to Custodian Bank ................................ 632,100
------------
6,854,412
------------
NET ASSETS ................................................ $732,439,974
============
Net Assets consist of:
Capital paid-in ......................................... $479,529,472
Undistributed net investment income ..................... (342,705)
Accumulated net realized gain ........................... 141,337,527
Unrealized appreciation on investments -- net ........... 111,915,680
------------
NET ASSETS ................................................ $732,439,974
============
Shares of beneficial interest outstanding,
no par value ........................................... 21,228,369
============
Net asset value per share* ............................... $34.50
============
*Shares of the Fund are sold and redeemed at net asset value ($732,439,974 /
21,228,369).
See accompanying notes to financial statements
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
- ------------------------------------------------------------------------------
STATEMENT OF
OPERATIONS
Six Months Ended June 30, 1997
(unaudited)
INVESTMENT INCOME
Income
Dividends ............................................... $ 3,014,821
Interest ................................................ 234,737
------------
3,249,558
------------
Expenses
Management fees ......................................... 3,294,223
Trustees' fees .......................................... 31,500
Accounting and Administration ........................... 30,000
Custodian ............................................... 61,000
Transfer agent .......................................... 107,000
Audit and tax services .................................. 16,500
Legal ................................................... 11,000
Printing ................................................ 15,000
Registration ............................................ 21,000
Miscellaneous ........................................... 5,040
------------
3,592,263
------------
Net loss ................................................ (342,705)
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain on investments -- net ...................... 141,793,386
Unrealized depreciation -- net ........................... (25,178,711)
------------
Net gain on investments .................................. 116,614,675
------------
NET INCREASE IN ASSETS FROM OPERATIONS .................... $116,271,970
============
See accompanying notes to financial statements
<PAGE>
<TABLE>
CGM CAPITAL DEVELOPMENT FUND
- ----------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
------------- ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) ........................... $ (342,705) $ 1,339,460
Net realized gain from investments ..................... 141,793,386 107,431,801
Unrealized appreciation (depreciation) ................. (25,178,711) 35,915,614
------------ ------------
Increase in net assets from operations ............... 116,271,970 144,686,875
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income .................................. -- (1,288,272)
Net realized gain on investments ....................... -- (107,431,801)
In excess of net realized gain on investments .......... -- (507,030)
------------ ------------
-- (109,227,103)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares ........................... 17,622,737 27,721,248
Net asset value of shares issued in connection with
reinvestment of:
Dividends from net investment income ................. -- 1,125,517
Distributions from net realized gain ................. -- 95,194,271
Distributions in excess of net realized gain on
investments ........................................ -- 449,274
------------ ------------
17,622,737 124,490,310
Cost of shares redeemed ................................ (32,714,805) (49,937,780)
------------ ------------
Increase (decrease) in net assets derived from capital
share transactions ................................. (15,092,068) 74,552,530
------------ ------------
Total increase in net assets ........................... 101,179,902 110,012,302
NET ASSETS
Beginning of period .................................... 631,260,072 521,247,770
------------ ------------
End of period (including undistributed net investment
income of ($342,705) and $0, respectively) ........... $732,439,974 $631,260,072
============ ============
NUMBER OF SHARES OF THE FUND:
Issued from sale of shares ............................. 566,063 905,100
Issued in connection with reinvestment of:
Dividends from net investment income ................. -- 38,642
Distributions from net realized gain ................. -- 3,273,530
Distributions in excess of net realized gain on
investments ........................................ -- 15,450
------------ ------------
566,063 4,232,722
Redeemed ............................................. (1,047,204) (1,597,130)
------------ ------------
Net change ........................................... (481,141) 2,635,592
============ ============
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
CGM CAPITAL DEVELOPMENT FUND
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1997 -----------------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ---- ---- ---- ---- ----
<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 ......... $29.08 $27.33 $20.58 $27.71 $27.43 $25.80
------ ------ ------ ------ ------ ------
Net investment income (loss) .. (0.02) 0.07 0.02 0.07 0.07 0.19
Dividends from net investment (0.20)
income ...................... -- (0.07) (0.02) (0.07) (0.07)
Net realized and unrealized 4.32
gain (loss) on investments .. 5.44 7.62 8.43 (6.42) 7.79
Distribution from net realized (2.66)
gain ........................ -- (5.84) (1.68) (0.69) (7.51)
Distribution in excess of net
realized gain on investments -- (0.03) -- (0.02) -- --
Distribution from paid-in (0.02)
capital ..................... -- -- -- -- --
------ ------ ------ ------ ------ ------
Net increase (decrease) in net
asset value ................. 5.42 1.75 6.75 (7.13) 0.28 1.63
------ ------ ------ ------ ------ ------
Net asset value at end of
period ...................... $34.50 $29.08 $27.33 $20.58 $27.71 $27.43
====== ====== ====== ====== ====== ======
Total Return (%) .............. 18.6 28.1 41.1 -22.9 28.7 17.5
Ratios:
Operating expenses to average
net assets (%) .............. 1.08* 0.82 0.85 0.84 0.85 0.86
Net investment income to 0.79
average net assets (%) ...... -0.10* 0.23 0.07 0.25 0.23
Portfolio turnover (%) ........ 263* 178 271 146 143 163
Average commission rate** ..... $0.0664 $0.0669 -- -- -- --
Net assets at end of period (in
thousands) ($) .............. 732,440 631,260 521,248 401,676 523,775 394,530
* Computed on an annualized basis.
** SEC regulations require portfolios to disclose the average commission rate paid on trades for which commissions were
charged for fiscal years beginning on or after September 1, 1995.
See accompanying notes to financial statements
</TABLE>
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 1997
(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 Fund's objective is long-term capital
appreciation. The Fund seeks to attain its objective by investing in the
equity securities of a diverse group of companies and industries.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
A. SECURITY VALUATION -- Equity securities are valued on the basis of
valuations furnished by a pricing service, authorized by the Board of
Trustees, which 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 may result in reclassifications to paid-in
capital. 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, 1997,
purchases and sales of securities other than United States government
obligations and short-term investments aggregated $870,396,170 and
$856,441,948, respectively. There were no purchases or sales of United States
government obligations.
3. A. MANAGEMENT FEES -- During the period ended June 30, 1997, the Fund
incurred management fees of $3,294,223 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 provides for a fee at
the annual rate of 1.00% on the first $500 million of the Fund's
average daily net assets, 0.95% of the next $500 million and 0.80% of
such assets in excess of $1 billion.
B. OTHER EXPENSES -- CGM performs certain administrative, accounting and
other services for the Fund. The expenses 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 $30,000 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 CGM Funds with an annual fee of $37,000 plus expenses for each
meeting attended. Of this amount, the Fund is responsible for $3,000
plus an annual variable fee calculated based on the proportion of the
Fund's average net assets to the aggregate average net assets of the
CGM Funds, which for 1997 is $6,847. 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.
CGM
CAPITAL
DEVELOPMENT
FUND
144th Quarterly Report
June 30, 1997
A No-Load Fund
[FENCER LOGO]
Investment Adviser
CAPITAL GROWTH MANAGEMENT
Limited Partnership
