<PAGE>
To our Shareholders:
- --------------------------------------------------------------------------------
CGM Capital Development Fund returned 9.3% during the second quarter of 1999
compared to the unmanaged Standard and Poor's 500 Index which rose 7.1%. For the
first six months of the year, CGM Capital Development Fund returned -0.1% while
the unmanaged S&P 500 Index rose 12.4%.
The economy is strong--perhaps, too strong. During the first quarter of 1999,
the Gross Domestic Product grew at a rate of 4.3%, exceeding the 3% rate deemed
by the Federal Reserve Board to be sustainable without risking the build-up of
inflationary forces. Consequently, policymakers increased the Federal Funds rate
by one quarter of one percent on June 30th. We believe much of the economy's
current strength is attributable to technology investments by businesses seeking
to increase productivity, reduce costs or prepare for the millennium. Consumer
spending, which is also brisk, has outpaced increases in personal income and is
thought to be largely fueled by the rising stock market. This phenomenon is
risky as it cannot persist for any length of time. Two years ago, the picture
was remarkably similar. However, then the Japanese and Asian economies were on
the threshold of a slowdown which subsequently relieved export and interest rate
pressures on the US economy. The outlook now is changed with Japan and much of
Asia rebounding and possibly even contributing to our economic growth.
In 1998, the stock market grew despite a small decline in overall corporate
profits. The General Motors strike, tobacco settlement and general cost
pressures took their toll on profits for many companies. So far this year,
profitability has been on the rise without last year's inhibiting factors.
Market performance may well become a contest between higher profits on one hand
and price-to- earnings ratios lowered by the threat of higher interest rates on
the other. Long term government bond rates have risen to 6.0% from 5.6% three
months ago. We believe today's level reflects the current strength of the
economy. We also acknowledge that future rate hikes could negatively affect the
market, complicating the job of finding attractive securities. For the moment,
however, the market has broadened to include a host of previously ignored
companies which are well run and prospering, and provide more opportunities in
individual stock picking and bond selection.
CGM Capital Development Fund holds important positions in the retail, steel and
electronic components industries. The Fund's three largest holdings are Texas
Instruments, Inc., Pohang Iron and Steel Co., Ltd., and Asia Pulp and Paper,
Ltd.
/s/ Robert L. Kemp
Robert L. Kemp
President
July 6, 1999
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
- -------------------------------------------------------------------------------
INVESTMENT PERFORMANCE
(unaudited)
- -------------------------------------------------------------------------------
Total Return for Periods Ended June 30, 1999
CGM CAPITAL
DEVELOPMENT S&P 500 THE FUND'S AVERAGE
FUND INDEX ANNUAL TOTAL RETURN
------------- ----------- -----------------------
10 Years ......... +509.3% +458.1% +19.8%
5 Years ......... +120.6 +241.7 +17.1
1 Year .......... + 1.3 + 22.8 + 1.3
3 Months + 9.3 + 7.1 --
The percentage figures for the Fund are based upon the beginning net asset
values of $17.55, $23.51, $28.86, and $22.80, respectively, and the June 30,
1999 net asset value of $24.93 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
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, 1973 -- JUNE 30, 1999 (UNAUDITED)
--------------------------------------------------------------------------------------------------------------------------------
IF YOU HAD PURCHASED ONE SHARE OF THE FUND ON DECEMBER 31, 1973
--------------------------------------------------------------------------------------------------------------------------------
--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 Shares Would Distributions Distributions Year End Total Return December 31,
31 Have Been of of Would Have Been of 1973 = 100.0
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1973 $12.69 100.0
1974 7.78 $ 0.37* $0.14 $ 8.12 - 36.0% 64.0
1975 9.35 -- 0.15 9.95 + 22.5 78.4
1976 10.98 -- 0.13 11.85 + 19.1 93.4
1977 10.74 -- 0.18 11.78 - 0.6 92.8
1978 13.05 -- 0.27 14.71 + 24.9 115.9
1979 16.20 -- 0.35 18.74 + 27.4 147.7
1980 20.50 1.65* 0.36 26.78 + 42.9 211.1
1981 17.34 3.38 0.36 27.99 + 4.5 220.6
1982 24.88 2.88 0.41 50.07 + 78.9 394.7
1983 25.21 2.50 0.47 57.88 + 15.6 456.3
1984 17.28 6.15 0.11 53.13 - 8.2 418.9
1985 25.02 -- 0.18 77.68 + 46.2 612.4
1986 23.12 7.46 0.16 99.74 + 28.4 786.3
1987 16.56 10.09 0.14 115.60 + 15.9 911.3
1988 15.87 0.02 0.62 115.25 - 0.3 908.6
1989 18.37 -- 0.34 135.88 + 17.9 1071.2
1990 18.53 -- 0.10 137.78 + 1.4 1086.2
1991 25.80 11.07* 0.06 274.32 + 99.1 2162.6
1992 27.43 2.68* 0.20 322.33 + 17.5 2541.1
1993 27.71 7.51 0.07 414.84 + 28.7 3270.4
1994 20.58 0.71 0.07 319.84 - 22.9 2521.5
1995 27.33 1.68 0.02 451.29 + 41.1 3557.8
1996 29.08 5.87 0.07 578.10 + 28.1 4557.5
1997 26.96 9.08 -- 716.27 + 23.9 5646.7
1998 24.95 4.19 0.11 777.15 + 8.5 6126.7
1999 (6/30) 24.93 -- -- 776.37 - 0.1 6120.6
------- ----- ------
Totals $ 77.29 $5.07 +6020.6
----------------------------------------------------------------------------------------------------------------------------------
* 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>
CGM CAPITAL DEVELOPMENT FUND
- --------------------------------------------------------------------------------
INVESTMENTS AS OF JUNE 30, 1999
(unaudited)
COMMON STOCKS -- 99.6% OF TOTAL NET ASSETS
SHARES VALUE(a)
------ --------
ALUMINUM -- 5.3%
Alcoa Inc. ........................................ 545,000 $ 33,721,875
------------
AUTOMOBILES AND RELATED -- 5.1%
Volkswagen AG Sponsored ADR (b)(c) ................ 2,580,000 32,572,500
------------
BEVERAGES AND TOBACCO -- 0.2%
Canandaigua Brands, Inc. (d) ...................... 25,000 1,310,938
------------
ELECTRONIC AND COMMUNICATION EQUIPMENT -- 1.8%
Nokia Corporation ADR (b)(c) ...................... 124,500 11,399,531
------------
ELECTRONIC COMPONENTS -- 12.0%
Koninklijke Philips Electronics Sponsored ADR (b)(c) 323,840 32,667,360
Texas Instruments, Inc. ........................... 306,000 44,370,000
------------
77,037,360
------------
HOME PRODUCTS AND COSMETIC -- 5.0%
Polaroid Corporation .............................. 1,165,000 32,183,125
------------
HOTELS AND RESTAURANTS -- 8.2%
Foodmaker, Inc. (d) ............................... 1,266,000 35,922,750
Ruby Tuesday, Inc. ................................ 854,200 16,229,800
------------
52,152,550
------------
MISCELLANEOUS -- 2.0%
Ryanair Holdings PLC Sponsored ADR (b)(c)(d) ...... 241,000 12,773,000
------------
OFFICE EQUIPMENT AND SUPPLY -- 5.2%
Lexmark International Group, Inc. (d) ............. 499,000 32,965,187
------------
PAPER PRODUCTS/CONSUMER -- 6.0%
Asia Pulp & Paper Company Ltd. ADR (b)(c) ......... 4,000,000 38,500,000
------------
PRINTING -- 5.7%
Aracruz Celulose S.A. ADR (b)(c)................... 1,650,000 36,300,000
------------
REAL ESTATE INVESTMENT TRUSTS -- 10.9%
Alexandria Real Estate Equity ..................... 65,000 2,031,250
Apartment Investment and Management Company ....... 870,000 37,192,500
Home Properties New York, Inc. .................... 775,600 21,425,950
Meristar Hospitality Corporation .................. 407,000 9,132,062
------------
69,781,762
------------
RETAIL -- 19.9%
Best Buy Co., Inc. (d) ............................ 540,000 36,450,000
Circuit City Stores, Inc. ......................... 320,000 29,760,000
Claire's Stores, Inc. ............................. 1,045,000 26,778,125
Tandy Corporation ................................. 700,000 34,212,500
------------
127,200,625
------------
STEEL -- 12.3%
Companhia Siderurgica National Sponsored ADR (b)(c) 1,330,675 34,930,219
Pohang Iron & Steel Co., Ltd. Sponsored ADR (b)(c) 1,300,000 43,712,500
------------
78,642,719
------------
TOTAL COMMON STOCKS (Identified Cost $587,669,461) .............. 636,541,172
------------
COMMON STOCK WARRANTS -- 0.3%
Asia Pulp & Paper Company Ltd. Exp. 7/27/00
(Identified Cost $2,800,000)(c) ................... 800,000 2,100,000
------------
SHORT-TERM INVESTMENT -- 0.9%
FACE AMOUNT
Chevron USA, Inc., 5.50%, 7/01/99 (Cost $5,560,000) . $5,560,000 5,560,000
TOTAL INVESTMENTS -- 100.8% (Identified Cost $596,029,641)(e) ... 644,201,172
Cash and Receivables ............................................ 16,729,625
Liabilities ..................................................... (22,037,112)
------------
TOTAL NET ASSETS -- 100.0% ...................................... $638,893,685
============
(a) See Note 1A.
(b) 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.
(c) The table below shows the percentages of the Fund's investments by country.
MARKET VALUE AS A PERCENTAGE
COUNTRY DIVERSIFICATION OF FUND'S NET ASSETS
----------------------- --------------------
Brazil .................................................... 11.1%
Finland ................................................... 1.8%
Germany ................................................... 5.1%
Ireland ................................................... 2.0%
Netherlands ............................................... 5.1%
Singapore ................................................. 6.4%
South Korea ............................................... 6.8%
United States ............................................. 62.5%
------
Total Investments ....................................... 100.8%
======
(d) Non-income producing security.
(e) Federal Tax Information: At June 30, 1999 the net unrealized appreciation on
investments based on cost of $596,029,641 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 ......... $ 79,275,968
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value ......... (31,104,437)
------------
Net unrealized appreciation ................................. $ 48,171,531
============
See accompanying notes to financial statements.
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(unaudited)
ASSETS
Investments at value (Identified
cost -- $596,029,641) ...................................... $644,201,172
Cash ........................................................ 3,862
Receivable for:
Securities sold ............................. $15,849,988
Shares of the Fund sold ..................... 697,792
Dividends and interest ...................... 104,285
Foreign Tax Reclaim ......................... 73,698 16,725,763
----------- ------------
660,930,797
------------
LIABILITIES
Payable for:
Securities purchased ........................ $20,919,984
Shares of the Fund redeemed ................. 580,208 21,500,192
----------- ------------
Accrued expenses:
Management fees ............................. 503,842
Trustees' fees .............................. 11,044
Accounting and Administration ............... 4,750
Other expenses .............................. 17,284 536,920
----------- ------------
22,037,112
------------
NET ASSETS ................................................... $638,893,685
============
Net Assets consist of:
Capital paid-in ............................................ $593,275,162
Undistributed net investment income ........................ 3,809,400
Accumulated net realized loss .............................. (6,362,408)
Unrealized appreciation on investments -- net .............. 48,171,531
------------
NET ASSETS ................................................... $638,893,685
============
Shares of beneficial interest outstanding,
no par value .............................................. 25,631,564
============
Net asset value per share* .................................. $24.93
============
*Shares of the Fund are sold and redeemed at net asset value
($638,893,685 / 25,631,564).
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999
(unaudited)
INVESTMENT INCOME
Income
Dividends (net of withholding tax
of $250,530) ......................................... $ 7,149,755
Interest .............................................. 75,541
-------------
7,225,296
-------------
Expenses
Management fees ....................................... 3,139,930
Trustees' fees ........................................ 22,308
Accounting and Administration ......................... 28,500
Custodian ............................................. 53,161
Transfer agent ........................................ 93,096
Audit and tax services ................................ 16,500
Legal ................................................. 33,426
Printing .............................................. 9,999
Registration .......................................... 16,023
Miscellaneous ......................................... 2,953
-------------
3,415,896
-------------
Net investment income ................................. 3,809,400
-------------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS
Realized losses on investments -- net .................. (3,932,917)
Unrealized depreciation -- net ......................... (3,500,740)
-------------
Net loss on investments ................................ (7,433,657)
-------------
NET CHANGE IN ASSETS FROM
OPERATIONS ............................................. $ (3,624,257)
=============
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, 1999 DECEMBER 31,
(UNAUDITED) 1998
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income .................................. $ 3,809,400 $ 2,753,284
Net realized gain (loss) from investments .............. (3,932,917) 100,982,649
Unrealized depreciation ................................ (3,500,740) (46,707,964)
------------ ------------
Change in net assets from operations ................. (3,624,257) 57,027,969
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income .................................. -- (2,753,284)
Net realized gain on investments ....................... -- (100,982,649)
In excess of net realized gain on investments .......... -- (1,692,581)
------------ ------------
-- (105,428,514)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares ........................... 12,996,805 32,751,922
Net asset value of shares issued in connection with
reinvestment of:
Dividends from net investment income ................. -- 2,347,427
Distributions from net realized gain ................. -- 89,237,891
Distributions in excess of net realized gain on
investments ........................................ -- 1,495,726
------------ ------------
12,996,805 125,832,966
Cost of shares redeemed ................................ (73,896,827) (96,687,361)
------------ ------------
Change in net assets derived from capital share
transactions ....................................... (60,900,022) 29,145,605
------------ ------------
Total change in net assets ............................. (64,524,279) (19,254,940)
NET ASSETS
Beginning of period .................................... 703,417,964 722,672,904
------------ ------------
End of period (including undistributed net investment
income of $3,809,400 and $0, respectively) ........... $638,893,685 $703,417,964
============ ============
NUMBER OF SHARES OF THE FUND:
Issued from sale of shares ............................. 534,001 1,202,694
Issued in connection with reinvestment of:
Dividends from net investment income ................. -- 91,218
Distributions from net realized gain ................. -- 3,580,435
Distributions in excess of net realized gain on
investments ........................................ -- 59,422
------------ ------------
534,001 4,933,769
Redeemed ............................................. (3,099,703) (3,544,824)
------------ ------------
Net change ........................................... (2,565,702) 1,388,945
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
CGM CAPITAL DEVELOPMENT FUND
- -------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 --------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
<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 ........ $24.95 $26.96 $29.08 $27.33 $20.58 $27.71
------ ------ ------ ------ ------ ------
Net investment income (loss) . 0.15 0.11 (0.08)(a) 0.07 0.02 0.07
Dividends from net investment
income ..................... -- (0.11) -- (0.07) (0.02) (0.07)
Net realized and unrealized
gain (loss) on investments . (0.17) 2.18 7.04 7.62 8.43 (6.42)
Distribution from net realized
gain ....................... -- (4.12) (9.08) (5.84) (1.68) (0.69)
Distribution in excess of net
realized gain on investments -- (0.07) -- (0.03) -- (0.02)
------ ------ ------ ------ ------ ------
Net increase (decrease) in net
asset value ................ (0.02) (2.01) (2.12) 1.75 6.75 (7.13)
------ ------ ------ ------ ------ ------
Net asset value at end of
period ..................... $24.93 $24.95 $26.96 $29.08 $27.33 $20.58
====== ====== ====== ====== ====== ======
Total Return (%) ............. (0.1) 8.5 23.9 28.1 41.1 (22.9)
Ratios:
Operating expenses to average
net assets (%) ............. 1.08* 1.07 1.07 0.82 0.85 0.84
Net investment income (loss)
to average net assets (%) .. 1.20* 0.39 (0.29) 0.23 0.07 0.25
Portfolio turnover (%) ....... 421* 335 230 178 271 146
Net assets at end of period
(in thousands) ($) ......... 638,894 703,418 722,673 631,260 521,248 401,676
(a) Per share net investment loss does not reflect the period's reclassification of permanent differences between book
and tax basis net investment loss. See Note 1D.
* Computed on an annualized basis.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CGM CAPITAL DEVELOPMENT FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 1999
(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. Dividend income received by the
Fund from its investment in REITs may be comprised of ordinary income,
capital gains, and return of capital. The portion derived from capital gains
and return of capital will result in a reduction of the Fund's dividend
income and an increase in realized and unrealized gain on investments.
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.
E. INVESTMENT RISK -- There are certain additional risks involved in investing
in foreign securities that are not inherent in investments in domestic
securities. These risks may involve adverse political and economic
developments and the possible imposition of currency exchange blockages or
other foreign governmental laws or restrictions. In addition, the securities
of some foreign companies and securities markets are less liquid and at
times more volatile than securities of comparable U.S. companies and U.S.
securities markets.
2. PURCHASES AND SALES OF SECURITIES -- For the period ended June 30, 1999,
purchases and sales of securities other than United States government
obligations and short-term investments aggregated $1,342,239,654 and
$1,401,588,770, respectively. There were no purchases or sales of United
States government obligations.
3. A. MANAGEMENT FEES -- During the period ended June 30, 1999, the Fund
incurred management fees of $3,139,930 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, 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 $28,500, for the period ended June 30, 1999,
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 travel 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 the year of 1999 is $5,554.
<PAGE>
CGM
CAPITAL
DEVELOPMENT
FUND
152nd Quarterly Report
June 30, 1999
A No-Load Fund
Investment Adviser
[logo] CAPITAL GROWTH MANAGEMENT
Limited Partnership
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 99 Printed in U.S.A.
