SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[X] Preliminary proxy statement.
[ ] Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2)).
[ ] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to sec. 240.14a-12.

CGM CAPITAL DEVELOPMENT FUND
------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment Of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

Front Cover:

IMPORTANT INFORMATION FOR SHAREHOLDERS

(b+w photo of Bob and Ken)

FROM KEN HEEBNER AND BOB KEMP

THE CGM FUNDS

Inside two panels

DEAR CGM FOCUS FUND SHAREHOLDER:

Ken has managed your Fund since its inception in September of 1997 and Bob has
been at the helm of CGM Funds since we founded the firm in 1990. As you know we
are not given to frequent communications. In our jobs, we believe actions speak
louder than words and any message we might have is best conveyed by investment
performance. Today, however, we are writing to ask for your approval of
important business and investment matters pertaining to your Fund. We invite
you to vote by proxy or in person at a shareholders meeting on Friday, November
19, 2004.

The Fund's Board of Trustees has unanimously recommended approval of the
following questions. We urge you to read the enclosed proxy materials carefully
and add your support by voting promptly on these important issues.

1. The first question seeks approval of a new independent Board trustee for
your Fund. To our great sadness, trustee Robert Kittredge died in January of
this year. Throughout the spring, we considered possible candidates,
interviewed several, and the Board, including the independent trustees, voted
unanimously to invite Mark Holland to join us. As a trustee, Mark offers both a
breadth of financial services experience and a commitment to shareholder
interests that promise to strengthen our Board. We hope you will lend your
support to ours and welcome Mark to the Fund's Board.

2. Secondly, you are being asked to approve an amendment to your Fund's
governing charter that would expressly recognize the equal obligations and
responsibilities of each of our trustees regardless of any special title they
may hold or duties they may perform as trustees. For example, the Board has
designated one of the trustees as an "audit committee financial expert". This
amendment makes the charter consistent with SEC regulations that provide that
the trustee who serves in that capacity has no greater degree of responsibility
and accountability for Board actions than any other trustees.

3. The third item addresses a change in the ownership of Capital Growth
Management Limited Partnership ("CGM"), the investment advisor responsible for
managing your Fund. CGM is a partnership, the general partner of which is a
corporation jointly owned by us. Over the past few years, Ken has gradually
acquired the majority of nonvoting shares in that corporation. Now, as Bob
looks ahead to provide for his family's future, Ken intends to purchase Bob's
voting shares. After the transfer, Ken will have sole voting control of the
general partner and CGM. Under applicable regulations, this transaction would
automatically end the Fund's current management contract with CGM.
Consequently, CGM must enter into a new contract with the Fund, which must be
approved by shareholders.

What effect is this expected to have on you as a Fund shareholder? Little, if
any. Bob Kemp will continue to serve as president and trustee of the Fund, as
well as minority owner of CGM's general partner. The Fund's investment process
and CGM's investment strategies will remain unchanged. The key terms of the new
management contract, including the level of fees, will be the same as under the
existing contract.

4. The final question pertains to the investment objective of your Fund. As you
know, CGM Focus Fund is a non-diversified fund that is flexibly and
opportunistically managed to take advantage of changing economic and market
conditions. Recent examples of the Fund's flexibility include the Fund's
response to the tech bubble of the late 1990s and to the appreciation in
homebuilding stocks over the past few years. A "yes" vote on question 4 would
provide the Fund with additional flexibility to hold a substantial
over-weighting in certain energy sector stocks under specified market
conditions. We believe that having the flexibility to make such a move may
provide the Fund with the opportunity to respond rapidly to the challenges of
the current market environment.

Please call us at 1-800-598-0702 to discuss these important issues. Our staff
is on hand and happy to answer your questions each business day between 8:30
a.m. and 8:00 p.m. (Eastern Standard Time).

We are proud to have managed your Fund over the years. We hope you will support
your Fund's Board and vote in favor of the proxy questions. And, we thank you
for your trust and loyalty and look forward to serving you for many more years
to come.

Best wishes,

Bob Kemp Ken Heebner
CGM Funds President CGM Focus Fund Portfolio Manager

Back Panel:

HOW TO VOTE

The enclosed Proxy Statement discusses important issues affecting your Fund. To
make voting quick and as convenient as possible, you may vote by completing and
returning the enclosed proxy card in the envelope provided or, via the internet
or touch-tone telephone 24 hours a day. If you vote by internet or phone, your
vote will be confirmed and posted immediately.

BY MAIL

1. Read the Proxy Statement.
2. Check the appropriate boxes on your proxy card.
3. Date and sign your name exactly as it appears on the proxy card.
4. Return your proxy card in the envelope provided.

VIA THE INTERNET

1. Read the Proxy Statement.
2. Go to the website address indicated on your proxy card.
3. Enter the control number on your proxy card.
4. Follow the instructions on the site.

BY TELEPHONE

1. Read the Proxy Statement.
2. Call the toll-free number listed on your proxy card.
3. Enter the control number on your proxy card.
4. Follow the recorded instructions.

Questions? Please call us at 1-800-598-0702 on business days between 8:30 a.m.
and 8:00 p.m. (Eastern Standard Time).

Logo The CGM Funds

(CGM Realty, Capital Development and Mutual)

Front Cover:

IMPORTANT INFORMATION FOR SHAREHOLDERS

(b+w photo of Bob and Ken)

FROM KEN HEEBNER AND BOB KEMP

THE CGM FUNDS

Inside two panels:

DEAR SHAREHOLDER:

Ken has managed your Fund for many years and Bob has been at the helm of CGM
Funds since we founded the firm in 1990. As you know we are not given to
frequent communications. In our jobs, we believe actions speak louder than
words and any message we might have is best conveyed by investment performance.
Today, however, we are writing to ask for your approval of important business
and investment matters pertaining to your Fund. We invite you to vote by proxy
or in person at a shareholders meeting on Friday, November 19, 2004.

Please call us at 1-800-598-0702 to discuss these important issues. Our staff
is on hand and happy to answer your questions between 8:30 a.m. and 8:00 p.m.
(Eastern Standard Time).

We are proud to have managed your Fund over the years. We hope you will support
your Board and vote in favor of the proxy questions. And, we thank you for your
trust and loyalty and look forward to serving you for many more years to come.

Best wishes,

Bob Kemp Ken Heebner
President, CGM Funds Portfolio Manager, CGM Funds

Back Panel:

HOW TO VOTE

BY MAIL

1. Read the Proxy Statement.
2. Check the appropriate boxes on your proxy card.
3. Date and sign your name exactly as it appears on the proxy card.
4. Return your proxy card in the envelope provided.

VIA THE INTERNET

1. Read the Proxy Statement.
2. Go to the website address indicated on your proxy card.
3. Enter the control number on your proxy card.
4. Follow the instructions on the site.

BY TELEPHONE

1. Read the Proxy Statement.
2. Call the toll-free number listed on your proxy card.
3. Enter the control number on your proxy card.
4. Follow the recorded instructions.

Questions? Please call us at 1-800-598-0702 on business days between 8:30 a.m.
and 8:00 p.m. (Eastern Standard Time).

Logo The CGM Funds

CGM MUTUAL FUND
CGM REALTY FUND
CGM FOCUS FUND

EACH, A SERIES OF CGM TRUST

AND

CGM CAPITAL DEVELOPMENT FUND

NOTICE OF CONCURRENT SPECIAL MEETINGS OF SHAREHOLDERS

TO BE HELD ON FRIDAY, NOVEMBER 19, 2004

Concurrent Special Meetings of Shareholders (together, the "Meetings")
of each of CGM Trust, with respect to CGM Mutual Fund, CGM Realty Fund and CGM
Focus Fund, and CGM Capital Development Fund (together with CGM Trust, the
"Trusts") will be held at the offices of Bingham McCutchen LLP, 150 Federal
Street, Boston, Massachusetts 02110 at 9:00 a.m. (Eastern Standard Time) on
Friday, November 19, 2004. The Meetings will be held for the following
purposes:

ITEM 1. To elect Mark W. Holland a Trustee of each Trust.

ITEM 2. To authorize the Trustees of each Trust to adopt an Amendment to the
Declaration of Trust of each Trust.

ITEM 3. To approve new Advisory Agreements between Capital Growth Management
Limited Partnership and respectively (i) CGM Capital Development Fund
and (ii) CGM Trust on behalf of each of CGM Mutual Fund, CGM Realty
Fund and CGM Focus Fund (the funds referred to in (i) and (ii)
together, the "Funds").

ITEM 4. To amend CGM Focus Fund's fundamental investment restriction on
industry concentration (for shareholders of CGM Focus Fund only).

ITEM 5. To transact such other business as may properly come before each
Meeting or any adjournments thereof.

THE BOARDS OF TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR
OF, AS APPLICABLE, ITEMS 1 THROUGH 4.

Shareholders of record on September 20, 2004 are entitled to vote at
the Meetings and at any adjournments thereof. If you own shares in more than
one Fund as of September 20, 2004, you may receive more than one proxy card.
Please be certain to vote each proxy card you receive.

By order of the Boards of Trustees

Leslie A. Lake, Secretary
September ___, 2004

CGM MUTUAL FUND
CGM REALTY FUND
CGM FOCUS FUND

EACH, A SERIES OF CGM TRUST

AND

CGM CAPITAL DEVELOPMENT FUND

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Boards of Trustees of CGM Capital Development
Fund and CGM Trust (each, a "Trust" and together, the "Trusts") to be used at
Concurrent Special Meetings of Shareholders (together, the "Meetings") of each
Trust to be held at 9:00 a.m. (Eastern Standard Time) on Friday, November 19,
2004 at the offices Bingham McCutchen LLP, 150 Federal Street, Boston,
Massachusetts 02110 and at any adjournment thereof. The Meetings will be held
for the purposes set forth in the accompanying Notice of Concurrent Special
Meetings of Shareholders.

Shareholders of record at the close of business on September 20, 2004 are
entitled to vote at the Meetings and have one vote for each share held. The
number of outstanding shares of CGM Capital Development Fund and each series of
CGM Trust (together, the "Funds") on September 20, 2004 is shown under "Funds
Information -- Shares Outstanding" below.

A free copy of your Fund's most recent annual and semi-annual report may be
obtained by written request to CGM Funds, c/o The CGM Funds Investor Services
Division, 222 Berkeley Street, Suite 1013, Boston, Massachusetts 02116, or by
calling the Funds toll free at 1-800-345-4048.

This Proxy Statement and the accompanying materials are being mailed by the
Boards of Trustees on or about September 24, 2004. If the enclosed proxy card
is executed and returned, it nevertheless may be revoked by the shareholder
prior to its exercise by a signed writing filed with the Trusts' Secretary or
delivered at the Meetings.

VOTES REQUIRED

Each Trust votes separately on Item 1, the election of Mark W. Holland as a
Trustee, and, within each Trust, shareholders vote together as a single class.
Within each Trust, approval of Item 1 requires the affirmative vote of a
plurality of the shares of the Trust that are present at the Meetings, in
person or by proxy, and voting on this Item.

Each Trust votes separately on Item 2, the proposed amendment of the
Declaration of Trust of each Trust, and, within each Trust, shareholders vote
as a single class. Within each Trust, approval of Item 2 requires the
affirmative vote of a majority of the shares of the Trust outstanding on the
Record Date entitled to vote, in person or by proxy, on this Item.

Item 3, approval of new advisory agreements for the Funds, will be considered
by the shareholders of each Fund, voting separately. Approval of Item 3 by the
shareholders of a Fund requires the affirmative vote of a "majority of the
outstanding voting securities" of that Fund. The vote of a "majority of the
outstanding voting securities" of a Fund means the affirmative vote of the
lesser of (a) 67% or more of the voting securities of the Fund that are present
at the Meetings or represented by proxy if holders of more than 50% of the
outstanding voting securities of the Fund are present or represented by proxy
or (b) more than 50% of the outstanding voting securities of the Fund.

Item 4 will be voted on by the shareholders of CGM Focus Fund only. Approval of
Item 4 by the shareholders of CGM Focus Fund requires the affirmative vote of a
"majority of the outstanding voting securities" of that Fund. The vote of a
"majority of the outstanding voting securities" of CGM Focus Fund means the
affirmative vote of the lesser of (a) 67% or more of the voting securities of
CGM Focus Fund that are present at the Meetings or represented by proxy if
holders of more than 50% of the outstanding voting securities of CGM Focus Fund
are present or represented by proxy or (b) more than 50% of the outstanding
voting securities of CGM Focus Fund.

The following table summarizes these voting requirements:

Shareholders Entitled to Vote Vote Required for Approval
----------------------------- --------------------------

Item 1 CGM Mutual Fund, CGM Realty Fund, The Trustee must be elected by a
(Election of Trustee) CGM Focus Fund and CGM Capital plurality of the shares of
Development Fund. each Trust voted at the Meetings.
Each Trust votes separately and
shareholders of each Trust vote as
a single class.

Item 2 CGM Mutual Fund, CGM Realty Fund, A majority of the outstanding shares of
(Authorization to amend the CGM Focus Fund and CGM Capital each Trust. Each Trust votes separately
Declarations of Trust) Development Fund. and shareholders of each Trust vote as a
single class.

Item 3 CGM Mutual Fund, CGM Realty Fund, A "majority of the outstanding voting
(Approval of new Advisory CGM Focus Fund and CGM Capital securities" of the relevant Fund.
Agreements) Development Fund. Shareholders of each Fund vote
separately.

Item 4 CGM Focus Fund only. A "majority of the outstanding voting
(Approval of amendment to CGM Focus securities" of CGM Focus Fund.
Fund's fundamental investment
restriction on industry
concentration)

MANNER OF VOTING PROXIES

If the enclosed proxy card is executed properly and returned, or if a proxy
card is properly authorized in accordance with the procedures for telephonic or
internet voting, shares represented by it will be voted at the Meetings in
accordance with the instructions on the proxy card. IF YOU DO NOT GIVE
INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR" THE MATTERS LISTED IN THE
ACCOMPANYING NOTICE OF CONCURRENT SPECIAL MEETINGS OF SHAREHOLDERS AND "FOR"
ANY OTHER MATTERS DEEMED APPROPRIATE IN THE JUDGMENT OF THE PERSONS NAMED IN
THE ENCLOSED PROXY CARD. If the enclosed proxy card is executed and returned,
it may nevertheless be revoked by the shareholder prior to its exercise by a
signed writing filed with the Secretary of the Trusts or delivered at the
Meetings.

Solicitation of proxies by personal interview, mail, telephone and telegraph
may be made by officers and Trustees of the Trusts, and employees of Capital
Growth Management Limited Partnership ("CGM" or the "Investment Manager") and
third-party solicitation agents. All costs incurred in connection with the
Meetings will be paid by CGM. CGM has engaged D.F. King & Co., Inc. ("D.F.
King") to assist in the solicitation of proxies for which they will be paid a
fee of $6,000 plus out-of-pocket expenses. It is anticipated that the cost of
the services provided by D.F. King in connection with the Meetings will be
approximately $200,000.

The Trustees know of no other matters to be brought before the Meetings. If,
however, because of any unexpected occurrence, any other matters properly come
before the Meetings, proxies not limited to the contrary will be voted in
accordance with the judgment of the persons named in the enclosed proxy card.

QUORUM

Forty percent of the shares entitled to vote on each matter to be considered at
the Meetings, present in person or represented by proxy, constitute a quorum
for such matter. For purposes of determining the presence or absence of a
quorum and for determining whether sufficient votes have been received for
approval of any matter to be acted upon at the Meetings, abstentions and broker
"non-votes" (that is, proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which
brokers or nominees do not have discretionary power) will be treated as shares
that are present at the Meetings but which have not been voted. For this
reason, abstentions and broker "non-votes" will assist the Funds in obtaining a
quorum but will have the practical effect of a "No" vote for purposes of
obtaining the requisite vote for approval of Item 2, Item 3 and Item 4, for
which the required vote is a majority of the shares of each Trust outstanding
on the Record Date entitled to vote for Item 2 and a "majority of the
outstanding voting securities" (as defined above) of the relevant Fund for Item
3 and Item 4. Abstentions and broker "non-votes" will have no effect on Item 1,
for which the required vote is a plurality of the number of the votes cast on
this Item.

In the event a quorum is not present in person or by proxy at the Meetings, or
in the event a quorum is present at the Meetings but sufficient votes to
approve a proposal are not received, the persons named as proxies may propose
one or more adjournments of the Meetings to permit further solicitation of
proxies. A vote may be taken on one or more of the items in this Proxy
Statement prior to any such adjournment if a quorum is present and sufficient
votes have been received for approval of such Item. Any such proposal for
adjournment will require the vote of a majority of those shares represented at
the Meetings in person or by proxy and entitled to vote on such Item. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of the underlying proposal. They will
vote against any such adjournment those proxies required to be voted against
the underlying proposal and will not vote in relation to any such adjournment
any proxies that direct them to abstain from voting on such underlying
proposal.

GENERAL BACKGROUND

Each of CGM Mutual Fund, CGM Realty Fund and CGM Focus Fund is organized as a
series of CGM Trust. CGM Capital Development Fund is a separate trust.

Each Trust is a Massachusetts business trust established under the laws of
Massachusetts in 1986. CGM Trust is governed by an Amended and Restated
Agreement and Declaration of Trust dated January 23, 1997, as amended by
Amendment No. 1 dated June 16, 1997 and Amendment No. 2 dated June 27, 2002
(the "CGM Trust Declaration of Trust"). CGM Trust is a successor in interest to
Loomis-Sayles Mutual Fund. On March 1, 1990, CGM Trust's name was changed from
"Loomis-Sayles Mutual Fund" to "CGM Mutual Fund" to reflect the assumption by
CGM of investment advisory responsibilities with respect to CGM Trust. On
December 20, 1991, CGM Trust's name was changed to "CGM Trust". As part of the
same Trust, CGM Mutual Fund, CGM Realty Fund and CGM Focus Fund share a common
Board of Trustees and the CGM Trust Declaration of Trust.

CGM Capital Development Fund is governed by an Amended and Restated Declaration
of Trust dated January 23, 1997 (the "Capital Development Fund Declaration of
Trust" and together with the CGM Trust Declaration of Trust, the "Declarations
of Trust"). CGM Capital Development Fund is a successor in interest of
Loomis-Sayles Capital Development Fund. On March 1, 1990, CGM Capital
Development Fund's name was changed from "Loomis-Sayles Capital Development
Fund" to "CGM Capital Development Fund" to reflect the assumption by CGM of
investment advisory responsibilities with respect to CGM Capital Development
Fund. The Trustees of CGM Capital Development Fund also serve on the Board of
Trustees of CGM Trust.

ITEM 1. TO ELECT A TRUSTEE OF THE TRUSTS.

At the Meetings, you will be asked to elect Mark W. Holland as Trustee of each
Trust in which you are a shareholder. Mr. Holland was elected a Trustee of each
Trust by the Boards of Trustees on April 29, 2004 to fill a vacancy existing in
the number of Trustees of the Trusts. While Mr. Holland's election is not
subject to approval by the Funds' shareholders, the Boards are seeking votes of
the shareholders of each Trust electing Mr. Holland so as to confirm that his
election is agreeable to the shareholders of each Trust and so that Mr. Holland
will thereafter be considered a Trustee elected by shareholders for purposes of
section 16 of the Investment Company Act of 1940, as amended (the "1940 Act").
In the future, the election of Mr. Holland by the shareholders may help the
Trusts comply with the requirements of section 16 of the 1940 Act. The current
Trustees, including Mr. Holland, are listed in the table below. The same
individuals serve as the Trustees of the Board of Trustees of each Trust.

The Trusts do not hold annual shareholder meetings for the purpose of electing
Trustees, and Trustees are not elected for fixed terms. This means that each
Trustee will be elected to hold office during the continued lifetime of the
Trust or until he earlier dies, retires, resigns or is removed from office, or
if sooner, until the election and qualification of his successor.

The following table presents certain information about the Trustees, including
their ages, their principal occupations during the past five years, the number
of CGM Funds they oversee, and certain other directorships they hold.

An asterisk in the table below identifies those Trustees who are "interested
persons" (as defined in the 1940 Act) of the Funds. Each Trustee noted as an
interested person is interested by virtue of that individual's position with
CGM, as described in the table below. Unless otherwise noted below, the address
of each interested trustee is One International Place, Boston, Massachusetts
02110. Correspondence intended for the Trustees who are not "interested
persons" of the Trust may be sent to c/o Capital Growth Management, One
International Place, Boston, Massachusetts 02110.

NUMBER OF
FUNDS IN
THE CGM
FUNDS
POSITION HELD AND PRINCIPAL OCCUPATION DURING PAST 5 YEARS AND COMPLEX
NAME AND AGE LENGTH OF TIME SERVED OTHER DIRECTORSHIPS HELD OVERSEEN

INTERESTED TRUSTEES
G. Kenneth Heebner;* age 63 Trustee since 1993 Employee, CGM; Part Owner, Kenbob, Inc. (general 4
partner of CGM)

Robert L. Kemp;* age 72 Trustee since 1990 Employee, CGM; Part Owner, Kenbob, Inc. (general 4
partner of CGM)

DISINTERESTED TRUSTEES
Peter O. Brown; age 64 Trustee since 1993 Counsel (formerly, Partner), Harter, Secrest & 4
Emery LLP (law firm); Trustee, TT International
U.S.A. Master and Feeder Trusts (four mutual
funds)

Mark W. Holland; age 54 Trustee since 2004 President, Wellesley Financial Advisors, LLC; 4
formerly Vice President and Chief Operating
Officer, Fixed Income Management, Loomis, Sayles
& Company, L.P. (investment management);
formerly Director, Loomis, Sayles & Company, L.P.

Laurens MacLure; age 79 Trustee since 1990 Retired; formerly President and Chief Executive 4
Officer, New England Deaconess Hospital;
formerly Trustee, New England Zenith Fund;
formerly Director, Massachusetts Blue Cross/Blue
Shield

James Van Dyke Quereau, Jr.; Trustee since 1993 Managing Partner and Director, Stratton 4
age 55 Management Company (investment management);
Director and Vice President, Semper Trust Co.

J. Baur Whittlesey; age 58 Trustee since 1990 Member, Ledgewood Law Firm, P.C. 4

Trustees Committees and Meetings. Each Trust has a Trustees Committee
consisting of all of the disinterested Trustees of such Trust. The
responsibilities of each Trustees Committee are to: (1) perform the specific
tasks assigned to disinterested Trustees pursuant to the 1940 Act, including
annual consideration of the investment advisory contracts with respect to each
of the Funds; (2) oversee the audit process for the Funds and otherwise perform
the functions of an audit committee, (3) review on a periodic basis the
governance structures and procedures of the Trusts, (4) review proposed
resolutions of conflicts of interest that may arise in the business of the
Trusts, and may have an impact on the shareholders; and (5) provide general
oversight of the Trusts on behalf of shareholders. Each Trustees Committee met
six times during the fiscal year ended December 31, 2003. The Boards of
Trustees met five times during the fiscal year ended December 31, 2003. Each
member of the Trustees Committees and Boards of Trustees attended all of the
meetings held during this period.

The Trusts do not have separate nominating committees. Given the relatively
small size of the Board of Trustees of each Trust and the infrequent elections
of Trustees, each Board of Trustees believes that it as a whole can effectively
serve the function of considering potential trustee nominees from time to time
as needed. Thus, each of the Trustees participates in the consideration of
potential trustee nominees.

General Nominating Policies, Procedures and Processes. The Board of Trustees of
each Trust as a whole is responsible for identifying, evaluating and
recommending nominees for trustee. While the Boards of Trustees do not have a
formal process or charter for identifying and evaluating Trustee candidates, in
identifying and evaluating nominees for Trustee, the Boards of Trustees seek to
ensure:

1. That each Board of Trustees possesses the strategic and financial skills and
experience necessary to fulfill its duties and to achieve its objectives; and

2. That each Board of Trustees is comprised collectively of Trustees who are
knowledgeable, disciplined thinkers capable of addressing critical issues to
reach satisfactory solutions and logical conclusions on behalf of shareholders
and in the best interests of each Trust.

The Boards of Trustees believe it appropriate that at least one of its members
meets the criteria for an "audit committee financial expert" as defined by
Securities and Exchange Commission rules. The Boards of Trustees also believe
it appropriate for key members of management to serve as Trustees.

The Boards of Trustees consider each nominee on a case-by-case basis regardless
of who suggests consideration of the nominee to determine whether the proposed
candidate possesses qualifications for election and is otherwise suitable for
further consideration. Each Trustee nominee must have displayed the highest
personal and professional ethics, integrity, values and sound business
judgment. Further, in reviewing the qualifications of each candidate to
determine if his or her election would further the goals described above, each
Board of Trustees may take into account all factors it considers appropriate,
which may include the following specifications:

1. High standards of integrity, commitment, independent thought and judgment,
and freedom from any conflict of interest that would violate any applicable law
or regulation or interfere with the proper performance of the responsibilities
of a Trustee.

2. Capacity to dedicate sufficient time, energy and attention to ensure the
diligent pursuit of his or her duties as a Trustee, including attendance at
meetings and advance review of all materials.

3. Ability to discuss major issues and reach reasonable conclusions with
respect to issues of importance to the Funds. While being collegial, the
candidate should have the ability to be direct and to disagree on important
issues.

Process for Shareholder Trustee Nominees. The Boards of Trustees do not have a
formal policy for considering any trustee candidates recommended by Fund
shareholders. Because of the relatively small size of the Boards of Trustees
and the historically small turnover of Trustees, the Boards of Trustees address
the need to retain members and fill vacancies after discussion among current
members. Accordingly, each Board of Trustees has determined that such a policy
is not appropriate at this time.

Shareholder Communications with Boards of Trustees. Shareholders of the Funds
may communicate with the Boards of Trustees (or individual Trustees serving on
the Boards of Trustees) by sending written communications, addressed to any
Trustee or to the applicable Board of Trustees as a group, to CGM Funds,
Attention: Trustees, c/o The CGM Funds Investor Services Division, 222 Berkeley
Street, Suite 1013, Boston, Massachusetts 02116, who will ensure that this
communication (assuming it is properly marked care of the applicable Board of
Trustees or care of a specific Trustee) is delivered to the applicable Board of
Trustees or the specified Trustee, as the case may be.

Trustee Indemnification. The By-Laws of each Trust provide for indemnification
by the Trust of the Trustees and officers of the Trust except with respect to
any matter as to which any such person shall have been finally adjudicated not
to have acted in good faith in the reasonable belief that such action was in
the best interests of the Trust. No officer or Trustee may be indemnified
against any liability to the Trust or the Trust's shareholders to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office.

Trustee Share Ownership. The following table shows the Trustees' beneficial
share ownership in the Funds as of August 31, 2004.

RANGE OF EQUITY
SECURITIES IN ALL
DOLLAR RANGE OF AGGREGATE DOLLAR FUNDS IN THE CGM
EQUITY SECURITIES DOLLAR RANGE OF DOLLAR RANGE OF DOLLAR RANGE OF FUNDS COMPLEX
IN CGM CAPITAL EQUITY SECURITIES EQUITY SECURITIES EQUITY SECURITIES OVERSEEN BY THE
NAME OF TRUSTEE DEVELOPMENT FUND IN CGM MUTUAL FUND IN CGM REALTY FUND IN CGM FOCUS FUND TRUSTEES

INTERESTED TRUSTEES
G. Kenneth Heebner $50,001 - $100,000 $10,001 - $50,000 Over $100,000 Over $100,000 Over $100,000

Robert L. Kemp Over $100,000 Over $100,000 Over $100,000 Over $100,000 Over $100,000

DISINTERESTED TRUSTEES
Peter O. Brown none none Over $100,000 $50,001 - $100,000 Over $100,000

Mark W. Holland none none none none none

Laurens MacLure $50,001 - $100,000 Over $100,000 none $10,001 - $50,000 Over $100,000

James Van Dyke none none none none none
Quereau, Jr.

J. Baur Whittlesey Over $100,000 $50,001 - $100,000 none none Over $100,000

As of August 31, 2004, the Trustees and officers of the Trusts owned
beneficially (i) less than 1% of the outstanding shares of CGM Capital
Development Fund, CGM Mutual Fund and CGM Focus Fund; and (ii) 3.5% of the
outstanding shares of CGM Realty Fund.

Trustee Compensation

Each Trust pays no compensation to the Trustees listed above who are interested
persons of the Funds. Trustees receive no pension or retirement benefits paid
by the Funds. Since January 1, 2004, (i) each Trustee has been compensated by
the Funds at an annual rate of $50,000, and (ii) the Funds have agreed to pay
Mr. Quereau, as chairman of the audit committee functions of the Trustees
Committees of each Board, an annual aggregate fee of 30,000 in addition to Mr.
Quereau's compensation for service as a Trustee or Trustees Committees member
of each Trust.

The following table sets forth the compensation paid by the Fund to its
Trustees for the year ended December 31, 2003:

PENSION OR
RETIREMENT
BENEFITS ESTIMATED
AGGREGATE ACCRUED AS ANNUAL COMPENSATION
COMPENSATION PART OF FUND BENEFITS UPON FROM THE TRUSTS AND FUND
NAME OF TRUSTEE FROM FUNDS EXPENSES RETIREMENT COMPLEX PAID TO TRUSTEES (a)

INTERESTED TRUSTEES
G. Kenneth Heebner None None None None
Robert L. Kemp None None None None

DISINTERESTED TRUSTEES **
Peter O. Brown $37,000 None None $37,000
Robert B. Kittredge (b) $37,000 None None $37,000
Laurens MacLure $37,000 None None $37,000
James Van Dyke Quereau, Jr. $37,000 None None $37,000
J. Baur Whittlesey $37,000 None None $37,000

** Mark W. Holland is not included in the compensation table above because he was elected a Trustee of each Trust on
April 29, 2004 and therefore did not receive any compensation for the year ended December 31, 2003.

(a) The Fund Complex is comprised of two Trusts with a total of four funds.

(b) Mr. Kittredge passed away in January 2004.

REQUIRED VOTE

Each Trust votes separately on the election of Mark W. Holland as Trustee, and,
within each Trust, shareholders vote together as a single class. Within each
Trust, the election of Mr. Holland will require approval by a plurality of the
shares of the Trust that are present at the Meetings, in person or by proxy,
and voting on this Item. Shareholders of CGM Mutual Fund, CGM Realty Fund and
CGM Focus Fund will vote together, but separately from the shareholders of CGM
Capital Development Fund.

THE BOARDS OF TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF EACH TRUST
VOTE FOR THE ELECTION OF MARK W. HOLLAND AS TRUSTEE OF EACH TRUST.

ITEM 2. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDMENT TO THE DECLARATION
OF TRUST.

The Funds are either organized as a Massachusetts business trust (CGM Capital
Development Fund) or as series of a Massachusetts business trust (CGM Mutual
Fund, CGM Realty Fund and CGM Focus Fund). Under Massachusetts law, a business
trust generally operates under a charter or organization document, usually
called a declaration of trust, that sets forth various provisions relating
primarily to the authority of the trust to conduct business and the governance
of the trust. The Funds currently operate under two such declarations of trust:
the Capital Development Fund Declaration of Trust governs CGM Capital
Development Fund, and the CGM Trust Declaration of Trust governs CGM Mutual
Fund, CGM Realty Fund and CGM Focus Fund.

At the Meetings, you will be asked to approve (a) if you hold shares of CGM
Capital Development Fund, an amendment to the Capital Development Fund
Declaration of Trust, and (b) if you hold shares of CGM Mutual Fund, CGM Realty
Fund or CGM Focus Fund, an amendment to the CGM Trust Declaration of Trust
(together, the "Amendments"). If approved, the Amendments would change the
liability provisions set forth in Article VII of each Declaration of Trust. In
particular, the Amendments would amend the Declarations of Trust to provide
that the appointment, designation or identification of a Trustee as a member or
chairperson of a committee or sub-committee of the Trustees or any function of
such a committee or sub-committee, an expert on any topic or in any area
(including an audit committee financial expert), or the lead or head
independent Trustee, or any other special appointment, designation or
identification of a Trustee, will not impose on that person any duty,
obligation or liability that is greater than the duties, obligations and
liabilities imposed on that person as a Trustee in the absence of the
appointment, designation or identification (provided that this limitation shall
not apply to duties expressly imposed pursuant to the By-Laws of the Trusts, a
charter of a committee or sub-committee of the Boards of Trustees or by a vote
of the Boards of Trustees). Each Amendment is attached to this Proxy Statement
as Appendix A with respect to CGM Trust and Appendix B with respect to CGM
Capital Development Fund.

The Amendments are intended to make it clear that each Trustee has the same
duties and responsibilities to the Trusts and their shareholders regardless of
whether some of the Trustees agree to serve in additional roles on the Boards
or committees of the Boards or are found to have particular skills, experience
or expertise. Recent statutes and regulations have required, and may in the
future require, the Boards to appoint one or more Trustees to special roles on
the Boards or their committees or to identify one or more Trustees as having
special skills, experience or expertise. In particular, the Amendments are
intended to make the Declarations of Trust consistent with SEC regulations
providing that the designation or identification of a Trustee as an "audit
committee financial expert" pursuant to SEC public reporting requirements under
the Sarbanes-Oxley Act of 2002 does not impose on such person any duties,
obligations, or liability that are greater than the duties, obligations, and
liability imposed on that Trustee as a member of the Board of Trustees or other
committee of the Board in the absence of such designation or identification. In
January 2004, each Board determined that Mr. Quereau qualified as an "audit
committee financial expert" for purposes of various disclosures required under
these public reporting requirements.

Each Board believes it is very important to make it clear that appointment to
serve in an additional role on the Boards or their committees or designation as
having particular skills, experience or expertise should not subject a Trustee
to greater potential liabilities than other Trustees that are not so appointed
or designated. Otherwise, a Trustee might be reluctant to accept such an
appointment or designation. Further, there would be the possibility of
divisions and conflicts of interest among the Trustees if some of them were
thought to be more liable than others in relation to particular actions of the
Boards or other matters.

The Amendments are not intended to reduce or diminish the responsibility of the
Trustees to the Trusts and their shareholders. Rather, the Amendments are
intended to preserve the principle that each of the Trustees has equal
responsibilities to the Trusts and their shareholders. To clarify the
applicable standard of care and permit each Trust to continue to attract
Trustee candidates of the highest caliber, each Board of Trustees approved the
Amendment to the relevant Declaration of Trust and authorized the submission of
the proposed Amendment to the Trust's shareholders for their consideration at
the Meetings. The Trustees find that each Amendment is in the best interest of
shareholders of the applicable Trust and unanimously recommend that you approve
it.

REQUIRED VOTE

Each Trust votes separately on this Item 2. Approval of the Amendment requires
the affirmative vote of a majority of the shares of each Trust outstanding on
the Record Date entitled to vote, in person or by proxy, on this Item.

If the Amendments are not approved, the Declarations of Trust will remain in
effect without Amendment.

THE BOARDS OF TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR THE
AMENDMENT TO EACH DECLARATION OF TRUST.

ITEM 3. TO VOTE ON NEW ADVISORY AGREEMENTS.

CGM is the registered investment adviser that serves as investment adviser to
CGM Capital Development Fund, CGM Mutual Fund, CGM Realty Fund and CGM Focus
Fund under advisory agreements which became effective on December 13, 1996,
December 13, 1996, August 30, 1996 and September 2, 1997, respectively. The
current advisory agreements for the Funds are referred to in this Proxy
Statement as the "Existing Advisory Agreements." The Existing Advisory
Agreements for each of CGM Capital Development Fund and CGM Mutual Fund were
approved by the shareholders of each such Fund in connection with an increase
in the advisory fee rates for these Funds at a special meeting held on December
12, 1996. The Existing Advisory Agreements for CGM Realty Fund and CGM Focus
Fund were approved by the initial shareholder of each such Fund on April 28,
1994 and July 24, 1999, respectively, in connection with the launch of those
Funds. CGM currently also acts as investment adviser of one other mutual fund
portfolio, and provides investment advice to other institutional clients.

CGM is a Massachusetts limited partnership organized pursuant to a limited
partnership agreement dated December 6, 1989. The partnership agreement was
amended and restated by the Second Amended and Restated Limited Partnership
Agreement dated June 23, 1993 (referred to as the "Amended Partnership
Agreement"). CGM's sole general partner is Kenbob, Inc., a Massachusetts
corporation ("Kenbob"), which currently holds a 48.8% general partnership
interest in CGM. Kenbob is solely responsible for the management of CGM. CDC
IXIS Asset Management North America, L.P., currently holds a limited
partnership interest in CGM of 50%. Two additional employees of CGM, who are
neither officers nor Trustees of the Funds, hold limited partnership interests
in CGM of 1.2% in the aggregate. Under the terms of the Amended Partnership
Agreement, the limited partners have no power with respect to the operations of
CGM and no right to remove or replace the general partner of CGM.

The share capital of Kenbob is composed of two classes of shares: Common Shares
that are the voting shares of Kenbob (the "Common Shares") and Class A Shares
that afford shareholders an economic interest in Kenbob without any voting
rights (the "Class A Shares"). The Common Shares of Kenbob are owned entirely
by Robert L. Kemp, the President of Kenbob, and G. Kenneth Heebner, the
Chairman and Treasurer of Kenbob, in equal shares, such that Mr. Kemp and Mr.
Heebner each holds 50% of the 2,000 outstanding Common Shares. In addition, Mr.
Kemp and Mr. Heebner currently own 2,600 and 15,400, respectively, of the
18,000 authorized and outstanding Class A Shares. The address of each of Mr.
Kemp and Mr. Heebner is Kenbob, Inc., One International Place, Boston,
Massachusetts 02110. Kenbob has no other function than to serve as general
partner of CGM and possesses no other assets than its partnership interest in
CGM.

For estate planning and other personal purposes, Mr. Kemp proposes to transfer
100% of his Common Shares in Kenbob to Mr. Heebner (the "Transfer"). Following
the Transfer, (i) Mr. Kemp will own approximately 14% of the outstanding Class
A Shares; and (ii) Mr. Heebner will own approximately 86% of the outstanding
Class A Shares and 100% of the outstanding Common Shares. The Transfer is not
expected to result in a change in the personnel, operations or financial
condition of CGM or in any changes in the investment approaches or styles of
CGM with respect to the Funds. However, as a result of the Transfer, Mr.
Heebner will acquire sole voting control of Kenbob, the general partner of CGM.

As required by the 1940 Act, each of the Existing Advisory Agreements between
the Funds and CGM provides for its automatic termination upon its assignment.
The 1940 Act defines "assignment" to include any direct or indirect transfer of
a controlling block of the assignor's outstanding voting securities by a
security holder of the assignor. There is a presumption under the 1940 Act that
ownership of 25% or more of the voting securities of a company constitutes
control. As the Transfer involves the transfer of Mr. Kemp's "voting
securities", which represent 50% of all of the outstanding Common Shares of
Kenbob, which controls CGM, the Transfer would be presumed to constitute a
"change in control" of CGM under the 1940 Act and have the effect of
terminating the Existing Advisory Agreements. Accordingly, Item 3 asks
shareholders to approve a new advisory agreement with respect to each Fund
(such new advisory agreements being referred to in this Proxy Statement as the
"Proposed Advisory Agreements" and, together with each Existing Advisory
Agreements, the "Advisory Agreements"). Each of the Proposed Advisory
Agreements will become effective, if approved by shareholders of the respective
Fund, immediately following the Transfer. Each of the Proposed Advisory
Agreements is identical to the corresponding Existing Advisory Agreement (with
the exception of the dates of effectiveness) and the Proposed Advisory
Agreements would not change the terms or conditions upon which CGM serves as
investment adviser of the Funds. The form of Proposed Advisory Agreement for
each of CGM Mutual Fund, CGM Realty Fund, CGM Focus Fund and CGM Capital
Development Fund is attached hereto as Appendix C, Appendix D, Appendix E and
Appendix F, respectively.

DESCRIPTION OF THE ADVISORY AGREEMENTS.

The following discussion of the Proposed Advisory Agreements is qualified in
its entirety by reference to text of the Proposed Advisory Agreements as set
forth in Appendix C, Appendix D, Appendix E and Appendix F. The Proposed
Advisory Agreements are identical to the Existing Advisory Agreements in all
respects (except the dates of effectiveness).

The Advisory Agreements provide that CGM shall manage the investment and
reinvestment of the assets of each Fund and generally administer its affairs,
subject to supervision of the Boards of Trustees of the Trusts. The Advisory
Agreements also provide that CGM shall furnish to the Funds or pay the expenses
of the Funds for the following with respect to each Fund:

(a) office space, facilities and equipment;

(b) necessary executive and other personnel for managing the affairs of the
Fund (exclusive of registration, filing, and other fees in connection with
requirements of regulatory authorities; all charges and expenses of its
custodian and transfer agent; the charges and expenses of its independent
accountants; all brokerage commissions and transfer taxes in connection with
portfolio transactions; all taxes and fees payable to governmental agencies;
the cost of any certificates representing shares of the Fund; the expenses of
meetings of the shareholders and trustees of the Fund; the charges and expenses
of the Fund's legal counsel; interest, including on any borrowings by the Fund;
the cost of services, including services of counsel, required in connection
with the preparation of, and the costs of printing, registration statements and
prospectuses relating to the Fund, including amendments and revisions thereto,
annual, semi-annual, and other periodic reports of the Fund, and notices and
proxy solicitation material furnished to shareholders of the Fund or regulatory
authorities, to the extent that any such materials relate to the Fund or its
shareholders; and the Fund's expenses of bookkeeping, accounting, auditing and
financial reporting, including related clerical expenses); and

(c) compensation of Trustees of the Trust who are partners, directors, officers
or employees of CGM or its affiliates (other than registered investment
companies).

Under the Advisory Agreements, each Fund is obligated to pay all its expenses
other than those paid by CGM as set forth above, including taxes and charges
for auditing and legal services, fees of the custodian and transfer agent,
expenses of shareholder and Trustees meetings, registration, filing and other
fees in connection with requirements of regulatory authorities, and the
printing and mailing of reports to shareholders.

The following is a summary of the annual rate of compensation payable to CGM by
each Fund.

CONTRACTUAL ANNUAL RATES OF
FUND COMPENSATION TO CGM (BASED ON EACH
FUND'S AVERAGE DAILY NET ASSETS)

CGM Mutual Fund 0.90% on the first $500 million;
0.80% of the next $500 million; and
0.75% of such value in excess of $1 billion.

CGM Realty Fund 0.85% on the first $ 500 million; and
0.75% on such value in excess of $500 million.

CGM Focus Fund 1.00% on the first $500 million;
0.95% of the next $500 million; and
0.90% of such value in excess of $1 billion.

CGM Capital Development Fund 1.00% of the first $500 million;
0.95% of the next $500 million; and
0.80% of such value in excess of $1 billion

The following table is a summary of the advisory fees paid to CGM by each of
the Funds for the fiscal year ended December 31, 2003.

FUND 2003 ADVISORY FEES

CGM Mutual Fund $3,255,088 (a)

CGM Realty Fund $3,888,854

CGM Focus Fund $4,814,634

CGM Capital Development Fund $2,917,477

(a) This amount reflects the fact that from July 1, 2003 to June 30, 2004, CGM
voluntarily waived a portion of its management fee, lowering the annual
rate to 0.72% of CGM Mutual Fund's average daily net assets. This waiver
was discontinued at June 30, 2004, at which time the fees for CGM Mutual
Fund started to accrue at the rates indicated in the table above. For the
fiscal year ended December 31, 2003, the advisory fee that would have been
payable to CGM for services rendered to CGM Mutual Fund absent the
voluntary fee waiver amounted to $3,644,174.

Certain office space, facilities, equipment and administrative services for
each Fund and other mutual funds under the investment management of the CGM
organization are furnished by CGM. In addition, CGM provides bookkeeping,
accounting, auditing, financial recordkeeping and related clerical services for
which it is entitled to be reimbursed by each Fund based on the cost of
providing these services. For these services rendered to each CGM Mutual Fund,
CGM Realty Fund, CGM Focus Fund and CGM Capital Development for the 2003 fiscal
year, CGM was reimbursed in the amounts of $72,000, $67,000, $71,325 and
$48,000, respectively. These services will continue to be furnished by CGM to
each Fund after the Proposed Advisory Agreements are approved by the
shareholders.

Each of the Proposed Advisory Agreements provides that it will continue in
effect for an initial term to run until June 1, 2006, and thereafter from year
to year so long as its continuance is approved at least annually (i) by the
Trustees of the Fund or by a vote of a "majority of the outstanding voting
securities" of the Fund, and (ii) by vote of a majority of the independent
trustees of the applicable Trust, cast in person at a meeting called for that
purpose. Any amendment to a Proposed Advisory Agreement must be approved by a
vote of a "majority of the outstanding voting securities" of the Fund and by
vote of a majority of the independent trustees of the Trusts cast in person at
a meeting called for the purpose of voting on such approval. Each of the
Proposed Advisory Agreements may be terminated without penalty by vote of the
Board of Trustees of the applicable Trust or by a vote of a "majority of the
outstanding voting securities" of the Fund on sixty days' written notice to CGM
or by CGM on ninety days' written notice to the Fund, and will terminate
automatically if assigned.

The Proposed Advisory Agreements provide that CGM shall not be subject to any
liability in connection with the performance of its services thereunder in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.

The Proposed Advisory Agreements provide that, upon termination by either party
or upon violation of any provision by a Trust, the Trust will, at the request
of CGM made within sixty days after CGM has knowledge of such termination or
violation, change its name so as to eliminate all reference to "Capital Growth
Management" or "CGM."

On April 29, 2004, a majority of the Trustees of each Trust, including a
majority of the independent trustees, approved the continuance of the Existing
Advisory Agreements until May 1, 2005.

The initial term of the Proposed Advisory Agreements will run until June 1,
2006, and thereafter the continuance of the Proposed Advisory Agreements will
be considered by the Trustees Committees and the Boards of Trustees on an
annual basis.

THE EFFECT OF ITEM 3 IS THAT THE FUNDS WOULD CONTINUE TO OPERATE, FOLLOWING THE
TRANSFER, UNDER INVESTMENT MANAGEMENT ARRANGEMENTS IDENTICAL TO THOSE THAT ARE
IN EFFECT IMMEDIATELY PRIOR TO THE TRANSFER. ITEM 3 IS NOT EXPECTED TO RESULT
IN ANY CHANGE IN CGM OR IN THE PERSONNEL PROVIDING ADVISORY SERVICES TO THE
FUNDS OR IN THE FEES PAYABLE BY THE FUNDS TO CGM UNDER THE ADVISORY AGREEMENTS.

REVIEW PROCESS OF TRUSTEES

Prior to voting on April 29, 2004 to continue the Existing Advisory Agreements,
the Boards of Trustees and the Trustees Committees considered the Existing
Advisory Agreements in detail at meetings that the Trustees Committees had on
March 25, 2004 and April 29, 2004, and a meeting of the Board of Trustees on
April 29, 2004. Based on this review of the Existing Advisory Agreements, the
Boards of Trustees has determined that the Proposed Advisory Agreements, which
are identical to the corresponding Existing Advisory Agreements (with the
exception of the dates of effectiveness), should be submitted to shareholders
for approval and recommend that the shareholders approve the Proposed Advisory
Agreements. While the Trustees Committees and the Boards of Trustees have not
yet formally approved the Proposed Advisory Agreements for purposes of the 1940
Act, the Trustees Committees and the Boards of Trustees will consider the
Proposed Advisory Agreements prior to the Meetings and the Proposed Advisory
Agreements will be considered at the Meetings only if they have been approved
by a majority of the members of the Trustees Committees and the Boards of
Trustees.

As part of their review of the Existing Advisory Agreements, the Boards of
Trustees and the Trustees Committees considered the nature, quality and scope
of the investment advisory and administrative services provided by CGM to the
Funds, the performance of the Funds and the costs of the services provided by
CGM and the profits to be realized by CGM from the relationship with the Funds.
During the review process, the Boards of Trustees and the Trustees Committees
consulted with Trusts' legal counsel, Bingham McCutchen LLP, which also serves
as counsel to the independent trustees of each Trust.

In reviewing the Existing Advisory Agreements, the Boards of Trustees and the
Trustees Committees considered the following: the short-term and long-term
performance of each Fund relative to the performance of other funds with
comparable objectives and policies as well as relative to standardized indices;
the fees charged by other managers of mutual funds with comparable objectives
and policies for comparable services and the total expense ratios of such
funds; the fees charged by CGM with respect to other mutual funds managed by
CGM with similar investment objectives to any of the Funds; the profitability
of CGM's relationship with the Funds; and other information relating to CGM,
its advisory personnel and its investment processes.

The Boards of Trustees and the Trustees Committees were satisfied with the
quality of CGM's advisory services and noted with approval the caliber of the
CGM employees who worked on the Funds.

The Boards of Trustees and Trustees Committees reviewed the levels of advisory
fees and other expenses borne by the Funds and compared them with those of
other mutual funds. The Boards of Trustees and the Trustees Committees found
that the overall expenses of the Funds were reasonable and compared favorably
with the expenses of many other comparable mutual funds. The Boards of Trustees
and the Trustees Committees reviewed the information supplied by CGM concerning
its profits in relation to the Funds and did not find these profits to be
excessive.

The Boards of Trustees and the Trustees Committees reviewed the performance of
each Fund and compared each Fund's performance with market indices, the
performance of comparable mutual funds and with the performance of other
accounts managed by CGM for its clients. In considering the Funds' performance
the Boards of Trustees and the Trustees Committees took note of the difficult
market climate in recent years and recent levels of subscriptions for, and
redemptions of, Fund shares.

The Boards of Trustees and the Trustees Committees reviewed the brokerage
expenses of the Funds and CGM's use of soft dollar arrangements. The Boards of
Trustees and the Trustees Committees considered the level of brokerage charges,
the products and services obtained by CGM with soft dollars, and the percentage
of total commissions allocated to soft dollars. The Boards of Trustees and the
Trustees Committees reviewed the compliance and controls procedures which had
been implemented by CGM.

Based upon their review and after considering the factors noted above, the
Boards of Trustees and the Trustees Committees concluded that the Existing
Advisory Agreements (which are identical to the corresponding Proposed Advisory
Agreements with the exception of the dates of effectiveness) were reasonable,
fair and in the best interests of the Funds and their shareholders. The Boards
of Trustees and the Trustees Committees also concluded that the fees provided
in the Existing Advisory Agreements (which are identical to the corresponding
Proposed Advisory Agreements with the exception of the dates of effectiveness)
were fair and reasonable in light of the usual and customary charges made by
others for services of the same nature and quality.

REQUIRED VOTE

Shareholders of each Fund, voting separately, will consider Item 3. For each
Fund, the affirmative vote of the holders of the lesser of (a) 67% or more of
the voting securities of that Fund present at the Meetings or represented by
proxy if holders of more than 50% of the outstanding voting securities of that
Fund are present or represented by proxy, or (b) more than 50% of the
outstanding voting securities of that Fund, is required to approve the Proposed
Advisory Agreement for that Fund. If approved by shareholders, the Proposed
Advisory Agreements will become effective immediately following the Transfer.
If shareholders do not approve this proposal, the Existing Advisory Agreements
will remain in effect unless and until the Transfer occurs and each Board of
Trustees will meet to consider the appropriate actions to take in the best
interests of the Funds and shareholders.

THE BOARDS OF TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR THE
PROPOSED ADVISORY AGREEMENTS.

OTHER INVESTMENT COMPANY PORTFOLIOS ADVISED BY CGM

In addition to serving as investment adviser to the Funds, CGM serves as
investment adviser to the fund listed in the following table that also includes
total assets of such fund at August 31, 2004 and the current rate of CGM's
compensation.

CONTRACTUAL ANNUAL RATES OF
TOTAL NET ASSETS AS COMPENSATION TO CGM (BASED ON
FUND OF AUGUST 31, 2004 THE FUND'S AVERAGE DAILY NET ASSETS)

CGM Adviser Targeted $696,380,935.03 0.75% of the first $200 million;
Equity Fund(1) 0.70% of the next $300 million;
0.65% of the next $1.5 billion; and
0.60% of such value in excess of
$1.5 billion

(1) CGM has agreed to pay CDC IXIS for certain shareholder services provided to
CGM Adviser Targeted Equity Fund.

CGM also provides investment advisory services to other institutional clients
as well as certain private investment accounts.

ITEM 4. TO VOTE ON AN AMENDMENT TO CGM FOCUS FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION ON INDUSTRY CONCENTRATION.

The Board of Trustees of CGM Trust has approved and recommends the adoption by
shareholders of CGM Focus Fund of an amendment to that Fund's investment
restriction on industry concentration. This restriction is a fundamental
restriction, which means it may be changed only upon shareholder approval.

Currently, one of CGM Focus Fund's fundamental investment restrictions
prohibits CGM Focus Fund from investing more than 25% of the market value of
its total assets in the securities of one or more issuers with their principal
business activities in the same industry (the "Existing Industry Concentration
Limit"). If this Item 4 is approved by shareholders, this restriction would
instead be revised as set forth below (the "Proposed Industry Concentration
Limit"):

"The Fund may not purchase any securities which would cause more than 25%
of the market value of its total assets at the time of such purchase to
be invested in the securities of one or more issuers having their
principal business activities in the same industry, provided (a) that
there is no limit with respect to investments in the securities issued by
the U.S. Government, its agencies and instrumentalities, and (b) that if
at the time of any purchase of securities by the Fund, the aggregate
market capitalization of the companies comprising the Energy sector of
the Standard & Poor's 500 Index (the "S&P 500 Index") or any successor
sector as determined by the Board of Trustees represents 9% or more of
the aggregate market capitalization of the companies included in the S&P
500 Index or any successor index as determined by the Board of Trustees,
both (i) the Fund may invest up to 35% of the market value of its total
assets at the time of such purchase in the securities of one or more
issuers having their principal business activities in the crude petroleum
and natural gas industry or any successor industry classification as
reasonably determined by the Board of Trustees; and (ii) the Fund may
invest up to an additional 35% of the market value of its total assets at
the time of such purchase in the securities of one or more issuers having
their principal business activities in the petroleum refining industry or
any successor industry classification as reasonably determined by the
Board of Trustees."

The S&P 500 Index is an index made up of 500 companies whose common stock is
widely held and that measures the general performance of the public U.S. equity
markets.

CGM, as investment advisor to CGM Focus Fund, recommended to the Board of
Trustees of CGM Trust that CGM Focus Fund adopt the Proposed Industry
Concentration Limit in place of the Existing Industry Concentration Limit. CGM
believes that in the future the oil and gas sector may significantly outperform
other sectors of the economy due to, among other things, possible increases in
the price of oil, interruptions of oil supplies, and limitations on the world's
petroleum resources. CGM might seek to take advantage of any such opportunity
by allocating a significant portion of CGM Focus Fund's portfolio to
investments in companies in the crude petroleum and natural gas industry and
the petroleum refining industry. CGM believes that this strategy would be
consistent with CGM Focus Fund's general investment policy, as stated in its
prospectus, of focusing on equity investments in a smaller number of companies
and/or in a more limited number of sectors than diversified mutual funds.

Under the Existing Industry Concentration Limit, CGM Focus Fund could invest up
to 25% of the market value of its total assets at the time of purchase in
securities of issuers in any one industry, including each of (a) the crude
petroleum and natural gas industry and (b) the petroleum refining industry.
Under the Proposed Industry Concentration Limit, CGM Focus Fund would be
permitted to invest up to 35% of the market value of its total assets at the
time of purchase in securities of issuers in each of these two industries, for
a maximum of 70% of the market value of the total assets of CGM Focus Fund in
both of these two industries, if at the time of investment the aggregate market
capitalization of the companies comprising the Energy sector of the S&P 500
Index represents 9% or more of the aggregate market capitalization of the
companies included in the S&P 500 Index. If the Energy sector represents 9% or
more of the aggregate market capitalization of the companies included in the
S&P 500 Index and then subsequently falls below this 9% threshold, CGM Focus
Fund would not be required to sell or otherwise dispose of investments in the
crude petroleum and natural gas industry or the petroleum refining industry
even if they exceed 25% of the market value of its total assets. However, in
these circumstances CGM Focus Fund would not make further investments in these
industry sectors that exceed 25% of its total assets unless and until the
Energy sector again represents 9% or more of the aggregate market
capitalization of the companies included in the S&P 500 Index. Thus, if the
Proposed Industry Concentration Limit is adopted, the combined CGM Focus Fund
investment in the crude petroleum and natural gas industry and the petroleum
refining industry could total up to 70% of the market value of the total assets
of CGM Focus Fund.

Under the Proposed Industry Concentration Limit, at any time when the aggregate
market capitalization of the companies comprising the Energy sector of the S&P
500 Index represents less than 9% of the aggregate market capitalization of the
companies included in the S&P 500 Index, the 25% concentration limit would
apply. Thus, CGM Focus Fund would be able to purchase securities in excess of
the 25% concentration limit only at such times as the aggregate market
capitalization of the companies comprising the Energy sector of the S&P 500
Index represents 9% or more of the aggregate market capitalization of the
companies included in the S&P 500 Index. (At September 20, 2004 the aggregate
market capitalization of the Energy sector within the S&P 500 Index represented
___% of the aggregate market capitalization of the S&P 500 Index.) This
condition for purchasing securities in excess of the 25% concentration limit is
designed to assure that CGM Focus Fund purchases securities in excess of the
25% concentration limit for either or both the crude petroleum and natural gas
and the petroleum refining industries only at times when there has been a
significant increase in the market capitalization of the companies comprising
the Energy sector of the S&P 500 Index relative to other sectors in the S&P 500
Index. In addition, this condition limits the extent to which CGM Focus Fund
may overweight investments in the crude petroleum and natural gas and the
petroleum refining industries.

The Proposed Industry Concentration Limit would not permit CGM Focus Fund to
exceed the 25% concentration limit in any industry other than each of the crude
petroleum and natural gas and the petroleum refining industries. This reflects
CGM's view that the crude petroleum and natural gas and the petroleum refining
industries may provide unique opportunities for CGM Focus Fund.

The crude petroleum and natural gas and the petroleum refining industries can
be significantly affected by (a) fluctuations in energy prices and supply and
demand of energy fuels, energy conservation, the success of exploration
projects, and tax and other government regulations; and (b) the supply of and
demand for specific products or services, the supply of and demand for oil and
gas, the price of oil and gas, exploration and production spending, government
regulation, world events, and economic conditions.

There is no assurance that if the Proposed Industry Concentration Limit is
adopted CGM Focus Fund will ever purchase securities in excess of the 25%
concentration limit in the crude petroleum and natural gas and the petroleum
refining industries or make or retain any investments in these industries. As
investment advisor to CGM Focus Fund, CGM will determine whether to invest
assets of the Fund in these industries in accordance with the investment
strategy and approach outlined in the Fund's prospectus. As of September 20,
2004, investments in these two industries aggregated ____% of the market value
of the total assets of CGM Focus Fund.

The Board of Trustees of the CGM Trust has accepted CGM's recommendation that
CGM Focus Fund adopt the Proposed Industry Concentration Limit. The Board has
concluded that the Proposed Industry Concentration Limit is consistent with the
overall investment strategy of CGM Focus Fund outlined in its prospectus and
will afford CGM Focus Fund additional flexibility with which to better
implement this strategy.

REQUIRED VOTE

Only CGM Focus Fund shareholders vote on this Item 4. The affirmative vote of
the holders of the lesser of (a) 67% or more of the voting securities of CGM
Focus Fund present at the Meetings or represented by proxy if holders of more
than 50% of the outstanding voting securities of the Fund are present or
represented by proxy, or (b) more than 50% of the outstanding voting securities
of CGM Focus Fund, is required to approve the Proposed Industry Concentration
Limit. If CGM Focus Fund shareholders do not approve this proposal, the
Existing Industry Concentration Limit will remain in effect without amendment.

THE BOARD OF TRUSTEES OF CGM TRUST UNANIMOUSLY RECOMMENDS THAT CGM FOCUS FUND
SHAREHOLDERS VOTE FOR THE PROPOSED AMENDMENT TO CGM FOCUS FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION ON INDUSTRY CONCENTRATION.

***

ACCOUNTANTS

PricewaterhouseCoopers LLP served as the auditor for each Fund for the fiscal
year ended December 31, 2003. Representatives from PricewaterhouseCoopers LLP
are not expected to attend the Meetings. Each Board of Trustees has appointed
PricewaterhouseCoopers LLP as independent accountants for each Fund for the
fiscal year ending December 31, 2004.

AUDIT FEES

For the fiscal years ended December 31, 2002 and December 31, 2003, the
aggregate fees billed by PricewaterhouseCoopers LLP for professional services
rendered for the audit of each Fund's annual financial statements and the issue
of reports on each Fund's system of internal control and procedures for
inclusion in the shareholders annual report were as follows:

FUNDS 2002 AUDIT FEES 2003 AUDIT FEES
- ----- --------------- ---------------

CGM Capital Development Fund $26,750 $26,750

CGM Mutual Fund $26,750 $26,750

CGM Realty Fund $26,750 $26,750

CGM Focus Fund $26,750 $26,750

TAX FEES

The aggregate fees billed by PricewaterhouseCoopers LLP for the fiscal years
ended December 31, 2002 and December 31, 2003 for professional services
rendered for tax compliance, tax advice and tax planning were as set forth in
the table below. These fees were paid to PricewaterhouseCoopers LLP for their
review of the Funds' 2002 and 2003 federal income and excise tax returns and
review of excise tax distribution requirements.

FUNDS 2002 TAX FEES 2003 TAX FEES
- ----- ------------- -------------

CGM Capital Development Fund $ 3,500 $3,500

CGM Mutual Fund $ 3,500 $3,500

CGM Realty Fund $12,750 $3,750

CGM Focus Fund $ 3,750 $3,750

NO OTHER FEES OF THE FUNDS, CGM AND AFFILIATES OF CGM

Other than the fees set forth under "Audit Fees" and "Tax Fees" above,
PricewaterhouseCoopers LLP did not provide to, or bill the Funds for, any other
services during the fiscal years ended December 31, 2002 and December 31, 2003.

PricewaterhouseCoopers LLP did not provide to, or bill CGM or any entity
controlling, controlled by, or under common control with CGM that provides
ongoing services to the Funds for, non-audit services during the fiscal years
ended December 31, 2002 and December 31, 2003.

TRUSTEES COMMITTEES PRE-APPROVAL POLICES AND PROCEDURES

The Trustees Committees are required to pre-approve all audit services, tax
services and permitted non-audit services provided by PricewaterhouseCoopers
LLP or any other independent public accountant engaged by the Trusts. The
Trustees Committees must also pre-approve any engagement of
PricewaterhouseCoopers LLP to provide non-audit services to (a) CGM, and (b)
any entity controlling, controlled by, or under common control with CGM that
provides ongoing services to the Trusts (entities in (a) and (b), hereinafter
"Service Affiliates") if the engagement relates directly to the operations and
financial reporting of the Trusts.

All of the audit and tax services described above were pre-approved by the
Trustees Committees to the extent required by applicable law (i.e., without
reliance upon the limited exceptions from the pre-approval requirement set
forth in the applicable SEC regulations).

BOARDS DETERMINATIONS

The Boards of Trustees have determined that the provision by
PricewaterhouseCoopers LLP of non-audit tax related services to the Funds, as
outlined under "Tax Fees" above, is compatible with maintaining
PricewaterhouseCoopers LLP's independence in accordance with Independence
Standards Board Standard No. 1.

FUNDS INFORMATION

This section provides certain information about the Funds, including
information about the number of outstanding shares of each Fund, information
about the Funds' officers and the identity of shareholders holding 5% or more
of the outstanding shares of any class of any Fund.

SHARES OUTSTANDING

As of September 20, 2004, the following number of shares of each Fund was
outstanding:

TOTAL
FUND SHARES OUTSTANDING

CGM Mutual Fund
CGM Realty Fund
CGM Focus Fund
CGM Capital Development Fund

Shareholders are entitled to one vote for each full share held (with fractional
votes for fractional shares held).

OFFICERS OF THE FUNDS

The following table presents certain information about the officers of the
Funds, their ages, their principal occupations during the past five years and
the number of CGM Funds they oversee.

All officers set forth in the table below are "interested persons" (as defined
in the 1940 Act) of the Funds by virtue of that individual's position with CGM,
as described in the table below. All the officers identified in the table below
hold the offices identified for both the Trusts and each of the Funds.

Unless otherwise noted below, the address of each officer is One International
Place, Boston, Massachusetts 02110.

POSITION HELD AND PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE LENGTH OF TIME SERVED PAST 5 YEARS

G. Kenneth Heebner; Vice President since Employee, CGM; Part Owner,
age 63 1990 Kenbob, Inc. (general partner
of CGM)

Robert L. Kemp; President since 1990 Employee, CGM; Part Owner,
age 72 Kenbob, Inc. (general partner
of CGM)

Kathleen S. Haughton; Vice President since Employee - Investor Services
age 44 1992 and Anti-Money Division, CGM
Address: 222 Berkeley Laundering
Street, Boston, Compliance Officer
Massachusetts 02116 since 2002

Leslie A. Lake; Vice President and Employee - Office
age 59 Secretary since 1992 Administrator, CGM

Martha I. Maguire; Vice President since Employee - Funds Marketing,
age 48 1994 CGM

Mary L. Stone; Assistant Vice Employee - Portfolio
age 59 President since 1990 Transactions, CGM

Jem A. Hudgins; Treasurer since 2004 Employee - CGM; formerly Vice
age 41 President - Tax and Treasury,
AEW Capital Management L.P.

W. Dugal Thomas; Vice President since Employee - Director of
age 67 1992 Marketing, CGM

David C. Fietze; Chief Compliance Employee - Legal Counsel,
age 35 Officer since CGM (1); formerly Counsel,
Address: 222 Berkeley 2004(1) Bartlett Hackett Feinberg, P.C.
Street, Boston, (law firm), formerly Counsel
Massachusetts 02116 McLane, Graf, Raulerson &
Middleton (law firm)

(1) Mr. Fietze assumed the position of Chief Compliance Officer in June 2004.

Each officer will hold his office until he resigns, he is terminated or his
successor is elected or qualified.

INTERESTS OF CERTAIN PERSONS

As of August 31, 2004, to the best of knowledge of the Trusts, the following
shareholders beneficially owned more than 5% of the outstanding shares of the
following Funds. The address of each Fund that is listed below is c/o The CGM
Funds Investor Services Division, 222 Berkeley Street, Suite 1013, Boston,
Massachusetts 02116.

NUMBER OF PERCENTAGE OF
NAME OF OUTSTANDING OUTSTANDING
BENEFICIAL OWNERS FUND SHARES OWNED SHARES OWNED
- --------------------------------------------------------------------------------
none CGM Mutual Fund --- ---

Charles Schwab & Co. CGM Realty Fund 3,413,035.865 14.46%
Pershing LLC 1,650,981.691 7.00%

Charles Schwab & Co. CGM Focus Fund 3,508,674.144 13.34%
Pershing LLC 2,778,826.274 10.56%
National Investor 2,240,047.345 8.52%

none CGM Capital Development --- ---
Fund

SUBMISSION OF PROPOSALS

CGM Capital Development Fund is an open-end management investment company
organized as a Massachusetts business trust and each of CGM Mutual Fund, CGM
Realty Fund and CGM Focus Fund is a series of an open-end management investment
company organized as a Massachusetts business trust. As such, they are not
required to hold annual meetings of shareholders. However, meetings of
shareholders may be held from time to time to consider such matters as changes
in certain investment restrictions. Proposals of shareholders which are
intended to be presented at future shareholders' meetings must be received by
the Funds a reasonable time before the proxy solicitation is made in order for
such proposals to be considered for inclusion in the proxy materials relating
to that meeting.

ADDITIONAL INFORMATION

The only business that management intends to present or knows that others will
present at the Meetings is the business mentioned in the Notice of Concurrent
Special Meetings of Shareholders. However, with respect to any additional
matters that properly come before the Meetings and all matters incidental to
the conduct of the Meetings, it is the intention of the persons named in the
enclosed proxy to vote the proxy in accordance with their judgment on such
matters, unless previously instructed to the contrary by means of written
instructions from a shareholder received by the Secretary of the respective
Trust.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.

CGM TRUST
CGM Mutual Fund
CGM Realty Fund
CGM Focus Fund

CGM CAPITAL DEVELOPMENT FUND

September ___, 2004

APPENDIX A

CGM TRUST
AMENDMENT NO. 3 TO AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST

This AMENDMENT NO. 3 dated as of _________ ____, 2004 (this
"Amendment") is made by the Trustees that have executed this Amendment below,
amending the Amended and Restated Agreement and Declaration of Trust dated as
of January 23, 1997 of CGM Trust (the "Trust"), as amended by Amendment No. 1
to the Amended and Restated Agreement and Declaration of Trust dated as of June
16, 1997 and as further amended by Amendment No. 2 to the Amended and Restated
Agreement and Declaration of Trust dated as of June 27, 2002 (as amended, the
"Agreement"). Capitalized terms used without definition in this Amendment have
the meanings specified thereof in the Agreement.

WHEREAS, Article VIII, Section 8 of the Agreement provides that the
Agreement may be amended at any time by an instrument in writing signed by a
majority of the then Trustees when authorized to do so by vote of a majority of
the Shares of the Trust entitled to vote;

WHEREAS, the Trustees desire to amend the Agreement as described in
Article VIII, Section 8 thereof to revise Article VII, Section 2; and

WHEREAS, the Trustees have been authorized to enter into this
Amendment by vote of a majority of the Shares of the Trust entitled to vote
taken at a Special Meeting held on _________________, 2004.

NOW, THEREFORE, the undersigned, being a majority of the Trustees of
the Trust do hereby agree as follows:

1. The first paragraph of Article VII, Section 2 of the Agreement is
hereby amended to add the following to the end thereof:

Without limiting the foregoing, the appointment, designation or
identification of any Trustee as (a) a member or chairperson of a
committee or sub-committee of the Trustees or any function of such a
committee or sub-committee, (b) an expert on any topic or in any area
(including an audit committee financial expert), (c) the lead or head
independent Trustee, or any other special appointment, designation or
identification of a Trustee (any of the foregoing referred to in (a),
(b), or (c), a "Special Appointment"), shall not impose on that person
any duty, obligation or liability that is greater than the duties,
obligations and liabilities imposed on that person as a Trustee in the
absence of the Special Appointment (except that the foregoing
limitation shall not apply to duties expressly imposed pursuant to the
By-Laws, a charter of a committee or sub-committee of the Board of
Trustees or a vote of the Board of Trustees), and no Trustee who has
special skills or expertise, or is appointed, designated or identified
as aforesaid, shall be held to a higher standard of care by virtue
thereof. In addition, no Special Appointment of a Trustee shall affect
in any way that Trustee's rights or entitlement to indemnification
under Article 4 of the By-Laws or otherwise by the Trust.

2. This Amendment may be executed in several counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument notwithstanding all of the parties have not signed the original or
the same counterpart.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, we have hereunto set our hands for ourselves and
for our successors and assigns as of the date first above written.

- -------------------------------------- ----------------------------------
Peter O. Brown, as Trustee and not Laurens MacLure, as Trustee and not
individually individually

- -------------------------------------- ----------------------------------
G. Kenneth Heebner, as Trustee and not James Van Dyke Quereau, Jr.,
individually as Trustee and not individually

- -------------------------------------- ----------------------------------
Mark W. Holland, as Trustee and not J. Baur Whittlesey, as Trustee and
individually not individually

- --------------------------------------
Robert L. Kemp, as Trustee and not
individually

APPENDIX B

CGM CAPITAL DEVELOPMENT FUND
AMENDMENT NO. 1 TO AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST

This AMENDMENT NO. 1 dated as of _________ ____, 2004 (this
"Amendment") is made by the Trustees that have executed the Amendment below,
amending the Amended and Restated Agreement and Declaration of Trust dated as
of January 23, 1997 (the "Agreement") of CGM Capital Development Fund (the
"Trust"). Capitalized terms used without definition in this Amendment have the
meanings specified thereof in the Agreement.

WHEREAS, the Trustees desire to amend the Agreement as described in
Article VIII, Section 8 thereof to revise Article VII, Section 2; and

WHEREAS, the Trustees have been authorized to enter into this
Amendment by vote of a majority of the Shares of the Trust entitled to vote
taken at a Special Meeting held on ____________, 2004.

NOW, THEREFORE, the undersigned, being a majority of the Trustees of
the Trust do hereby agree as follows:

1. The first paragraph of Article VII, Section 2 of the Agreement is
hereby amended to add the following to the end thereof:

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, we have hereunto set our hands for ourselves and
for our successors and assigns as of the date first above written.

- -------------------------------------- ----------------------------------
Peter O. Brown, as Trustee and not Laurens MacLure, as Trustee and not
individually individually

- -------------------------------------- ----------------------------------
G. Kenneth Heebner, as Trustee and not James Van Dyke Quereau, Jr.,
individually as Trustee and not individually

- -------------------------------------- ----------------------------------
Mark W. Holland, as Trustee and not J. Baur Whittlesey, as Trustee and
individually not individually

- --------------------------------------
Robert L. Kemp, as Trustee and not
individually

APPENDIX C

FORM OF
ADVISORY AGREEMENT

AGREEMENT made this ____ day of ____________, 2004 by and between CGM
TRUST, a Massachusetts business trust (the "Trust"), with respect to its CGM
MUTUAL FUND series (the "Series"), and CAPITAL GROWTH MANAGEMENT LIMITED
PARTNERSHIP, a Massachusetts partnership (the "Adviser").

WITNESSETH:

WHEREAS, the Trust and the Adviser wish to enter into an agreement
setting forth the terms upon which the Adviser will perform certain services
for the Series;

NOW THEREFORE, in consideration of the premises and covenants
hereinafter contained, the Trust and the Adviser agree as follows:

1. The Trust hereby employs the Adviser to manage the investment and
reinvestment of the assets of the Series and to perform the other services
herein set forth, subject to the supervision of the Board of Trustees of the
Trust. The Adviser hereby accepts such employment and agrees, at its own
expense, to render the services and to assume the obligations herein set forth,
for the compensation herein provided. The Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.

2. In carrying out its obligations to manage the investment and
reinvestment of the assets belonging to the Series, the Adviser shall:

(a) obtain and evaluate such economic, statistical and
financial data and information and undertake such additional
investment research as it shall believe necessary or advisable for the
management of the investment and reinvestment of the assets belonging
to the Series in accordance with the Series, investment objective and
policies;

(b) take such steps as are necessary to implement the
investment policies of the Series by purchase and sale of securities,
including the placing of orders for such purchase and sale; and

(c) regularly report to the Board of Trustees with respect to
the implementation of the investment policies of the Series.

3. All activities in connection with the management of the affairs of
the Series undertaken by the Adviser pursuant to this Agreement shall at all
times be subject to the supervision and control of the Board of Trustees, any
duly constituted committee thereof or any officer of the Trust acting pursuant
to like authority.

4. In addition to performing at its expense the obligations set forth
in section 2 hereof, the Adviser shall furnish to the Trust at the Adviser's
own expense or pay the expenses of the Trust for the following:

(a) office space in such place or places as may be agreed
upon from time to time, and all necessary office supplies, facilities
and equipment;

(b) necessary executive and other personnel for managing the
affairs of the Series (exclusive of those related to and to be
performed under contract for custodial, transfer, dividend and plan
agency services by the bank selected to perform such services and
exclusive of any managerial functions described in section 5); and

(c) compensation, if any, of Trustees of the Trust who are
directors, officers, partners or employees of the Adviser or any
affiliated person (other than a registered investment company) of the
Adviser.

5. Nothing in section 4 hereof shall require the Adviser to bear, or
to reimburse the Trust for:

(a) any of the costs of printing and distributing the items
referred to in subsection (m) of this section 5, except as otherwise
provided in any agreement between the Trust and its principal
underwriter in effect from time to time relating to distribution of
shares of the Series;

(b) compensation of Trustees of the Trust who are not
directors, officers, partners or employees of the Adviser or of any
affiliated person (other than a registered investment company) of the
Adviser;

(d) the charges and expenses of the Custodian appointed by
the Trust for custodial services;

(e) charges and expenses of independent accountants retained
by the Trust;

(f) charges and expenses of any transfer agents, paying
agents, plan agents and registrars appointed by the Trust;

(g) brokers, commissions and issue and transfer taxes
chargeable to the Trust in connection with securities transactions to
which the Trust is a party;

(h) taxes and fees payable by the Trust to Federal, State or
other governmental agencies;

(i) the cost of certificates representing shares of the
Series;

(j) expenses of meetings of shareholders and Trustees of the
Trust;

(k) charges and expenses of legal counsel retained by the
Trust;

(l) interest, including interest on borrowings by the Trust;

(m) the cost of services, including services of counsel,
required in connection with the preparation of the Trust's
registration statements and prospectuses with respect to shares of the
Series, including amendments and revisions thereto, annual, semiannual
and other periodic reports of the Trust, and notices and proxy
solicitation material furnished to shareholders of the Trust or
regulatory authorities, to the extent that any such materials relate
to the Series or to the shareholders thereof; and

(n) the Trust's expenses of bookkeeping, accounting, auditing
and financial reporting, including related clerical expenses with
respect to the Series.

6. The services of the Adviser to the Trust hereunder are not to be
deemed exclusive and the Adviser shall be free to render similar services to
others, so long as its services hereunder are not impaired thereby.

7. As full compensation for all services rendered, facilities
furnished and expenses borne by the Adviser hereunder, the Trust shall pay the
Adviser compensation at the annual percentage rates of the corresponding levels
of the Series' average daily net assets set forth in the following chart:

Annual Average Daily
Percentage Rate Net Asset Value Levels
--------------- ----------------------
0.90% of the first $500,000,000;
0.80% of the next $500,000,000; and
0.75% of such assets in excess of $1,000,000,000.

Such compensation shall be payable monthly in arrears or at such other
intervals, not less frequently than quarterly, as the Board of Trustees of the
Trust may from time to time determine and specify in writing to the Adviser,
The Adviser hereby acknowledges that the Trust's obligation to pay such
compensation is binding only on the assets and property belonging to the
Series.

8. If the total of all ordinary business expenses of the Series or the
Trust as a whole (including investment advisory fees but excluding taxes
portfolio brokerage commissions and interest) for any fiscal year exceeds the
lowest applicable percentage of average net assets limitation prescribed by any
state in which shares of the Series are qualified for sale, the total fee
otherwise due the Adviser for such fiscal year pursuant to section 7 hereof
shall be reduced by the amount of such excess belonging to the Series, and, if,
after giving effect to such reduction, the total of all ordinary business
expenses continues to exceed any such applicable limitation, the Adviser shall
pay any such continuing excess belonging to the Series; provided, however, that
the Adviser will not reduce its fees nor pay any such expenses to an extent or
under circumstances which would result in the inability of the Series to
qualify as a regulated investment company under the Internal Revenue Code.
Solely for purposes of applying such limitations in accordance with the
foregoing sentence, the Series and the Trust shall each be deemed to be a
separate fund subject to such limitations. Should the applicable state
limitation provisions fail to specify how the average net assets of the Trust
or belonging to the Series are to be calculated, that figure shall be
calculated by reference to the average daily net assets of the Trust or the
Series, as the case may be.

9. It is understood that any of the shareholders, trustees, officers,
employees and agents of the Trust may be a partner, shareholder, director,
officer, employee or agent of, or be otherwise interested in, the Adviser, any
affiliated person of the Adviser, any organization in which the Adviser may
have an interest or any organization which may have an interest in the Adviser;
that the Adviser any such affiliated person or any such organization may have
an interest in the Trust; and that the existence of any such dual interest
shall not affect the validity hereof or of any transactions hereunder except as
otherwise provided in the Agreement and Declaration of Trust of the Trust and
the Partnership Agreement of the Adviser, respectively, or by specific
provisions of applicable law.

10. The Adviser consents to the use by the Trust of the names "CGM
Trust" and "CGM Mutual Fund," or other names embodying the words "Capital
Growth Management" or "CGM" in such forms as the Adviser shall in writing
approve, but only on condition that so long as this Agreement shall remain in
force the Trust shall fully perform, fulfill and comply with all provisions of
this Agreement expressed herein to be performed, fulfilled or complied with by
it. No such name shall be used by the Trust at any time or in any place for any
purposes or under any conditions except as in this paragraph provided.

Upon any termination of this Agreement by either party or upon the
violation of any of its provisions by the Trust, it will, at the request of the
Adviser made within sixty days after the Adviser has knowledge of such
termination or violation, change its name so as to eliminate all reference to
"Capital Growth Management" or "CGM" and will not thereafter transact any
business in a name containing "Capital Growth Management" or "CGM" in any form
or combination whatsoever, or designate itself as the same business trust as or
successor to a business trust of such name, or otherwise use the name "Capital
Growth Management" or "CGM" or any other reference to the Adviser. Such
covenants on the part of the Trust shall be binding upon it, its Trustees,
officers, shareholders, creditors and all other persons claiming under or
through it.

11. This Agreement shall become effective as of the date of its
execution, and

(a) unless otherwise terminated, after June 1, 2006 this
Agreement shall continue in effect only so long as such continuance is
specifically approved at least annually (i) by the Board of Trustees
of the Trust or by vote of a majority of the outstanding voting
securities of the Series, and (ii) by vote of a majority of the
Trustees of the Trust who are not interested persons of the Trust or
the Adviser, cast in person at a meeting called for the purpose of
voting on such approval;

(b) this, Agreement may at any time be terminated on sixty
days written notice to the Adviser either by vote of the Board of
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Series;

(d) this Agreement may be terminated by the Adviser on ninety
days written notice to the Trust.

Termination of this Agreement pursuant to this section 11 shall be
without payment of any penalty.

12. This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Trust shall have been
approved by vote of a majority of the outstanding voting securities of the
Series and by vote of a majority of the Trustees of the Trust who are not
interested persons of the Trust or the Adviser, cast in person at a meeting
called for the purpose of voting on such approval.

13. For the purpose of this Agreement, the terms "vote of a majority
of the outstanding voting securities", "interested person", "affiliated person"
and "assignment" shall have their respective meanings defined in the Investment
Company Act of 1940, subject, however, to such exemptions as may be granted by
the Securities and Exchange Commission under said Act. References in this
Agreement to any assets, property or liabilities "belonging to" the Series
shall have the meaning defined in the Trust's Agreement and Declaration of
Trust.

14. In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Adviser, or reckless disregard of its obligations
and duties hereunder, the Adviser shall not be subject to any liability to the
Trust, to any shareholder of the Trust or to any other person, firm or
organization, for any act or omission in the course of, or connected with,
rendering services hereunder.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.

CGM TRUST ON BEHALF OF ITS CGM
MUTUAL FUND SERIES

By:
-----------------------------------
Title:

CAPITAL GROWTH MANAGEMENT
LIMITED PARTNERSHIP

By:
-----------------------------------
President, Kenbob, Inc.,
General Partner

A copy of the Agreement and Declaration of Trust establishing CGM Trust is on
file with the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the
Series on behalf of the Trust by officers of the Trust as officers and not
individually and that the obligations of or arising out of this Agreement are
not binding upon any of the Trustees, officers or shareholders individually but
are binding only upon the assets and property belonging to the Series.

APPENDIX D

FORM OF
ADVISORY AGREEMENT FOR CGM REALTY FUND

AGREEMENT made this ___ day of _________, 2004 by and between CGM
TRUST, a Massachusetts business trust (the "Trust"), with respect to its CGM
REALTY FUND (the "Series"), and CAPITAL GROWTH MANAGEMENT LIMITED PARTNERSHIP,
a Massachusetts partnership (the "Adviser").