UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-00933
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CGM CAPITAL DEVELOPMENT FUND
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(Exact name of registrant as specified in charter)
One International Place, Boston, Massachusetts 02110
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(Address of principal executive offices) (Zip code)
T. John Holton, Esq.
Bingham McCutchen LLP
150 Federal Street
Boston, MA 02110
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-737-3225
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Date of fiscal year end: December 31, 2006
-----------------
Date of reporting period: December 31, 2006
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ITEM 1. REPORTS TO STOCKHOLDERS.
CGM
CAPITAL
DEVELOPMENT
FUND
46th Annual Report
December 31, 2006
A No-Load Fund
[logo] Investment Adviser
CAPITAL GROWTH MANAGEMENT
Limited Partnership
TO OUR SHAREHOLDERS:
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CGM Capital Development Fund increased 2.9% during the fourth quarter of 2006
compared to the unmanaged Standard and Poor's 500 Index which returned 6.7%.
For the year just ended, CGM Capital Development Fund returned 6.3% and the
unmanaged S&P 500 Index increased 15.8%.
THE YEAR IN REVIEW AND ECONOMIC OUTLOOK
2006 was another year of economic expansion with November marking the fifth
anniversary of the start of the current growth cycle. The year took off with a
bang with real Gross Domestic Product jumping by 5.6% (annualized) in the
first quarter, but GDP growth slowed significantly to a 2.0% rate (annualized)
by the third quarter. Two sectors were largely responsible for putting on the
economic brakes: First, the American auto industry continues to lose market
share and is increasingly forced to cut back in order to compete with foreign
brands. Second, after four years of booming business and unsustainably
spiraling prices, in our view, the homebuilding industry is feeling the pinch,
curiously though, in spite of low unemployment and relatively low interest
rates. Downturns in these two major industries notwithstanding, the US economy
added 140,000 jobs per month in 2006 with the largest gains coming in the
health and service sectors.
The Federal Reserve Board ratcheted up the Federal Funds rate from 1% in June
of 2004 to 5.25% in June of 2006 in an attempt to slow the economy and ward
off inflation. We believe the Fed's plan seems to be working since core
inflation (ex food and energy) clocked in at a growth rate of 2.2%
(annualized) over the past three months, down from 3.5% (annualized) in July.
Four consecutive meetings of the Fed have come and gone since its last rate
hike and the long term (ten-year) treasury yield has declined from 5.1% in
June 2006 to 4.7% at year end. We are still experiencing the "inverted yield
curve," we described in our last report and, though this state of affairs when
short-term interest rates exceed long-term interest rates is often considered
a harbinger of recession, we believe otherwise. Vital signs, most notably the
strength of employment numbers, a recovery in Consumer Confidence and the fact
that weakness in the housing industry hasn't spread to other businesses, in
our opinion, point to continued growth at a modest rate.
From January 3, 2006 until early May of 2006, the US equity market as measured
by the S&P 500 Index rose 6% from 1,248 to 1,325. The S&P dropped 7.5% to
1,225 in mid-June and then, gradually climbed 16% exclusive of dividends over
the remaining months to 1,418 at year end. Given year-end profit levels, the
S&P 500 Index was priced about 16 times earnings of the Index at the end of
2006, which seems to us quite reasonable in light of current inflation and
long term interest rates.
PORTFOLIO STRATEGY
CGM Capital Development Fund remained fully invested throughout 2006, which
reflected our belief in continued global economic growth.
We maintained a significant position in energy and related industries that
reached 36.2% of portfolio net assets as of June 30, 2006 in anticipation of
rising energy prices. The price of oil, which was $60 a barrel in January of
2006, rose to $78 per barrel in July, but fell abruptly to less than $60 at
the end of September. The value of the portfolio's energy-related stocks
declined significantly along with the cost of oil and the position was reduced
to 4% of the portfolio at the end of September. As a consequence, CGM Capital
Development Fund underperformed the unmanaged Standard and Poor's 500 Index by
12.9% for the third quarter which had a sizeable negative impact on total 2006
performance.
The Fund also invested in a variety of special situations during the year.
Securities in an energy drink producer and Mexican homebuilder generated
sizeable appreciation. At the other end of the scale, investments in
securities of a convenience-store-operator and diet-foods-marketer were sold
at considerable losses.
At the end of the year, CGM Capital Development Fund owned 23 stocks in a
variety of industries. The Fund held important positions in the airline,
housing and building materials and financial services industries on December
31 and the largest holdings were Desarrolladora Homex, S.A.B. de C.V. ADR,
Sotheby's and LAN Airlines, S.A., ADR.
/s/ Robert L. Kemp
Robert L. Kemp
President
/s/ G. Kenneth Heebner
G. Kenneth Heebner
Portfolio Manager
January 3, 2007
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CGM CAPITAL DVELOPMENT FUND AND THE UNMANAGED S&P 500 INDEX
assuming reinvestment of dividends and capital gains
- --------------------------------
CGM CAPITAL DEVELOPMENT FUND
Average Annual Total Returns
through 12/31/06
- --------------------------------
1 year 5 year 10 year
6.3% 14.1% 7.5%
- --------------------------------
Past performance is no
indication of future results
- --------------------------------
Unmanaged
CGM Capital S&P 500
Development Fund Index
----------------------------------------------
Start $10,000 $10,000
1997 12,390 13,340
1998 13,443 17,155
1999 14,478 20,758
2000 13,928 18,869
2001 10,655 16,624
2002 8,439 12,950
2003 13,089 16,667
2004 15,471 18,484
2005 19,385 19,390
2006 20,606 22,454
CGM CAPITAL DEVELOPMENT FUND
PORTFOLIO MANAGER
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G. Kenneth Heebner has managed CGM Capital Development Fund since 1976. In
1990, Mr. Heebner founded Capital Growth Management Limited Partnership with
Robert L. Kemp. Prior to establishing the new company, Mr. Heebner was at
Loomis, Sayles and Company where he managed the Fund, then known as Loomis-
Sayles Capital Development Fund. In addition to CGM Capital Development Fund,
Mr. Heebner currently manages CGM Mutual Fund, CGM Realty Fund and CGM Focus
Fund.
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See the Schedule of Investments on pages 3 and 4 for the percentage of net
assets of the Fund invested in particular industries or securities as of
December 31, 2006.
INVESTMENT PERFORMANCE
(unaudited)
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Cumulative Total Return for Periods Ended
December 31, 2006
CGM CAPITAL
DEVELOPMENT
FUND
-----------
10 Years ....................................................... +106.1%
5 Years ....................................................... + 93.3
1 Year ........................................................ + 6.3
3 Months ...................................................... + 2.9
The performance data contained in the report represent past performance, which
is no guarantee of future results. The graph and table above do not reflect
the deduction of taxes a shareholder would pay on Fund distributions or the
redemption of Fund shares and assume the reinvestment of all Fund
distributions. The investment return and the principal value of an investment
in the Fund will fluctuate so that investors' shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower
or higher than the performance data quoted.
CGM CAPITAL DEVELOPMENT FUND
- ----------------------------------------------------------------------------------------------------------------
INVESTMENTS AS OF DECEMBER 31, 2006
COMMON STOCKS -- 99.3% OF TOTAL NET ASSETS
SHARES VALUE(a)
------ --------
AIRLINES -- 11.6%
Lan Airlines S.A. ADR (b) .................................................... 534,000 $ 29,311,260
TAM S.A. ADR (b)(c) .......................................................... 780,000 23,407,800
------------
52,719,060
------------
BEVERAGES AND TOBACCO -- 5.1%
Hansen Natural Corporation (c) ............................................... 685,000 23,070,800
------------
BUSINESS SERVICES -- 5.2%
Anixter International Inc. (c) ............................................... 434,800 23,609,640
------------
CHEMICALS - SPECIALTY -- 5.5%
Albemarle Corporation ........................................................ 345,000 24,771,000
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FINANCIAL SERVICES -- 8.8%
Affiliated Managers Group, Inc. (c) .......................................... 230,000 24,179,900
Eaton Vance Corp. ............................................................ 470,000 15,514,700
------------
39,694,600
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HOUSING AND BUILDING MATERIAL -- 9.6%
Desarrolladora Homex, S.A.B. de C.V. ADR (b)(c) .............................. 740,000 43,711,800
------------
INSURANCE -- 2.6%
RenaissanceRe Holdings Ltd. .................................................. 197,900 11,874,000
------------
LIGHT CAPITAL GOODS -- 5.3%
The Middleby Corporation (c) ................................................. 230,000 24,074,100
------------
MACHINERY -- 4.9%
AGCO Corporation (c) ......................................................... 725,000 22,431,500
------------
METALS AND MINING -- 5.0%
RTI International Metals, Inc. (c) ........................................... 290,000 22,683,800
------------
MISCELLANEOUS -- 12.5%
Corrections Corporation of America (c) ....................................... 585,000 26,459,550
Sotheby's .................................................................... 975,000 30,244,500
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56,704,050
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OIL -- INDEPENDENT PRODUCTION - 4.0%
Arena Resources, Inc. (c) .................................................... 220,000 9,396,200
Whiting Petroleum Corporation (c) ............................................ 185,000 8,621,000
------------
18,017,200
------------
OIL SERVICE -- 7.3%
Core Laboratories N.V. (c) ................................................... 266,100 21,554,100
Helix Energy Solutions Group, Inc. (c) ....................................... 200,000 6,274,000
Hydril Company (c) ........................................................... 20,000 1,503,800
Oil States International, Inc. (c) ........................................... 120,000 3,867,600
------------
33,199,500
------------
RETAIL -- 6.7%
The Gymboree Corporation (c) ................................................. 480,000 18,316,800
The Wet Seal, Inc. (c) ....................................................... 1,780,000 11,872,600
------------
30,189,400
------------
STEEL -- 5.2%
Carpenter Technology Corporation ............................................. 230,000 23,579,600
------------
TOTAL COMMON STOCKS (Identified Cost $411,610,083) ............................. 450,330,050
------------
FACE
AMOUNT
------
SHORT-TERM INVESTMENT -- 1.0% OF TOTAL NET ASSETS
American Express Credit Corporation, 5.26%, 01/02/07 (Cost $4,350,000) ....... $4,350,000 4,350,000
------------
TOTAL INVESTMENTS -- 100.3% (Identified Cost $415,960,083) ..................... 454,680,050
Cash and receivables ......................................................... 5,061,861
Liabilities .................................................................. (6,226,629)
------------
TOTAL NET ASSETS -- 100.0% ..................................................... $453,515,282
============
(a) See Note 1A.
(b) An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing the right to receive
securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States or Canada.
(c) Non-income producing security.
See accompanying notes to financial statements.
CGM CAPITAL DEVELOPMENT FUND
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STATEMENT OF ASSETS AND LIABILITIES
December 31, 2006
ASSETS
Investments at value
(Identified cost $415,960,083) ................. $454,680,050
Cash ............................................ 1,858
Receivable for:
Securities sold ............................... $4,995,113
Shares of the Fund sold ....................... 882
Dividends and interest ........................ 64,008 5,060,003
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Total assets .............................. 459,741,911
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LIABILITIES
Payable for:
Securities purchased .......................... 5,113,753
Shares of the Fund redeemed ................... 622,003
Distributions declared ........................ 42 5,735,798
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Accrued expenses:
Management fees ............................... 390,833
Trustees' fees ................................ 11,855
Accounting, Administration and Compliance
expenses ..................................... 7,051
Transfer agent fees ........................... 22,890
Other expenses ................................ 58,202 490,831
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Total liabilities ....................................... 6,226,629
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NET ASSETS .................................................... $453,515,282
============
Net Assets consist of:
Capital paid-in ............................................. $416,181,093
Accumulated net realized loss on investments ................ (1,385,778)
Net unrealized appreciation on investments .................. 38,719,967
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NET ASSETS ................................................... $453,515,282
============
Shares of beneficial interest outstanding, no par value ....... 17,382,241
============
Net asset value per share* .................................... $26.09
======
* Shares of the Fund are sold and redeemed at net asset value
($453,515,282 / 17,382,241).
See accompanying notes to financial statements.
CGM CAPITAL DEVELOPMENT FUND
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STATEMENT OF OPERATIONS
Year Ended December 31, 2006
INVESTMENT INCOME
Income:
Dividends (net of withholding tax of $20,227) ................ $ 1,922,917
Interest ..................................................... 260,008
------------
2,182,925
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Expenses:
Management fees .............................................. 4,753,467
Trustees' fees ............................................... 55,473
Accounting, Administration and Compliance expenses ........... 84,606
Custodian fees and expenses .................................. 107,543
Transfer agent fees .......................................... 137,302
Audit and tax services ....................................... 35,800
Legal ........................................................ 22,819
Printing ..................................................... 38,061
Registration fees ............................................ 26,622
Miscellaneous expenses ....................................... 2,530
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5,264,223
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Net investment loss ............................................ (3,081,298)
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gains on investments and foreign currency
transactions (including net realized loss of $840,836 on
sales of investments in non-controlled affiliated issuers) .. 67,208,466
Net unrealized depreciation .................................. (34,882,718)
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Net realized and unrealized gains on investments
and foreign currency transactions ........................... 32,325,748
------------
CHANGE IN NET ASSETS FROM OPERATIONS ........................... $ 29,244,450
============
See accompanying notes to financial statements.
CGM CAPITAL DEVELOPMENT FUND
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STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
-----------------------------
2006 2005
------------ ------------
FROM OPERATIONS
Net investment loss.............................................................. $ (3,081,298) $ (2,270,485)
Net realized gains from investments and foreign currency transactions ........... 67,208,466 92,382,493
Unrealized appreciation (depreciation) .......................................... (34,882,718) 8,106,228
------------ ------------
Change in net assets from operations .......................................... 29,244,450 98,218,236
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net short-term realized capital gains on investments ............................ (51,867,597) (57,886,555)
Net long-term realized capital gains on investments ............................. (13,096,951) (29,553,609)
------------ ------------
(64,964,548) (87,440,164)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares .................................................... 3,675,833 2,803,858
Net asset value of shares issued in connection with reinvestment of:
Distributions from net short-term realized capital gains on investments ....... 44,224,486 49,431,710
Distributions from net long-term realized capital gains on investments ........ 11,167,178 25,237,888
------------ ------------
59,067,497 77,473,456
Cost of shares redeemed ......................................................... (30,658,918) (27,773,482)
------------ ------------
Change in net assets derived from capital share transactions .................... 28,408,579 49,699,974
------------ ------------
Total change in net assets ...................................................... (7,311,519) 60,478,046
NET ASSETS
Beginning of period ............................................................. 460,826,801 400,348,755
------------ ------------
End of period ................................................................... $453,515,282 $460,826,801
============ ============
NUMBER OF SHARES OF THE FUND:
Issued from sale of shares ...................................................... 120,293 90,624
Net asset value of shares issued in connection with reinvestment of:
Distributions from net short-term realized capital gains on investments ....... 1,681,551 1,729,591
Distributions from net long-term realized capital gains on investments ........ 424,614 883,061
------------ ------------
2,226,458 2,703,276
Redeemed ........................................................................ (1,006,308) (894,776)
------------ ------------
Net change ...................................................................... 1,220,150 1,808,500
============ ============
See accompanying notes to financial statements.
CGM CAPITAL DEVELOPMENT FUND
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FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
For a share of the Fund outstanding throughout each period:
Net asset value at the beginning of period ................ $28.51 $27.89 $23.60 $15.22 $19.21
------- ------- ------- ------- -------
Net investment loss (a) ................................... (0.19) (0.16) (0.01) (0.10) (0.12)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions ........................... 2.02 7.23 4.30 8.48 (3.87)
------- ------- ------- ------- -------
Total from investment operations .......................... 1.83 7.07 4.29 8.38 (3.99)
------- ------- ------- ------- -------
Distribution from net short-term realized gains ........... (3.39) (4.27) -- -- --
Distribution from net long-term realized gains ............ (0.86) (2.18) -- -- --
------- ------- ------- ------- -------
Total distributions ....................................... (4.25) (6.45) -- -- --
------- ------- ------- ------- -------
Net increase (decrease) in net asset value ................ (2.42) 0.62 4.29 8.38 (3.99)
------- ------- ------- ------- -------
Net asset value at end of period .......................... $26.09 $28.51 $27.89 $23.60 $15.22
======= ======= ======= ======= =======
Total Return (%) .......................................... 6.3 25.3 18.2 55.1 (20.8)
Ratios:
Operating expenses to average net assets (%) .............. 1.11 1.12 1.14 1.17 1.15
Net investment loss to average net assets (%) ............. (0.65) (0.52) (0.06) (0.56) (0.67)
Portfolio turnover (%) .................................... 300 211 263 305 209
Net assets at end of period (in thousands) ($)............. 453,515 460,827 400,349 369,021 259,818
(a) Per share net investment loss has been calculated using the average shares outstanding during the period.
See accompanying notes to financial statements.
CGM CAPITAL DEVELOPMENT FUND
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NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 2006
1. The Fund is organized as a Massachusetts business trust under the laws of
Massachusetts pursuant to an Agreement and Declaration of Trust. The Fund is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. Along with three other funds in a separate
Trust, there are four CGM Funds. The Fund commenced operations on August 14,
1961. The Fund's objective is long-term capital appreciation. The Fund seeks
to attain its objective by investing in the equity securities of a relatively
small but diverse group of companies and industries.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
A. SECURITY VALUATION -- Equity securities are valued on the basis of
valuations furnished by a pricing service, authorized by the Board of
Trustees. The pricing service provides the last reported sale price for
securities listed on a national securities exchange or, in the case of the
NASDAQ national market system, the NASDAQ official closing price. For
securities with no sale reported and in the case of over-the-counter
securities not so listed, the last reported bid price is used. Short-term
investments having a maturity of sixty days or less are stated at
amortized cost, which approximates value. Other assets and securities
which are not readily marketable will be valued in good faith at fair
value using methods determined by the Board of Trustees.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed) and dividend income is recorded on the ex-dividend date
net of applicable foreign taxes. Interest income is recorded on the
accrual basis. Net gain or loss on securities sold is determined on the
identified cost basis.
C. FEDERAL INCOME TAXES -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies, and to distribute to its shareholders all of its
taxable income and net realized capital gains, within the prescribed time
period. Accordingly, no provision for federal income tax has been made. At
December 31, 2006, there were no capital loss carryovers available to
offset future realized gains.
As of December 31, 2006, the components of distributable earnings on a tax
basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED LONG-TERM NET UNREALIZED
ORDINARY INCOME CAPITAL GAINS APPRECIATION/(DEPRECIATION)
--------------- ----------------------- ---------------------------
$-- $-- $37,334,189
The identified cost of investments in securities owned by the Fund for
federal income tax purposes, and their respective gross unrealized
appreciation and depreciation at December 31, 2006 was as follows:
GROSS UNREALIZED GROSS UNREALIZED NET UNREALIZED
IDENTIFIED COST APPRECIATION DEPRECIATION APPRECIATION
--------------- ---------------- ---------------- --------------
$417,345,861 $47,543,072 $(10,208,883) $37,334,189
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions
are recorded by the Fund on the ex-dividend date. The classification of
income and capital gains distributions is determined in accordance with
income tax regulations. Distributions from net investment income and
short-term capital gains are treated as ordinary income for income tax
purposes. Permanent book and tax differences relating to shareholder
distributions may result in reclassifications to paid-in capital or
accumulated realized gain/loss. These differences are primarily related to
foreign exchange gains/losses and netting net operating loss with net
short-term gains. The Fund also utilized earnings and profits distributed
to shareholders on redemption of shares as a part of the dividend
deduction for income tax purposes. Undistributed net investment income or
accumulated net investment loss may include temporary book and tax
differences such as tax deferral of losses on wash sales, which will
reverse in a subsequent period. Any taxable income or gain remaining at
fiscal year end is distributed in the following year.
The tax character of distributions paid during the period ended December
31, 2006, were as follows:
LONG-TERM
ORDINARY INCOME CAPITAL GAINS TOTAL
--------------- ------------- -----
$51,867,597 $13,096,951 $64,964,548
E. FOREIGN CURRENCY TRANSLATION -- All assets and liabilities initially
expressed in terms of foreign currencies are translated into U.S. dollars.
Transactions affecting statement of operations accounts and net realized
gain/(loss) on investments are translated at the rates prevailing at the
dates of the transactions. The Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments. Reported net realized foreign
exchange gains or losses arise from sales of foreign currency, currency
gains or losses realized between the trade and settlement dates on
securities transactions and the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes
in the value of assets and liabilities other than investments in
securities at the end of the period, resulting from changes in the
exchange rate.
F. INDEMNITIES -- In the normal course of business, CGM Capital Development
Fund may enter into contracts that provide indemnities to third parties
for various potential losses and claims. CGM Capital Development Fund's
maximum exposure under these arrangements is unknown as this would depend
on future claims that may be made against CGM Capital Development Fund.
The risk of material loss from such claims is considered remote.
2. FOREIGN INVESTMENT RISK -- There are certain additional risks involved in
investing in foreign securities that are not inherent in investments in
domestic securities. These risks may involve adverse political and economic
developments and the possible imposition of currency exchange blockages or
other foreign governmental laws or restrictions. In addition, the securities
of some foreign companies and securities markets are less liquid and at times
more volatile than securities of comparable U.S. companies and U.S. securities
markets.
3. PURCHASES AND SALES OF SECURITIES -- For the period ended December 31,
2006, purchases and sales of securities other than United States government
obligations and short-term investments aggregated $1,415,927,524 and
$1,457,210,460, respectively. There were no purchases or sales of United
States government obligations.
4. A. MANAGEMENT FEES -- During the period ended December 31, 2006, the Fund
incurred management fees of $4,753,467 paid or payable to the Fund's
investment adviser, Capital Growth Management Limited Partnership
(CGM), certain officers and directors of which are also officers and
trustees of the Fund. The management agreement provides for a fee at
the annual rate of 1.00% on the first $500 million of the Fund's
average daily net assets, 0.95% of the next $500 million and 0.80% of
such assets in excess of $1 billion.
B. OTHER EXPENSES -- CGM performs certain administrative, accounting,
compliance and other services for the Fund. The expenses of those
services, which are paid to CGM by the Fund, include the following:
(i) expenses for personnel performing bookkeeping, accounting, and
financial reporting functions and clerical functions relating to the
Fund; (ii) expenses for services required in connection with the
preparation of registration statements and prospectuses, shareholder
reports and notices, proxy solicitation material furnished to
shareholders of the Fund or regulatory authorities and reports and
questionnaires for SEC compliance; (iii) registration, filing and
other fees in connection with requirements of regulatory authorities;
and (iv) compliance in connection to the Investment Company Act of
1940 and the Sarbanes Oxley Act of 2002. The Accounting,
Administration and Compliance expense of $84,606, for the period ended
December 31, 2006, is shown separately in the financial statements.
These expenses include the reimbursement of a portion of the
compensation expenses incurred by CGM for its employees who provide
these administrative, accounting, compliance, and other services to
the Fund, some of whom are officers of the Fund. Of the total expense
reimbursement, $65,890 represented reimbursements by the Fund to CGM
for a portion of the salaries of CGM employees who are officers of the
Fund.
C. TRUSTEES FEES AND EXPENSES -- The Fund does not pay any compensation
directly to any trustees who are directors, officers or employees of
CGM, or any affiliate of CGM (other than registered investment
companies). For the period ended December 31, 2006, each disinterested
trustee was compensated by the CGM Funds with an annual fee of $50,000
plus travel expenses for each meeting attended. The disinterested
trustees are responsible for the audit committee functions of the CGM
Funds and have designated a chairman to oversee these functions who
receives an additional $30,000 annually. Of these amounts, each of the
CGM Funds is responsible for $7,000 per trustee annually, plus an
annual variable fee calculated based on the proportion of each of the
CGM Funds' average net assets relative to the aggregate average net
assets of the CGM Funds.
5. AFFILIATED ISSUERS -- Affiliated issuers, as defined under the Investment
Company Act of 1940, are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer. The
following summarizes transactions with affiliates of the Fund during the
period ended December 31, 2006:
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
SHARES HELD SHARES SHARES SHARES HELD DIVIDEND MARKET VALUE
NAME OF ISSUER DECEMBER 31, 2005 PURCHASED SOLD DECEMBER 31, 2006 INCOME DECEMBER 31, 2006
- -------------- ----------------- --------- --------- ----------------- -------- -----------------
Hartmarx Corporation+* 2,098,800 100,000 2,198,800 0 $0 $ 0
=== ===========
- ------------
+ Non-ncome producing security.
* Position in issuer liquidated during the preceding twelve months.
6. OTHER -- On July 13, 2006 the Financial Accounting Standards Board (FASB)
released FASB Interpretation No. 48 "Accounting for Uncertainty in Income
Taxes" (FIN48). FIN 48 provides guidance for how uncertain tax positions
should be recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or expected
to be taken in the course of preparing the fund's tax returns to determine
whether the tax positions are "more likely than not" of being sustained by the
applicable tax authority. Tax positions not deemed to meet the more likely
than not threshold would be recorded as a tax benefit or expense in the
current year. Adoption of FIN 48 is required for the first financial statement
reporting period after June 29, 2007 and is to be applied to all open tax
years as of the effective date. At this time, management is evaluating the
implications of FIN 48 and its impact on the financial statements, if any, has
not yet been determined.
CGM CAPITAL DEVELOPMENT FUND
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of CGM Capital Development Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of CGM Capital
Development Fund (the "Fund") at December 31, 2006, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2006 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 14, 2007
CGM CAPITAL DEVELOPMENT FUND
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION
(unaudited)
AVAILABILITY OF PROXY VOTING INFORMATION:
Proxy voting policies and information regarding how the Fund voted proxies
relating to portfolio securities during the twelve month period ended June 30,
2006 are available without charge, upon request by calling 1-800-345-4048. The
policies also appear in the Fund's Statement of Additional Information, which
can be found on the SEC's website, http://www.sec.gov. The voting records can
also be found on the SEC's website on the N-PX filing.
PORTFOLIO HOLDINGS:
The Fund files its complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms
N-Q are available on the SEC's website at http://www.sec.gov and may be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
CGM CAPITAL DEVELOPMENT FUND
- -------------------------------------------------------------------------------
FUND EXPENSES
As a shareholder of CGM Capital Development Fund, you incur two types of
costs: (1) transaction costs, which could include, among other charges, wire
fees and custodial maintenance fees for certain types of accounts and (2)
ongoing costs, including management fees and other Fund expenses. This Example
is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period July 1, 2006 to December 31, 2006.
ACTUAL RETURN AND EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder
reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as any wire
fees or custodial maintenance fees that may be payable. Therefore, the second
line of the table is useful in comparing ongoing costs only, and will not help
you determine the relative total costs of owning different funds. In addition,
if these transactional costs were included, your costs would have been higher.
- -------------------------------------------------------------------------------
Beginning Ending Expenses Paid
Account Value Account Value During Period*
7/01/06 12/31/06 7/01/06 - 12/31/06
- -------------------------------------------------------------------------------
Actual $1,000.00 $954.40 $5.47
- -------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,019.61 $5.65
- -------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.11%,
multiplied by the average account value over the period, multiplied by
184/365 (to reflect the one-half year period).
CGM CAPITAL DEVELOPMENT FUND
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
25 YEAR INVESTMENT RECORD
DECEMBER 31, 1981 -- DECEMBER 31, 2006 (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
IF YOU HAD PURCHASED ONE SHARE OF THE FUND ON DECEMBER 31, 1981
- -----------------------------------------------------------------------------------------------------------------------------------
-- AND HAD TAKEN ALL DIVIDENDS OR -- HAD REINVESTED ALL DIVIDENDS AND CAPITAL
AND DISTRIBUTIONS IN CASH GAINS DISTRIBUTIONS IN ADDITIONAL SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
During the Year
You Would Have Received Which Would Represent
--------------------------------- -------------------------------
The Value of A Cumulative
The Net Your Original Change
Asset Value Per Share Per Share Investment An Expressed
On of Your Capital Gains Income At Each Annual As An Index With
December Shares Would Distributions Distributions Year End Total Return December 31,
31 Have Been of of Would Have Been of 1981 = 100.0
- -----------------------------------------------------------------------------------------------------------------------------------
1981 $17.34 100.0
1982 24.88 $ 2.88 $0.41 $ 31.02 + 78.9% 178.9
1983 25.21 2.50 0.47 35.86 + 15.6 206.8
1984 17.28 6.15 0.11 32.92 - 8.2 189.8
1985 25.02 -- 0.18 48.13 + 46.2 277.5
1986 23.12 7.46 0.16 61.80 + 28.4 356.3
1987 16.56 10.09 0.14 71.63 + 15.9 413.0
1988 15.87 0.02 0.62 71.42 - 0.3 411.8
1989 18.37 -- 0.34 84.20 + 17.9 485.5
1990 18.53 -- 0.10 85.38 + 1.4 492.3
1991 25.80 11.07* 0.06 169.99 + 99.1 980.2
1992 27.43 2.68* 0.20 199.74 + 17.5 1151.7
1993 27.71 7.51 0.07 257.07 + 28.7 1482.2
1994 20.58 0.71 0.07 198.20 - 22.9 1142.8
1995 27.33 1.68 0.02 279.66 + 41.1 1612.5
1996 29.08 5.87 0.07 358.24 + 28.1 2065.6
1997 26.96 9.08 -- 443.86 + 23.9 2559.3
1998 24.95 4.19 0.11 481.59 + 8.5 2776.8
1999 26.20 0.56 0.11 518.67 + 7.7 2990.6
2000 25.12 -- 0.10 498.96 - 3.8 2877.0
2001 19.21 -- -- 381.70 - 23.5 2200.9
2002 15.22 -- -- 302.31 - 20.8 1743.1
2003 23.60 -- -- 468.88 + 55.1 2703.5
2004 27.89 -- -- 554.22 + 18.2 3195.5
2005 28.51 6.45 -- 694.44 + 25.3 4004.0
2006 26.09 4.25 -- 738.19 + 6.3 4256.3
------ ----- --------
Totals $83.15 $3.34 + 4156.3
- -----------------------------------------------------------------------------------------------------------------------------------
*Includes $0.02 and $0.02 per share distributed from paid-in capital.
- -----------------------------------------------------------------------------------------------------------------------------------
The performance data contained in this report represent past performance, which is no guarantee of future results. The table above
does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The
investment return on, and the principal value of, an investment in the Fund will fluctuate so that investors' shares, when
redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data
quoted.
CGM CAPITAL DEVELOPMENT FUND
- -------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 12/31/2006
We are providing this information as required by the Internal Revenue Code.
The amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
For the year ended December 31, 2006, the Fund designated $13,179,033 as long-
term capital dividends.
TRUSTEES AND OFFICERS
The Fund is supervised by the board of trustees (the "Board") of the Trust.
The Board is responsible for the general oversight of the Fund, including
general supervision and review of the Fund's investment activities. The Board,
in turn, elects the officers who are responsible for administering the Fund's
day-to-day operations.
An asterisk in the table below identifies those trustees and officers who are
"interested persons" of the Trust as defined in the Investment Company Act of
1940. Each trustee and officer of the Trust noted as an interested person is
interested by virtue of that individual's position with Capital Growth
Management Limited Partnership ("CGM"), the Fund's investment adviser, as
described in the table below. Each trustee serves during the continued
lifetime of the Trust or until he earlier dies, resigns or is removed, or if
sooner, until the election and qualification of his successor. Each officer
serves until his or her successor is elected or qualified or until the officer
sooner dies, resigns, or is removed or becomes disqualified.
The trustees and officers of the Trust, their ages, their principal occupations
during the past five years, the number of CGM Funds they oversee, and other
directorships they hold are set forth below. Unless otherwise noted below, the
address of each interested trustee and officer is One International Place,
Boston, Massachusetts 02110. Correspondence intended for the trustees who are
not "interested persons" of the Trust may be sent c/o Capital Growth
Management, One International Place, Boston, Massachusetts 02110.
The Statement of Additional Information for the Fund includes additional
information about Fund trustees and is available, without charge, upon request
by calling the CGM Marketing Department, toll free, at 800-345-4048.
NUMBER OF
FUNDS IN THE
PRINCIPAL OCCUPATION DURING CGM FUNDS
POSITION HELD AND PAST 5 YEARS AND COMPLEX
NAME, ADDRESS AND AGE LENGTH OF TIME SERVED OTHER DIRECTORSHIPS HELD OVERSEEN
- --------------------- --------------------- --------------------------- ------------
INTERESTED TRUSTEES
G. Kenneth Heebner* Trustee since 1993 Co-founder and Employee, CGM; 4
age 66 Controlling Owner, Kenbob, Inc. (general
partner of CGM)
Robert L. Kemp* Trustee since 1990 Co-founder and Employee, CGM; Non-voting 4
age 74 Owner, Kenbob, Inc. (general partner
of CGM)
DISINTERESTED TRUSTEES
Peter O. Brown Trustee since 1993 Counsel (formerly, Partner), Harter, Secrest 4
age 66 & Emery LLP (law firm); formerly Executive
Vice President and Chief Operating Officer,
The Glenmeade Trust Company (from 1990-1993);
formerly Senior Vice President, J.P.
Morgan Chase Bank (from 1981-1990);
Trustee, TT International U.S.A. Master and
Feeder Trusts (four mutual funds) from
2000-2005
Mark W. Holland Trustee since 2004 President, Wellesley Financial Advisors, LLC 4
age 57 (since 2003); formerly Vice President and
Chief Operating Officer, Fixed Income
Management, Loomis, Sayles & Company,
L.P.; formerly Director, Loomis, Sayles &
Company, L.P. (from 1999-2002)
James Van Dyke Quereau, Jr. Trustee since 1993 Managing Partner and Director, Stratton 4
age 58 Management Company (investment
management); Director and Vice President,
Semper Trust Co.
J. Baur Whittlesey Trustee since 1990 Member, Ledgewood, P.C. (law firm) 4
age 60
OFFICERS
G. Kenneth Heebner* Vice President since 1990 Co-founder and Employee, CGM; 4
age 66 Controlling Owner,Kenbob, Inc. (general
partner of CGM)
Robert L. Kemp* President since 1990 Co-founder and Employee, CGM; Non-voting 4
age 74 Owner, Kenbob, Inc. (general partner of CGM)
David C. Fietze* Chief Compliance Officer Employee - Legal counsel, CGM; formerly 4
age 37 since 2004 counsel, Bartlett Hackett Feinberg, P.C.
address:
38 Newbury Street
Boston, Massachusetts
02116
Kathleen S. Haughton* Vice President since 1992 Employee - Investor Services Division, CGM 4
age 46 and Anti-Money
address: Laundering Compliance
38 Newbury Street Officer since 2002
Boston, Massachusetts
02116
Jem A. Hudgins* Treasurer since 2004 Employee - CGM 4
age 43
Leslie A. Lake* Vice President and Employee - Office Administrator, CGM 4
age 61 Secretary since 1992
Martha I. Maguire* Vice President since 1994 Employee - Funds Marketing, CGM 4
age 51
Mary L. Stone* Assistant Vice President Employee - Portfolio Transactions, CGM 4
age 62 since 1990
INVESTMENT ADVISER
CAPITAL GROWTH MANAGEMENT
LIMITED PARTNERSHIP
Boston, Massachusetts 02110
TRANSFER AND DIVIDEND PAYING
AGENT AND CUSTODIAN OF ASSETS
STATE STREET BANK AND TRUST COMPANY
Boston, Massachusetts 02111
SHAREHOLDER SERVICING AGENT
FOR STATE STREET BANK AND
TRUST COMPANY
BOSTON FINANCIAL DATA SERVICES, INC.
P.O. Box 8511
Boston, Massachusetts 02266-8511
- -------------------------------------------------------
TELEPHONE NUMBERS
For information about:
[ ] Account Procedures and Status
[ ] Redemptions
[ ] Exchanges
Call 800-343-5678
[ ] New Account Procedures
[ ] Prospectuses
[ ] Performance
[ ] Proxy Voting Policies and Voting Records
[ ] Complete Schedule of Portfolio Holdings
for the 1st & 3rd Quarters (as filed on Form N-Q)
Call 800-345-4048
- -------------------------------------------------------
MAILING ADDRESS
CGM Shareholder Services
c/o Boston Financial Data Services
P.O. Box 8511
Boston, MA 02266-8511
- -------------------------------------------------------
This report has been prepared for the shareholders of the Fund
and is not authorized for distribution to current or prospective
investors in the Fund unless it is accompanied or preceded by
a prospectus.
CAR 06 Printed in U.S.A.
ITEM 2. CODE OF ETHICS.
CGM Capital Development Fund has adopted a code of ethics that applies to the
registrant's principal executive officer and principal financial officer (the
"Code"). The Code is filed herewith as Exhibit 99.CODE ETH. There were no
amendments to the Code required to be disclosed in response to this Item 2
during the fiscal year ended December 31, 2006. There were no waivers or
implicit waivers from the Code granted by the registrant during the fiscal year
ended December 31, 2006.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
CGM Capital Development Fund's Board of Trustees has determined that it has at
least one audit committee financial expert serving on its audit committee. The
name of the audit committee financial expert is James Van Dyke Quereau, Jr.
James Van Dyke Quereau, Jr. is "independent" as defined in Item 3(a)(2) of Form
N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fee: The aggregate fees billed for each of the last two
fiscal years for professional services rendered by the
principal accountant for the audit of CGM Capital Development
Fund's annual financial statements or services that are
normally provided by the accountant in connection with
statutory and regulatory filings or engagements are the
following: 2005 - $28,900 and 2006 - $30,600.
(b) Audit-Related Fees: The aggregate fees billed in each of the
last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the
performance of the audit of CGM Capital Development Fund's
financial statements and are not reported under paragraph (a)
of this Item are the following: 2005 - $0 and 2006 - $0.
(c) Tax Fees: The aggregate fees billed in each of the last two
fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax
planning are the following: 2005 - $3,800 and 2006 - $4,100.
The nature of the services comprising the fees disclosed under
this category is tax compliance related to the preparation and
review of federal income and excise tax returns and review of
excise tax distribution requirements.
(d) All Other Fees: The aggregate fees billed in each of the last
two fiscal years for products and services provided by the
principal accountant, other than the services reported in
paragraphs (a) through (c) of this Item are the following: 2005
- $0 and 2006 - $0.
(e) (1) The Trustees Committees of the Boards of Trustees of the
Capital Development Fund and the CGM Trust (the "Trustees
Committees") are required to pre-approve (i) all audit
services, tax services and permitted non-audit services
provided by PricewaterhouseCoopers LLP or any other independent
public accountant engaged by the CGM Capital Development Fund
and CGM Trust (together, the "Trusts") and (ii) any engagement
of PricewaterhouseCoopers LLP to provide non-audit services to
(a) Capital Growth Management Limited Partnership ("CGM"), and
(b) any entity controlling, controlled by, or under common
control with CGM that provides ongoing services to the Trusts
if the engagement relates directly to the operations and
financial reporting of the Trusts. The Trustees Committees
generally review each necessary pre-approval on a case by case
basis. However, the Trustees Committees have authorized the
President or Treasurer of each of the CGM Capital Development
Fund and the CGM Trust, on behalf of its series (such series
collectively with the Capital Development Fund, the "Funds"),
to incur additional fees totaling in the aggregate not more
than $7,500.00 for services relating to the audit of the Funds
for the fiscal year ended December 31, 2006, the close-out of
the 2006 accounts, calculation of year-end dividends, and/or
related tax or accounting matters.
(2) 0% of services described in each of paragraphs (b)through(d) of
this Item were approved by the Trustees Committees pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate non-audit fees billed by CGM Capital Development
Fund's accountant for services rendered to (i) CGM Capital
Development Fund, (ii) CGM, and (iii)any entity controlling,
controlled by, or under common control with CGM that provides
ongoing services to the CGM Capital Development Fund for each of
the last two fiscal years of the CGM Capital Development Fund are
the following: 2005 - $3,800 and 2006 - $4,100.
(h) There were no non-audit services that were rendered to CGM or any
entity controlling, controlled by, or under common control with CGM
that provides ongoing services to CGM Capital Development Fund that
were not pre-approved pursuant to paragraph (c)(7)(ii) or Rule 2-01
of Regulation S-X, thus no consideration by the Trustees Committees
was necessary to determine if services were compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable. Investments in securities of unaffiliated issuers as
of December 31, 2006, as set forth in 210.12-12 of Regulation S-X, are included
as part of the report to shareholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
As described in the CGM Capital Development Fund's most recent proxy statement
on Schedule 14A filed on September 24, 2004, the CGM Capital Development Fund
does not have a formal policy for considering any trustee candidates
recommended by shareholders.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the CGM Capital Development Fund's disclosure
controls and procedures within 90 days of the filing of this Form N-CSR, the
principal executive officer and principal financial officer of CGM Capital
Development Fund have concluded that the CGM Capital Development Fund's
disclosure controls and procedures are effective to provide reasonable
assurance that information required to be disclosed by the CGM Capital
Development Fund on Form N-CSR and Form N-Q is recorded, processed, summarized
and reported within the time periods specified in Securities and Exchange
Commission rules and forms.
(b) There were no changes in CGM Capital Development Fund's internal control
over financial reporting (as defined in Rule 30a-3(d) under the Act) that
occurred during the CGM Capital Development Fund's last fiscal quarter of the
period covered by this report.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics described in Item 2 is attached hereto as EX-99.CODE ETH.
(a)(2) Certifications for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2(a) under the
Investment Company Act of 1940 are attached hereto as EX-99.CERT.
(b) Certifications for each principal executive officer and principal financial
officer of the registrant as required by Rule 30a-2(b) under the Investment
Company Act of 1940 are attached hereto as EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
CGM Capital Development Fund
By: /S/Robert L. Kemp
Robert L. Kemp
President
Principal Executive Officer
Date: February 26, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: /S/ Robert L. Kemp
Robert L. Kemp
President
Principal Executive Officer
Date: February 26, 2007
By: /S/ Jem A. Hudgins
Jem A. Hudgins
CFO & Treasurer
Principal Financial Officer
Date: February 26, 2007