-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tlv4gJPu8rrxdBNp1vv+ZaRYHXuRdASnWWPxw6QIRkq6BxArkbtv2wWfdNqENfCs 1Ur3c1T+4dv5jL7tZS5rGw== 0000318192-07-000006.txt : 20070309 0000318192-07-000006.hdr.sgml : 20070309 20070309150124 ACCESSION NUMBER: 0000318192-07-000006 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070309 DATE AS OF CHANGE: 20070309 EFFECTIVENESS DATE: 20070309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHEAST INVESTORS GROWTH FUND INC CENTRAL INDEX KEY: 0000318192 IRS NUMBER: 042708574 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-03074 FILM NUMBER: 07684095 BUSINESS ADDRESS: STREET 1: 50 CONGRESS ST RM 1000 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6175233588 MAIL ADDRESS: STREET 1: 50 CONGRESS ST CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: NORTHEAST FUND INC DATE OF NAME CHANGE: 19801001 0000318192 S000011441 NORTHEAST INVESTORS GROWTH FUND INC C000031646 NORTHEAST INVESTORS GROWTH FUND INC NTHFX N-CSR 1 ncsr2006.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-03074 Northeast Investors Growth Fund (Exact name of registrant as specified in charter) 150 Federal Street Boston, MA 02110 (Address of principal executive offices) (Zip code) David Randall 150 Federal Street Boston, MA 02110 (Name and address of agent for service) Registrant's telephone number, including area code: 617-523-3588 Date of fiscal year end: December 31, 2006 Date of reporting period: December 31, 2006 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. 3507. Item 1. Reports to Stockholders. NORTHEAST INVESTORS GROWTH FUND A NO-LOAD FUND Annual Report For the Year Ended December 31, 2006 Table of Contents Letter to Shareholders ************************ 2 Fund Performance******************************* 4 Schedule of Investments *********************** 9 Financial Statements ************************** 12 Notes to the Financial Statements************** 16 Report of Ernst & Young LLP, Independent Registered Public Accounting Firm ************* 20 Trustees & Officers *************************** 21 Dear Fellow Shareholders: Most of the broad market indices finished in positive territory for the year ending December 2006 - though it helped to have your seat belt buckled for much of the ride. The market began the year strongly, fell sharply lower at the beginning of May, leveled out in late summer and began a steady upward march from August through the end of December, as energy prices declined and the market's fear of inflation subsided. The total return for Northeast Investors Growth Fund for 2006 was +9.24%, underperforming its benchmark, the S&P 500 Index, which returned +15.79%. Though all sectors of the S&P 500 Index were up in 2006, some sectors advanced more than others. Strengths in particular industries and sectors favored more value oriented investments and led to a relative under-performance of the Fund as compared to the S&P 500 Index. The Fund began the year with a meaningful over-weighted position in the energy sector. This position continued until third quarter of 2006 when the area was gradually reduced which brought the sector more in-line with the index. The heavy exposure to energy has been a help to Fund performance over the past years and 2006 was no exception - this sector of the S&P returned over 20% - and a number of the Fund's holding's Exxon Mobil, Chevron and Schlumberger were among the top ten performers in the Fund each returning upward of 25%. A calm hurricane season and a warm start to the winter caused some energy related names in the Fund to retrench later in the year. The Fund remained over-weight relative to the index in financials, with this sector replacing energy as the most significant over-weight. Two of the Fund's top 10 performers were in this area - Goldman Sachs Group and Boston Properties. Goldman Sachs Group benefited from increased merger & acquisition activity, strong trading profits and continued strength in its underwriting division. Boston Properties, a real estate investment trust, benefited from higher rental rates and increased demand for office space in the corporate and financial markets - mainly in locations where their properties are concentrated. The Fund continued its under-weight relative to the S&P 500 in the consumer discretionary sector, a position the Fund maintained for over a year and, in retrospect, this likely detracted from Fund performance. By year-end, this sector of the Index was up over 17%, with most of this gain occurring in the last few months of the year. The Fund was concerned that higher energy prices, a weakening housing market and rising interest rates would slow the rate of consumption. Instead, energy prices moderated, and the Federal Reserve held rates steady. Though pleased with the performance of the names held in the sector - Best Buy Co., Walt Disney Co., DSW Shoes, and Starbucks Corp., - if the Fund had been more market-weighted in this sector, performance might have been enhanced. We would be remiss if we did not acknowledge the Fund's best performing stock in 2006, Akamai Technologies. Though many of the names in our Information Technology area did not perform in-line with the S&P 500 Index, and the sector itself was a relative under-performer, Akamai Technologies continued to report strong earnings growth and continued its dominance in the facilitation and delivery of digital data over the Internet. We currently maintain an in-line weighting for the sector and anticipate a better 2007. Other leading sectors of the S&P 500 in 2006 included telecom, materials, and utilities. Though the Fund has some representation in the telecom area, it maintained no representation in materials and utilities- these allocations hindered performance. Still, we remain comfortable with these choices. We view these sectors as more cyclical and believe they could face more challenges in 2007. We welcome and encourage you to contact us with any questions, concerns or comments. Please call us directly or visit our website at www.northeastinvestors.com where you can view the Fund's closing price, portfolio composition, and historical performance. If you follow your investments on-line, the ticker symbol for the Fund is NTHFX. Our lines of communication are always open to our most important partners, our fellow shareholders. We continue to appreciate your support. Yours sincerely, William A. Oates, Jr. President February 20, 2007 Average Annual Total Return One year ended December 31, 2006 *********************************** 9.24% Five years ended December 31, 2006 ********************************* 5.58% Ten years ended December 31, 2006 ********************************** 8.15% Performance Graph (Ten Years) The following graph compares the cumulative total shareholder return on the Northeast Investors Growth Fund shares over the ten preceding years to the cumulative total share return on the Standard & Poor's 500 Index. Assuming an investment of $10,000 in both at their closing prices on December 31, 1996 and reinvestment of dividends and capital gains. The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Keep in mind that past performance does not guarantee future returns, and an investment in the Fund is not guaranteed. For management's discussion of the Fund's 2006 performance, including strategies and market conditions which influenced such performance, see the President's letter to shareholders. Table Omitted 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Northeast Investors Growth $13,728 $18,305 $23,637 $20,101 $16,654 $12,878 $16,534 $17,950 $19,992 $21,840 Fund Standard & Poor's $13,310 $17,082 $20,676 $18,795 $16,562 $12,902 $16,602 $18,408 $19,312 $22,361 500 Index
Returns and Per Share Data Year Ended December 31, 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Net Asset Value 15.84 20.47 26.08 20.23 15.43 11.91 15.26 16.52 18.40 20.10 Income Dividend 0.06 0.05 0.02 0.00 0.00 0.02 0.03 0.05 0.00 0.00 Capital Gains Dist. 0.77 0.55 0.31 2.05 1.44 0.00 0.00 0.00 0.00 0.00 NEIG Return (%) 37.28 33.34 29.13 -14.96 -17.15 -22.67 28.39 8.56 11.38 9.24 S&P 500 Return (%) 33.10 28.34 21.04 -9.10 -11.88 -22.10 28.68 10.88 4.91 15.79 Table Omitted
Quarterly Portfolio Holdings: Each fiscal quarter-end the Fund is required to file a complete schedule of investments with the Securities and Exchange Commission. The schedules of portfolio holdings for the second and fourth quarters appear in the semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the schedules of portfolio holdings with the SEC on Form N-Q. The Fund makes the information on Form N-Q available on its website at www.northeastinvestors.com or upon request. Shareholders may also access and review information and reports of the Fund, including Form N-Q, at the SEC's Public Reference Room in Washington, D.C. You can call the SEC at 1-202-942-8090 for information about the operation of the Public Reference Room. Reports and other information about the Fund are available on the SEC's internet site at http://www.sec.gov. and copies may be obtained for a duplicating fee by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Center of the Securities and Exchange Commission, 100 F Street NE Washington, D.C. 20549-0102. The Fund's reference number as a registrant under the Investment Company Act of 1940 is 811-3074 About Your Fund's Expenses Beginning Account Value Ending Account Value Expenses Paid During Period 6/30/2006 12/31/2006 6/30/2006 - 12/31/2006 Actual Return 6.75% $1,000.00 $1,067.45 $6.00 Hypothetical (5% return before expenses) $1,000.00 $1,019.36 $5.90
Example: As a shareholder of the Fund, you incur ongoing costs, including management fees, and other fund expenses. This example is intended to help you understand these expenses 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, 6/30/2006 - 12/31/2006. Actual Expenses: The first line of the table above 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 above 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 other funds. Ten Largest Investment Holdings December 31, 2006 Market Percent of Value Net Assets Akamai Technologies, Inc. ***************** $5,529,792 3.95% Goldman Sachs Group *********************** 5,342,580 3.82% Apple, Inc. ******************************* 4,835,880 3.46% Eaton Vance Corp. ************************* 4,733,634 3.38% Zions Bancorporation ********************** 3,990,096 2.85% Procter & Gamble Co. ********************** 3,779,076 2.70% UBS AG ************************************ 3,348,315 2.39% General Electric Co. ********************** 3,319,132 2.37% Gilead Sciences, Inc. ********************* 3,291,951 2.35% Google, Inc., Class A ********************* 3,223,360 2.30% Summary of Sector Weightings December 31, 2006 Percentage of Net Assets Market Northeast Investors S&P 500 Major Sectors Value Growth Fund Index Consumer Discretionary************** $11,187,527 8.00% 10.80% Consumer Staples******************* $13,947,475 9.97% 10.10% Energy ***************************** $12,340,894 8.82% 9.30% Financials ************************** $42,529,291 30.39% 21.50% Health Care ************************ $15,401,231 11.01% 11.70% Industrials ************************** $18,696,222 13.36% 10.70% Information Technology ************** $21,933,070 15.67% 16.40% Materials *************************** $ - 0.00% 2.90% Telecommunication Services********** $ 2,471,664 1.77% 3.30% Utilities ***************************** $ - 0.00% 3.30% Cash, other assets and liabilities **** $ 1,419,449 1.01% 0.00% 100.00% 100.00%
Summary of Net Assets by Industry December 31, 2006 % of Value Net Assets Common Stocks Aerospace & Defense $ 4,491,788 3.21% Air Freight & Logistics 2,194,124 1.57% Application Software 2,429,024 1.74% Asset Management & Custodian 10,774,944 7.70% Biotechnology 8,785,794 6.28% Communications Equipment 4,352,019 3.11% Computer & Electronics 1,768,381 1.26% Computer Hardware 4,835,880 3.45% Construction and Farming 2,152,683 1.54% Consumer Finance 2,760,485 1.97% Data Processing 1,507,877 1.08% Distillers & Vintners 2,245,536 1.60% Diversified Financial Services 8,529,921 6.10% Drug Retail 2,702,461 1.93% Electrical Components & Equipment 2,451,404 1.75% Electronic Equipment Manufacturer 1,942,534 1.39% Food Distributors 2,931,072 2.09% Footwear 2,682,929 1.92% Health Care Equipment 5,167,541 3.69% Household Products 3,779,076 2.70% Industrial Conglomerate 5,088,143 3.64% Industrial Machinery 2,318,080 1.66% Internet Software and Services 8,753,152 6.26% Integrated Oil & Gas 6,353,955 4.54% Investment Bank & Brokerage 9,543,205 6.82% Managed Health 1,447,896 1.03% Movies & Entertainment 2,176,145 1.56% Office REITS 2,506,112 1.79% Oil & Gas Equipment 2,210,600 1.58% Oil & Gas Exploration 3,776,339 2.70% Regional Banks 7,442,624 5.32% Restaurants 2,617,538 1.87% Soft Drinks 2,289,330 1.64% Specialized Financial 972,000 0.69% Systems Software 2,526,782 1.81% Total Common Stocks 138,507,374 98.99% Total Repurchase Agreement 1,389,649 0.99% Total Security Lending Collateral 9,016,564 6.44% Total Investment Portfolio 148,913,587 106.42% Net Other Assets and Liabilities (8,986,764) -6.42% Total Net Assets $139,926,823 100.00% Schedule of Investments December 31, 2006 Number Market Percent Common Stock Sector of Value of Net Name of Issuer Shares (Note B) Assets Consumer Discretionary Best Buy Co., Inc.* *************************** 35,950 $ 1,768,381 DSW, Inc., Class A^# ************************** 69,560 2,682,929 Garmin Ltd.# ********************************** 34,900 1,942,534 Starbucks Corp.^ ****************************** 73,900 2,617,538 Walt Disney Co. ******************************* 63,500 2,176,145 ----------- 11,187,527 8.00% Consumer Staples Brown-Forman Corp., Class B******************** 33,900 2,245,536 CVS Corp.* ************************************ 87,430 2,702,461 PepsiCo, Inc. ********************************* 36,600 2,289,330 Procter & Gamble Co.* ************************* 58,800 3,779,076 United Natural Foods, Inc.^# ****************** 81,600 2,931,072 ----------- 13,947,475 9.97% Energy Apache Corp. ********************************** 27,900 1,855,629 BP, PLC *************************************** 17,500 1,174,250 Chevron Corp. ********************************* 30,700 2,257,371 EnCana Corp.* ********************************* 41,800 1,920,710 Exxon Mobil Corp.* **************************** 20,082 1,538,884 Schlumberger Ltd. ***************************** 35,000 2,210,600 Suncor Energy, Inc. *************************** 17,532 1,383,450 ----------- 12,340,894 8.82% Financials American Express Co. ************************** 45,500 2,760,485 Bank of America Corp.* ************************ 58,170 3,105,696 Boston Properties, Inc. *********************** 22,400 2,506,112 Citigroup, Inc. ******************************* 49,950 2,782,215 Commerce Bancorp, Inc. ************************ 53,200 1,876,364 Eaton Vance Corp.* *************************** 143,400 4,733,634 Goldman Sachs Group* ************************* 26,800 5,342,580 JPMorgan Chase & Co. ************************* 54,700 2,642,010 KBW, Inc.^ *********************************** 29,000 852,310 NYSE Group, Inc.^# *************************** 10,000 972,000 Seacoast Banking Corp. *********************** 63,555 1,576,164 State Street Corp. *************************** 43,500 2,933,640 T. Rowe Price Group, Inc. ******************** 71,000 3,107,670 UBS AG *************************************** 55,500 3,348,315 Zions Bancorporation* ************************ 48,400 3,990,096 ----------- 42,529,291 30.39% Health Care Amgen, Inc.*^ ******************************* 36,600 2,500,146 Cerner Corp.^# ****************************** 49,400 2,247,700 Genentech, Inc.^ **************************** 36,900 2,993,697 Gilead Sciences, Inc.*^ ********************* 50,700 3,291,951 Hologic, Inc.^ ****************************** 24,690 1,167,343 Stryker Corp. ******************************* 31,800 1,752,498 Wellpoint, Inc.^ **************************** 18,400 1,447,896 ----------- 15,401,231 11.01% Industrials 3M Co.* ************************************* 22,700 1,769,011 The Boeing Company ************************** 26,000 2,309,840 Caterpillar, Inc. *************************** 35,100 2,152,683 Danaher Corp. ******************************* 32,000 2,318,080 Emerson Electric Co. ************************ 55,600 2,451,404 FedEx Corp. ********************************* 20,200 2,194,124 General Electric Co.* *********************** 89,200 3,319,132 United Technologies Corp. ******************* 34,900 2,181,948 ----------- 18,696,222 13.36% Information Technology Adobe Systems, Inc.^ ************************ 32,800 1,348,736 Akamai Technologies, Inc.*^ **************** 104,100 5,529,792 Apple, Inc.*^ ******************************* 57,000 4,835,880 Corning, Inc.*^***************************** 100,500 1,880,355 Google, Inc., Class A^ ********************** 7,000 3,223,360 Infosys Technologies ************************ 19,800 1,080,288 Iron Mountain, Inc.^# *********************** 36,475 1,507,877 Microsoft Corp. ***************************** 38,700 1,155,582 Oracle Corp.^******************************** 80,000 1,371,200 ----------- 21,933,070 15.67% Telecommunication Services American Tower Corp., Class A*^ ************* 66,300 2,471,664 1.77% Total Common Stocks (Cost-$103,423,331) ******** $138,507,374 98.99% Repurchase Agreement Investors Bank & Trust Co. Repurchase Agreement, 3.5% due 1/3/07 @ ************************************* 1,389,649 Total Repurchase Agreement (Cost-$1,389,649) *** $ 1,389,649 0.99% Security Lending Collateral American Beacon FundsY~5.21518% **************** 3,516,564 BGI Institutional Money Market Fund~5.25179% ***** 5,500,000 Total Security Lending Collateral (Cost- $9,016,564) *************************************** $9,016,564 6.44% ------------ Total Investment Portfolio (Cost-$113,829,544) **** 148,913,587 106.42% ------------ Net Other Assets and Liabilities ****************** (8,986,764) -6.42% Total Net Assets ********************************* $139,926,823 100.00% @Acquired on December 29, 2006. Collateralized by $1,459,131 of market value of U.S. Government mortgage-backed securities due through 12/25/26. The maturity value is $1,390,189. * All or a portion of this security is pledged to collateralize short-term borrowings ^ Non-income producing security # All or a portion of this security is currently out on loan (See Note I) ~ Security held as collateral for securities on loan. The rate quotes is the annualized seven-day yield of the fund at period end (See Note I) The accompanying notes are an integral part of the financial statements. Statement of Assets and Liabilities December 31, 2006 Assets Investments-at market value (including securities loaned of $8,566,650) (cost $113,829,544) ********************************************** $148,913,587 Dividends receivable ************************************************** 250,888 Receivable for shares sold ********************************************* 13,043 Other receivables ****************************************************** 13,288 Total Assets ****************************************************** 149,190,806 Liabilities Collateral on securities loaned, at value *************************** 9,016,564 Payable for shares repurchased **************************************** 117,564 Accrued investment advisory fee***************************************** 68,141 Accrued expenses ******************************************************* 61,714 Total Liabilities *************************************************** 9,263,983 Net Assets******************************************************** $139,926,823 Net Assets Consist of: Capital paid-in *************************************************** $95,618,111 Undistributed net investment income *********************************** 102,663 Accumulated net realized gain *************************************** 9,122,006 Net unrealized appreciation of investments ************************* 35,084,043 Net Assets******************************************************** $139,926,823 Net Asset Value, offering price and redemption price per share ($139,926,823/6,962,496 shares) ************************************* $20.10 The accompanying notes are an integral part of the financial statements. Statement of Operations December 31, 2006 Investment Income Dividend income **************************************************** $1,601,904 Security Lending Income ************************************************ 29,536 Interest income ******************************************************** 21,046 Other income *********************************************************** 22,200 Total Income ******************************************************** 1,674,686 Expenses Investment advisory fee *********************************************** 784,663 Administrative expenses and salaries ********************************** 326,082 Audit fees ************************************************************ 108,960 Computer and related expenses ****************************************** 79,950 Printing, postage, and stationery ************************************** 60,000 Legal fees ************************************************************* 58,600 Insurance ************************************************************** 41,090 Trustee fees *********************************************************** 30,000 Commitment fee ********************************************************* 25,188 Registration and Filing fees******************************************** 24,400 Telephone expense******************************************************* 15,200 Custodian fees********************************************************** 10,876 Interest fee ************************************************************** 914 Miscellaneous fees ****************************************************** 6,100 Total Expenses ****************************************************** 1,572,023 Net Investment Income ************************************************* 102,663 Realized and Unrealized Gain on Investments: Net realized gain from investment transactions ******************** $10,976,145 Change in unrealized appreciation of investments********************* 1,048,760 Net gain on investments ******************************************** 12,024,905 Net Increase in Net Assets Resulting from Operations ************** $12,127,568 The accompanying notes are an integral part of the financial statements. Statements of Changes in Net Assets Year Ended Year Ended December 31, December 31, 2006 2005 Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ********************************** $102,663 $(192,184) Net realized gain from investment transactions ******************* 10,976,145 9,036,562 Change in unrealized appreciation (depreciation) of investments *** 1,048,760 4,937,206 Net Increase (Decrease) in Net Assets Resulting from Operations ******************************* 12,127,568 13,781,584 From Net Fund Share Transactions (see Note E) **************** (6,613,081) (15,607,250) Total Increase (Decrease) in Net Assets ********************** 5,514,487 (1,825,666) Net Assets: Beginning of Period ******************************************* 134,412,336 136,238,002 End of Period ************************************************ $139,926,823 $134,412,336 Undistributed Net Investment Income*************************** $102,663 -
The accompanying notes are an integral part of the financial statements. Financial Highlights Year Ended December 31, 2006 2005 2004 2003 2002 Per Share Data^ Net Asset Value: Beginning of Period $18.40 $16.52 $15.26 $11.91 $15.43 Income From Investment Operations: Net investment income (loss) 0.01 (0.02) 0.04 0.03 0.02 Net realized and unrealized gain (loss) on investment 1.69 1.90 1.27 3.35 (3.52) Total from investment operations 1.70 1.88 1.31 3.38 (3.50) Less Distributions: Net investment income 0.00 0.00 (0.05) (0.03) (0.02) Capital Gain 0.00 0.00 0.00 0.00 0.00 Total Distributions - - (0.05) (0.03) (0.02) Net Asset Value: End of Period $20.10 $18.40 $16.52 $15.26 $11.91 Total Return 9.24% 11.38% 8.56% 28.39% -22.67% Ratios & Supplemental Data Net assets end of period (in thousands) $139,927 $134,412 $136,238 $141,561 $125,986 Ratio of operating expenses to average net assets (includes interest expense) 1.15% 1.18% 1.32% 1.43% 1.31% Ratio of interest expense to average net assets 0.00%* 0.00%* 0.07% 0.22% 0.21% Ratio of net investment income to average net assets 0.08% -0.15% 0.29% 0.21% 0.17% Portfolio turnover rate 52% 57% 19% 25% 26% ^ Average share method used to calculate per share data * Amount is less than .01%
Notes to Financial Statements Note A-Organization Northeast Investors Growth Fund (the "Fund") is a diversified, no-load, open-end, series-type management investment company registered under the Investment Company Act of 1940, as amended. The Fund presently consists of one portfolio and is organized as a Massachusetts business trust. The Fund's objective is to produce long term growth for its shareholders. Note B-Significant Accounting Policies Significant accounting policies of the Fund are as follows: Valuation of Investments: Investments in securities traded on national securities exchanges are valued based upon closing prices on the exchanges. Securities traded in the over-the-counter market and listed securities with no sales on the date of valuation are valued at closing bid prices. Repurchase agreements are valued at cost with earned interest included in interest receivable. Other short-term investments, when held by the Fund, are valued at cost plus earned discount or interest which approximates market value. Securities and other assets for which market quotations are not readily available (including restricted securities, if any) are valued at their fair value as determined in good faith under consistently applied procedures approved by the Board of Trustees. The Fund may use fair value pricing for foreign securities if a material event occurs that may effect the price of a security after the close of the foreign market or exchange (or on days the foreign market is closed) but before the Fund prices it's portfolio, generally at 4:00 p.m. ET. Fair value pricing may also be used for securities acquired as a result of corporate restructurings or reorganizations as reliable market quotations for such issues may not be readily available. At December 31, 2006 there were no securities priced at fair value as determined in good faith. In September 2006, FASB Statement No. 157, Fair Value Measurements (the "Statement") was issued, and is effective for fiscal years beginning after November 15, 2007 and for all interim periods within those fiscal years. This Statement provides a single definition of fair value, a hierarchy for measuring fair value and expanded disclosures about fair value measurements. Management is evaluating the application of the Statement to the Fund, and believes the impact will be limited to expanded disclosures resulting from the adoption of this Statement on the Fund's financial statements. Security Transactions: Security transactions are accounted for as of trade date for financial reporting purposes. Gains and losses on securities sold are determined on the basis of identified cost. Federal Income Taxes: No provision for federal income taxes is necessary since the Fund has elected to qualify under subchapter M of the Internal Revenue Code and its policy is to distribute all of its taxable income, including net realized capital gains, within the prescribed time periods. State Income Taxes: Because the Fund has been organized by an Agreement and Declaration of Trust executed under the laws of the Commonwealth of Massachusetts, it is not subject to state income or excise taxes. Distributions and Income: Income and capital gain distributions are determined in accordance with income tax regulations which may differ from U.S. generally accepted accounting principles. These differences are primarily due to differing treatments for capital loss carryovers and losses deferred due to wash sales. Permanent book and tax differences relating to shareholder distributions will result in reclassifications to paid-in-capital. The Fund's distributions and dividend income are recorded on the ex-dividend date. Interest income, which consists of interest from repurchase agreements, is accrued as earned. Net Asset Value: In determining the net asset value per share, rounding adjustments are made for fractions of a cent to the next higher cent. Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note C-Investment Advisory and Service Contract The Fund has its investment advisory and service contract with Northeast Management & Research Company, Inc. (the "Advisor"). Under the contract, the Fund pays the Advisor an annual fee at a maximum rate of 1% of the first $10,000,000 of the Fund's average daily net assets, 3/4 of 1% of the next $20,000,000 and 1/2 of 1% of the average daily net assets in excess of $30,000,000, in monthly installments on the basis of the average daily net assets during the month preceding payment. All trustees except Messrs. John C. Emery, Michael Baldwin, and F. Washington Jarvis are officers or directors of the Advisor. The compensation of all disinterested trustees of the Fund is borne by the Fund. Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of the Advisor provide the Fund with advice and assistance in the choice of investments and the execution of securities transactions, and otherwise maintain the Fund's organization. The Advisor also provides the Fund with necessary office space and portfolio accounting and bookkeeping services. The salaries of all officers of the Fund or of the Advisor performing services relating to research, statistical and investment activities are paid by the Advisor. The Fund pays expenses, including the salaries of employees engaged in the following activities, related to its role as transfer, dividend paying and shareholder servicing agent. Note D-Purchases and Sales of Investments The cost of purchases and proceeds from sales of investments, other than short-term securities, aggregated $71,517,211 and $79,428,582, respectively, for the year ended December 31, 2006. Note E-Shares of Beneficial Interest At December 31, 2006, there was an unlimited number of shares of beneficial interest authorized with no par value. Transactions in shares of beneficial interest were as follows: December 31, 2006 December 31, 2005 Shares Amount Shares Amount Shares sold ************************ 390,449 $ 7,534,693 361,828 $ 6,158,841 Shares issued to shareholders in reinvestment of distributions from net investment income and realized gains from security transactions **** 0 0 0 0 ------- ---------- ------- ---------- 390,449 $ 7,534,693 361,828 $ 6,158,841 Shares repurchased **************** (734,701) $(14,147,774)(1,305,097) $(21,766,091) Net Increase *********************** (344,252) $ (6,613,081) (943,269) $(15,607,250)
Note F-Repurchase Agreement On a daily basis, the Fund invests any cash balances into repurchase agreements hypothecated by U.S. Government obligations. Securities pledged as collateral for repurchase agreements are held by the Fund's custodian bank until maturity of the repurchase agreement. Provisions of the agreement ensure that the market value of the collateral is sufficient in the event of default. However, in the event of default or bankruptcy by the other party to the agreement, realization and/ or retention of the collateral may be subject to legal proceedings. Note G-Committed Line of Credit Short-term bank borrowings, which do not require maintenance of compensating balances, are generally on a demand basis and are at rates equal to adjusted money market interest rates in effect during the period in which such loans are outstanding. At December 31, 2006, the Fund had unused lines of credit amounting to $25,000,000 and there was no outstanding balance. In addition the Fund pays a commitment fee of 0.10% per annum, payable at the end of each quarter based on the unused portion of the line of credit. The committed lines of credit may be terminated at the banks' option at their annual renewal dates. The following information relates to aggregate short-term borrowings during the year ended December 31, 2006: Average amount outstanding (total of daily outstanding principal balances divided by number of days with debt outstanding during the period)***** $232,981 Weighted average interest rate******************************************** 5.21% Note H-Additional Tax Information The Fund did not pay any distributions during the fiscal years ended December 31, 2005 and 2006. As of December 31, the components of accumulated earnings (losses) on a tax basis were as follows: 2006 Unrealized appreciation ***************************************** $36,742,853 Unrealized depreciation ****************************************** (1,658,810) Net unrealized appreciation of investments *********************** 35,084,043 Accumulated net investment income *********************************** 102,663 Accumulated net realized gain ************************************* 9,122,006 Capital paid-in ************************************************** 95,618,111 During the fiscal year ended December 31, 2006, the Fund utilized $1,854,139 of capital loss carryforwards. At December 31, 2006 the Fund's aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes was as follows: 2006 Tax cost ****************************************************** $113,829,544 Gross unrealized gain******************************************** 36,742,853 Gross unrealized loss ******************************************* (1,658,810) Net unrealized security gain (loss)**************************** $ 35,084,043 On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). 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 will "more-likely-than-not" be 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 reporting period. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of June 29, 2007. At this time, management is evaluating the implications of FIN 48 and any impact in the financial statements has not been determined. Note I-Securities Lending The Fund may seek additional income by lending portfolio securities to qualified institutions. The Fund will receive cash or securities as collateral in an amount equal to at least 102% of the current market value of any loaned securities plus accrued interest. By reinvesting any cash collateral it receives in these transactions, the Fund could realize additional gains and losses. If the borrower fails to return the securities and the value of the collateral has declined during the term of the loan, the Fund will bear the loss. At December 31, 2006, the value of securities loaned and the value of collateral was $8,566,650 and $9,016,564, respectively. During the year ended December 31, 2006, income from securities lending amounted to $29,536. Report of Ernst & Young LLP, Independent Registered Public Accounting Firm To the Board of Trustees and Shareholders of Northeast Investors Growth Fund We have audited the accompanying statement of assets and liabilities of Northeast Investors Growth Fund (the Fund), including the schedule of investments, as of December 31, 2006, and the related statement of operations for the year then ended, the statements of changes in net assets for the each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended December 31, 2002 were audited by other auditors whose report dated February 14, 2003 expressed an unqualified opinion on those financial statements and financial highlights. We conducted our audits 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 and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2006, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Northeast Investors Growth Fund at December 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with U.S. generally accepted accounting principles. Boston, Massachusetts February 16, 2007 Trustees and Officers The Trustees of Northeast Investors Growth Fund are William A. Oates, Jr., Ernest E. Monrad, Robert B. Minturn, John C. Emery, Michael Baldwin, and F. Washington Jarvis. Under Massachusetts Law, the Trustees are generally responsible for protecting the interests of the shareholders by overseeing the operation and management of the Fund. The table below provides certain information about the Fund's Trustees and Officers. The mailing address for the Trustees and Officers of the Fund is 150 Federal Street, Boston, MA 02110-1745. The Fund's Statement of Additional Information (SAI) contains additional information about the Trustees. To request a free copy, call the Fund at 800-225-6704 or visit our website at www.northeastinvestors.com. Principal Occupation(s) During the Past Five Years/and Name/Age/Service* Position Other Directorships AFFILIATED TRUSTEES AND FUND OFFICERS Williams A. Oates, Jr. Trustee and Trustee and President of Northeast Age: 64 President Investors Growth Fund; President and Years of Service: 26 Director of Northeast Investment Management, Inc. Ernest E. Monrad Trustee Trustee of Northeast Investors Trust; Age: 76 Director of New America High Income Years of Service: 26 Fund, Inc. Gordon C. Barrett Senior Vice Chief Financial Officer of Northeast Age: 50 President and Investors Growth Fund, Chief Financial Years of Service: 13 Chief Financial Officer of Northeast Investors Trust, and Officer Officer of Northeast Investment Management, Inc. Robert B. Minturn Trustee, Clerk, Officer of Northeast Investors Trust; Age: 67 Vice President, and Trustee and Officer of Northeast Years of Service: 26 Chief Legal Officer Investors Growth Fund INDEPENDENT TRUSTEES John C. Emery Trustee Partner, Law Firm of Sullivan & Age: 76 Worcester Years of Service: 26 Michael Baldwin Trustee Partner, Baldwin Brothers, Registered Age: 66 Investment Advisor Years of Service: 7 F. Washington Jarvis Trustee Headmaster Emeritus at Roxbury Latin Age: 67 School Years of Service: 3 * The Trustees serve until their resignation or the appointment of a successor and the officers serve at the pleasure of the Trustees.
Trustees William A. Oates, Jr. John C. Emery Ernest E. Monrad Michael Baldwin Robert B. Minturn F. Washington Jarvis Officers William A. Oates, Jr., President Gordon C. Barrett, Senior Vice President & Chief Financial Officer Ernest E. Monrad, Assistant Treasurer Robert B. Minturn, Vice President, Clerk & Chief Legal Officer Richard J. Semple, Vice President & Chief Compliance Officer Bruce H. Monrad, Vice President David A. Randall, Vice President Investment Advisor Northeast Management & Research Company, Inc. 150 Federal Street Boston, Massachusetts 02110 Custodian Investors Bank & Trust Company 200 Clarendon Street Boston, Massachusetts 02205 Legal Counsel Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, Massachusetts 02111 Transfer Agent Northeast Investors Growth Fund 150 Federal Street Boston, Massachusetts 02110 Independent Registered Public Accounting Firm Ernst & Young LLP 200 Clarendon Street Boston, Massachusetts 02116-5072 This report is prepared for the information of the shareholders of Northeast Investors Growth Fund and must not be given to others unless preceded or accompanied by a copy of the current Prospectus by which all offerings of the Fund shares are made. It should be noted in reading this report and the letter to shareholders that the record of past performance is not a representation as to the Fund's future performance, and that the Fund's investments are subject to market risks. For a free copy of the Fund's proxy voting guidelines and proxy voting record visit www.northeastinvestors.com/growth/proxypolicy.stm, call 1-800-225-6704 or visit the Securities and Exchange Commission (SEC)'s website at www.sec.gov. Shares of the Fund are sold to investors at net asset value by Northeast Investors Growth Fund 150 Federal Street Boston, Massachusetts 02110 800-225-6704 ) 617-523-3588 www.northeastinvestors.com Item 2. Code of Ethics. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer and principal financial officer. A copy of the code of ethics has been filed as Exhibit to registrant's Report on Form N-CSR for its fiscal year ended December 31, 2003. The registrant has not made any amendment to its code of ethics during the covered period. The registrant has not granted any waivers from any provisions of the code of ethics during the covered period. Item 3. Audit Committee Financial Expert. The registrant does not have an Audit Committee Financial Expert. Although the members of the registrant's Audit Committee have a variety of business and investment experience, none of them has been determined to meet the technical qualifications required in order to meet the definition of an Audit Committee Financial Expert under this Item. Certain of the registrant's trustees who are considered to be "interested persons" as defined in Section 2(a)(19) under the Investment Company of 1940, as amended, do possess such qualifications, but it has been determined that the Audit Committee should consist entirely of independent trustees. The Audit Committee, under its charter, has the ability to retain independent advisers if it deems it necessary or appropriate without the need to seek approval from the management of the Fund. Item 4. Principal Accountant Fees and Services. (a) Audit Fees. The aggregate fees billed for the registrant's fiscal years ended December 31, 2006 and December 31, 2005 for professional services rendered by the registrant's principal accountant for audit of its annual financial statements or services that are normally provided by such accountant in connection with statutory and regulatory filings were $48,000, and $44,000 respectively. (b) Audit-Related Fees The aggregate fees billed for the registrant's fiscal year ended December 31, 2006 and December 31, 2005 for assurance and related services by the registrant's principal accountant reasonably related to the performance of audit of the registrant's financial statements and not reported under Paragraph (a) of this Item were $19,500 and $18,125 respectively. Such services consisted of a report of the Fund's transfer agent internal controls pursuant to rule 17AD-13, semi-annual report review and a report on the Fund's anti-money laundering controls and policies. (c) Tax Fees. The aggregate fees billed in the registrant's fiscal years ended December 31, 2006 and December 30, 2005 for professional services rendered by the registrant's principal accountant for tax matters were $7,500 and $7,000 respectively. Such services consisted of the preparation of the registrant's federal income and excise tax returns. (d) All other Fees. No products or services were provided to the registrant during its last two fiscal years by its principal accountants other than the services reported in Paragraphs (a) - (c) of this item. (e) It is the registrant's policy that all audit and non-audit services provided by the registrant's principal accountant be approved in advance by the Audit Committee, and all of the services described in Paragraphs (a) - (d) of this item were so approved. (f) The registrant has been advised by its independent accountants that less than 50% of the hours expended on the principal accountant's engagement to audit the registrant's financial statements were attributed to work by persons other than the principal accountants' full-time, permanent employees. (g) No non-audit services were provided by the registrant's principal accountant to the registrant's investment adviser. There is no entity affiliated with registrant's investment adviser that provides ongoing services to the registrant. (h) Not applicable to the registrant. Item 5. Audit Committee of Listed Registrants. Not applicable to the registrant. Item 6. Schedule of Investments Included as part of Item 1 above. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable to the registrant. Item 8. Portfolio Manager of Closed-End Management Investment Companies Not applicable to the registrant. Item 9. Purchase of Equity Securities by Closed-End Management Company and Affiliated Purchasers Not applicable to the registrant. Item 10. Submission of Matters to a Vote of Security Holders. No material changes have been made with respect to procedures by which shareholders may recommend nominees for trustee during the covered period. Item 11. Controls and Procedures. (a) The registrant's principal executive and financial officers, after evaluating the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended), have concluded that, based on such evaluation, the registrant's disclosure controls and procedures were effective as of a date within 90 days of the filing of this report. (b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a) 99.CERT Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (b) 99.906CERT A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached. 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. (Registrant) Northeast Investors Growth Fund By (Signature and Title) William A. Oates, Jr. President (principal executive officer) Date: March 9, 2007 By (Signature and Title) Gordon C. Barrett Chief Financial Officer (principal financial officer) Date: March 9, 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 (Signature and Title) William A. Oates, Jr. President (principal executive officer) Date: March 9, 2007 By (Signature and Title) Gordon C. Barrett Chief Financial Officer (principal financial officer) Date: March 9, 2007 Exhibit 99.CERT Certification Pursuant to Section 302 of the Sarbanes-Oxley Act I, William A. Oates, Jr., certify that: 1. I have reviewed this report on Form N-CSR of Northeast Investors Growth Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 9, 2007 William A. Oates, Jr. President (principal executive officer) Certification Pursuant to Section 302 of the Sarbanes-Oxley Act I, Gordon C. Barrett, certify that: 1. I have reviewed this report on Form N-CSR of Northeast Investors Growth Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 9, 2007 Gordon C. Barrett Chief Financial Officer (principal financial officer) Exhibit 99.906CERT Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Northeast Investors Growth Fund, a Massachusetts business trust (the "Registrant"), does hereby certify, to such officer's knowledge, that: The report on Form N-CSR for the period ended December 31, 2006 of the Registrant (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: March 9, 2007 William A. Oates, Jr. President (Principal Executive Officer) Dated: March 9, 2007 Gordon C. Barrett Chief Financial Officer (Principal Financial Officer) The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. EX-99.CERT 2 cert99.txt Exhibit 99.CERT Certification Pursuant to Section 302 of the Sarbanes-Oxley Act I, William A. Oates, Jr., certify that: 1. I have reviewed this report on Form N-CSR of Northeast Investors Growth Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 9, 2007 William A. Oates, Jr. President (principal executive officer) Certification Pursuant to Section 302 of the Sarbanes-Oxley Act I, Gordon C. Barrett, certify that: 1. I have reviewed this report on Form N-CSR of Northeast Investors Growth Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 9, 2007 Gordon C. Barrett Chief Financial Officer (principal financial officer) EX-99.906 CERT 3 cert99906.txt Exhibit 99.906CERT Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Northeast Investors Growth Fund, a Massachusetts business trust (the "Registrant"), does hereby certify, to such officer's knowledge, that: The report on Form N-CSR for the period ended December 31, 2006 of the Registrant (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: March 9, 2007 William A. Oates, Jr. President (Principal Executive Officer) Dated: March 9, 2007 Gordon C. Barrett Chief Financial Officer (Principal Financial Officer) The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----