-----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, NssnUDi6bJUZogiWypcW55M5m6Ew+CSWgTrS/5Y3REtyLmG7iiJbl/GxvA4CRb0z SgZUtQcmhi0Th04Z5TaeDA== 0000318192-09-000006.txt : 20090311 0000318192-09-000006.hdr.sgml : 20090311 20090311161951 ACCESSION NUMBER: 0000318192-09-000006 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20081231 FILED AS OF DATE: 20090311 DATE AS OF CHANGE: 20090311 EFFECTIVENESS DATE: 20090311 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: 09672750 BUSINESS ADDRESS: STREET 1: 150 FEDERAL STREET CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6175233588 MAIL ADDRESS: STREET 1: 150 FEDERAL STREET CITY: BOSTON STATE: MA ZIP: 02110 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 ncsr2008.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, 2008 Date of reporting period: December 31, 2008 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, 2008 Table of Contents Letter to Shareholders . . . . . . . . . . . . . . . . .. . . 2 Fund Performance. . . . . . . . . . . . . . . . . . . . . . . 4 Schedule of Investments . . . . . . . . . . . . . . . . . . . 9 Financial Statements . . . . . . . . . . . . . . . . . . . . 11 Notes to the Financial Statements. . . . . . . . . . . . . . 15 Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . 20 Trustees & Officers . . . . . . . . . . . . . . . . . . . . 21 Dear Fellow Shareholders: The past year was an extraordinarily difficult time for investors. Unfortunately Northeast Investors Growth Fund shareholders, which include me and my team, were not spared. In fact, 2008 was the worst performing year for U.S. large-cap equities since the Great Depression. We, like many others, did not foresee the magnitude of the dramatic events which unfolded in 2008. There was a string of financial collapses previously thought inconceivable - AIG, Lehman Brothers, Fannie Mac, Freddie Mac, Bear Stearns, Wachovia and Washington Mutual among them. These failures contributed to an almost complete collapse of the credit markets and the near evaporation of liquidity in the global financial system. As the year progressed, we positioned the Fund's portfolio for a possible shallow recession by increasing exposure to more traditionally defensive sectors, namely Consumer Staples, Healthcare and Utilities, and reduced the Fund's exposure to more cyclical economic sectors such as Energy, Industrials, Materials and Technology. With hindsight, those defensive moves proved inadequate in the face of the carnage that unfolded last fall. The Fund finished the year returning -41.61%, underperforming its benchmark, the S&P 500 Index, which returned -37.00%. Unfortunately, in 2008, there were no sectors within the S&P 500 Index in which 'to hide' as all segments contributed negative results. The best performing sector in the S&P 500 Index was Consumer Staples which was down -18% while the worst performing sector was Financials which declined -57%. The Developed Equity Markets as measured by the EAFE Index and fast growing developing economies as measured by the Emerging Market Index were drastically down last year, declining - -45% and -54%, respectively. The Fund's 'leastworst' performing sectors were Consumer Discretionary, Consumer Stables, and Utilities down -16%, -25% & -28%, respectively. The worst performing sectors in the Fund during the period were Materials, Technology and Financials down -62%, -56% & -54% respectively. Again, as evidenced by these return figures, there were no safe harbors for equity investors. In terms of individual stocks held by the Fund last year, the list of losers far outweighs the list of winners as just five companies posted positive returns. The winners included Wells Fargo (+16%), Gilead Sciences (+10%), McDonald's (+8%), StreetTracks Gold (+5%) and Intuitive Surgical (+2%). McDonald's was, in fact, the holding which was the Fund's best relative performer as the company offered value, quality and convenience to consumers in a period of economic weakening. Not surprisingly, the worst performing stocks were concentrated in the Energy, Materials and Financial sectors. These names included Freeport McMoran (-76%), Bank of America (-67%), Suncor (-67%) Weatherford International (-65%) and Companhia Valer Rio Doce (-63%). Financials were the biggest detractor from Fund performance. The problems affecting the Financial Sector have been well documented, as have the historic declines in energy and material prices. Looking forward, we are cautiously optimistic about the opportunities ahead of us. Without question, much uncertainty remains surrounding the eventual fix of the banking industry and the overall outlook for the global economies as we approach the longest recession since the 1930's. We believe, however, that the government has done and will continue to do the things necessary to right our ship despite some missteps along the way. Ultimately, the economy and the financial system will recover, possibly sooner than most anticipate. The fear that permeates the market has provided an opportunity for diligent, longterm investors to purchase great companies at extraordinary prices. We believe the Fund will be rewarded for purchases made in the face of this fear. Our lines of communication are always open to our most important partners, our fellow shareholders. Please call us directly or visit our website at www.northeastinvestors.com where you can view the Fund's closing price, month-end portfolio composition, and historical performance. If you follow your investments on-line, the ticker symbol for the Fund is NTHFX. We continue to appreciate your support. William A. Oates, Jr. January 2009 Average Annual Total Return One year ended December 31, 2008 . . . . . . . . . . . . . . . . . . . .-41.61% Five years ended December 31, 2008. . . . . . . . . . . . . . . . . . . - 2.56% Ten years ended December 31, 2008 . . . . . . . . . . . . . . . . . . . - 2.29% Performance Graph (Unaudited) (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, 1998 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 Growth Fund's 2008 performance, including strategies and market conditions which influenced such performance, see the President's letter to shareholders. Table Omitted 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Northeast Investors Growth $12,913 $10,981 $9,098 $7,035 $9,033 $9,806 $10,922 $11,931 $13,590 $7,935 Fund Standard & Poor's $12,104 $11,003 $9,695 $7,553 $9,719 $10,776 $11,305 $13,091 $13,808 $8,699 500 Index
Returns and Per Share Data Year Ended December 31, 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Net Asset Value 26.08 20.23 15.43 11.91 15.26 16.52 18.40 20.10 20.19 11.74 Income Dividend 0.02 0.00 0.00 0.02 0.03 0.05 0.00 0.00 0.04 0.05 Capital Gains Dist 0.31 2.05 1.44 0.00 0.00 0.00 0.00 0.00 2.60 0.00 NEIG Return(%) 29.13 14.96 17.15 22.67 28.39 8.56 11.38 9.24 13.90 41.61 S&P 500 Return(%) 21.04 9.10 11.88 22.10 28.68 10.88 4.91 15.79 5.48 37.00 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 semi-annual 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 Forms 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 copiesmay 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, 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 (Unaudited) Beginning Account Value Ending Account Value Expenses Paid During Period 6/30/2008 12/31/2008 6/30/2008 - 12/31/2008 Actual Return - -35.19% $1,000.00 $ 648.12 $5.60 Hypothetical (5% return per year before expenses) $1,000.00 $1,018.12 $7.15
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, 6/30/2008 - 12/31/2008. 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 you 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 this5%hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Ten Largest Investment Holdings December 31, 2008 Market Percent of Value Net Assets Procter & Gamble Co. . . . . . . . . . . .. $3,369,190 4.29% Eaton Vance Corp. . . . . . . . . . . . . . 2,890,976 3.68% Gilead Sciences, Inc. . . . . . . . . . . . 2,822,928 3.60% CVS Caremark Corp. . . . . . . . . . . . . . 2,780,020 3.54% T. Rowe Price Group, Inc. . . . . . . . . . 2,647,368 3.37% PepsiCo, Inc. . . . . . . . . . . . . . . . 2,645,391 3.37% Nestle SA . . . . . . . . . . . . . . . . . 2,501,100 3.19% Burlington Northern Santa Fe Corp. . . . . . 2,324,297 2.96% Emerson Electric Co. . . . . . . . . . . . . 2,174,634 2.77% JPMorgan Chase & Co. . . . . . . . . . . . . 2,169,264 2.77% Summary of Sector Weightings as a Percentage of Net Assets December 31, 2008 Market Northeast Investors S&P 500 Major Sectors Value Growth Fund Index Consumer Discretionary . . . . . . . $ 3,621,585 4.61% 8.40% Consumer Staples . . . . . . . . . . $12,700,076 16.19% 12.88% Energy . . . . . . . . . . . . . . . $ 9,038,155 11.52% 13.34% Financials . . . . . . . . . . . . . $10,784,491 13.75% 13.29% Health Care. . . . . . . . . . . . . $10,941,124 13.95% 14.79% Industrials . . . . . . . . . . . . . $ 9,975,062 12.71% 11.08% Information Technology . . . . . . . $12,239,862 15.60% 15.27% Materials . . . . . . . . . . . . . . $ 1,836,630 2.34% 2.93% Telecommunication Services . . . . . .$ 2,697,324 3.44% 3.83% Utilities . . . . . . . . . . . . . . $ 2,808,093 3.58% 4.19% Cash, other assets and liabilities . .$ 1,811,024 2.31% 0.00% ----- ----- 100.00% 100.00%
Summary of Net Assets by Industry December 31, 2008 % of Value Net Assets Common Stocks Aerospace & Defense . . . . . . . . . . . . . . $ 2,085,040 2.66% Asset Management & Custodian . . . . . . . . . 5,538,344 7.06% Biotechnology . . . . . . . . . . . . . . . . . . 3,569,208 4.55% Communications Equipment . . . . . . . . . . . . 5,871,554 7.49% Computer Hardware . . . . . . . . . . . . . . . . 2,935,957 3.74% Construction & Farming . . . . . . . . . . . . . 1,381,436 1.76% Diversified Banks . . . . . . . . . . . . . . . . 589,600 0.75% Diversified Financial Services . . . . . . . . . 2,662,064 3.39% Diversified Minerals . . . . . . . . . . . . . . 1,360,050 1.73% Drug Retail . . . . . . . . . . . . . . . . . . . 2,780,020 3.54% Electric Utility . . . . . . . . . . . . . . . . 2,808,093 3.58% Electrical Components & Equipment . . . . . . . . 2,174,634 2.77% Footwear . . . . . . . . . . . . . . . . . . . . 1,662,600 2.12% Health Care Distribution . . . . . . . . . . . . 1,943,470 2.48% Health Care Equipment . . . . . . . . . . . . . . 4,124,152 5.26% Household Products . . . . . . . . . . . . . . . 3,369,190 4.29% Hypermarkets & Super Centers . . . . . . . . . . 1,404,375 1.79% Industrial Machinery . . . . . . . . . . . . . . 2,009,655 2.56% Integrated Oil & Gas . . . . . . . . . . . . . . 5,102,350 6.50% Integrated Telecommunication Services . . . . . . 1,069,155 1.36% Internet Software & Services . . . . . . . . . . 3,432,351 4.38% Investment Bank & Brokerage . . . . . . . . . . . 1,130,826 1.44% Metals & Mining . . . . . . . . . . . . . . . . 476,580 0.61% Oil & Gas Equipment . . . . . . . . . . . . . . . 1,481,550 1.89% Oil & Gas Exploration . . . . . . . . . . . . . . 2,454,255 3.13% Packaged Foods. . . . . . . . . . . . . . . . . . 2,501,100 3.19% Pharmaceuticals . . . . . . . . . . . . . . . . . 1,304,294 1.66% Railroads . . . . . . . . . . . . . . . . . . . . 2,324,297 2.96% Restaurants . . . . . . . . . . . . . . . . . . . 1,958,985 2.50% Soft Drinks . . . . . . . . . . . . . . . . . . . 2,645,391 3.37% Specialized Finance . . . . . . . . . . . . . . . . 863,657 1.10% Wireless Services . . . . . . . . . . . . . . . . 1,628,169 2.08% ----------- ----- Total Common Stocks . . . . . . . . . . . . . . 76,642,402 97.69% Total Cash Equivalents. . . . . . . . . . . . . 1,844,164 2.35% ----------- ----- Total Investment Portfolio . . . . . . . . . . 78,486,566 100.04% Net Other Assets and Liabilities. . . . . . . . (33,140) -0.04% ----------- ----- Total Net Assets . . . . . . . . . . . . . . . . 78,453,426 100.00% Schedule of Investments December 31, 2008 Number Market Percent Common Stock Sector of Value of Net Name of Issuer Shares (Note B) Assets - ------------------------------------------------------------------------------- Consumer Discretionary - ------------------------------------------------------------------------------- McDonald's Corp.* . . . . . . . . . . . 31,500 $ 1,958,985 Nike, Inc. . . . . . . . . . . . . . .. 32,600 1,662,600 ----------- 3,621,585 4.61% Consumer Staples - ------------------------------------------------------------------------------- Costco Wholesale Corp. . . . . . . . . 26,750 $ 1,404,375 CVS Caremark Corp.* . . . . . . . . . . 96,730 2,780,020 Nestle SA* . . . . . . . . . . . . . . 63,000 2,501,100 PepsiCo, Inc.* . . . . . . . . . . . . 48,300 2,645,391 Procter & Gamble Co.* . . . . . . . . . 54,500 3,369,190 ----------- 12,700,076 16.19% Energy - ------------------------------------------------------------------------------- Apache Corp. . . . . . . . . . . . . . 17,900 1,334,087 Chevron Corp.* . . . . . . . . . . . . 25,700 1,901,029 ConocoPhillips . . . . . . . . . . . . 27,000 1,398,600 EnCana Corp. . . . . . . . . . . . . . 24,100 1,120,168 Exxon Mobil Corp.* . . . . . . . . . . 22,582 1,802,721 Schlumberger Ltd. . . . . . . . . . . . 35,000 1,481,550 ----------- 9,038,155 11.52% Financials - ------------------------------------------------------------------------------- Bank of America Corp. . . . . . . . . . 35,000 492,800 CME Group, Inc. . . . . . . . . . . . . 4,150 863,657 Eaton Vance Corp.* . . . . . . . . . . 137,600 2,890,976 Goldman Sachs Group . . . . . . . . . . 13,400 1,130,826 JPMorgan Chase & Co.* . . . . . . . . . 68,800 2,169,264 T. Rowe Price Group, Inc.*. . . . . . . 74,700 2,647,368 Wells Fargo & Co. . . . . . . . . . . . 20,000 589,600 ----------- 10,784,491 13.75% Health Care - ------------------------------------------------------------------------------- AmericourceBergen Corp.* . . . . . . . 54,500 1,943,470 Celgene Corp.^ . . . . . . . . . . . . 13,500 746,280 Gilead Sciences, Inc.*^ . . . . . . . . 55,200 2,822,928 Hologic, Inc.^ . . . . . . . . . . . . 106,780 1,395,615 Johnson & Johnson . . . . . . . . . . . 21,800 1,304,294 Medtronic, Inc. . . . . . . . . . . . . 35,600 1,118,552 Stryker Corp. . . . . . . . . . . . . . 40,300 1,609,985 ----------- 10,941,124 13.95% Industrials - ------------------------------------------------------------------------------- Burlington Northern Santa Fe Corp.* . . 30,700 2,324,297 Danaher Corp.* . . . . . . . . . . . . 35,500 2,009,655 Deere & Co. . . . . . . . . . . . . . . 36,050 1,381,436 Emerson Electric Co.* . . . . . . . . . 59,400 2,174,634 United Technologies Corp.* . . . . . . 38,900 2,085,040 ----------- 9,975,062 12.71% Information Technology - ------------------------------------------------------------------------------- Akamai Technologies, Inc.^ . . . . . . .92,900 1,401,861 Apple, Inc.^ . . . . . . .. . . . . . . 16,650 1,421,077 Cisco Systems, Inc.^ . . . . . . . . . 82,500 1,344,750 Corning, Inc. . . . . .. . . . . . . . 154,100 1,468,573 Google, Inc., Class A*^ . .. . . . . . . 6,600 2,030,490 International Business Machines Corp. . 18,000 1,514,880 Itron, Inc.^ . . . . . . . . . . . . . 26,900 1,714,606 Qualcomm, Inc. . . . . . . . . . . . . 37,500 1,343,625 ----------- 12,239,862 15.60% Materials - ------------------------------------------------------------------------------- BHP Billiton Ltd. . . . . . . . . . . . 19,000 815,100 Companhia Vale Rio Doce . . . . . . . . 45,000 544,950 Freeport-McMoran Copper & Gold, Inc. . 19,500 476,580 ----------- 1,836,630 2.34% Telecommunication Services - ------------------------------------------------------------------------------- America Movil, ADR . . . . . . . . . . 34,500 1,069,155 American Tower Corp., Class A^ . . . . 55,531 1,628,169 ----------- 2,697,324 3.44% Utilities - ------------------------------------------------------------------------------- Entergy Corp. . . . . . . . . . . . . . 10,500 872,865 Exelon Corp.* . . . . . . . . . . . . . 34,800 1,935,228 ----------- 2,808,093 3.58% Total Common Stocks (Cost-$86,546,686) . . . . . . . . $76,642,402 97.69% Repurchase Agreement - ------------------------------------------------------------------------------- State Street Bank & Trust Co. Repurchase Agreement, 0.01% due 1/2/09 @ . . . . . . . . . . . . . . . . . . . 1,844,164 Total Repurchase Agreement (Cost-$1,844,164) . . . . . $ 1,844,164 2.35% ----------- Total Investment Portfolio (Cost-$88,390,850). . . . . . 78,486,566 100.04% ----------- Net Other Assets and Liabilities . . . . . . . . . . . . (33,140) -0.04% ----------- Total Net Assets . . . . . . . . . . . . . . . . . . . $78,453,426 100.00% * All or a portion of this security is pledged to collateralize short-term borrowings, when utilized ^ Non-income producing security @ Acquired on December 31, 2008. Collateralized by $1,901,283 of market value of U.S. Government mortgage-backed securities due through 01/01/37. The maturity value is $1,844,165. The accompanying notes are an integral part of the financial statements. Statement of Assets and Liabilities December 31, 2008 Assets - ------------------------------------------------------------------------------ Investments-at market value (cost $88,390,850) . . . . . . . . . . $78,486,566 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,194 Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 88,264 Receivable for shares sold . . . . . . . . . . . . . . . . . . . . . . . 7,250 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,707 ----------- Total Assets . . . . . . . . . . . . . . . . . . . . . . . . 78,611,981 Liabilities - ------------------------------------------------------------------------------- Accrued investment advisory fee . . . . . . . . . . . . . . . . . . . . 40,691 Accrued audit expense . . . . . . . . . . . . . . . . . . . . . . . . . 41,892 Accrued other expenses. . . . . . . . . . . . . . . . . . . . . . . . . 12,079 Payable for shares repurchased . . . . . . . . . . . . . . . . . . . . . 63,893 ----------- Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . 158,555 Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $78,453,426 Net Assets Consist of: Capital paid-in . . . . . . . . . . . . . . . . . . . . . . . . . . $91,756,078 Accumulated net realized gain/(loss) . . . . . . . . . . . . . . . (3,398,368) Net unrealized appreciation/(depreciation) of investments . .. . . . (9,904,284) ----------- Net Assets . . .. . . . . . . . . . . . . . . . . . . . . . . . . . $78,453,426 ----------- ----------- Net Asset Value, offering price and redemption price per share ($78,453,426/6,684,865 shares) . . . . . . . . . . . . . . . . . . . . . $11.74 The accompanying notes are an integral part of the financial statements. Statement of Operations Year Ended December 31, 2008 - ------------------------------------------------------------------------------- Investment Income Dividend Income . . . . . . . . . . . . . . . . . . . . . . . . . . $1,733,614 Security Lending Income . . . . . . . . . . . . . . . . . . . . . . . . 52,263 Interest Income. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . 9,672 Other Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,861 ----------- Total Income 1,806,410 Expenses - ------------------------------------------------------------------------------- Investment advisory fee . . . . . . . . . . . . . . . . . . . . . . . $681,888 Administrative expenses and salaries . . . . . . . . . . .. . . . . . . 345,046 Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,900 Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,030 Printing, postage, and stationery . . . . . . . . . . . . .. . . . . . . 61,128 Computer and related expenses . . . . . . . . . . . . . . .. . . . . . . 42,525 Insurance . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 42,090 Registration and Filing fees . . . . . . . . . . . . . . . . . . . . . . 33,600 Trustee fees. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 30,000 Commitment fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,118 Telephone expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,300 Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,444 Interest fee . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 2,731 Miscellaneous fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,150 ---------- Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,477,950 ---------- Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . $328,460 ---------- Realized and Unrealized Gain (Loss) on Investments: Net realized gain (loss) from investment transactions . . . . . . . $(3,398,368) Change in unrealized appreciation (depreciation) of investments . . (55,730,920) ---------- Net gain (loss) on investments . . . . . . . . . . . . . . . . . .. (59,129,288) ---------- Net increase (decrease) in net assets resulting from operations . $(58,800,828) ---------- ---------- The accompanying notes are an integral part of the financial statements. Statement of Changes in Net Assets Year Ended Year Ended December 31, December 31, 2008 2007 Increase (Decrease) in Net Assets From Operations: Net investment income (loss) . . . . . . . . . . . . . . . . $328,460 $152,107 Net realized gain (loss) from investment transactions . . . . (3,398,368) 7,592,914 Change in unrealized appreciation (depreciation) of investments(55,730,920) 10,742,593 ---------- ---------- Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . . . (58,800,828) 18,487,614 ---------- ---------- Distributions to Shareholders From net investment income . . . . . . . . . . . . . . . . . . . (328,460) (254,770) From net realized gains from investment transactions . . . . . . - (16,714,448) ---------- ---------- Total Distributions to Shareholders . . . . . . . . . . . . . . . (328,460) (16,969,218) From Net Fund Share Transactions . . . . . . . . . . . . . .. . (7,856,946) 3,994,441 ---------- ---------- Total Increase (Decrease) in Net Assets . . . . . . . . . . . .(66,986,234) 5,512,837 Net Assets: Beginning of Period . . . . . . . . . . . . . . . . . . . . . .145,439,660 139,926,823 ----------- ----------- End of Period. . . . . . . . . . . . . . . . . . . . . . . . . $78,453,426 $145,439,660 The accompanying notes are an integral part of the financial statements.
Financial Highlights Year Ended December 31, 2008 2007 2006 2005 2004 Per Share Data ^ Net Asset Value: Beginning of Period . . . . . . . . . . . . $20.19 $20.10 $18.40 $16.52 $15.26 ------ ------ ------ ------ ------ Income From Investment Operations: Net investment income (loss) . . . . . . . . 0.05 0.02 0.01 (0.02) 0.04 Net realized and unrealized gain (loss) on investment . . . . . . . . . . . . . . . . . . (8.45) 2.71 1.69 1.90 1.27 ------ ------ ------ ------ ------ Total from investment operations . . . . . . (8.40) 2.73 1.70 1.88 1.31 ------ ------ ------ ------ ------ Less Distributions: Net investment income . . . . . . . . . . . (0.05) (0.04) 0.00 0.00 (0.05) Capital Gain . . . . . . . . . . . . . . . . . 0.00 (2.60) 0.00 0.00 0.00 ------ ------ ------ ------ ------ Total Distributions . . . . . . . . . . . . . (0.05) (2.64) 0.00 0.00 (0.05) Net Asset Value: End of Period . . . . . . . . . . . . . . . . $11.74 $20.19 $20.10 $18.40 $16.52 ------ ------ ------ ------ ------- Total Return . . . . . . . . . . . . . . . . -41.61% 13.90% 9.24% 11.38% 8.56% Ratios & Supplemental Data Net assets end of period (in thousands) . . $78,453 $145,440 $139,927 $134,412 $136,238 Ratio of operating expenses to average net assets (includes interest expense) . . . . . . . . . . . . . . . . . . . 1.27% 1.10% 1.15% 1.18% 1.32% Ratio of interest expense to average net assets . . . . . . . . . . . . . . . . . . . . 0.00%* 0.01% 0.00%* 0.00%* 0.07% Ratio of net investment income to average net assets . . . . . . . . . . . . . 0.29% 0.11% 0.08% -0.15% 0.29% Portfolio turnover rate . . . . . . . . . . . 45% 40% 52% 57% 19% ^ 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 fair 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, 2008 there were no securities priced at fair value as determined in good faith. Security Transactions: Security transactions are accounted for as of trade date. 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. Messrs. John C. Emery, Michael Baldwin, and F. Washington Jarvis are not 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 agent. Note D-Purchases and Sales of Investments The cost of purchases and proceeds from sales of investments, other than short-term securities, aggregated $51,755,166 and $63,064,703, respectively, for the year ended December 31, 2008. Note E-Shares of Beneficial Interest At December 31, 2008, 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, 2008 December 31, 2007 ----------------- ----------------- Shares Amount Shares Amount Shares sold . . . . . . . . . . . . . 384,741 $ 6,358,765 292,188 $ 6,243,717 Shares issued to shareholders in reinvestment of distributions from net investment income and realized gains from security transactions . . . . . . . . . . . . . 24,885 289,801 790,393 15,570,737 -------- ----------- ------- ----------- 409,626 $ 6,648,566 1,082,581 $ 21,814,454 Shares repurchased . . . . . . . . . (929,233) $(14,505,512) (840,605) $(17,820,013) -------- ----------- ------- ------------ Net Increase . . . . . .. . . . . . . (519,607) $ (7,856,946) 241,976 $ 3,994,441
Note F-Repurchase Agreement On a daily basis, the Fund generally 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, 2008, the Fund had an unused line of credit amounting to $20,000,000. In addition the Fund pays a commitment fee of 0.125% per annum, payable at the end of each quarter based on the unused portion of the line of credit. The committed line of credit may be terminated at the bank's option at the annual renewal date. The following information relates to aggregate short-term borrowings during the year ended December 31, 2008: Average amount outstanding (total of daily outstanding principal balances divided by number of days with debt outstanding during the period) . . $419,768 Weighted average interest rate . . . . . . . . . . . . . . . . . . .. . . 3.24% Note H-Additional Tax Information Dividends paid during the fiscal year ended December 31, 2007 and 2008 were $254,770 and $328,460 respectively, and such dividends were classified for tax purposes as ordinary income. Capital gain distributions paid during the fiscal year ended December 31, 2007 and 2008 were $16,714,448 and $0 respectively, and such capital gain distributions were classified for tax purposes as long term capital gains. As of December 31, the components of accumulated earnings (losses) on a tax basis were as follows: 2008 ---- Capital loss carryforward*. . . . . . . . . . . . . . . . . . . . . $ (864,347) Timing Differences . . . . . . . . . . . . . . . . . . . .. . . . . (2,534,021) Unrealized gains (losses) - net . . . . . . . . . . . . . . . . . . (9,904,284) ----------- Total accumulated earnings (losses) - net . . . . . . . . . . . . $(13,302,652) * The capital loss carryforward will expire as follows: Expiration Year Amount - ---- ---------- 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(864,347) At December 31, 2008 the Fund's Post October loss deferral was $(2,534,021). At December 31, 2008 the Fund's aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes was as follows: 2008 ---- Tax cost . . . . . . . . . . . . . . . . . . . . .. . . . . . . . $ 88,390,850 Gross unrealized gain . . . . . . . . . . . . . . . . . . . . . . . 7,590,562 Gross unrealized loss . . . . . . . . . . . . . . . . . . . . . . (17,494,846) --------------- Net unrealized security gain (loss) . . . . . . . . . . . . . . . $ (9,904,284) 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 Fund's current fiscal year. FIN 48 did not result in any unrecognized tax benefits and management has concluded that no provision is required in the Fund's accompanying financial statements, however each of the open tax years (2005-2007) remains subject to examination by the Internal Revenue Service. Note I-Securities Lending The Fund may seek additional income by lending portfolio securities to qualified institutions. The Fund will receive cash 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, 2008, there were no securities loaned. During the year ended December 31, 2008, income from securities lending amounted to $52,263. Note J-Financial Accounting Standards No. 157 ("FAS 157") In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157 ("FAS 157"), "Fair Value Measurements". FAS 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements in financial statements, effective for the Fund's current fiscal period. The various inputs that may be used to determine the value of the Fund's investments are summarized in three broad levels. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Level 1 - Quoted prices in active markets for identical securities. Level 2 - Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) Level 3 - Significant unobservable inputs (including the Fund's own assumptions used to determine the fair value of investments). The following table summarized the Fund's investment as of December 31, 2008, based on the inputs used to value them. Investments in Valuation Inputs Securities - ---------------- -------------- Level 1 - Quoted prices . . . . . . . . . . . . . .. . . . . . . . $76,642,402 Level 2 - Other significant observable inputs . . .. . . . . . . . . 1,844,164* Level 3 - Significant unobservable inputs . . . . .. . . . . . . . . . . . . 0 -------------- Total . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . $78,486,566 * Repurchase Agreement Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm To the Board of Trustees and Shareholders 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, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five 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. 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, 2008, by correspondence with custodian. 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, 2008, 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 five years in the period then ended, in conformity with U.S. generally accepted accounting principles. Ernst & Young LLP Boston, Massachusetts February 18, 2009 Trustees and Officers TRUSTEES & OFFICERS The Trustees of Northeast Investors Growth Fund are William A. Oates, Jr., John C. Emery, Michael Baldwin, and F. Washington Jarvis. Under Massachusetts Law, the Trustees are generally responsible for 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 President Trustee and President of Age: 66 Northeast Investors Growth Years of Service: 28 Fund; President and Director of Northeast Investment Management, Inc. Gordon C. Barrett Senior Vice President, Chief Chief Financial Officer of Age: 52 Financial Officer, and Chief Northeast Investors Growth Years of Service: 15 Compliance Officer Fund, Chief Financial Officer of Northeast Investors Trust, and Officer of Northeast Investment Management, Inc. Robert B. Minturn Clerk, Vice President, And Officer of Northeast Investors Age: 69 Chief Legal Officer Trust; Officer of Northeast Years of Service: 28 Investors Growth Fund (Trustee until November 2008); Officer of Northeast Investment Management, Inc. Independent Trustees John C. Emery Trustee Partner, Law Firm of Sullivan & Age: 78 Worcester Years of Service: 28 Michael Baldwin Trustee Partner, Baldwin Brothers, Age: 68 Registered Investment Advisor Years of Service: 9 F. Washington Jarvis Trustee Headmaster Emeritus at Age: 69 Roxbury Latin School Years of Service: 5 * 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. Michael Baldwin John C. Emery F. Washington Jarvis Officers - ------------------------------------------------------------------------------- William A. Oates, Jr., President Gordon C. Barrett, Senior Vice President, Chief Financial Officer & Chief Compliance Officer Robert B. Minturn, Vice President, Clerk & Chief Legal Officer Bruce H. Monrad, Vice President David A. Randall, Vice President John F. Francini, Vice President Nancy M. Mulligan, Vice President Investment Advisor - ------------------------------------------------------------------------------- Northeast Management & Research Company, Inc. 150 Federal Street Boston, Massachusetts 02110 Custodian - ------------------------------------------------------------------------------- State Street Bank & Trust Company 200 Clarendon Street Boston, Massachusetts 02111 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. The registrant's trustee who is considered to be an "interested person" as defined in Section 2(a)(19) under the Investment Company of 1940, as amended, does 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, 2008 and December 31, 2007 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 $50,880, and $48,000 respectively. (b) Audit-Related Fees The aggregate fees billed for the registrant's fiscal year ended December 31, 2008 and December 31, 2007 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 $20,650 and $19,500 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, 2008 and December 31, 2007 for professional services rendered by the registrant's principal accountant for tax matters were $8,500 and $8,000 respectively. Such services consisted of the preparation of the registrant's federal income and excise tax returns. (d) Other Fees. During the fiscal years ended December 31, 2008 and 2007 the aggregate fees billed for other services rendered by the registrant's principal accountant were $0 and $16,731 respectively. Such services consisted of a review and testing of registrant's compliance policies and procedures pursuant to Rule 38a-1 under the Investment Company Act of 1940, as amended. (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 11, 2009 By (Signature and Title) Gordon C. Barrett Chief Financial Officer (principal financial officer) Date: March 11, 2009 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 11, 2009 By (Signature and Title) Gordon C. Barrett Chief Financial Officer (principal financial officer) Date: March 11, 2009 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 11, 2009 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 11, 2009 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, 2008 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 11, 2009 William A. Oates, Jr. President (Principal Executive Officer) Dated: March 11, 2009 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 11, 2009 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 11, 2009 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, 2008 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 11, 2009 William A. Oates, Jr. President (Principal Executive Officer) Dated: March 11, 2009 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-----