-----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, SCaupwhpVg9H53gJyh6hRJadhHfHRLmafLERXEIq3keD41XVvRWblRmJZaY9yRfL ld3s01uBtpcZwMj7BlM32A== 0000318192-10-000007.txt : 20100310 0000318192-10-000007.hdr.sgml : 20100310 20100310142948 ACCESSION NUMBER: 0000318192-10-000007 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20091231 FILED AS OF DATE: 20100310 DATE AS OF CHANGE: 20100310 EFFECTIVENESS DATE: 20100310 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: 10670048 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 ncsr2009.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) 100 High Street Boston, MA 02110 (Address of principal executive offices) (Zip code) David Randall 100 High 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, 2009 Date of reporting period: December 31, 2009 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, 2009 Table of Contents Letter to Shareholders . . . . . . . . . . . . . . . . . . . 2 Fund Performance. . . . . . . . . . . . . . . . . . . . . . . 4 Schedule of Investments . . . . . . . . . . . . . . . . . . . 9 Financial Statements . . . . . . . . . . . . . . . . . . . . 14 Notes to the Financial Statements. . . . . . . . . . . . . . 15 Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . .. . . 19 Trustees & Officers . . . . . . . . . . . . . . . . . .. . . 20 Dear Fellow Shareholders: We are happy to report that 2009 ended firmly in positive territory with Northeast Investors Growth Fund +29.05%, outperforming the S&P 500 Index, which was +26.47%. Volatility peaked in the early part of the year, as market indices, including the S&P 500 Index, bottomed in early March. From this point, however, with the aid of substantial fiscal and monetary support from both the US and world governments, markets across the globe rallied sharply, with a trough to peak movement on the S&P 500 Index of more than 60% for the year. By keeping the target on short-term interest rates low, and through substantial quantitative easing, the Fed helped to stabilize domestic markets. As the credit markets steadied, businesses were able to access credit more easily than was possible under the conditions seen at the end of 2008. As the year progressed, corporate profits stabilized, though much was due to aggressive cost-cutting across the board. There were also nascent signs of recovery in the housing market and employment. In a reversal of 2008's market performance, where defensive sectors and holdings did better relative to the market, the best performing sectors in 2009 were those that would benefit from a recovering US and world economy, namely the more cyclical Technology, Materials, and Consumer Discretionary sectors. The Fund's performance was aided significantly by its overexposure to the first two of these areas. On an absolute level, the Fund's investments in the Materials sector, Freeport McMoran (+232%), Vale SA (+145%), and BHP Billiton (+84%), ranked in the top 10 performers for the year. This contributed to the Fund outperforming the overall return in the Materials sector for the S&P 500 Index. Near the latter part of the year, we broadened our exposure in the Materials sector with the addition of Kinross Gold, a gold mining company, and US Steel Corp. If one were to look at the Fund's holdings over the past ten years, we have not held meaningful weightings in this area. Over the past four years, we have initiated and increased our holdings on the thesis that they will benefit from global growth dynamics. Currently, we hold greater than a market weight in this sector. Performance within the Technology sector was helped by both stock selection and sector allocation in 2009. Long-term holdings in the sector- Apple, up over 140%, Corning, up more than 100%, Google, up close to 100%, and Akamai, putting in a strong finish for the year at up more than 65% - all appeared in the top 10 performers for the year. We maintained a slightly greater than market exposure to Technology during the year, and our stock selection, on average, outperformed the market. We continue to like our Technology holdings, but have pared exposure coming into year end. Investments in Financials also contributed positively to performance this year. During the year, we added back and added to names held at earlier times: Bank of America, Fifth Third Bancorp, Goldman Sachs, JP Morgan and Wells Fargo & Co. Within the Financials, our investments in Goldman Sachs Group (up over 100%), and CME Group Inc., (up about 65%) did best. Still we have seen strong recovery across the group and maintain an overweighting to this area. Our underweighting to areas like Telecoms and Utilities helped performance relative to the S&P 500 Index, as these defensive categories were the bottom performing sectors in the Index. An area in which we did underperform relative to the S&P 500 was the Consumer Discretionary sector. This area, despite the still significant headwinds against the consumer, was a strong performer. We were underweighted in this area, and our choices, McDonalds, Nike, and Amazon, on average underperformed in a sector where companies like Ford Motors rose from the ashes. Looking ahead, we remain cautious but optimistic in our investment outlook. We have seen better than expected earnings reports, GDP turn positive for the year, and some recovery in the housing market in terms of prices and sales. There are still challenges in the economy, particularly when one considers the high level of unemployment in the US, the continued deleveraging of the consumer, and concerns over the high level of debt our government has assumed to aid this recovery. We expect the coming year to be more moderate in its returns and do not expect the top performers to remain firmly in the cyclical sectors. With 2009 being buoyed by the extraordinary fiscal and monetary policy measures, it is likely that 2010 will be colored by the expectation that the government will need to begin to withdraw from this supportive position at some point. This withdrawal may necessarily have a dampening effect upon the markets as rates are raised or monetary or fiscal policy becomes less accommodative. We would argue that these moves are, at some point, necessary. The level of debt we see now represents a significant burden upon our tax-paying citizens and the question is not if, but when these moves will be made. 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. December 2009 Average Annual Total Return One year ended December 31, 2009 . . . . . . . . . . . . . . . . . . . 29.05% Five years ended December 31, 2009. . . . . . . . . . .. . . . . . . . . 0.87% Ten years ended December 31, 2009 . . . . . . . . . . .. . . . . . . . . 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, 1999 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 2009 performance, including strategies and market conditions which influenced such performance, see the President's letter to shareholders. Table Omitted 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Northeast Investors Growth $8,504 $7,046 $5,448 $6,995 $7,594 $8,458 $9,240 $10,524 $6,145 $7,930 Fund Standard & Poor's $9,090 $8,010 $6,240 $8,029 $8,903 $9,340 $10,815 $11,408 $7,187 $9,089 500 Index
Returns and Per Share Data Year Ended December 31, 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net Asset Value 20.23 15.43 11.91 15.26 16.52 18.40 20.10 20.19 11.74 15.15 Income Dividend 0.00 0.00 0.02 0.03 0.05 0.00 0.00 0.04 0.05 0.00 Capital Gains Dist. 2.05 1.44 0.00 0.00 0.00 0.00 0.00 2.60 0.00 0.00 NEIG Return(%) 14.96 17.15 22.67 28.39 8.56 11.38 9.24 13.90 41.61 29.05 S&P 500 Return(%) 9.10 11.88 22.10 28.68 10.88 4.91 15.79 5.48 37.00 26.47 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 Beginning Account Value Ending Account Value Expenses Paid During Period 6/30/2009 12/31/2009 6/30/2009 - 12/31/2009 Actual Return 22.37% $1,000.00 $1,223.75 $9.13 Hypothetical (5% return per year before expenses) $1,000.00 $1,017.12 $8.15
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 wth 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, 6/30/2009 - 12/31/2009. 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, 2009 Market Percent of Value Net Assets Apple, Inc. . . . . . . . . . . . . . . $3,508,688 3.80% Google, Inc., Class A . . . . . . . . . 3,347,892 3.62% Corning, Inc. . . . . . . . . . . . . . 2,975,671 3.22% Goldman Sachs Group . . . . . . . . . . 2,600,136 2.82% Emerson Electric Co. . . . . . . . . . . 2,530,440 2.74% United Technologies Corp. . . . . . . . 2,422,409 2.62% American Tower Corp., Class A. . . . . . 2,399,495 2.60% International Business Machines Corp. . 2,356,200 2.55% Akamai Technologies, Inc. . . . . . . . 2,354,086 2.55% Deere & Co. . . . . . . . . . . . . . . 2,301,530 2.49% Summary of Sector Weightings as a Percentage of Net Assets December 31, 2009 Market Northeast Investors S&P 500 Major Sectors Value Growth Fund Index Consumer Discretionary . . . . . . $ 5,095,742 5.52% 9.58% Consumer Staples . . . . . . . . . $ 8,656,338 9.37% 11.36% Energy . . . . . . . . . . . . . . .$14,958,653 16.20% 11.48% Financials . . . . . . . . . . . . .$16,043,976 17.37% 14.38% Health Care. . . . . . . . . . . . $ 4,899,457 5.30% 12.63% Industrials . . . . . . . . . . . . $11,363,849 12.30% 10.24% Information Technology . . . . . . $19,986,297 21.64% 19.86% Materials . . . . . . . . . . . . . $ 6,565,125 7.11% 3.60% Telecommunication Services . . . . .$ 4,255,205 4.61% 3.16% Utilities . . . . . . . . . . . . . $ - 0.00% 3.71% Cash, other assets and liabilities $ 539,136 0.58% 0.00% ------------- ------ 100.00% 100.00% Summary of Net Assets by Industry December 31, 2009 Market % of Value Net Assets Common Stocks Aerospace & Defense . . . . . . . . . . . . $ 2,422,409 2.62% Asset Management & Custodian . . . . . . . . . 4,502,911 4.88% Automobile Manufacturers . . . . . . . . . . . 975,000 1.06% Communications Equipment . . . . . . . . . . . 6,996,691 7.58% Computer Hardware . . . . . . . . . . . . . . 5,864,888 6.35% Construction & Farming . . . . . . . . . . . . 2,301,530 2.49% Diversified Banks . . . . . . . . . . . . . . 1,268,530 1.37% Diversified Financial Services . . . . . . . . 4,138,455 4.48% Diversified Minerals . . . . . . . . . . . . . 2,761,370 2.99% Drug Retail . . . . . . . . . . . . . . . . . 1,534,162 1.66% Electrical Components & Equipment . . . . . .. 2,530,440 2.74% Footwear . . . . . . . . . . . . . . . . . . . 2,153,882 2.33% Health Care Services . . . . . . . . . . . . . 2,203,179 2.39% Household Products . . . . . . . . . . . . . . 1,776,459 1.92% Hypermarkets & Super Centers . . . . . . . . . 1,582,797 1.71% Industrial Conglomerate . . . . . . . . . . . 1,860,990 2.02% Industrial Machinery . . . . . . . . . . . . . 2,248,480 2.44% Integrated Oil & Gas . . . . . . . . . . . . . 5,633,610 6.10% Integrated Telecommunication Services . . . . 1,855,710 2.01% Internet Software & Services . . . . . . . . . 5,701,978 6.17% Investment Bank & Brokerage . . . . . . . . . 2,600,136 2.82% Metals & Mining . . . . . . . . . . . . . . . 2,646,235 2.87% Oil & Gas Equipment . . . . . . . . . . . . . 3,512,669 3.80% Oil & Gas Exploration . . . . . . . . . . . . 5,812,374 6.29% Packaged Foods. . . . . . . . . . . . . . . . 2,127,400 2.30% Pharmaceuticals . . . . . . . . . . . . . . . 2,696,278 2.92% Regional Banks . . . . . . . . . . . . . . . . 1,803,750 1.95% Restaurants . . . . . . . . . . . . . . . . . 1,966,860 2.13% Soft Drinks . . . . . . . . . . . . . . . . . 1,635,520 1.77% Specialized Finance . . . . . . . . . . . . . 1,730,194 1.87% Steel . . . . . . . . . . . . . . . . . . . . 1,157,520 1.25% Systems Software . . . . . . . . . . . . . . . 1,422,740 1.54% Wireless Services . . . . . . . . . . . . . . 2,399,495 2.60% ---------- ------- Total Common Stocks . . . . . . . . . . . . .$91,824,642 99.42% Total Cash Equivalents. . . . . . . .. . . . . 7,088,709 7.67% ---------- ------- Total Investment Portfolio . . . . .. . . . . 98,913,351 107.09% Net Other Assets and Liabilities. . . . . . . (6,549,573) 7.09% ---------- ------- Total Net Assets . . . . . . . . . . . . . . $92,363,778 100.00% Schedule of Investments December 31, 2009 Number Market Percent Common Stock Sector of Value of Net Name of Issuer Shares (Note B) Assets Consumer Discretionary - ------------------------------------------------------------------------------- Ford Motor Co. . . . . . . . . . . . . .97,500 $ 975,000 McDonald's Corp.* . . . . . . . . . . . 31,500 1,966,860 Nike, Inc. . . . . . . . . . . . .. . . 32,600 2,153,882 ---------- 5,095,742 5.52% Consumer Staples - ------------------------------------------------------------------------------- Costco Wholesale Corp. . . . . . . . . 26,750 $ 1,582,797 CVS Caremark Corp.* . . . . . . . . . . 47,630 1,534,162 Nestle SA* . . . . . . . . . . . . . . 44,000 2,127,400 PepsiCo, Inc.* . . . . . . . . . . . . 26,900 1,635,520 Procter & Gamble Co.* . . . . . . . . . 29,300 1,776,459 ---------- 8,656,338 9.37% Energy - ------------------------------------------------------------------------------- Apache Corp. . . . . . . . . . . . . . .22,000 2,269,740 Cenovus Energy, Inc. . . . . . . . . . 30,600 771,120 Chevron Corp.* . . . . . . . . . . . . 25,700 1,978,643 EnCana Corp. . . . . . . . . . . . . . 30,600 991,134 Exxon Mobil Corp.* . . . . . . . . . . 22,582 1,539,866 National Oilwell Varco, Inc. . .. . . . 28,000 1,234,520 Occidental Petroleum Corp. . . . . . . 26,000 2,115,100 Petroleo Brasileiro, ADR . . . . . . . 42,000 1,780,380 Schlumberger Ltd. . . . . . . . . . . . 35,000 2,278,150 ---------- 14,958,653 16.20% Financials - ------------------------------------------------------------------------------- Bank of America Corp. . . . . . . . . .124,000 1,867,440 CME Group, Inc. . . . . . . . . . . . . 5,150 1,730,194 Eaton Vance Corp.* . . . . . . . . . . 54,600 1,660,386 Fifth Third Bancorp . . . .. . . . . . 185,000 1,803,750 Goldman Sachs Group . . . . . . . . . . 15,400 2,600,136 JPMorgan Chase & Co. . . . . . . . . . 54,500 2,271,015 Northern Trust Corp. . . . . . . . . . 20,000 1,048,000 T. Rowe Price Group, Inc.* . . . . . . 33,700 1,794,525 Wells Fargo & Co. . . . . . . . . . . . 47,000 1,268,530 ---------- 16,043,976 17.37% Health Care - ------------------------------------------------------------------------------- Athenaheatlh, Inc. . . . . . . . . . . .22,000 995,280 Johnson & Johnson . . . . . . . . . . . 21,800 1,404,138 Medco Health Solutions, Inc. . . . . . 18,900 1,207,899 Teva Pharmaceutical . . . . . . . . . . 23,000 1,292,140 ---------- 4,899,457 5.30% Industrials - ------------------------------------------------------------------------------- Danaher Corp.* . . . . . . . . . . . . .29,900 2,248,480 Deere & Co.*# . . . . . . . . . . . . . 42,550 2,301,530 Emerson Electric Co.*. . . . . . . . . 59,400 2,530,440 General Electric Co. . . . . . . . . . 123,000 1,860,990 United Technologies Corp.* . . . . . . 34,900 2,422,409 ---------- 11,363,849 12.30% Information Technology - ------------------------------------------------------------------------------- Akamai Technologies, Inc.^# . . . . . . 92,900 $ 2,354,086 Apple, Inc.^ . . . . .. . . . . . . . . 16,650 3,508,688 Cisco Systems, Inc.^ . . . . .. . . . . 95,500 2,286,270 Corning, Inc.* . . . . . . . . . . . . 154,100 2,975,671 Google, Inc., Class A*^ . . . . . . . . 5,400 3,347,892 International Business Machines Corp. . 18,000 2,356,200 Oracle Corp. . . . . . . . . . . . . . 58,000 1,422,740 Qualcomm, Inc. . . . . . . . . . . .. . 37,500 1,734,750 ---------- 19,986,297 21.64% Materials - ------------------------------------------------------------------------------- BHP Billiton Ltd.#. . . . . . . . .. . 19,000 1,455,020 Freeport-McMoran Copper & Gold, Inc. . 21,500 1,726,235 Kinross Gold Corp. . . . . . . . . . . 50,000 920,000 United States Steel Corp.# . . . . . . 21,000 1,157,520 Vale SA# . . . . . . . . . . . . . . . 45,000 1,306,350 ---------- 6,565,125 7.11% Telecommunication Services - ------------------------------------------------------------------------------- America Movil, ADR . . . . . . . . . . .39,500 1,855,710 American Tower Corp., Class A^ . .. . . 55,531 2,399,495 ---------- 4,255,205 4.61% Total Common Stocks (Cost-$75,891,797). . . . . . . $91,824,642 99.42% Repurchase Agreement - ------------------------------------------------------------------------------- State Street Bank & Trust Co. Repurchase Agreement, 0.01% due 1/4/10 @. . . . . . . . . . . . . 611,334 -------- Total Repurchase Agreement (Cost-$611,334). . . . $ 611,334 0.66% Cash Equivalents - ------------------------------------------------------------------------------- State Street Bank & Trust Navigator Prime~ . . . . . 6,477,375 ---------- Total Cash Equivalents (Cost-$6,477,375) . . . . . .$ 6,477,375 7.01% Total Investment Portfolio (Cost-$82,980,506) . . . .98,913,351 107.09% ---------- Net Other Assets and Liabilities . . . . . . . . . . (6,549,573) 7.09% Total Net Assets. . . . . . . . . . . . . . . . . . $92,363,778 100.00% * All or a portion of this security is pledged to collateralize short-term borrowings, when utilized ^ Non-income producing security # All or a portion of this security is currently out on loan (See Note I) @ Acquired on December 31, 2009. Collateralized by $633,336 of market value of U.S. Government mortgage-backed securities due through 12/25/2038. The maturity value is $611,335 ~ Security held as collateral for securities on loan The accompanying notes are an integral part of the financial statements. Statement of Assets and Liabilities December 31, 2009 Assets - ------------------------------------------------------------------------------- Investments - at market value (including securities loaned of $6,300,021) (cost $82,980,506) . . . . . . . . . . . . . . .. . . . . . . . . . $98,913,351 Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 77,893 Receivable for shares sold. . . . . . . . . . . . . . . . . . . . . . . . 50 Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,102 ----------- Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,010,396 Liabilities - ------------------------------------------------------------------------------- Collateral on securities loaned, at value . . . . . . . . . . . . . . 6,477,375 Payable for shares repurchased . . . . . . . . . . . . . . . . . . . . . 49,434 Accrued investment advisory fee . . . . . . . . . . . . . . . . . . . . 47,507 Accrued audit expense . . . . . . . . . . . . . . . . . . . . . . . . . 44,477 Accrued other expenses . . . . . . . . . . . . . . . . . . . . . . . . . 27,825 ---------- Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 6,646,618 Net Assets . . . . . . . . . . . . . . . . . .. . . . . . . . . . . $92,363,778 Net Assets Consist of: Capital paid-in . . . . . . . . . . . . . . . . . . . . . . . . . . $84,069,680 Undistributed net investment income . . . . . . . . . . . . . . . . . . 134,876 Accumulated net realized gain (loss) . . . . . . . . . . . . . . . . (7,773,623) Net unrealized appreciation (depreciation) of investments .. . . . . 15,932,845 ----------- Net Assets . . . . . . . . . . . . . . . . . .. . . . . . . . . . . $92,363,778 Net Asset Value, offering price and redemption price per share ($92,363,778/6,097,435 shares) . . . . . . . . . . . . . . . . . . . . . $15.15 The accompanying notes are an integral part of the financial statements. Statement of Operations Year Ended December 31, 2009 Investment Income Dividend Income . . . . . . . . . . . . . . . . . . . . . . . . . . $1,401,976 Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,913 Security Lending Income . . . . . . . . . . . . . . . . . . . . . . . . . 2,958 Other Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,428 ---------- Total Income . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 1,446,275 Expenses Investment advisory fee . . . . . . . . . . . . . . . . . . . . . . . $509,131 Administrative expenses and salaries . . . . . . . . . . . . . .. . . . 326,064 Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 113,975 Audit fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,840 Printing, postage, and stationery . . . . . . . . . . . . . . . . . . . 60,625 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,975 Computer and related expenses . . . . . . . . . . . . . . . . . . . . . 39,750 Registration and Filing fees . . . . . . . . . . . . . . . . . . . . . . 36,275 Trustee fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 Commitment fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,836 Telephone expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,250 Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,510 Interest fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,543 Miscellaneous fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,625 ---------- Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,311,399 ---------- Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . $134,876 ---------- Realized and Unrealized Gain (Loss) on Investments: Net realized gain (loss) from investment transactions . . . . . . . $(4,375,255) Change in unrealized appreciation (depreciation) of investments . . 25,837,129 ---------- Net gain (loss) on investments . . . . . . . . . . . . . . . . . . . 21,461,874 ---------- Net increase (decrease) in net assets resulting from operations . . $21,596,750 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, 2009 2008 Increase (Decrease) in Net Assets From Operations: Net investment income (loss) . . . . . .. . . . . . . . . . . . . . . . $134,876 $328,460 Net realized gain (loss) from investment transactions . . . . . . . . (4,375,255) (3,398,368) Change in unrealized appreciation (depreciation) of investments . . . 25,837,129 (55,730,920) ---------- ---------- Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . . . . . . . 21,596,750 (58,800,828) ---------- ---------- Distributions to Shareholders From net investment income . . . . . . . . . . . . . . . . . . . . . . . . . - (328,460) ---------- ---------- Total Distributions to Shareholders . . . . . . . . . . . . . . . . . . . - (328,460) From Net Fund Share Transactions . . . . . . . . . . . . . . . . . . .(7,686,398) (7,856,946) ---------- --------- Total Increase (Decrease) in Net Assets . . . . . . . . . . . . . . . 13,910,352 (66,986,234) Net Assets: Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . 78,453,426 145,439,660 ---------- ----------- End of Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . $92,363,778 $78,453,426 ---------- ----------- ---------- ----------- Undistributed Net Investment Income . . . . . . . . . . . . . . . . . . $134,876 - The accompanying notes are an integral part of the financial statements.
Financial Highlights Year Ended December 31, Per Share Data^ 2009 2008 2007 2006 2005 Net Asset Value: Beginning of Period . . . . . . . . . . . . $11.74 $20.19 $20.10 $18.40 $16.52 Income From Investment Operations: Net investment income (loss) . . . . . . . . . 0.02 0.05 0.02 0.01 (0.02) Net realized and unrealized gain (loss) on investment . . . . . . . . . . . . . . . . . . .3.39 (8.45) 2.71 1.69 1.90 ----- ----- ----- ----- ----- Total from investment operations . . . . . . . 3.41 (8.40) 2.73 1.70 1.88 Less Distributions: Net investment income. . . . . . . . . . . . 0.00 (0.05) (0.04) 0.00 0.00 Capital Gain . . . . . . . . . . . . . . . . . .0.00 0.00 (2.60) 0.00 0.00 ----- ----- ----- ----- ----- Total Distributions . . . . . . . . . . . . . . 0.00 (0.05) (2.64) 0.00 0.00 Net Asset Value: End of Period . . . . . . . . . . . . . . . . $15.15 $11.74 $20.19 $20.10 $18.40 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total Return . . . . . . . . . . . . . . . . 29.05% -41.61% 13.90% 9.24% 11.38% Ratios & Supplemental Data Net assets end of period (in thousands) . . $92,364 $78,453 $145,440 $139,927 $134,412 Ratio of operating expenses to average net assets (includes interest expense). . . . . 1.60% 1.27% 1.10% 1.15% 1.18% Ratio of interest expense to average net assets . . . . . . . . . . . . . . . . . . . . 0.00%* 0.00%* 0.01% 0.00%* 0.00%* Ratio of net investment income to average net assets . . . . . . . . . . . . . . . . . . 0.16% 0.29% 0.11% 0.08% -0.15% Portfolio turnover rate . . . . . . . . . . . . .36% 45% 40% 52% 57% ^ 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, seriestype 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, 2009 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. The Fund has reviewed the tax positions for the open tax years as of December 31, 2009 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. \ 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. 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. Messrs. John C. Emery, Michael Baldwin, and F. Washington Jarvis, the Fund's disinterested trustees, are not officers or directors of the Advisor. The compensation of all disinterested trustees of the Fund is borne by the Fund. 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 $29,325,898 and $35,124,072, respectively, for the year ended December 31, 2009. Note E-Shares of Beneficial Interest At December 31, 2009, 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, 2009 December 31, 2008 Shares Amount Shares Amount Shares sold . . . . . . . . . . . . . . 261,500 $3,181,058 384,741 $6,358,765 Shares issued to shareholders in reinvestment of distributions from net investment income and realized gains from security transactions . . . . . . . . . . . . . . . 0 0 24,885 289,801 -------- ---------- ------- ---------- 261,500 $3,181,026 409,626 $6,648,566 Shares repurchased . . . . . . . . . . (848,930) $(10,867,456) (929,233) $(14,505,512) -------- ---------- ------- ----------- Net Increase. . .. . . . . . . . . . . (587,430) $ (7,686,398) (519,607) $ (7,856,946)
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, 2009, the Fund had an unused line of credit amounting to $10,000,000. In addition the Fund pays a commitment fee of 0.15% 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, 2009: Average amount outstanding (total of daily outstanding principal balances divided by number of days with debt outstanding during the period) . $1,112,943 Weighted average interest rate . . . . . . . .. . . . . . . . . . . . . . 0.80% Note H-Additional Tax Information Dividends paid during the fiscal year ended December 31, 2008 and the year ended December 31, 2009 were $328,460 and $0 respectively, and such dividends were classified for tax purposes as ordinary income. As of December 31, the components of accumulated earnings (losses) on a tax basis were as follows: 2009 ---- Undistributed ordinary income . . . . . . . . . . . . . . . . .. . . $ 134,876 Capital loss carryforward* . . . . . . . . . . . . . . . . . . . . (7,658,091) Unrealized gains (losses) - net . . . . . . . . . . . . . . . . . . 15,817,313 ----------- Total accumulated earnings (losses) - net . . . . . . . . . . .. . $ 8,294,098 * The capital loss carryforward will expire as follows: Expiration Year Amount - ---- ---------- 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (864,347) 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,793,744) At December 31, 2009 the Fund's aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes was as follows: 2009 ---- Tax cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $83,096,038 Gross unrealized gain. . . . . . . . . . . . . . .. . . . . . . . . 17,662,167 Gross unrealized loss . . . . . . . . . . . . . . . . . . . . . . . (1,844,854) ------------ Net unrealized security gain (loss) . . . . . . . . . . . . . . . $15,817,313 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, 2009, the value of securities loaned and the value of collateral was $6,300,021 and $6,477,375, respectively. During the year ended December 31, 2009, income from securities lending amounted to $2,958. Note J-Fair Value Measurements Accounting Standards Codification ASC 820, "Fair Value Measurements and Disclosures" (ASC 820) established a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund's own market assumptions (unobservable inputs). The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The various inputs that may be used to determine the value of the Fund's investments are summarized in the following fair value hierarchy: Level 1 - Unadjusted 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, 2009, based on the inputs used to value them. Level 1 Level 2 Level 3 Total Common Stock . . . .. $91,824,642 - - $91,824,642 Cash Equivalents . . .$ 6,477,375 - - $ 6,477,375 Repurchase Agreement . . . .- $611,334 - $ 611,334 --------- ------- -------- ----------- $98,302,017 $611,334 - $98,913,351 Note K-Review for Subsequent Events In accordance with the provisions set forth in Accounting Standards Codification ASC 855 "Subsequent Events", adopted by the Fund as of December 31, 2009, events and transactions from January 1, 2010 through February 18, 2010, the date the financial statements were available to be issued, have been evaluated by management for subsequent events. Management has determined that there were no material events that would require disclosure in the Fund's financial statements through this date. Report of Independent Registered Public Accounting Firm 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, 2009, 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, 2009, 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, 2009, 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, 2010 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 100 High Street, Boston, MA 02110-2301. 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: 67 Northeast Investors Growth Years of Service: 29 Fund; President and Director of Northeast Investment Management, Inc. Gordon C. Barrett Senior Vice President, Chief Chief Financial Officer of Age: 53 Financial Officer, and Chief Northeast Investors Growth Years of Service: 16 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: 70 Chief Legal Officer Trust; Officer of Northeast Years of Service: 29 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: 79 Worcester Years of Service: 29 Michael Baldwin Trustee Partner, Baldwin Brothers, Age: 69 Registered Investment Advisor Years of Service: 10 F. Washington Jarvis Trustee Headmaster Emeritus at Age: 70 Roxbury Latin School Years of Service: 6 * 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. 100 High 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 100 High 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 100 High 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, 2009 and December 31, 2008 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 $52,410, and $50,880 respectively. (b) Audit-Related Fees The aggregate fees billed for the registrant's fiscal year ended December 31, 2009 and December 31, 2008 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 $21,270 and $20,650 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, 2009 and December 31, 2008 for professional services rendered by the registrant's principal accountant for tax matters were $8,760 and $8,500 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, 2009 and 2008 the aggregate fees billed for other services rendered by the registrant's principal accountant were $0. (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 for its fiscal year ended December 31, 2009 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 10, 2010 By (Signature and Title) Gordon C. Barrett Chief Financial Officer (principal financial officer) Date: March 10, 2010 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 10, 2010 By (Signature and Title) Gordon C. Barrett Chief Financial Officer (principal financial officer) Date: March 10, 2010 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 10, 2010 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 10, 2010 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, 2009 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 10, 2010 William A. Oates, Jr. President (Principal Executive Officer) Dated: March 10, 2010 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 cert992009.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 10, 2010 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 10, 2010 Gordon C. Barrett Chief Financial Officer (principal financial officer) EX-99.906 CERT 3 cert999062009.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, 2009 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 10, 2010 William A. Oates, Jr. President (Principal Executive Officer) Dated: March 10, 2010 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-----