0000318192-11-000027.txt : 20110908 0000318192-11-000027.hdr.sgml : 20110908 20110908172627 ACCESSION NUMBER: 0000318192-11-000027 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20110630 FILED AS OF DATE: 20110908 DATE AS OF CHANGE: 20110908 EFFECTIVENESS DATE: 20110908 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-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03074 FILM NUMBER: 111081785 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-CSRS 1 ncsr63011.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) Robert Kane 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 Date of reporting period: June 30, 2011 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 Semi-Annual Report For the Period Ended June 30, 2011 Table of Contents Letter to Shareholders . . . . . . . . . . . . . . . . . .. . 2 Fund Performance. . . . . . . . . . . . . . . . . . . . . . . 4 Investment Sectors . . . . . . . . . . . . . . . . . . . .. . 7 Schedule of Investments . . . . . . . . . . . . . . . . . . . 9 Financial Statements . . . . . . . . . . . . . . . . . . . . 11 Financial Highlights . . . . . . . . . . . . . . . . . . . . 14 Notes to the Financial Statements. . . . . . . . . . . . . . 15 Trustees & Officers . . . . . . . . . . . . . . . . . . . . 20 Dear Fellow Shareholders: The first half of 2011 was a difficult period for Northeast Investors Growth Fund. The Fund was +0.28% during this period, underperforming the S&P 500 Index, which was +6.02%. Although we are disappointed with this short-term performance we believe, over the longer term, the investments we hold in well-run, industry leading companies that exhibit strong growth characteristics will prove to be a winning hand. The first half of the year began with favorable market trends, the continuation of a rally that began at the end of August 2010 with the introduction of a second round of quantitative easing by the Federal Reserve, the extension of lower capital gains tax rates, and additional payroll tax cuts at the end of December. These actions helped propel the market upward until the end of April 2011. During this eight-month plus period, from August through April, most pro-cyclical sectors such as Technology, Energy and the Industrial areas did better relative to defensive names. Tactically, we were well represented in these areas, and this helped performance as we ended 2010. Events since April brought into question whether the economy would be able to continue its positive growth trends. Problems continued to challenge developed nations: high levels of unemployment, high levels of debt both on the consumer and the government level, a continued weak housing market, the expected end of expansionary monetary policy in June and possibly tighter fiscal policy. There were shocks to the world economy that cropped up: the earthquake and tsunami in Japan and political unrest in a number of countries in Africa and the Middle East. Additionally, as the U.S. and other developed nations attempted to stimulate flagging economies, governments of emerging economies tried to dampen their growth slightly as inflation was a primary concern. Near-term these macroeconomic factors weighed on our holdings as our portfolio was positioned for a continuation of the economic expansion.We maintained heavy exposures to cyclical sectors such as Industrial, Financials, Information Technology, and Consumer Discretionary and less exposure to traditionally defensive sectors such as Health Care, Staples, and Utilities. Long-term we believe this environment represents an investment opportunity for us and are confident that the products and services provided by the high quality, well managed companieswe own will prevail. Thus, we decided at present to hold the course. Technology is an area where we continue to see strong long-term growth prospects, though in the short-term the sector has not performed as well as the S&P 500 Index. For example, through June, Google was down about 15%, trading at a very reasonable price of about 15x earnings, with cash of about $120 per share on its balance sheet. Though their business was initially built through search engines, they have diversified into growing markets such as smart phones, and have quickly become market leaders. Google detracted from Fund performance this half, but long-term we continue to be excited about its prospects. Near-term, this market weakness could be used to add to a wellcapitalized company at a very reasonable valuation. The Financial sector also detracted from Fund performance this half. It was the bottom performing sector in the S&P 500, down around 4%. We chose to concentrate our investments in commercial banks such as Citigroup, Wells Fargo and JP Morgan; Page 2 investment banks like Goldman Sachs; and asset managers T. Rowe Price and Eaton Vance. As concerns about the state of the global economy increased and economic conditions faltered, these investments experienced a significant decline and underperformed the S&P 500 Index. Still, longer-term as the economy recovers, these businesses will recover as well. If it appears that the earnings prospects of these investments have changed dramatically relative to other investment choices, we will change course. Among areas that performed well for us was Energy.We maintained a heavy weighting in this sector as compared to the S&P 500 Index, which was a good decision as this was the best performing sector for the Index during the first half. Companies that did exceptionally well were National Oilwell Varco (+17%), an oil drilling and service company, and Chevron (+14%), an integrated oil and gas company. Consumers at home and abroad are dependent on oil, and though demand may decrease if growth slows, longer-term there are few substitutes, so again we presently intend to hold the course. Health care, the second best sector performer in the S&P 500 Index, and an area we tactically added to this year, held many favorable performers. Pfizer (+20%), an addition last year, was the second best performer in the Fund, and Allergan (+16%) was a relatively new addition. Favorable characteristics of our investments in this area are diversified product portfolios which include pharmaceuticals, generic drugs, consumer health products, and exposure to consumers in emerging markets. Our outlook for the balance of 2011 remains cautiously positive. We believe equity market valuations are reasonable and offer a favorable risk/reward opportunity. Corporate balance sheets are healthy and second quarter earnings were very encouraging. Consumer balance sheets are being repaired. The U.S. economy is exhibiting positive, though slow growth, and the U.S. government is showing some signs that it is beginning to deal with its debt issues. Moreover, our investments are in well-run, industry leading companies that exhibit strong growth characteristics and have been purchased at what we believe to be reasonable valuations. This is the reason for our judgment that over time, these holdings will provide healthy returns to you, our shareholders. We welcome and encourage you to contact us with any questions, concerns or comments. Please call us directly or visit our website at www.northeastinvest.com where you can view the Fund's closing price, portfolio composition, and historical performance. If you follow your investments online, the ticker symbol for the Fund is NTHFX. Our lines of communication are always open to our most important partners, our fellow shareholders. We continue to appreciate your support. William A. Oates, Jr. Nancy M. Mulligan John F. Francini Average Annual Total Return (unaudited) One year ended June 30, 2011 . . . . . . . . . . . . . . 26.11% Five years ended June 30, 2011 . . . . . . . . . . . . . 1.35% Ten years ended June 30, 2011 . . . . . . . . . . . . . . 2.23% Performance Graph (Ten Years) (unaudited) 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 return on the Standard & Poor's 500 Index, assuming an investment of $10,000 in both at their closing prices on December 31, 2000 and reinvestment of dividends and capital gains. The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Keep in mind that past performance does not guarantee future returns, and an investment in the Fund is not guaranteed. For management's discussion of the Fund's 2011 performance, including strategies and market conditions which influenced such performance, see the portfolio managers' letter to shareholders. Table Omitted Six Months Ended June 30, 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Northeast Investors Growth $8,285 $6,407 $8,226 $8,930 $9,946 $10,865 $12,375 $7,226 $9,325 $10,852 $10,883 Fund Standard & Poor's $8,812 $6,865 $8,833 $9,794 $10,275 $11,898 $12,550 $7,906 $9,999 $11,506 $12,199 500 Index
Returns and Per Share Data Six Months Ended Year Ended December 31, June 30, 2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (unaudited) Net Asset Value 15.43 11.91 15.26 16.52 18.40 20.10 20.19 11.74 15.15 17.60 17.65 Income Dividend 0.00 0.02 0.03 0.05 0.00 0.00 0.04 0.05 0.00 0.03 0.00 Capital Gains Dist. 1.44 0.00 0.00 0.00 0.00 0.00 2.60 0.00 0.00 0.00 0.00 NEIG Return (%) 17.15 22.67 28.39 8.56 11.38 9.24 13.90 41.61 29.05 16.38 0.28 S&P 500 Return (%) 11.88 22.10 28.68 10.88 4.91 15.79 5.48 37.00 26.47 15.07 6.02 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 Form N-Q available on its website at www.northeastinvestors.com or upon request. NOTE: Beginning August 29, 2011 the Fund's new website is www.northeastinvest.com Shareholders may also access and review information and reports of the Fund, including Form N-Q, at the SEC's Public Reference Room in Washington, D.C. You can call the SEC at 1-202-942-8090 for information about the operation of the Public Reference Room. Reports and other information about the Fund are available on the SEC's internet site at http://www.sec.gov. and copies may be obtained for a duplicating fee by electronic request at the following e-mail address: publicinfo@sec.gov or by writing the Public Reference Center of the Securities and Exchange Commission, 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 12/31/2010 6/30/2011 12/31/2010 - 6/30/2011 Actual Return 0.28% $1,000.00 $1,002.84 $6.89 Hypothetical (5% return before expenses) $1,000.00 $1,018.03 $6.82
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, 12/31/2010 - 6/30/2011. 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 theexpenses 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 (unaudited) June 30, 2011 Percent Market of Net Value Assets ------------------------------------------------------------------------------- International Business Machines Corp. . . . . . $2,813,420 3.19% Apple, Inc. . . . . . . . . . . . . . . .. . . . 2,668,577 3.03% Schlumberger Ltd. . . . . . . . . . . . .. . . . 2,574,720 2.92% Google, Inc., Class A. . . . . . . . . . . . . . 2,298,965 2.61% United Technologies Corp. . . . . . . . .. . . . 2,292,409 2.60% Danaher Corp. . . . . . . . . . . . . . .. . . . 2,246,776 2.55% JPMorgan Chase & Co. . . . . . . . . . . . . . . 2,231,230 2.53% National Oilwell Varco, Inc. . . . . . . . . . . 2,213,343 2.51% American Tower Corp., Class A . . . . . .. . . . 2,168,084 2.46% Emerson Electric Co. . . . . . . . . . . . . . . 2,160,000 2.45% Summary of Sector Weightings as a Percentage of Net Assets (unaudited) June 30, 2011 Northeast Market Investors S&P 500 Major Sectors Value Growth Fund Index ------------------------------------------------------------------------------- Consumer Discretionary . . . . . . . . $11,210,238 12.71% 10.12% Consumer Staples . . . . . . . . . . . $ 5,879,228 6.67% 11.53% Energy . . . . . . . . . . . . . . . . $15,182,073 17.22% 10.68% Financials . . . . . . . . . . . . .. . $11,416,789 12.95% 16.31% Health Care. . . . . . . . . . . . .. . $ 9,323,980 10.58% 12.09% Industrials . . . . . . . . . . . . . . $12,545,567 14.23% 10.38% Information Technology . . . . . . .. . $16,441,825 18.65% 18.69% Materials. . . . . . . . . . . . . .. . $ 3,515,885 3.99% 3.44% Telecommunication Services . . . . . . $ 2,168,084 2.46% 3.00% Utilities . . . . . . . . . . . . . . . $ -- 0.00% 3.76% Cash, other assets and liabilities . . $ 484,791 0.54% 0.00% ------ ------ 100.00% 100.00% Summary of Net Assets by Industry (unaudited) June 30, 2011 Market % of Value Net Assets ------------------------------------------------------------------------------- Common Stocks Aerospace & Defense . . . . . . . . . . . . . . . . . . $2,292,409 2.60% Asset Management & Custodian . . . . . . . . . . . . . . 3,684,016 4.18% Automobile Manufacturers . . . . . . . . . . . . . . . . 1,689,275 1.91% Communications Equipment . . . . . . . . . . . . . . . . 3,233,493 3.67% Computer Hardware . . . . . . . . . . . . . . . . . . . 2,668,577 3.03% Computer Storage & Peripherals . . . . . . . . . . . . . 1,556,575 1.76% Construction & Farming. . . . . . . . . . . . . . . . . 2,081,862 2.36% Dental Supplies . . . . . . . . . . . . . . . . . . . . 1,047,200 1.19% Diversified Banks . . . . . . . . . . . . . . . . . . . 3,451,957 3.92% Diversified Chemicals . . . . . . . . . . . . . . . . . 1,053,975 1.20% Diversified Financial Services . . . . . . . . . . . . . 2,231,230 2.53% Diversified Minerals . . . . . . . . . . . . . . . . . . 1,118,250 1.27% Electrical Components & Equipment . . . . . . . . . . . 2,160,000 2.45% Electronic Components . . . . . . . . . . . . . . . . . .1,962,015 2.23% Food and Beeverage . . . . . . . . . . . . . . . . . . . 1,071,120 1.21% Footwear . . . . . . . . . . . . . . . . . . . . . . . . 1,610,642 1.83% Health Care Services . . . . . . . . . . . . . . . . . . 1,605,168 1.82% Household Products . . . . . . . . . . . . . . . . . . . 1,354,041 1.54% Industrial Conglomerate . . . . . . . . . . . . . . . . 1,697,400 1.93% Industrial Machinery . . . . . . . . . . . . . . . . . . 2,246,776 2.55% Integrated Oil & Gas. . . . . . . . . . . . . . . . . . .6,071,075 6.89% Internet Retail . . . . . . . . . . . . . . . . . . . . 3,697,425 4.19% Internet Software & Services . . . . . . . . . . . . . . 2,298,965 2.61% Investment Banking & Brokerage. . . . . . . . . . . . . 2,049,586 2.32% IT Consulting & Other Services . . . . . . . . . . . . . 2,813,420 3.19% Metals & Mining . . . . . . . . . . . . . . . . . . . . 1,343,660 1.52% Movies & Entertainment . . . . . . . . . . . . . . . . . 1,892,464 2.15% Oil & Gas Equipment . . . . . . . . . . . . . . . . . .. 4,788,063 5.43% Oil & Gas Exploration & Production . . . . . . . . . . . 4,322,935 4.90% Packaged Foods . . . . . . . . . . . . . . . . . . . . . 1,559,500 1.77% Pharmaceuticals . . . . . . . . . . . . . . . . . . . . .7,718,812 8.75% Railroads . . . . . . . . . . . . . . . . . . . . . . . .2,067,120 2.34% Restaurants . . . . . . . . . . . . . . . . . . . . . . 1,273,232 1.44% Soft Drinks . . . . . . . . . . . . . . . . . . . . . . 1,894,567 2.15% Systems Software . . . . . . . . . . . . . . . . . . . . 1,908,780 2.16% Wireless Services . . . . . . . . . . . . . . . . . . . 2,168,084 2.46% ---------- ----- Total Common Stocks . . . . . . . . . . . . . . . . . . 87,683,669 99.45% Total Cash Equivalents and Repurchase Agreement . . . . .6,353,189 7.21% ---------- ----- Total Investment Portfolio . . . . . . . . . . . .. . . 94,036,858 106.66% Net Other Assets and Liabilities. . . . . . . . . . . . (5,868,398) 6.66% ---------- ----- Total Net Assets . . . . . . . . . . . . . . . . . . . $88,168,460 100.00% Schedule of Investments June 30, 2011 (unaudited) Number Market Percent Common Stock Sector of Value of Net Name of Issuer Shares (Note B) Assets ------------------------------------------------------------------------------- Consumer Discretionary ------------------------------------------------------------------------------- Amazon.com, Inc.^ . . . . . . . . . . . 8,600 $1,758,614 Dentsply International, Inc. # . . . . 27,500 1,047,200 Ford Motor Co. ^# . . . . . . . . . . 122,500 1,689,275 McDonald's Corp.* . . . . . . . . . . 15,100 1,273,232 Netflix, Inc. ^# . . . . . . . . . . . 3,900 1,024,491 Nike, Inc. . . . . . . . . . . . . . . 17,900 1,610,642 Opentable, Inc. ^# . . . . . . . . . . 11,000 914,320 Walt Disney Co. . . . . . . . . . . .. 48,475 1,892,464 ---------- 11,210,238 12.71% Consumer Staples ------------------------------------------------------------------------------- Green Mountain Coffee Roasters ^#. . . 12,000 1,071,120 Nestle SA * . . . . . . . . . . . . . 25,000 1,559,500 PepsiCo, Inc. * . . . . . . . . . . . 26,900 1,894,567 Procter & Gamble Co. * . . . . . . . . 21,300 1,354,041 ---------- 5,879,228 6.67% Energy ------------------------------------------------------------------------------- Apache Corp. . . . . . . . . . . . . . 16,400 2,023,596 Cenovus Energy, Inc. . . . . . . . . . 25,000 941,500 Chevron Corp. * . . . . . . . . . . . 18,500 1,902,540 EnCana Corp. . . . . . . . . . . . . . 44,100 1,357,839 Exxon Mobil Corp. * . . . . . . . . .. 25,782 2,098,139 National Oilwell Varco, Inc. . . . . . 28,300 2,213,343 Occidental Petroleum Corp. . . . . . . 19,900 2,070,396 Schlumberger Ltd. . . . . . . . . . .. 29,800 2,574,720 ---------- 15,182,073 17.22% Financials ------------------------------------------------------------------------------- Citigroup, Inc. . . . . . . . . . . .. 41,120 1,712,237 Eaton Vance Corp. * . . . . . . . . .. 54,600 1,650,558 Goldman Sachs Group . . . . . . . . .. 15,400 2,049,586 JPMorgan Chase & Co. . . . . . . . . . 54,500 2,231,230 T. Rowe Price Group, Inc. * . . . . .. 33,700 2,033,458 Wells Fargo & Co. . . . . . . . . . .. 62,000 1,739,720 ---------- 11,416,789 12.95% Health Care ------------------------------------------------------------------------------- Allergan, Inc. . . . . . . . . . . . . 23,400 1,948,050 Medco Health Solutions, Inc. ^ . . . . 28,400 1,605,168 Novartis AG, ADR . . . . . . . . . . . 32,000 1,955,520 Pfizer, Inc. . . . . . . . . . . . . . 89,000 1,833,400 Teva Pharmaceutical Industries Ltd. . 41,100 $1,981,842 ---------- 9,323,980 10.58% Industrials ------------------------------------------------------------------------------- Danaher Corp. * . . . . . . . . . .. . 42,400 2,246,776 Deere & Co. * . . . . . . . . . . .. . 25,250 2,081,862 Emerson Electric Co. * . . . . . . . . 38,400 2,160,000 General Electric Co. . . . . . . . . . 90,000 1,697,400 Union Pacific Corp. . . . . . . . .. . 19,800 2,067,120 United Technologies Corp. * . . . .. . 25,900 2,292,409 ---------- 12,545,567 14.23% Information Technology ------------------------------------------------------------------------------- Apple, Inc. ^ . . . . . . . . . . . . . 7,950 2,668,577 Corning, Inc. *. . . . . . . . . . .. 108,100 1,962,015 EMC Corp. ^# . . . . . . . . . . . . . 56,500 1,556,575 Google, Inc., Class A*^ . . . . . . . 4,540 2,298,965 International Business Machines Corp. 16,400 2,813,420 Juniper Networks, Inc. ^ . . . . . . . 45,500 1,433,250 Oracle Corp. . . . . . . . . . . . . . 58,000 1,908,780 Qualcomm, Inc. . . . . . . . . . . . . 31,700 1,800,243 ---------- 16,441,825 18.65% Materials ------------------------------------------------------------------------------- Dupont . . . . . . . . . . . . . . . . 19,500 1,053,975 Freeport-McMoRan Copper & Gold, Inc. . 25,400 1,343,660 Vale SA. . . . . . . . . . . . . . . . 35,000 1,118,250 ---------- 3,515,885 3.99% Telecommunication Services ------------------------------------------------------------------------------- American Tower Corp., Class A^ . . . . 41,431 2,168,084 2.46% ---------- Total Common Stocks (Cost--$65,055,624) . . . . . . . .$87,683,669 99.46% Repurchase Agreement ------------------------------------------------------------------------------- State Street Bank & Trust Co. Repurchase Agreement, 0.01% due 7/1/10@. . . . . . . . 496,264 Total Repurchase Agreement (Cost--$496,264). . . . . . .$ 496,264 0.56% Cash Equivalents ------------------------------------------------------------------------------- State Street Bank & Trust Navigator Prime . . . . . . . 5,856,925 Total Cash Equivalents (Cost--$5,856,925). . . . . . $ 5,856,925 6.64% Total Investment Portfolio (Cost--$71,408,813) . . . . 94,036,858 106.66% Net Other Assets and Liabilities . . . . . . . . . . . (5,868,398) -6.66% Total Net Assets . . . . . . . . . . . . . . . . . . $88,168,460 100.00% ----------- ----------- * 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 June 30, 2011. Collateralized by $511,593, of market value of U.S. Government Treasury Bills due through 11/25/40. The maturity value is $496,265 ~ Security held as collateral for securities on loan The accompanying notes are an integral part of the financial statements. Statement of Assets and Liabilities (unaudited) June 30, 2011 Assets ------------------------------------------------------------------------------- Investments--at market value (including securities loaned of $5,764,811) (cost $71,408,813). . . . . . . . . . . . . . . . . . . . . . . . . $94,036,858 Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . 116,625 Receivable for shares sold . . . . . . . . . . . . . . . . . . . . . . . . 925 ----------- Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,154,408 Liabilities ------------------------------------------------------------------------------- Collateral on securities loaned, at value . . . . . . . . . . . . . . 5,856,925 Accrued audit expense . . . . . . . . . . . . . . . . . . . . . . . . . 48,702 Accrued investment advisory fee . . . . . . . . . . . . . . . . . . . . 43,581 Accrued other expenses. . . . . . . . . . . . . . . . . . . . . . . . . 26,111 Payable for shares repurchased . . . . . . . . . . . . . . . . . . . . . 10,629 ----------- Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 5,985,948 ----------- Net Assets . . . . . . . . . . . . . . . . . . . . .. . . . . . . . $88,168,460 ----------- ----------- Net Assets Consist of: Capital paid-in . . . . . . . . . . . . . . . . . . . . . . . . . . $66,434,442 Undistributed net investment income . . . . .. . . . . . . . . . . . . . 87,863 Accumulated net realized gain/(loss) . . . . . . . . . . . . . . . . . (981,890) Net unrealized appreciation/(depreciation) of investments . . . . . 22,628,045 ----------- Net Assets . . . . . . . . . . . . . . . . . . . . .. . . . . . . . $88,168,460 ----------- ----------- Net Asset Value, offering price and redemption price per share ($88,168,460/4,997,532 shares) . . . . . . . . . . . . . . . . . . . . . $17.65 The accompanying notes are an integral part of the financial statements. Statement of Operations (unaudited) Six Months Ended June 30, 2011 Investment Income ------------------------------------------------------------------------------- Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . $705,227 Security lending income. . . . . . . . . . . . . . . .. . . . . . . . . . 3,567 Other income . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 728 ------- Total Income . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 709,522 Expenses ------------------------------------------------------------------------------- Investment advisory fee . . . . . . . . . . . . . . . . . . . . . . .. $277,680 Administrative expenses and salaries . . . . . . . . . . . . . . . . . 132,809 Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,075 Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,725 Computer and related expenses . . . . . . . . . . . . . . . . . . . .. . 22,625 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 20,815 Printing, postage, and stationery . . . . . . . . . . . . . . . . . .. . 18,825 Registration and Filing fees . . . . . . . . . . . . . . . . . . . . . . 18,100 Trustee fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,705 Telephone expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,050 Commitment fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,996 Interest fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,729 Miscellaneous fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,525 ------- Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621,659 ------- Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . 87,863 Realized and Unrealized Gain (Loss) on Investments: Net realized gain (loss) from investment transactions. . . . . . . . $4,303,502 Change in unrealized appreciation (depreciation) of investments . . (4,082,600) ---------- Net gain (loss) on investments . . . . . . . . . . . . . . . . . . .. . 220,902 Net increase (decrease) in net assets resulting from operations . . . $308,765 ---------- The accompanying notes are an integral part of the financial statements. Statement of Changes in Net Assets Six Months Ended June 30, Year Ended 2011 December 31, (unaudited) 2010 Increase (Decrease) in Net Assets From Operations: Net investment income (loss) . . . . . . . . . . . . . . . . . . . .. . $87,863 $29,402 Net realized gain (loss) from investment transactions . . . . . . . . 4,303,502 2,488,231 Change in unrealized appreciation (depreciation) of investments . . .(4,082,600) 10,777,800 ----------- ---------- Net Increase (Decrease) in Net Assets Resulting from Operations . . . . . . . . . . . . . . . . . . . . . . . 308,765 13,295,433 ----------- ---------- Distributions to Shareholders From net investment income . . . . . . . . . . . . . . . . . . . . . . . . . -- (164,278) ----------- ---------- Total Distributions to Shareholders . . . . . . . . . . . . . . . . . . . -- (164,278) From Net Fund Share Transactions . . . . . . . . . . . . . . . . . . (5,404,086) (12,231,152) ----------- ----------- Total Increase (Decrease) in Net Assets . . . .. . . . . . . . . . . (5,095,321) 900,003 Net Assets: Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . 93,263,781 92,363,778 ----------- ----------- End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . $88,168,460 $93,263,781 ----------- ----------- ----------- ----------- Undistributed Net Investment Income . . . . . . . . . . . . . . . . . . $87,863 $0 The accompanying notes are an integral part of the financial statements.
Financial Highlights Six Months Ended June 30, 2011 Year Ended December 31, Per Share Data ^ (unaudited) 2010 2009 2008 2007 2006 Net Asset Value: Beginning of Period . . . . . . . . . . $17.60 $15.15 $11.74 $20.19 $20.10 $18.40 Income From Investment Operations: Net investment income (loss) . . . . . . . 0.02 0.01 0.02 0.05 0.02 0.01 Net realized and unrealized gain (loss) on investment . . . . . . . . . . . . . . . 0.03 2.47 3.39 (8.45) 2.71 1.69 ------ ----- ----- ----- ----- ----- Total from investment operations . . . . 0.05 2.48 3.41 (8.40) 2.73 1.70 Less Distributions: Net investment income . . . . . . . . . 0.00 (0.03) 0.00 (0.05) (0.04) 0.00 Capital Gain . . . . . . . . . . . . . . . . 0.00 0.00 0.00 0.00 (2.60) 0.00 ------ ----- ----- ----- ----- ----- Total Distributions . . . . . . . . . . . . 0.00 -0.03 0.00 (0.05) (2.64) 0.00 Net Asset Value: End of Period . . . . . . . . . . . . . . $17.65 $17.60 $15.15 $11.74 $20.19 $20.10 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total Return. . . . . . . . . . . . . . . . . 0.28%# 16.38% 29.05% -41.61% 13.90% 9.24% Ratios & Supplemental Data Net assets end of period (in thousands) . . . . . . . . . . . . . . . . $88,168 $93,264 $92,364 $78,453 $145,440 $139,927 Ratio of operating expenses to average net assets (includes interest expense) . . . . . . . . . . . . . . . . . . 1.36%~ 1.39% 1.60% 1.27% 1.10% 1.15% Ratio of interest expense to average net assets . . . . . . . . . . . . . . . . . 0.00%*~ 0.01% 0.00%* 0.00%* 0.01% 0.00%* Ratio of net investment income to average net assets . . . . . . . . . . . 0.21%~ 0.03% 0.16% 0.29% 0.11% 0.08% Portfolio turnover rate . . . . . . . . . . . 14%# 15% 36% 45% 40% 52% ^ Average share method used to calculate per share data * Amount is less than 0.01% ~ Annualized # Not annualized
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. Methodologies and factors used to fair value securities may include, but are not limited to, information of any recent sales, the analysis of the company's financial statements, quotations or evaluated prices from broker-dealers and/or pricing services and information obtained from analysts. 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 June 30, 2011 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, 2010 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 Page 15 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 $12,951,756 and $18,692,314, respectively, for the six months ended June 30, 2011. Note E-Shares of Beneficial Interest At June 30, 2011, there was an unlimited number of shares of beneficial interest authorized with no par value. Transactions in shares of beneficial interest were as follows: June 30, 2011 December 31, 2010 ------------- ----------------- Shares Amount Shares Amount Shares sold . . . . . . . . . . . . . . 48,354 $867,064 94,619 $1,505,210 Shares issued to shareholders in reinvestment of distributions from net investment income and realized gains from security transactions. . . . . . . . -- -- 8,317 144,718 ------ ------- ------ --------- 48,354 $867,064 102,936 $1,649,928 Shares repurchased . . . . . . . . . (350,019) $(6,271,150) (901,174) $(13,881,080) -------- ----------- -------- ------------ Net Increase. . . . . . . . . . . . . (301,665) $(5,404,086) (798,238) $(12,231,152)
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 June 30, 2011, the Fund had an unused line of credit amounting to $10,000,000. 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 six months ended June 30, 2011: Average amount outstanding (total of daily outstanding principal balances divided by number of days with debt outstanding during the period) . . $370,849 Weighted average interest rate . . . . . . . . . . . . . . . . . . . . . 1.44% Note H-Additional Tax Information Dividends paid during the fiscal year ended December 31, 2010 were $164,278, and such dividends were classified for tax purposes as ordinary income. There were no dividends paid during the six months ended June 30, 2011 As of December 31, 2010 the components of accumulated earnings (losses) on a tax basis were as follows: 2010 ---- Capital loss carryforward* . . . . . . . . . . . . . . . . . . . . $ (4,274,091) Timing Differences . . . . . . . . . . . . . . . . . . . . . . . . . . (592,955) Unrealized gains (losses)--net . . . . . . . . . . . . . . . . . . . 26,292,299 ------------- Total accumulated earnings (losses)--net . . . . . . . . . . . . .. $21,425,253 *The capital loss carryforward will expire as follows: Expiration Year Amount ---- ----------- 2017 . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . $(4,274,091) At December 31, 2010 the Fund's Post October loss deferral was $(592,955). At December 31, 2010 the Fund's aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes was as follows: 2010 ---- Tax cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $72,176,741 Gross unrealized gain. . . . . . . . . . . . . . . . . . . . . . . . 26,930,842 Gross unrealized loss . . . . . . . . . . . . . . .. . . . . . . . . . (638,543) ------------ Net unrealized security gain (loss) . . . . . . . . . . . . . . . . $26,292,299 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 June 30, 2011, the value of securities loaned and the value of collateral was $5,764,811 and $5,856,925, respectively. During the six months ended June 30, 2011, income from securities lending amounted to $3,567. 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 June 30, 2011, based on the inputs used to value them. Level 1 Level 2 Level 3 Total ------- ------- ------- ------ Common Stock . . . .$87,683,669 -- -- $87,683,669 Cash Equivalents . . .5,856,925 -- -- 5,856,925 Repurchase Agreement . . . -- $496,264 -- 496,264 ---------- -------- ------- ------------ $93,540,594 $496,264 -- $94,036,858 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 02110-1745. The Fund's Statement of Additional Information (SAI) contains additional information about the Trustees. To request a free copy prior to August 29, 2011, call the Fund at 800-225-6704 or visit our website at www.northeastinvestors.com. NOTE: Beginning August 29, 2011 the Fund's new phone number is 855-755-NEIG (6344); the new website is www.northeastinvest.com Principal Occupation(s) During the Past Five Years/and Name/Age/Service* Position Other Directorships ------------------------------------------------------------------------------------------------------------------------- Affiliated Trustees and Fund Officers ------------------------------------------------------------------------------------------------------------------------- Williams A. Oates, Jr. Trustee and Trustee and President of Northeast Age: 69 President Investors Growth Fund; President and Years of Service: 30 Director of Northeast Investment Management, Inc. Gordon C. Barrett Senior Vice Chief Financial Officer of Northeast Age: 54 President, Chief Investors Growth Fund, Chief Financial Years of Service: 17 Financial Officer Officer of Northeast Investors Trust, and Officer of Northeast Investment Management, Inc. Robert B. Minturn Clerk, Vice Officer of Northeast Investors Trust; Age: 72 President, And Officer of Northeast Investors Growth Years of Service: 30 Chief Legal Officer Fund (Trustee until November 2008); Officer of Northeast Investment Management, Inc. David A. Randall Chief Compliance Vice President of Northeast Investors Age: 44 Officer Growth Fund and Vice President of Years of Service: 10 Northeast Investors Trust Independent Trustees -------------------------------------------------------------------------------------------------------------------------- John C. Emery Trustee Partner, Law Firm of Sullivan & Age: 80 Worcester Years of Service: 30 Michael Baldwin Trustee Partner, Baldwin Brothers, Registered Age: 70 Investment Advisor Years of Service: 11 F. Washington Jarvis Trustee Headmaster Emeritus at Roxbury Latin Age: 72 School Years of Service: 7 * The Trustees serve until their resignation or the appointment of a successor and the officers serve at the pleasure of the Trustees.
Board Approval of Investment Advisory Contract At its meeting held on June 3, 2011, the Board of Trustees of the Fund, including the Independent Trustees voting separately, voted to extend the Fund's investment management agreement with Northeast Management & Research Company, Inc. (the "Investment Adviser"). The Investment Adviser presented detailed information to the Board requested by the Independent Trustees. Such information included (i) information confirming the financial condition of the Investment Adviser and the Investment Adviser's profitability derived from its relationship with the Fund; (ii) a description of the personnel and services provided by the Investment Adviser; (iii) comparative information on investment performance; and (iv) information regarding brokerage and portfolio transactions. The Board reviewed and discussed financial information provided by the Investment Adviser, including fees, income and expenses, and the Investment Adviser's profitability derived from its relationship with the Fund. The Board determined that the Investment Adviser is solvent and in a position to perform the ongoing responsibilities to the Fund and to satisfy its obligations under the Act and the advisory agreement. The Board reviewed the advisory fee and the effective investment advisory fee rate paid by the Fund and the appropriateness of such advisory fee. The Board reviewed and considered any economies of scale which might be realized by the Fund and how the current advisory fee for the Fund reflects the economies of scale for the benefit of the shareholders of the Fund. The Board also reviewed and considered the fees or other payments received by the Investment Adviser. The Board reviewed and considered comparison of fees charged by investment advisers to fund peers of the Fund. The Board also considered and reviewed information regarding brokerage. The Board reviewed and considered the qualifications of the current and anticipated portfolio managers to manage the portfolio of the Fund, including their history managing investments generally and growth oriented investments in particular, as well as the background and expertise of the key personnel and amount of time they would be able to devote to the affairs of the Fund. The Board concluded, in light of the particular requirements of the Fund, that it was satisfied with the professional qualifications and overall commitment to the Fund of the anticipated portfolio management team. The Board considered the nature, extent and quality of services rendered to the Fund by the Investment Adviser and the investment performance of the Fund based on the data provided which included comparisons with index data and data concerning performance relative to other funds with generally similar objectives and management policies. The Board determined that in light of the data taken as a whole and the nature of the investment program of the Fund, the investment performance was reasonable and acceptable. The Board discussed the Investment Adviser's profitability, and it was determined to be reasonable, given the services rendered and the Fund's performance and services provided. The Board concluded that the Fund's fees paid to the Investment Adviser were reasonable in light of comparative performance and advisory fee information, costs of the services provided and profits to be realized and benefits derived by the Investment Adviser from the relationship with the Fund. 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 Robert B. Minturn, Vice President, Clerk & Chief Legal Officer David A. Randall, Vice President & Chief Compliance Officer 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 02116 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 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/growth/proxypolicy.stm, call 1-800-225-6704 or visit the Securities and Exchange Commission (SEC)'s website at www.sec.gov. Beginning August 29, 2011 the Fund's new phone number is 855-755-NEIG (6344); the new website is www.northeastinvest.com Shares of the Fund are sold to investors at net asset value by Northeast Investors Growth Fund 100 High Street Boston, Massachusetts 02110 855-755-NEIG (6344) www.northeastinvest.com Item 2. Code of Ethics. Not applicable for semi-annual report. Item 3. Audit Committee Financial Expert. Not applicable for semi-annual report. Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual report. 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 Managers 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. The registrant has not adopted procedures for the submission of nominees for Trustee. 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: September 7, 2011 By (Signature and Title) John F. Francini Chief Financial Officer (principal financial officer) Date: September 7, 2011 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: September 7, 2011 By (Signature and Title) John F. Francini Chief Financial Officer (principal financial officer) Date: September 7, 2011 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 second fiscal quarter of the period covered by this 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: September 7, 2011 William A. Oates, Jr. President (principal executive officer) Certification Pursuant to Section 302 of the Sarbanes-Oxley Act I, John F. Francini, 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 second fiscal quarter of the perio covered by this 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: September 7, 2011 John F. Francini 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 June 30, 2011 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: September 7, 2011 William A. Oates, Jr. President (Principal Executive Officer) Dated: September 7, 2011 John F. Francini 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 second fiscal quarter of the period covered by this 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: September 7, 2011 William A. Oates, Jr. President (principal executive officer) Certification Pursuant to Section 302 of the Sarbanes-Oxley Act I, John F. Francini, 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 second fiscal quarter of the perio covered by this 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: September 7, 2011 John F. Francini 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 June 30, 2011 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: September 7, 2011 William A. Oates, Jr. President (Principal Executive Officer) Dated: September 7, 2011 John F. Francini 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.