UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS FOR REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act file number 811-576 Northeast Investors Trust (Exact name of registrant as specified in charter) 150 Federal Street Boston, MA 02110 (Address of principal executive offices) (Zip code) David Randall 150 Federal Street Boston, MA 02110 (Name and address of agent for service) Registrant's telephone number, including area code: 612-523-3588 Date of fiscal year end: September 30 Date of reporting period: June 30, 2008 Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 ($$ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q 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. Schedule of Investments. Schedule of Investments June 30, 2008 (unaudited) Corporate Bonds, Notes & Preferred Securities- 101.13% Value Name of Issuer Principal (Note B) --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- Advertising - 3.41% --------------------------------------------------------------------------------------------------------------------------- Interpublic Group Co. Notes, 7.25%, 8/15/11 $ 29,900,000 $ 29,003,000 Automobile & Truck - 2.37% --------------------------------------------------------------------------------------------------------------------------- Collins and Aikman Products, 10.75%, 12/31/11 (a) 20,000,000 50,000 Delphi Corp. Senior Unsecured Notes, 6.55%, 6/15/06 (a) (b) 36,950,000 7,944,250 Dura Operating Corp. Senior Unsecured Notes, Series B, 8.625%, 4/15/12 (a) 35,310,000 1,412,400 United Rentals NA, Inc. Senior Notes, 6.5%, 2/15/12 12,000,000 10,800,000 ------------------ 20,206,650 Broadcast Cable TV - 6.49% --------------------------------------------------------------------------------------------------------------------------- Charter Comm. Opt. LLC Senior Secured Notes, Series 144A, 8%, 4/30/12 (c) 40,000,000 37,800,000 Charter Comm. Opt. LLC Senior Secured Notes, Series 144A, 8.375%, 4/30/14 (c) 5,000,000 4,737,500 Paxson Comm. Corp. Senior Secured Notes, Series 144A, FRN, 5.963%, 1/15/12 (c) 15,000,000 12,750,000 ------------------ 55,287,500 Building & Construction - 1.71% --------------------------------------------------------------------------------------------------------------------------- Associated Materials, Inc. Notes, 9.75%, 4/15/12 14,750,000 14,602,500 Building Products - 0.48% --------------------------------------------------------------------------------------------------------------------------- Builders Firstsource, Inc. Senior Secured Notes, 6.926%, 2/15/12 6,000,000 4,080,000 Chemicals - 4.20% --------------------------------------------------------------------------------------------------------------------------- Polyone Corp. Senior Notes, Series 144A, 8.875%, 5/01/12 (c) 5,000,000 5,000,000 Polyone Corp. Senior Notes, 8.875%, 5/01/12 20,000,000 20,000,000 Reichhold Industries, Inc. Senior Notes, Series 144A, 9%, 8/15/14 (c) 7,315,000 7,315,000 Sterling Chemical, Inc., Series 144A, 10.25%, 4/01/15 (c) 3,500,000 3,491,250 ------------------- 35,806,250 Drug Stores - 1.44% --------------------------------------------------------------------------------------------------------------------------- Rite Aid Corp. Notes, 7.5%, 1/15/15 11,500,000 12,305,000 Electrical Equipment - 0.77% --------------------------------------------------------------------------------------------------------------------------- Coleman Cable, Inc. Notes, 9.875%, 10/01/12 7,000,000 6,580,000 Electrical Utilities - 3.67% --------------------------------------------------------------------------------------------------------------------------- Mirant Americas Genr, Inc. Senior Unsecured Notes, 8.3%, 5/01/11 30,250,000 31,233,125 Energy/Natural Resources - 14.00% --------------------------------------------------------------------------------------------------------------------------- Clayton Williams Energy Notes, 7.75%, 8/01/13 19,847,000 19,053,120 Comstock Resources, Inc. Senior Notes, 6.875%, 3/01/12 10,300,000 10,119,750 Forest Oil Corp. Notes, 8%, 12/15/11 14,890,000 15,336,700 Forest Oil Corp. Senior Unsecured Notes, 7.75%, 5/01/14 11,604,000 11,662,020 Frontier Oil Corp. Notes, 6.625%, 10/01/11 6,668,000 6,567,980 Gulfmark Offshore, Inc. Notes, 7.75%, 7/15/14 14,246,000 14,352,845 Stone Energy Corp. Senior Sub. Notes, 8.25%, 12/15/11 18,296,000 17,838,600 Stone Energy Corp. Senior Sub. Notes, 6.75%, 12/15/14 4,600,000 4,036,500 Swift Energy Co. Senior Notes, 7.625%, 7/15/11 1,000,000 995,000 W & T Offshore, Inc. Notes, Series 144A, 8.25%, 6/15/14 (c) 20,000,000 19,300,000 ------------------ 119,262,515 Entertainment - 9.53% --------------------------------------------------------------------------------------------------------------------------- AMC Entertainment, Inc. Senior Sub. Notes, 8%, 3/01/14 26,780,000 23,767,250 AMC Entertainment, Inc. Notes, 11%, 2/01/16 10,000,000 9,900,000 Cinemark, Inc. Senior Discount Notes, 0/9.75%, 3/15/14 (d) 50,000,000 47,500,000 ------------------ 81,167,250 Financial Services - 12.26% --------------------------------------------------------------------------------------------------------------------------- Bank of America Corp. Junior Sub. PFD, 8%, 12/29/49 (e) 30,000,000 28,106,100 Bank of America Corp. Junior Sub. PFD, 8.125%, 12/29/49 (e) 3,000,000 2,835,780 Citigroup, Inc. Junior Sub. PFD, 8.4%, 04/30/49 (e) 45,000,000 42,777,450 Finova Group, Inc. Notes, 7.5%, 11/15/09 (a) 4,360,745 512,388 Wachovia Corp, Junior Sub. PFD, 7.98%, 02/28/49 (e) 32,818,000 30,140,051 ------------------ 104,371,769 Food Processing - 4.07% --------------------------------------------------------------------------------------------------------------------------- B&G Foods, Inc. Notes, 8%, 10/01/11 1,000,000 982,500 Chiquita Brands Intl. Senior Notes, 7.5%, 11/01/14 14,150,000 11,532,250 Chiquita Brands Intl. Senior Unsub. Notes, 8.875%, 12/01/15 22,500,000 19,687,500 Mrs. Fields Brands Financing Notes, 9%, 3/15/11 3,500,000 2,450,000 ------------------- 34,652,250 Gaming - 8.96% --------------------------------------------------------------------------------------------------------------------------- Las Vegas Sands Corp. Notes, 6.375%, 2/15/15 5,000,000 4,250,000 MGM Mirage, Inc. Senior Unsecured Notes, 8.5%, 9/15/10 17,030,000 16,817,125 Mandalay Resort Group Senior Sub. Notes, 9.375%, 2/15/10 10,000,000 10,000,000 Trump Entertainment Resorts, Inc. Senior Secured Notes, 8.5%, 6/01/15 69,914,327 43,521,669 Wimar Opco LLC / Fin. Corp. Senior Sub Notes, 9.625%, 12/15/14 (a) 3,535,000 1,679,125 ------------------ 76,267,919 Health Care Diversified - 0.01% --------------------------------------------------------------------------------------------------------------------------- Global Health Sciences Co. Notes, 11%, 5/01/08 (a) (b) (f) 4,667,424 62,077 Home Furnishings - 0.53% --------------------------------------------------------------------------------------------------------------------------- Norcraft Cos LP Notes, 9%, 11/01/11 4,500,000 4,522,500 Independent Power Producer - 1.23% --------------------------------------------------------------------------------------------------------------------------- NRG Energy, Inc. Notes, 7.25%, 2/01/14 5,000,000 4,775,000 NRG Energy, Inc. Notes, 7.375%, 1/15/17 6,000,000 5,670,000 ------------------ 10,445,000 Machine / Tools - 1.52% --------------------------------------------------------------------------------------------------------------------------- Thermadyne Holdings Corp. Notes, 9.25%, 2/01/14 13,513,000 12,904,915 Marketing / Sales - 1.34% --------------------------------------------------------------------------------------------------------------------------- Harry and David Operations Notes, 9%, 3/01/13 13,000,000 11,440,000 Metals & Mining - 0.15% --------------------------------------------------------------------------------------------------------------------------- Kaiser Aluminum & Chemical Corp. Notes, 12.75%, 2/01/03 (a) (b) (f) 46,230,000 1,294,440 LTV Steel Co., Inc. Senior Unsecured Notes, 8.2%, 9/15/07 (a) (b) 7,776,278 78 LTV Steel Co., Inc. Unsecured Senior Sub. Notes, 11.75%, 11/15/09 (a) 7,286,184 73 National Steel Corp. First Mortgage Notes, 8.375%, 8/01/06 (a) (b) (f) 461,951 2,309 ------------------ 1,296,900 Oil & Gas Drilling - 1.82% --------------------------------------------------------------------------------------------------------------------------- Pride International, Inc. Senior Unsecurd Notes, 7.375%, 7/15/14 15,550,000 15,511,125 Packaging & Container - 16.00% --------------------------------------------------------------------------------------------------------------------------- Constar International, FRN 6.051%, 2/15/12 20,750,000 17,845,000 Jefferson Smurfit Corp. Notes, 8.25%, 10/01/12 15,250,000 13,305,625 Jefferson Smurfit Corp. Senior Unsecured Notes, 7.5%, 6/01/13 15,405,000 12,709,125 Pliant Corp. Senior Secured PIK Notes, 11.625%, 6/15/09 28,128,312 28,268,954 Pliant Corp. Senior Secured Notes, 11.125%, 9/01/09 25,000,000 21,125,000 Smurfit-Stone Container Senior Unsecured Notes, 8%, 3/15/17 8,780,000 7,024,000 Stone Container Senior Notes, 8.375%, 7/01/12 8,000,000 7,020,000 Stone Container Notes, 7.375%, 7/15/14 5,000,000 4,000,000 Tekni-Plex, Inc. Senior Secured Notes, 10.875%, 8/15/12 2,000,000 2,030,000 Tekni-Plex, Inc. Senior Secured Notes, 8.75%, 11/15/13 27,500,000 22,962,500 ------------------ 136,290,204 Paper/Forest Products - 2.92% --------------------------------------------------------------------------------------------------------------------------- American Tissue, Inc. Senior Secured Notes, Series B, 12.5%, 7/15/06 (a) (b) (f) 14,061,292 210,919 Scotia Pacific Co. LLC Senior Secured Notes, Series B, 7.11%, 1/20/14 (a) 8,500,000 6,120,000 Scotia Pacific Co. LLC Senior Secured, Series B, 7.71%, 1/20/14 (a) 24,900,000 18,550,500 ------------------ 24,881,419 Publishing - 1.52% --------------------------------------------------------------------------------------------------------------------------- Houghton Mifflin Co. Unsecured Notes, 7.2%, 3/15/11 13,000,000 12,967,500 Retail Food Chains - 0.13% --------------------------------------------------------------------------------------------------------------------------- Denny's Corp. Holding, Inc. Notes, 10%, 10/01/12 455,000 441,350 Planet Hollywood Secured PIK Notes, 9%, 3/30/10 (a) (f) 1,470,145 690,968 ------------------- 1,132,318 Textiles - 0.00% --------------------------------------------------------------------------------------------------------------------------- West Point Stevens, Inc. Senior Unsecured Notes, 7.875%, 6/15/05 (a) (b) 25,725,000 2,572 West Point Stevens, Inc. Senior Unsecured Notes, 7.875%, 6/15/08 (a) (b) 11,750,000 1,175 ------------------ 3,747 Tires & Rubber - 0.58% --------------------------------------------------------------------------------------------------------------------------- Goodyear Tire & Rubber Co., FRN 6.678%, 12/01/09 5,000,000 4,962,500 Total Corporate Bonds, Notes & Preferred Securities - (cost - $1,156,593,810) $861,245,933 ------------------- Convertible Bonds Value Name of issuer Principal (Note B) --------------------------------------------------------------------------------------------------------------------------- Convertible Bonds - 0.01% --------------------------------------------------------------------------------------------------------------------------- Eurotunnel Group Tier 1, 3%, 7/28/08 GBP $74 $34,790 Eurotunnel Group Tier 2, 3%, 7/28/09 GBP 74 29,483 Eurotunnel Group Tier 3, 3%, 7/28/10 GBP 74 32,431 Eurotunnel Group NRS II 6%, 7/28/10 GBP 40 9,763 ------------------ Total Convertible Bonds - (cost - $96,659) $106,467 ------------------- Foreign Bonds Value Name of issuer Principal (Note B) --------------------------------------------------------------------------------------------------------------------------- Foreign Bonds - 0.40% --------------------------------------------------------------------------------------------------------------------------- Republic of Argentina GDP Linked Security, FRN, 12/15/35 34,386,574 3,404,271 ------------------- Total Foreign Bonds - (cost - $1,423,420) $3,404,271 ------------------- Number of Value Stocks Shares (Note B) Name of issuer --------------------------------------------------------------------------------------------------------------------------- Common Stock - 6.99% --------------------------------------------------------------------------------------------------------------------------- Amtrol, Inc. (f) (g) 640,565 4,612,068 Chubb Corp. 118,353 5,800,481 Core-Mark Holding Co., Inc. (g) 241,361 6,323,658 Holdco (f) (g) (h) 62,100 310,500 International Airline Support Group (g) 219,540 2,195 Kronos Worldwide, Inc. 270,700 4,166,073 MAXXAM, Inc. (g) 200,000 5,076,000 NL Industries 510,200 4,862,206 Ormet Corp. (g) (h) 372,638 2,962,472 The Penn Traffic Co. (g) 164,352 1,068,288 Planet Hollywood International, Inc. (f) (g) (h) 2,402 24 Polymer Group, Inc., Class A (g) 843,103 10,960,339 Prandium (g) 869,935 696 Romacorp, Inc. (f) (g) (h) 82,220 3,288,800 Safelite Realty Corp. (f) (g) (h) 7,403 25,911 Sterling Chemical, Inc. (g) 250,827 4,013,232 Tokheim (g) (h) 180,224 361 Viskase Cos., Inc. (g) (h) 2,096,128 1,048,064 WestPoint Stevens, Inc. (g) 1,600,000 1,600 Zemex Minerals Group, Inc. (f) (g) 2,102 386,222 Zions Bancorporation 145,600 4,584,944 ------------------ Total Common Stocks - (cost - $200,286,597) $59,494,134 ------------------- Warrants Number of Value Name of Issuer Shares or Units (Note B) --------------------------------------------------------------------------------------------------------------------------- Warrants - 0.43% --------------------------------------------------------------------------------------------------------------------------- Core-Mark Holding Co., Inc. Warrants (f) (g) 48,142 427,982 Eurotunnel Group Warrants (g) EUR 55,120 22,599 Key Energy Service Warrants (f) (g) 15,000 3,177,900 Sterling Chemical, Inc. Warrants (f) (g) 91,385 91 ------------------ Total Warrants - (cost - $9,975,865) $3,628,572 ------------------- Total Investments - 108.96% (cost - $1,368,376,351) 927,879,377 ------------------- Net Other Assets - (8.96%) (76,278,147) ------------------- Net Assets - 100% $ 851,601,230 =================== (a) Non-income producing security due to default or bankruptcy filing. (b) Security is in principal default. As of date of this report, the bond holders are in discussion with the issuer to negotiate repayment terms of principal. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $90,393,750 or 10.61% of net assets. (d) Represents a zero coupon bond that converts to a fixed rate at a designated future date. The date shown on the schedule of investments represents the maturity date of the security and not the date of coupon conversion. (e) Perpetual floating rate security. Rate shown reflects rate in effect at period end. (f) Security is valued at fair value as determined in good faith under consistently applied procedures approved by the Board of Trustees. (g) Non-income producing security. (h) All or a portion of security is restricted. The aggregate market value of restricted securities as of March 31, 2008 is $7,636,132 , which represents 0.90% of total net assets. All of these securities are deemed to be liquid. Additional information on each holding is as follows: Security Acquisition Date Acquisition Cost Holdco 04/14/05 $11,778,313 Ormet Corp. 01/09/07 $ 2,702,880 Planet Hollywood, Inc. 09/26/00 - 03/30/03 $ 450 Romacorp, Inc. 11/15/06 $ 4,118,756 Safelite Realty Corp. 09/29/00 $ 965,195 Tokheim 10/20/00 $ - Viskase Cos., Inc. 04/03/03 - 03/21/07 $ 1,051,606 PIK Payment in Kind EUR Principal denoted in Euros FRN Floating Rate Note PFD Preferred Security
Item 2. Controls and Procedures. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 3. Exhibits. Certifications pursuant to Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) and Section 302 of the Sarbanes-Oxley Act of 2002 are filed herewith. 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 Trust By (Signature and Title) /s/ Bruce H. Monrad Bruce H. Monrad President (principal executive officer) Date: August 29, 2008 By (Signature and Title) /s/ Gordon C. Barrett Gordon C. Barrett Treasurer (principal financial officer) Date: August 29, 2008 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. (Registrant) Northeast Investors Trust By (Signature and Title) /s/ Bruce H. Monrad Bruce H. Monrad President (principal executive officer) Date: August 29, 2008 By (Signature and Title) /s/ Gordon C. Barrett Gordon C. Barrett Treasurer (principal financial officer) Date: August 29, 2008 Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act I, Bruce H. Monrad, certify that: 1. I have reviewed this report on Form N-Q of Northeast Investors Trust; 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 schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 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 quarter 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: August 29, 2008 /s/ Bruce H. Monrad Bruce H. Monrad President (principal financial officer) Certification Pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act I, Gordon C. Barrett, certify that: 1. I have reviewed this report on Form N-Q of Northeast Investors Trust; 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 schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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 quarter 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: August 29, 2008 /s/ Gordon C. Barrett Gordon C. Barrett Treasurer (principal financial officer)