<PAGE>
______________________________________
W.P. STEWART & CO. GROWTH FUND, INC.
______________________________________
ANNUAL REPORT
DECEMBER 31, 1996
<PAGE>
- --------------------------------------------------------------------------------
W.P. STEWART & CO. GROWTH FUND, INC.
ANNUAL REPORT AS OF DECEMBER 31, 1996
- --------------------------------------------------------------------------------
MANAGEMENT COMMENTS
Review of the Year
During the past year, the Fund's net asset value per share increased from
$125.94 at December 31, 1995 to $152.65 at December 31, 1996, after giving
effect to a distribution of $11.65 per share. This represents a total
investment return of 30.64%.
Improved earning power behind each of our holding company's shares accounted for
about half of the increase in their value during the past year. Broadening
investor interest in high-quality growth shares in general, and Intel and
Microsoft in particular, provided the rest. Our portfolio's 1996 price/earnings
(P/E) ratio rose to 26, whereas we anticipated a year-end P/E ratio of about 24.
Obviously, we were pleased to note that the market's enthusiasm exceeded our
goal.
Long-term View
Because our holdings are increasing their profits fairly quickly, they are
currently selling a little more than 22 times anticipated 1997 earnings per
share. Longer-term interest rates, which have a significant impact on P/E
ratios, did not fall as we had expected during 1996. This reflected continued
concern that the US economy would overheat, spurring inflation which would
require the Federal Reserve to increase short-term interest rates. We still
believe the domestic economy, and more importantly the world economy, has
significant additional capacity available to fill anticipated demand.
Accordingly, we do not envision interest rates moving much higher and believe
that lower interest rates and, correspondingly, higher P/E ratios are a good
prospect later this year and next.
Last year we forecasted the American economy would slow during 1996 - 1997 and
Europe and Japan would not grow fast enough to offset that slowdown. That is
about how things worked out. As a result, the American central bank has not
found it necessary to raise interest rates. US consumers appear to be somewhat
over-indebted, retail sales are not buoyant and the strong dollar is beginning
to slow the growth of American exports. Therefore, we continue to expect
further slowdown in profit growth for most companies as 1997 unfolds. A steady
or gradually slowing economy provides the best investment environment for the
kind of investments we hold.
At the moment, however, investors are expecting improving business conditions,
modestly higher inflation and rising interest rates. In the near-term our
portfolio will do well in this kind of an investment climate. However, as we
believe that investor's expectations will change later this year, we remain
fully invested and very optimistic about our company's longer-term prospects.
We have pointed out in the past that high-quality growth shares have been
undervalued for many years. The fact that they provided substantially better
than average returns for more than 20 years without significantly increasing
their premium to the market is ample evidence of this. Some of that under-
valuation was corrected in 1996. If interest rates remain at current or lower
levels and profit growth of ordinary, cyclical businesses slows over the next
few years we believe this upward reevaluation process will continue.
<PAGE>
Profits behind each of our company's shares should more than double over the
next five years. Accordingly, we expect the value of our holdings to do at
least as well. Even better long-term returns will be earned if the gradual
reevaluation of growth company shares occurs as we expect.
We look forward to reporting to you again in July.
New York, NY
February 13, 1997
WILLIAM P. STEWART
PRESIDENT
W. P. STEWART & CO., INC.
INVESTMENT MANAGER
<PAGE>
[Graph]
WP Stewart Growth Fund-Plot Points for the Edgarization of the Graph
Growth Fund Growth Fund, Net S&P 500
2/28/94 100 100 100
12/31/94 101.06 100.55 101.396
12/31/95 129.08 128.44 138.601
12/31/96 168.63 167.79 170.48
Page 1
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
NAME OF ISSUER MARKET
AND TITLE OF ISSUE SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS--96.5%
CONSUMER SERVICES--3.1%
CUC International, Incorporated (a) . . . . . . 26,200 $ 622,250
-----------
DATA PROCESSING SERVICES--21.3%
Automatic Data Processing, Incorporated . . . . 55,000 2,358,125
First Data Corporation. . . . . . . . . . . . . 51,000 1,861,500
-----------
4,219,625
-----------
DRUGS & HEALTH CARE--5.0%
Pfizer Incorporated . . . . . . . . . . . . . . 12,000 994,500
-----------
ELECTRONICS--10.3%
Intel Corporation . . . . . . . . . . . . . . . 15,600 2,042,625
-----------
FOOD & BEVERAGE--4.8%
Coca Cola Company . . . . . . . . . . . . . . . 18,000 947,250
-----------
HOUSEHOLD PRODUCTS--8.6%
Gillette Company. . . . . . . . . . . . . . . . 22,000 1,710,500
-----------
LEISURE TIME--5.3%
Walt Disney Company . . . . . . . . . . . . . . 15,000 1,044,375
-----------
POLLUTION CONTROL--5.3%
Rentokil Group PLC, ADR . . . . . . . . . . . . 14,000 1,051,764
-----------
RESTAURANTS--5.2%
McDonald's Corporation. . . . . . . . . . . . . 22,900 1,036,225
-----------
RETAIL--18.1%
Autozone Incorporated (a) . . . . . . . . . . . 55,000 1,512,500
Dollar General Corporation. . . . . . . . . . . 33,000 1,056,000
Walgreen Corporation. . . . . . . . . . . . . . 25,500 1,020,000
-----------
3,588,500
-----------
SOFTWARE--4.6%
Microsoft Corporation (a) . . . . . . . . . . . 11,000 908,875
-----------
TOYS & AMUSEMENTS--4.9%
Mattel Incorporated . . . . . . . . . . . . . . 35,000 971,250
-----------
TOTAL INVESTMENTS--(Cost $15,532,826)--96.5% 19,137,739
OTHER ASSETS LESS LIABILITIES--3.5% 691,093
-----------
NET ASSETS--100.0% $ 19,828,832
-----------
-----------
(a) No dividends paid on security.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
ASSETS:
Investments in securities, at market value
(identified cost $15,532,826) . . . . . . . . . . . . . $19,137,739
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,552
Receivable for securities sold . . . . . . . . . . . . . . . 1,658,671
Receivable for Fund shares sold. . . . . . . . . . . . . . . 108,000
Dividends receivable . . . . . . . . . . . . . . . . . . . . 10,600
Receivable due from Adviser. . . . . . . . . . . . . . . . . 7,639
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 503
-------------
Total Assets. . . . . . . . . . . . . . . . . . . . . . 21,206,704
-------------
LIABILITIES:
Capital gains distribution payable . . . . . . . . . . . . . 1,282,894
Advisory fee payable . . . . . . . . . . . . . . . . . . . . 74,532
Other accrued expenses . . . . . . . . . . . . . . . . . . . 20,446
-------------
Total Liabilities . . . . . . . . . . . . . . . . . . . 1,377,872
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,828,832
-------------
-------------
NET ASSETS CONSIST OF:
Capital stock, $0.001 par value; 100,000,000 shares
authorized, 129,896 shares issued and outstanding . . . $ 130
Capital paid in excess of par. . . . . . . . . . . . . . . . 15,740,902
Accumulated realized gain on investments - net . . . . . . . 482,887
Unrealized appreciation on investments - net . . . . . . . . 3,604,913
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,828,832
-------------
-------------
Net asset value per share. . . . . . . . . . . . . . . . . . $ 152.65
-------------
-------------
Redemption price per share . . . . . . . . . . . . . . . . . $ 151.89
-------------
-------------
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $2,003) . . . . $ 121,601
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 34,580
-------------
156,181
-------------
EXPENSES:
Investment advisory fees . . . . . . . . . . . . . . . . . . 252,692
Administration fees. . . . . . . . . . . . . . . . . . . . . 70,941
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . 49,197
Transfer agent fees. . . . . . . . . . . . . . . . . . . . . 33,900
Registration fees. . . . . . . . . . . . . . . . . . . . . . 23,860
Miscellaneous fees . . . . . . . . . . . . . . . . . . . . . 3,800
-------------
Total expenses before reimbursement . . . . . . . . . . 434,390
-------------
Expenses reimbursed by the Adviser. . . . . . . . . . . (43,085)
-------------
Expenses, net of reimbursement. . . . . . . . . . . . . 391,305
-------------
Net investment loss. . . . . . . . . . . . . . . . . . . . . (235,124)
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments . . . . . . . . . . . . . . 2,016,510
Net change in unrealized appreciation on investments . . . . 2,384,634
-------------
Net gain on investments. . . . . . . . . . . . . . . . . . . 4,401,144
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . $ 4,166,020
-------------
-------------
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss. . . . . . . . . . . . . $ (235,124) $ (98,949)
Net realized gain on investments . . . . . . 2,016,510 550,541
Net change in unrealized appreciation on
investments . . . . . . . . . . . . . . . . 2,384,634 1,132,515
------------- -----------
Net increase in net assets
resulting from operations. . . . . . . 4,166,020 1,584,107
------------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments. . . . (1,480,720) (267,489)
------------- -----------
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold. . . . . . . . . . 6,755,344 7,051,750
Shares issued to shareholders
in reinvestment of distributions. . . . 439,506 0
Cost of redemptions. . . . . . . . . . . . . (840,805) (687,836)
------------- -----------
Net increase in net assets
from Fund share transactions . . . . . 6,354,045 6,363,914
------------- -----------
Net increase in net assets. . . . . . . 9,039,345 7,680,532
NET ASSETS:
Beginning of year. . . . . . . . . . . . . . 10,789,487 3,108,955
------------- -----------
End of year. . . . . . . . . . . . . . . . . $ 19,828,832 $ 10,789,487
------------- -----------
------------- -----------
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE PERIOD
YEAR YEAR FEBRUARY 28, 1994*
ENDED ENDED THROUGH
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
INCOME FROM INVESTMENT OPERATIONS:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period . . . . . . . . . . . . $ 125.94 $ 101.06 $ 100.00
-------- -------- --------
Net investment loss . . . . . . . . . . . . . . . . . . (1.81) (1.15) (0.48)
Net realized and unrealized gain on investments . . . . 40.17 29.19 1.54
-------- -------- --------
Net increase from investment operations. . . . . . . . . . . 38.36 28.04 1.06
Distributions to shareholders from net
realized gain on investments. . . . . . . . . . . . . . (11.65) (3.16) 0.00
-------- -------- --------
Net asset value, end of period . . . . . . . . . . . . . . . $ 152.65 $ 125.94 $ 101.06
-------- -------- --------
-------- -------- --------
TOTAL INVESTMENT RETURN (a). . . . . . . . . . . . . . . . . 30.64% 27.73% 1.06%
RATIOS AND SUPPLEMENTAL DATA:
Ratio of expenses to average net assets. . . . . . . . . . . 2.50% 2.50% 2.50% (b)
Ratio of fees and expenses waived and reimbursed by the
Adviser and Administrator to average net assets . . . . .28% 1.32% 10.20% (b)(c)
Ratio of net investment loss to average net assets . . . . . (1.51)% (1.36)% (1.25)% (b)
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . 76% 76% 9%
Average commission rate (d). . . . . . . . . . . . . . . . . $ .1000 $ -0- $ -0-
Net assets, end of period (in thousands) . . . . . . . . . . $ 19,829 $ 10,789 $ 3,109
</TABLE>
* Commencement of investment operations.
(a) Total investment return is calculated assuming a purchase of common stock
at net asset value at the beginning of the period, a sale at net asset
value at the end of the period, reinvestment of all dividends and
distributions at net asset value during the period and no redemption fee.
Total investment return would be reduced if a redemption fee were taken
into account. Total investment return for a period of less than one year
is not annualized. Past performance results shown in this report should
not be considered a representation of future performance. Investment
return and net asset value of shares, when redeemed, may be worth more or
less than their original cost.
(b) Annualized.
(c) Includes organization expenses.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which commissions are charged.
Contained above is the audited operating performance, based on a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data, for the periods indicated. This information has been
determined based upon financial information provided in the financial
statements.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND FUND DESCRIPTION
W.P. Stewart & Co. Growth Fund, Inc. (Fund) is an open-end, non-diversified,
management investment company registered under the Investment Company Act of
1940 (Act). It was incorporated under the laws of the State of Maryland in
September 1993. The Fund had no operations prior to October 25, 1993, other
than those relating to organizational matters. The initial capital contribution
of $100,000 was provided on October 25, 1993 by W.P. Stewart & Co., N.V. in
exchange for 1,000 shares of the Fund. The Fund invests primarily in common
stocks listed on the New York Stock Exchange. W.P. Stewart & Co., Inc., a
registered investment adviser and broker-dealer, is the Fund's investment
adviser (Adviser). Shares of the Fund are available for subscription by
eligible investors. There is no sales charge. The redemption fee is .50%.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund.
USE OF ESTIMATES: The process of preparing financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
INVESTMENT VALUATION: In general, the Fund values portfolio securities as of
their last available public sale price on the valuation date in the case of
securities listed on any established securities exchanges or included in the
NASDAQ National Market System or any comparable foreign over-the-counter
quotation system providing last sale data, or if no sales of such securities are
reported on such date, and in the case of over-the-counter securities not
described above in this paragraph, at the last reported bid price. In special
circumstances in which the Adviser determines that market prices or quotations
do not fairly represent the value of particular assets, the Adviser is
authorized to assign a value to such assets which differs from the market prices
or quotations. The values of assets which are not publicly traded will be
recorded at their fair values as determined by the Adviser. In these
circumstances, the Adviser will attempt to use consistent and fair valuation
criteria and may (but is not required to) obtain independent appraisals at the
expense of the Fund.
INVESTMENT TRANSACTIONS: All securities transactions are recorded on a trade
date basis. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Realized gains and losses on sales of
securities are determined on the basis of identified cost.
SECURITIES LENDING: The Fund may lend its portfolio securities to brokers,
dealers and financial institutions when secured by collateral maintained on a
daily mark-to-market basis in an amount equal to at least 100% of the market
value, determined daily, of the loaned securities. The Fund may at any time
call the loan and obtain the return of the securities loaned. The Fund will
continue to receive the income on loaned securities and will, at the same time,
earn interest on the loan collateral, a portion of which generally will be
rebated to the borrower. Any cash collateral received under these loans will be
invested in short-term money market instruments. Where voting or consent rights
with respect to the loaned securities pass to the borrower, the Fund will follow
the policy of calling the loan, in whole or in part as may be appropriate, to
permit the exercise of such voting or consent rights if the matters involved
will have a material effect on the Fund's investment in the securities loaned.
The Fund did not engage in securities lending during the year ended December 31,
1996.
8
<PAGE>
REPURCHASE AGREEMENTS: A repurchase agreement customarily obligates the seller
at the time it sells securities to the Fund to repurchase the securities at a
mutually agreed upon time and price which, in the case of the Fund's
transactions, is within seven days. The total amount received by the Fund on
repurchase would be calculated to exceed the price paid by the Fund, reflecting
an agreed upon market rate of interest for the period of time to the settlement
date, and would not necessarily be related to the interest rate on the
underlying securities. The underlying securities are ordinarily United States
government securities, but may consist of other securities in which the Fund is
permitted to invest. Repurchase agreements will be fully collateralized at all
times. However, to the extent that the proceeds from any sale upon default in
the obligation to repurchase is less than the repurchase price, the Fund would
suffer a loss. Also, the Fund might incur costs and encounter delays in
liquidating collateral. The Fund may enter into repurchase agreements maturing
within seven days with domestic dealers, banks and other financial institutions
deemed to be creditworthy by the Adviser.
ORGANIZATION EXPENSES: The Adviser has borne all costs and expenses associated
with the organization and initial registration of the Fund and its shares.
FEDERAL INCOME TAXES: The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment companies
and to distribute all of its taxable income to its stockholders. Therefore, no
Federal income tax provision is required.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund intends to pay an annual
dividend to shareholders of record representing its entire net investment income
and to distribute all of its realized net capital gains at least annually.
Distributions are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
For the year ended December 31, 1996, the Fund distributed $11.65 per share.
RECLASSIFICATION OF COMPONENTS OF NET ASSETS: During the year, the Fund
reclassified certain components of net assets. The reclassification was the
result of permanent book to tax differences pertaining to the reclassification
of both current and prior year net operating losses. The current year
reclassification resulted in a net decrease to accumulated realized gain on
investments of $235,124. The prior year reclassification resulted in a net
decrease to accumulated realized gain on investments and a net increase to
additional
paid - in capital of $100,831. Net Assets were not affected by the change.
3. RELATED PARTY AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Trading activities of the Fund will be managed by its investment adviser, W.P.
Stewart & Co., Inc., pursuant to an agreement between the Adviser and the Fund
(Investment Advisory Services Agreement). The Investment Advisory Services
Agreement has a two-year term, and thereafter, continues in effect from year to
year so long as its continuance is specifically approved at least annually by
the Board of Directors or by a vote by the holders of a majority of the
outstanding shares. The Adviser is entitled to receive quarterly advisory fees
payable in arrears as of the first day of each quarter at an annual rate equal
to 1.5% of the net asset value of the Fund, as determined on the last day of the
preceding quarter (after giving effect to substantial subscriptions and
redemptions effective on such date).
In addition to the quarterly advisory fee, the Fund bears all costs and expenses
directly related to investment transactions effected and positions held for the
Fund's account, including brokerage commissions, custodial fees, interest on
borrowings and administrative fees. The Adviser will, in any fiscal year,
reimburse the Fund for expenses that exceed the most restrictive expense
limitation imposed by state securities commissions. The most restrictive
expense limitation is defined to be 2 1/2% of the average value of the Fund's
net assets during the year up to $30 million, 2% of the next $70 million of
average net assets and 1 1/2% thereafter. For the year ended December 31, 1996,
the total expenses reimbursed by the Adviser were $43,085. In addition, the
Adviser has, on behalf of the Fund, borne the cost of professional services
incurred by the Fund, including Audit, Legal, Printing and Insurance expenses.
The amount of the expenses for professional services borne was $38,779 for the
year ended December 31, 1996.
8
<PAGE>
Under the terms of the Investment Advisory Services Agreement, the Adviser may
conduct brokerage services for the Fund. For the year ended December 31, 1996,
the Adviser earned $53,260 in commissions as broker on trades of portfolio
securities.
Certain directors of the Adviser are also directors of the Fund. Each of the
Fund's directors who is not an officer or employee of the Adviser is paid by the
Adviser a fee of $1,250 for each meeting of the Fund's Board of Directors and
for each meeting of any committee of the Board of Directors that they attend.
For the year ended December 31, 1996 there were no directors' fees paid.
4. ADMINISTRATION AGREEMENT
The Fund has also entered into an Administration Agreement with State Street
Bank and Trust Company (Administrator) dated January 11, 1994. The
Administrator receives an annual fee equal to .08% of the Fund's net asset value
up to $125 million, .06% of the next $125 million and .04% in excess of $250
million.
5. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of investments, excluding short-term
securities, for the year ended December 31, 1996 were $16,014,866 and
$11,287,634, respectively. As of December 31, 1996, net unrealized appreciation
for Federal income tax purposes aggregated $3,604,913, of which $3,664,367
related to appreciated securities and $59,454 related to depreciated securities.
The aggregate cost of investments at December 31, 1996 for Federal income tax
purposes was $15,532,826.
6. FUND SHARE TRANSACTIONS
The Fund is authorized to issue 100,000,000 shares of $.001 par value capital
stock. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Shares sold . . . . . . . . . . . . . . 46,937 60,528
Shares reinvested . . . . . . . . . . . 3,293 0
Shares redeemed . . . . . . . . . . . . (6,004) (5,621)
--------- ---------
Net increase. . . . . . . . . . . . . . 44,226 54,907
--------- ---------
--------- ---------
</TABLE>
7. BENEFICIAL INTEREST
At December 31, 1996, there were three shareholders who owned over 5% of the
Fund's outstanding shares.
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments," requires
disclosure of fair value information about financial instruments, for which it
is practicable to estimate the value, whether or not recognized on the statement
of financial condition. As a registered investment company, the investments in
securities are already recorded at market value. The fair value of all other
financial assets and liabilities is considered to approximate the recorded
value, due to the short-term nature of the financial instruments.
9. CONCENTRATION OF CREDIT RISK
At December 31, 1996, the Fund has cash at a bank in excess of federally
insurable limits and is exposed to the credit risk resulting from this
concentration of cash.
8
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
TAX INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
If certain requirements are met, 43.12% of the ordinary distributions paid by
The W.P. Stewart Growth Fund during 1996 qualifies for the deduction for
dividends paid available to corporate shareholders only, pursuant to Internal
Revenue Code Section 243. Corporate shareholders should consult their tax
advisor to determine if they qualify for this deduction.
8
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Shareholders and
Board of Directors
W.P. Stewart & Co. Growth Fund, Inc.
We have audited the accompanying statement of assets and
liabilities of W.P. Stewart & Co. Growth Fund, Inc., including the schedule
of investments as of December 31, 1996, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the two years in the period then ended, and for the period from
February 28, 1994 (commencement of investment operations) through December
31, 1994. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of W.P. Stewart & Co. Growth Fund, Inc. as of December 31, 1996, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and financial highlights for
each of the two years in the Period then ended. and for the period from February
28, 1994 (commencement of investment operations) through December 31, 1994, in
conformity with generally accepted accounting principles.
/s/ Lopey Edwards Frank & Co., UP
New York, New York
February 13, 1997
- - ONE PENN PLAZA, SUITE 4501, NEW YORK, NY 10119-4598 (212) 685-7000
FAX. (212) 967-6538
- - 70 EAST SUNRISE HIGHWAY, BOX 547 VALLEY STREAM, NY 11 682-0547 (516) 872-3400
FAX: (516) $72-23S?
8
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
527 MADISON AVENUE
NEW YORK, NY 10022
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
- ----------------------
William P. Stewart President and Director
Robert L. Schwartz Treasurer, Secretary and Director
Antoine Bernheim Director
June Eichbaum Director
William Talcott May Director
Stephen E. Memishian Vice President
Kevin S. Aarons Assistant Treasurer and Assistant Secretary
INVESTMENT ADVISER
- ------------------
W.P. Stewart & Co., Inc.
527 Madison Avenue
New York, NY 10022
(212) 750-8585
ADMINISTRATOR, CUSTODIAN, TRANSFER AGENT AND SHAREHOLDER SERVICING AGENT
- ------------------------------------------------------------------------
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
INDEPENDENT AUDITORS
- --------------------
Lopez Edwards Frank & Co. LLP
1 Penn Plaza
New York, NY 10119-0141
LEGAL COUNSEL
- -------------
McDermott, Will, & Emery
1211 Avenue of the Americas
New York, NY 10036-8701
- --------------------------------------------------------------------------------
THIS REPORT IS NOT AUTHORIZED FOR USE AS AN OFFER OF SALE OR A SOLICITATION OF
AN OFFER TO BUY SHARES OF THE FUND UNLESS ACCOMPANIED OR PRECEDED BY THE FUND'S
CURRENT PROSPECTUS. PAST PERFORMANCE RESULTS SHOWN IN THIS REPORT SHOULD NOT BE
CONSIDERED A REPRESENTATION OF FUTURE PERFORMANCE. INVESTMENT RETURN AND NET
ASSET VALUE OF SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
