STEWART W P & CO GROWTH FUND INC
N-30D, 1998-08-26
Previous: LIFE & ANNUITY TRUST, 485APOS, 1998-08-26
Next: MILLS CORP, 8-K, 1998-08-26



<PAGE>

                       ---------------------------------------
                         W.P. STEWART & CO. GROWTH FUND, INC.
                       ---------------------------------------

     
                                 SEMI-ANNUAL REPORT
                                    (UNAUDITED)
                                          
                                          
                                          
                                   JUNE 30, 1998
<PAGE>

- --------------------------------------------------------------------------------
W. P. STEWART & CO. GROWTH FUND, INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS AS OF JUNE 30, 1998
- --------------------------------------------------------------------------------

MANAGEMENT COMMENTS

REVIEW OF THE SIX MONTHS ENDED JUNE 30, 1998

Over the past six months, the Fund's net asset value per share increased by
21.28%, from $168.71 on December 31, 1997 to $204.61 on June 30, 1998.

The Fund's shares benefited from both good earnings performance and P/E
expansion.  As corporate earnings slow, and more companies disappoint, your
holdings were rewarded for delivering on expectations.

The Market became increasingly volatile over the past six months.  By June 30,
stocks were recovering from a pullback starting in late May, but were still off
their highs for the year.  We expect this kind of volatility to continue, and we
use it to opportunistically purchase additional shares of our high quality
companies at attractive prices.


LONG-TERM VIEW

The economic and political environment in the U.S. remains remarkably solid
despite a variety of outside pressures.  The Far East remains a major concern,
and has caused us to focus even more on U.S. only companies and those minimally
affected by economic weakness in that part of the globe.  Troubles in Russia,
Pakistan, and India do not seem short lived.  Our own domestic troubles seem
confined to the investigation of our President.  Inflation remains under
control, having affected wages, but not resulting in price increases for U.S.
goods.  Thus, many corporations continue to feel earnings pressure, giving
companies with more secure earnings forecasts a definite advantage.  We believe
we are well-positioned in such an environment.

We look forward to reporting to you again in January.


New York, New York
August 10, 1998
MARILYN G. BRESLOW
PRESIDENT

W. P. STEWART & CO., INC.
INVESTMENT MANAGER


                                         1
<PAGE>

W.P. STEWART & CO. GROWTH FUND, INC. 
SCHEDULE OF INVESTMENTS 
JUNE 30, 1998 (UNAUDITED)

<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------
     Name of Issuer                                                    Market
   and Title of Issue                                  Shares          Value
- --------------------------------------------------------------------------------
<S>                                                   <C>          <C>
COMMON STOCKS--100.0% 
BANKS--1.6%
     Northern Trust Corporation. . . . . . . . . .     9,000       $   686,250
                                                                   -----------
CHEMICALS--2.9% 
     Monsanto Company. . . . . . . . . . . . . . .    23,000         1,285,125
                                                                   -----------
COMMERCIAL SERVICES--3.6% 
     Cognizant Corporation . . . . . . . . . . . .    25,000         1,575,000
                                                                   -----------
DATA PROCESSING SERVICES--9.2% 
     Automatic Data Processing, Inc. . . . . . . .    55,000         4,008,125
                                                                   -----------
DRUGS & HEALTH CARE--16.2% 
     Johnson & Johnson . . . . . . . . . . . . . .    18,500         1,364,375
     Lilly (Eli) & Company . . . . . . . . . . . .    27,500         1,816,719
     Merck & Company, Inc. . . . . . . . . . . . .     6,500           869,375
     Pfizer, Inc.. . . . . . . . . . . . . . . . .    27,700         3,010,644
                                                                   -----------
                                                                     7,061,113
                                                                   -----------
ELECTRICAL EQUIPMENT--4.8% 
     General Electric Company. . . . . . . . . . .    23,000         2,093,000
                                                                   -----------
ELECTRONICS--4.7% 
     Intel Corporation . . . . . . . . . . . . . .    28,000         2,075,500
                                                                   -----------
ENVIRONMENTAL SERVICES--5.6%
     Rentokil Initial PLC, ADR . . . . . . . . . .    33,800         2,433,455
                                                                   -----------
FINANCE & BANKING--4.0%
     State Street Corporation. . . . . . . . . .      25,000         1,737,500
                                                                   -----------
FOOD & BEVERAGE--4.7% 
     Coca Cola Company . . . . . . . . . . . . . .    23,790         2,034,045
                                                                   -----------
HOUSEHOLD PRODUCTS--8.3% 
     Gillette Company. . . . . . . . . . . . . . .    43,000         2,437,562
     Procter & Gamble Company. . . . . . . . . . .    13,000         1,183,813
                                                                   -----------
                                                                     3,621,375
                                                                   -----------
LEISURE TIME--4.4% 
     Walt Disney Company . . . . . . . . . . . . .    18,500         1,943,656
                                                                   -----------
NETWORK SOFTWARE--4.8% 
     Cisco Systems, Inc. (a) . . . . . . . . . . .    22,662         2,086,320
                                                                   -----------
</TABLE>


(a) No dividends paid on security.


The accompanying notes are an integral part of these financial statements.


                                          2
<PAGE>

W.P. STEWART & CO. GROWTH FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 1998 (UNAUDITED) 

<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------
     Name of Issuer                                                    Market
   and Title of Issue                                  Shares          Value
- --------------------------------------------------------------------------------
<S>                                                   <C>         <C>

COMMON STOCKS (CONTINUED)
RESTAURANTS--2.0%
     McDonald's Corporation. . . . . . . . . . .      13,000       $   897,000
                                                                  ------------
RETAIL--17.2% 
     Autozone, Inc. (a). . . . . . . . . . . . . .    49,000         1,564,938
     CVS Corporation . . . . . . . . . . . . . . .    34,000         1,323,875
     Dollar General Corporation. . . . . . . . . .    66,125         2,616,070
     Walgreen Co.. . . . . . . . . . . . . . . . .    48,400         1,999,525
                                                                  ------------
                                                                     7,504,408
                                                                  ------------
SOFTWARE--6.0%
     Microsoft Corporation (a) . . . . . . . . .      24,400         2,644,350
                                                                  ------------

               TOTAL COMMON STOCKS-
               (COST $30,250,399). . . . . . . . .                  43,686,222
                                                                  ------------


TOTAL INVESTMENTS--(COST $30,250,399)--100.0%. . .                  43,686,222
OTHER ASSETS LESS LIABILITIES--0.0%. . . . . . . .                     (16,613)
                                                                  ------------
NET ASSETS--100.0% . . . . . . . . . . . . . . . .                $ 43,669,609
                                                                  ------------
                                                                  ------------
</TABLE>


(a) No dividends paid on security. 


The accompanying notes are an integral part of these financial statements.


                                          3
<PAGE>

W.P. STEWART & CO. GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED) 

<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------
<S>                                                               <C>
ASSETS:
Investments in securities, at market value
     (Identified Cost $30,250,399) . . . . . . . . . . . . .      $ 43,686,222
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . .           295,251
Dividends and interest receivable. . . . . . . . . . . . . .            17,826
                                                                  ------------
     Total Assets. . . . . . . . . . . . . . . . . . . . . .        43,999,299
                                                                  ------------

LIABILITIES:
Advisory fee payable . . . . . . . . . . . . . . . . . . . .           301,504
Other accrued expenses . . . . . . . . . . . . . . . . . . .            28,186
                                                                  ------------
     
Total Liabilities. . . . . . . . . . . . . . . . . . . . . .           329,690
                                                                  ------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . .      $ 43,669,609
                                                                  ------------
                                                                  ------------
Net assets consist of:
Capital stock, $0.001 par value; 100,000,000 shares
     authorized, 213,428 shares issued and outstanding . . .      $        213
Capital paid in excess of par. . . . . . . . . . . . . . . .        29,381,365
Undistributed net investment loss. . . . . . . . . . . . . .          (294,099)
Accumulated realized gain on investments - net . . . . . . .         1,146,307
Unrealized appreciation on investments - net . . . . . . . .        13,435,823
                                                                  ------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . .      $ 43,669,609
                                                                  ------------
                                                                  ------------

Net asset value per share. . . . . . . . . . . . . . . . . .      $     204.61
                                                                  ------------
                                                                  ------------

Redemption price per share . . . . . . . . . . . . . . . . .      $     203.59
                                                                  ------------
                                                                  ------------
</TABLE>


                                          4


The accompanying notes are an integral part of these financial statements.
<PAGE>

W.P. STEWART & CO. GROWTH FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) 

<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------
<S>                                                               <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $2,241) . . . .      $    121,364
Interest . . . . . . . . . . . . . . . . . . . . . . . . . .             9,904
                                                                  ------------
     Total investment income . . . . . . . . . . . . . . . .           131,268
                                                                  ------------
EXPENSES:
Investment advisory fees . . . . . . . . . . . . . . . . . .           320,660
Administrative fees. . . . . . . . . . . . . . . . . . . . .            40,952
Custodian fees . . . . . . . . . . . . . . . . . . . . . . .            24,105
Transfer agent fees. . . . . . . . . . . . . . . . . . . . .            18,633
Registration fees. . . . . . . . . . . . . . . . . . . . . .               942
Printing fees. . . . . . . . . . . . . . . . . . . . . . . .             2,585
Directors' fees. . . . . . . . . . . . . . . . . . . . . . .             3,159
Blue sky fees. . . . . . . . . . . . . . . . . . . . . . . .             9,612
Miscellaneous fees . . . . . . . . . . . . . . . . . . . . .             4,719
                                                                  ------------
     Total operating expenses. . . . . . . . . . . . . . . .           425,367
                                                                  ------------
Net investment loss. . . . . . . . . . . . . . . . . . . . .          (294,099)
                                                                  ------------


REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments . . . . . . . . . . . . . .           961,242
Net change in unrealized appreciation on investments . . . .         6,999,179
                                                                  ------------
Net gain on investments. . . . . . . . . . . . . . . . . . .         7,960,421
                                                                  ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . .      $  7,666,322
                                                                  ------------
                                                                  ------------
</TABLE>


The accompanying notes are an integral part of these financial statements.


                                          5

<PAGE>

W.P. STEWART & CO. GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)

<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------

                                                    FOR THE
                                                  SIX  MONTHS 
                                                     ENDED      FOR THE YEAR
                                                JUNE 30, 1998      ENDED
                                                 (UNAUDITED)   DECEMBER 31, 1997
                                                 -----------   ----------------
<S>                                             <C>            <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss. . . . . . . . . . . . .    $  (294,099)    $  (401,797)
Net realized gain on investments . . . . . .        961,242       4,077,134
Net change in unrealized appreciation
 on investments. . . . . . . . . . . . . . .      6,999,179       2,831,731
                                               ------------    ------------
     Net increase in net assets resulting
      from operations. . . . . . . . . . . .      7,666,322       6,507,068
                                               ------------    ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments . . . . . .              -      (3,973,159)
                                               ------------    ------------
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold. . . . . . . . . .      3,414,492      11,638,859
Shares issued to shareholders
     in reinvestment of distributions. . . .              -       4,849,063
Cost of redemptions. . . . . . . . . . . . .     (3,612,611)     (2,649,257)
                                               ------------    ------------
     Net (decrease) increase in net assets
      from Fund share transactions . . . . .       (198,119)     13,838,665
                                               ------------    ------------

NET INCREASE IN NET ASSETS . . . . . . . . .      7,468,203      16,372,574
                                               ------------    ------------
                                               ------------    ------------
NET ASSETS:
Beginning of period. . . . . . . . . . . . .     36,201,406      19,828,832
                                               ------------    ------------

End of period  . . . . . . . . . . . . . . .   $ 43,669,609    $ 36,201,406
                                               ------------    ------------
                                               ------------    ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                          6
<PAGE>

W.P. STEWART & CO. GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
(UNAUDITED)

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                           FOR THE SIX           FOR THE            FOR THE
                                                                           MONTHS ENDED            YEAR              YEAR
                                                                           JUNE 30,1998            ENDED             ENDED
                                                                            (UNAUDITED)     DECEMBER 31, 1997  DECEMBER 31, 1996
                                                                            -----------     -----------------  -----------------
<S>                                                                        <C>              <C>                <C>
INCOME FROM INVESTMENT OPERATIONS:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period . . . . . . . . .                       $ 168.71            $ 152.65            $ 125.94
                                                                             ---------           --------            --------
   Net investment loss . . . . . . . . . . . . . . . .                          (1.38)              (1.87)              (1.81)
   Net realized and unrealized gain on
    investments. . . . . . . . . . . . . . . . . . . .                           37.28              38.53               40.17
                                                                             ---------           --------            --------
Net increase from investment operations. . . . . . . .                          35.90               36.66               38.36
Distributions to shareholders from net
  realized gain on investments . . . . . . . . . . . .                              -              (20.60)             (11.65)
                                                                             ---------           --------            --------
Net asset value, end of period . . . . . . . . . . . .                       $ 204.61            $ 168.71            $ 152.65
                                                                             ---------           --------            --------
                                                                             ---------           --------            --------

TOTAL INVESTMENT RETURN (a). . . . . . . . . . . . . .                          21.28%              24.69%              30.64%

RATIOS AND SUPPLEMENTAL DATA:
Ratio of expenses to average net assets. . . . . . . .                           2.12% (b)           2.13%               2.50%
Ratio of fees and expenses waived and
  reimbursed by the Adviser and
  Administrator to average net assets. . . . . . . . .                              -                0.02%               0.28%
Ratio of net investment loss to
  average net assets . . . . . . . . . . . . . . . . .                          (1.46)% (b)         (1.35)%             (1.51)%
   
Portfolio turnover . . . . . . . . . . . . . . . . . .                             23%                 79%                 76%
Net assets, end of period (in thousands) . . . . . . .                         $43,670             $36,201             $19,829
</TABLE>

- --------------------------------------------------------------------------------

(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 the redemption fee of 0.50% was
     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 will vary, and net asset value of shares, when redeemed,
     may be worth more or less than their original cost.

(b)  Annualized.

The chart set forth above reflects the unaudited operating performance, based on
a share of Fund common stock outstanding, as well as total investment return,
ratios to average net assets and other supplemental data for the periods
indicated.  This information has been determined based upon information provided
in the financial statements.


The accompanying notes are an integral part of these financial statements.


                                          7
<PAGE>

W.P. STEWART & CO. GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                   FOR THE                  FOR THE PERIOD
                                                                                    YEAR                   FEBRUARY 28, 1994*
                                                                                    ENDED                        THROUGH
                                                                                DECEMBER 31, 1995          DECEMBER 31, 1994
                                                                                -----------------          -----------------
<S>                                                                             <C>                        <C>
INCOME FROM INVESTMENT OPERATIONS:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period . . . . . . . . . . . . . . . . .           $  101.06                     $  100.00
                                                                                 ---------                     ---------
   Net investment loss . . . . . . . . . . . . . . . . . . . . . . . .               (1.15)                        (0.48)
   Net realized and unrealized gain on
     investments . . . . . . . . . . . . . . . . . . . . . . . . . . .               29.19                          1.54
                                                                                 ---------                     ---------
Net increase from investment operations. . . . . . . . . . . . . . . .               28.04                          1.06
Distributions to shareholders from net
   realized gain on investments. . . . . . . . . . . . . . . . . . . .               (3.16)                            -
                                                                                 ---------                     ---------
Net asset value, end of period . . . . . . . . . . . . . . . . . . . .           $  125.94                      $ 101.06
                                                                                 ---------                     ---------
                                                                                 ---------                     ---------
TOTAL INVESTMENT RETURN (a). . . . . . . . . . . . . . . . . . . . . .               27.73%                         1.06%

RATIOS AND SUPPLEMENTAL DATA:
Ratio of expenses to average net assets. . . . . . . . . . . . . . . .                2.50%                         2.50% (b)
Ratio of fees and expenses waived and
   reimbursed by the Adviser and
   Administrator to average net assets . . . . . . . . . . . . . . . .                1.32%                        10.20% (b)(c)
Ratio of net investment loss to
   average net assets. . . . . . . . . . . . . . . . . . . . . . . . .               (1.36)%                       (1.25)% (b)
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . . . . . .                  76%                            9%
Net assets, end of period (in thousands) . . . . . . . . . . . . . . .              $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 the redemption fee of 0.50% was
     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 will vary, and net asset value of shares, when redeemed,
     may be worth more or less than their original cost.

(b)  Annualized.

(c)  Includes organization expenses paid by Adviser.

The chart set forth above reflects the unaudited operating performance, based on
a share of Fund common stock outstanding, as well as total investment return,
ratios to average net assets and other supplemental data for the periods
indicated.  This information has been determined based upon 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 
June 30, 1998 (Unaudited)

- --------------------------------------------------------------------------------

1.  ORGANIZATION AND FUND DESCRIPTION

W.P. Stewart & Co. Growth Fund, Inc. (the "Fund") is an open-end,
non-diversified management investment company registered under the Investment
Company Act of 1940 (the "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, is the Fund's investment
adviser.  W.P. Stewart & Co., Inc. assumed this responsibility from its
affiliate in July, 1998.  The change did not involve any change in actual
control or management of the investment adviser to the Fund.  W.P. Stewart &
Co., Inc. and its predecessor are together referred to as the "Adviser."  Shares
of the Fund are available for subscription by eligible investors, although new
sales may be suspended from time to time based on regulatory considerations. 
There is no sales charge.  The redemption fee is 0.50%.

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 which 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.  All other
securities and assets are valued at fair value as determined in good faith by or
under the direction of the Board of Directors.

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 marked-to-market basis in an amount equal to at least 100% of the market
value, determined daily, of the loaned securities.  The Fund at any time may
demand the return of the securities loaned.  The Fund will continue to receive
the income on loaned securities and, at the same time, will 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 six months ended June 30, 1998.


                                          9
<PAGE>

W.P. STEWART & CO. GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
June 30, 1998 (Unaudited)

- -----------------------------------------------------------------------------

REPURCHASE AGREEMENTS:  A repurchase agreement customarily requires the seller
to repurchase the securities at a mutually agreed upon time and price.  The
total amount received by the Fund on repurchase would be calculated to exceed
the price paid by the Fund, reflecting an agreed upon yield for the period of
time to the settlement (repurchase) date.  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.  If the seller defaults in its obligation
to repurchase, the Fund may suffer a loss as a result of the cost in liquidating
the collateral and if the collateral declines in value.  

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 shareholders.  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. 
During the six months ended June 30, 1998, the Fund did not make any
distributions to shareholders.

3.  RELATED PARTY AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

When the Fund commenced operations, it retained the Adviser to provide portfolio
management and other services to the Fund pursuant to a written investment
advisory services agreement (the "Original Advisory Agreement"), effective
January 11, 1994.  The Original Advisory Agreement had a two-year term and
continued in effect from year to year so long as its continuance was
specifically approved at least annually by the Fund's Board of Directors.

Each of the Directors of the Fund recalls having considered, and approved,
continuation of the Original Advisory Agreement for an additional one-year
period at a meeting of the Board of Directors held in early 1996.  Further, the
minutes of the Board of Directors' February 20, 1997 meeting reflect that the
Board considered and approved the further continuation of the Original Advisory
Agreement at that time.  Thus, the Directors of the Fund believe that the
Original Advisory Agreement was continued on an annual basis.  However, there is
some uncertainty concerning this matter, because the Fund's written records of
its Board's meetings from 1996 are missing or otherwise deficient, and the 1997
approval may not have complied in all respects with the technical requirements
for approval, as one of the Directors attended the meeting by telephone
conference.  This is significant because if the Original Advisory Agreement was
not effectively continued by the Board in either 1996 or 1997, then it would
have lapsed as a technical matter and could not have been revived without
shareholder approval.

Because of the importance of removing any doubt about the status of the advisory
agreement between the Adviser and the Fund, the Adviser proposed that the Fund's
Directors consider approving a new investment advisory services agreement (the
"New Advisory Agreement"), having substantially identical terms as the Original
Advisory Agreement, and submitting this New Advisory Agreement to the Fund's
shareholders for their approval.  The Board has approved the New Advisory
Agreement, and shareholders will be asked to approve it at a meeting to be held
on September 25, 1998.  Shareholders will also be asked to ratify the advisory
fees paid under the Original Advisory Agreement between January 12, 1996 and the
date of approval of the New


                                          10
<PAGE>

Advisory Agreement.  Proxy materials in connection with the meeting will be
mailed to shareholders of record on August 7,1998.

W.P. STEWART & CO. GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
June 30, 1998 (Unaudited)

- -----------------------------------------------------------------------------

The New Advisory Agreement is identical in all material respects to the Original
Advisory Agreement except for a change in the method of calculating the fee
payable to the Fund.  The Original Advisory Agreement provides that the fee is
paid quarterly, in advance, based on the net asset value of the Fund as of the
last day of the preceding quarter (after giving effect to subscriptions and
redemptions on that date).  Under the New Advisory Agreement, the fee rate will
not change (remaining at 1.50% of the Fund's net assets) but the fee will be
calculated based on the Fund's average daily net assets and paid in arrears.

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.  Pursuant to state law requirements
previously in effect, the Adviser waived and/or reimbursed expenses of the Fund
so that total Fund operating expenses do not exceed 2.5% of the average annual
net assets of the Fund up to $30 million, 2% of the average annual net assets of
the Fund of the next $70 million, and 1.5% of the average annual net assets of
the Fund in excess of $100 million.  These requirements no longer apply to the
Fund.  In addition, the Adviser voluntarily has borne the cost of certain
professional services incurred by the Fund, although this arrangement may change
in the future.  The amount of the expenses for professional services borne by
the Adviser was $38,937 for the six months ended June 30, 1998.

Under the terms of both the Original and New Advisory Agreements, an affiliated
company of the Adviser may conduct brokerage services for the Fund.  For the six
months ended June 30, 1998, the Adviser's affiliate earned $28,138 in
commissions as broker on trades of portfolio securities.

One director of the Adviser is also a director of the Fund.  Each of the Fund's
directors who is not an officer or employee of the Adviser is entitled to be
paid by the Adviser a fee of $1,250 for each meeting that they attend of the
Fund's Board of Directors and each meeting of any committee of the Board of
Directors on which they serve.  Directors may waive such fees.  For the six
months ended June 30, 1998, the Fund has paid a total of $6,250 to the directors
for their services.

4.  ADMINISTRATION AGREEMENT

The Fund is a party to an Administration Agreement with State Street Bank and
Trust Company (the "Administrator") dated January 11, 1994.  Under that
agreement, the Administrator receives an annual fee equal to 0.08% of the Fund's
net asset value up to $125 million, 0.06% of the next $125 million, and 0.04% of
assets in excess of $250 million.  

5.  INVESTMENT TRANSACTIONS

Purchases of investments and proceeds from sales of investments, excluding
short-term securities, for the six months ended June 30, 1998 were $8,246,774
and $8,130,486, respectively.  As of June 30, 1998, unrealized appreciation for
Federal income tax purposes was $13,435,823. The aggregate cost of investments
at June 30, 1998 for Federal income tax purposes was $30,250,399.

6.  FUND SHARE TRANSACTIONS

The Fund is authorized to issue 100,000,000 shares of $0.001 par value capital
stock.  For the six months ended June 30, 1998 and the year ended December 31,
1997 transactions in shares were as follows:


                                          11
<PAGE>

W.P. STEWART & CO. GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 
JUNE 30, 1998 (UNAUDITED)

- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                    SIX MONTHS ENDED JUNE 30,1998            YEAR ENDED DECEMBER 31, 1997

                                                       SHARES            AMOUNT               SHARES                 AMOUNT
                                                       ------            ------               ------                 -------
<S>                                                <C>               <C>                     <C>                  <C>
     Sold. . . . . . . . . . . . . . . . . .          18,228         $ 3,414,492              70,106              $11,638,859
     Reinvested. . . . . . . . . . . . . . .               -                   -              30,257                4,849,063
     Redeemed. . . . . . . . . . . . . . . .         (19,381)         (3,612,611)            (15,677)              (2,649,257)
                                                   ----------        -----------            --------              -----------
     Net (decrease) increase . . . . . . . .          (1,153)         $ (198,119)             84,686              $13,838,665
                                                   ----------        -----------            --------              -----------
                                                   ----------        -----------            --------              -----------
</TABLE>


7.  BENEFICIAL INTEREST

At June 30, 1998, no shareholder owned more than 5% of the Fund's outstanding
shares.

8.  ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards 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 Fund's 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 June 30, 1998, the Fund had cash at a bank in excess of federally insurable
limits and was exposed to the credit risk resulting from this concentration of
cash.
     

                                          10

<PAGE>

W.P. STEWART & CO. GROWTH FUND, INC.
527 MADISON AVENUE
New York, NY  10022
- --------------------------------------------------------------------------------

DIRECTORS AND OFFICERS
Marilyn G. Breslow                      President
John C. Russell                         Vice President
Robert L. Schwartz                      Treasurer, Secretary and Director
Lisa D. Levey                           Assistant Secretary
William P. Stewart                      Director
Antoine Bernheim                        Director
June Eichbaum                           Director
William Talcott May                     Director

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
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, NY  10022-9998








- --------------------------------------------------------------------------------

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 WILL VARY,
AND NET ASSET VALUE OF SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.


                                          13


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission