<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 7, 1998
SECURITIES ACT FILE NO. 33-71142
INVESTMENT COMPANY ACT FILE NO. 811-8128
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[_]
PRE-EFFECTIVE AMENDMENT NO. [_]
[X]
POST-EFFECTIVE AMENDMENT NO. 5
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
[_]
[X]
AMENDMENT NO. 6
----------------
W.P. STEWART & CO. GROWTH FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
527 MADISON AVENUE
NEW YORK, NEW YORK 10022
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(212) 750-8585
----------------
COPY TO:
W. P. STEWART & CO., INC.
527 MADISON AVENUE JOEL H. GOLDBERG, ESQ.
NEW YORK, NEW YORK 10022 SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN, LLP
ATTN: LISA D. LEVEY 919 THIRD AVENUE
(NAME AND ADDRESS OF AGENT FOR
SERVICE) NEW YORK, NEW YORK 10022-9998
----------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of this Registration Statement.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK
APPROPRIATE BOX)
[_] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates
a new effective date for a previously filed
post-effective amendment.
Title of Securities Being Registered.... Shares of Common Stock, $0.001
Par Value
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<PAGE>
CROSS REFERENCE SHEET
SHOWING LOCATION OF INFORMATION IN PROSPECTUS
AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
FORM N-1A ITEM AND CAPTION LOCATION IN PROSPECTUS
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<C> <S> <C>
PART A
Item 1. Cover Page.............. Cover Page
Item 2. Synopsis................ Summary; Fee Table
Item 3. Condensed Financial
Information............ Condensed Financial Information
Item 4. General Description of The Fund; Summary; Investment Objective,
Registrant............. Methods and Policies
Item 5. Management of the Fund.. Fee Table; Management; Fees and Expenses;
Additional Information
Item 5A. Management's Discussion
of Fund Performance.... Management's Discussion of Fund Performance
Item 6. Capital Stock and Other Additional Information--Capital Stock;
Securities............. Redemptions and Distributions--Dividends
and Distributions; Inquiries; Taxation;
Additional Information
Item 7. Purchase of Securities Purchase of Shares; Net Asset Value
Being Offered.......... Calculation
Item 8. Redemption or
Repurchase............. Redemption and Distributions
Item 9. Pending Legal
Proceedings............ Not Applicable
<CAPTION>
LOCATION IN STATEMENT
FORM N-1A ITEM AND CAPTION OF ADDITIONAL INFORMATION
-------------------------- -------------------------
<C> <S> <C>
PART B
Item 10. Cover Page.............. Cover Page
Item 11. Table of Contents....... Table of Contents
Item 12. General Information and
History................ Organization of the Fund
Item 13. Investment Objectives Investment Objective, Policies and
and Policies........... Restrictions
Item 14. Management of the Fund.. Management of the Fund
Item 15. Control Persons and
Principal Holders of Management of the Fund; Investment Advisory
Securities............. and Other Services
Item 16. Investment Advisory and Investment Advisory and Other Services;
Other Services......... Custody of Portfolio; Shareholder Servicing
Agent; Independent Auditors
Item 17. Brokerage Allocation and
Other Practices........ Brokerage Allocation
Item 18. Capital Stock and Other
Securities............. Organization of the Fund
Item 19. Purchase, Redemption and
Pricing of Securities Computation of Net Asset Value; Purchase of
Being Offered.......... Shares; Redemptions
Item 20. Tax Status.............. Tax Status
Item 21. Underwriters............ Not Applicable
Item 22. Calculation of
Performance Data....... Performance Information
Item 23. Financial Statements.... Financial Statements; Report of Independent
Accountants
</TABLE>
<PAGE>
PROSPECTUS
W.P. STEWART & CO. GROWTH FUND, INC.
----------------
Investment Adviser
W.P. STEWART & CO., INC.
527 MADISON AVENUE
NEW YORK, NEW YORK 10022
----------------
W.P. Stewart & Co. Growth Fund, Inc. (the "Fund") is a non-diversified
mutual fund. The Fund's principal investment objective is capital gains. The
Fund invests primarily in common stocks listed on the New York Stock Exchange,
Inc. (the "New York Stock Exchange"). There can be no certainty that the Fund
will achieve its principal investment objective.
This Prospectus sets forth concisely the information about the Fund that you
ought to know before investing. This Prospectus should be kept for further
reference.
Additional information about the Fund, including a Statement of Additional
Information dated [ ], 1998, has been filed with the Securities and
Exchange Commission. The Statement of Additional Information can be obtained
free of charge upon request in writing or by telephoning the Fund. Contact
information for the Fund is on page 18 of this Prospectus. The Statement of
Additional Information has been incorporated by reference into this
Prospectus.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
[ ], 1998
<PAGE>
NOTICE
THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF SHARES OF W.P. STEWART & CO.
GROWTH FUND, INC. (THE "FUND") IN ANY JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE IS NOT AUTHORIZED OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER, SOLICITATION OR SALE. NO PERSON HAS BEEN AUTHORIZED TO
MAKE ANY REPRESENTATIONS CONCERNING THE FUND WHICH ARE INCONSISTENT WITH THOSE
CONTAINED IN THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION. YOU
SHOULD NOT RELY ON ANY INFORMATION NOT CONTAINED IN THIS PROSPECTUS, THE
STATEMENT OF ADDITIONAL INFORMATION OR THE FUND'S REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION.
YOU SHOULD NOT CONSIDER THE CONTENTS OF THIS PROSPECTUS, THE STATEMENT OF
ADDITIONAL INFORMATION OR THE FUND'S REGISTRATION STATEMENT AS LEGAL, TAX OR
FINANCIAL ADVICE.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
NOTICE...................................................................... 2
SUMMARY..................................................................... 4
FEE TABLE................................................................... 6
FINANCIAL HIGHLIGHTS........................................................ 7
THE FUND.................................................................... 8
INVESTMENT OBJECTIVE, METHODS AND POLICIES.................................. 8
Investment Objective and Methods.......................................... 8
Other Investment Methods and Policies..................................... 9
Fundamental Investment Policies........................................... 10
MANAGEMENT.................................................................. 11
The Board of Directors.................................................... 11
The Investment Adviser.................................................... 11
The Custodian, Transfer Agent and Dividend Paying Agent................... 13
FEES AND EXPENSES........................................................... 13
FUND PERFORMANCE............................................................ 14
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE................................. 15
NET ASSET VALUE CALCULATION................................................. 15
PURCHASE OF SHARES.......................................................... 15
REDEMPTIONS AND DISTRIBUTIONS............................................... 16
Redemptions............................................................... 16
Distributions............................................................. 16
TAXATION.................................................................... 17
ADDITIONAL INFORMATION...................................................... 18
Accountants and Legal Counsel............................................. 18
Reports to Shareholders................................................... 18
Capital Stock............................................................. 18
Inquiries................................................................. 18
</TABLE>
3
<PAGE>
SUMMARY
The following summary is intended to highlight certain information contained
in this Prospectus and is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
The Fund....................
W.P. Stewart & Co. Growth Fund, Inc. (the "Fund")
is a non-diversified mutual fund registered under
the Investment Company Act of 1940, as amended
(the "Act"). The Fund commenced operations on
February 28, 1994. See "The Fund."
Investment Objective,
Methods and Policies.. The Fund's principal investment objective is
capital gains. The Fund invests primarily in
common stocks listed on the New York Stock
Exchange. The Fund's investment adviser uses an
appraisal method to select investment
opportunities. See "Investment Objective, Methods
and Policies."
Investment Adviser..........
W.P. Stewart & Co., Inc. (the "Adviser"), based
in New York City, is a registered investment
adviser which, as of December 31, 1997, provided
investment advice with respect to more than $10
billion in assets. See "Management--The
Investment Adviser."
Risk Factors................
General. There can be no certainty that the Fund
will achieve its principal investment objective.
Because the Fund invests a relatively high
percentage of its assets in common stocks, the
Fund does not necessarily represent a complete
investment program and the price of the Fund's
shares may be more volatile than a fund investing
in equity securities and non-equity securities,
such as fixed income securities. See "Investment
Objective, Methods and Policies."
Borrowing. The Fund may borrow money for
investment purposes up to 33 1/3% of the Fund's
total assets. The Fund will borrow only when the
Adviser believes borrowing will benefit the Fund
after taking account of the risks relating to
borrowing. As a result of the use of borrowing,
the Fund's net asset value and yield are expected
to be more volatile than would be the case if
borrowing were not used. The Fund expects it will
borrow only from banks. If the income derived
from borrowing is more than the interest and
other expenses the Fund pays in connection with
such borrowing, the Fund's net income will be
greater than if borrowing were not used. On the
other hand, if the income obtained is not
sufficient to cover the cost of the borrowing,
the Fund may suffer a loss. See "Investment
Objective, Methods and Policies--Investment
Objective and Methods--Borrowing."
Non-Diversified Status. As a non-diversified
investment company, as defined in the Act, the
Fund may invest more than 5% of the value of its
assets in the securities of any single issuer and
may acquire
4
<PAGE>
more than 10% of the voting securities of a
single issuer, subject to the diversification
requirements of subchapter M of the Internal
Revenue Code of 1986, as amended. Because the
Fund invests a relatively high percentage of its
assets in the securities of a limited number of
issuers, the Fund may be more affected by any
single economic, political or regulatory
occurrence or by any change in an issuer's
financial condition than a diversified investment
company. See "Investment Objective, Methods and
Policies."
Purchase of Shares..........
Shares of the Fund, par value $0.001 per share
("Shares"), are generally sold on every Business
Day for a price equal to their net asset value.
See "Net Asset Value Calculation." The minimum
initial investment in the Fund is $50,000,
although the Fund may in its discretion accept
investments of a lesser amount. There are no
sales charges. See "Purchase of Shares."
Redemptions and
Distributions..............
The Fund's Shares may be redeemed on any day on
which the New York Stock Exchange is open for
trading (a "Business Day"). See "Net Asset Value
Calculation." A redemption fee equal to 0.5% of
the gross redemption proceeds will be charged by
the Fund; this charge is paid to the Fund and is
an allowance for actual transaction costs and
other expenses of processing the redemption. The
Fund intends to pay out to shareholders at least
annually substantially all of its net ordinary
income and net capital gains. Dividends and/or
capital gains distributions paid by the Fund will
be automatically reinvested in Shares, unless you
tell us otherwise. See "Redemptions and
Distributions--Dividends and Distributions."
Fees and Expenses...........
The Adviser receives quarterly advisory fees
payable in advance at an annual rate equal to
1.5% of the net asset value of the Fund. The Fund
is obligated to pay all costs and expenses
directly related to the Fund's investment program
including: (a) expenses of portfolio transactions
such as brokerage commissions, custodial fees,
interest on borrowings and withholding and
transfer taxes and (b) professional fees of
auditors and attorneys and government fees. See
"Fee Table" and "Fees and Expenses."
5
<PAGE>
FEE TABLE
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)............................................................. None
Maximum Deferred Sales Load......................................... None
Maximum Sales Load Imposed on Reinvested Dividends.................. None
Redemption Fee (as a percentage of the amount redeemed)............. 0.50%
Exchange Fee........................................................ None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET AS-
SETS)
Management Fees/1/.................................................. 1.50%
12b-1 Fees.......................................................... None
Other Expenses (After Expense Reimbursement)/2/..................... 0.63%
----
Total Fund Operating Expenses (After Expense Reimbursement)/2/...... 2.13%
====
</TABLE>
- --------
/1/ The management fee payable to the Adviser is significantly higher than the
advisory fees paid by most mutual funds.
/2/ The Adviser has voluntarily agreed to waive advisory fees and/or reimburse
expenses of the Fund so that Total Fund Operating Expenses do not exceed
2.5% of the average net assets of the Fund up to $30 million, 2% of the
next $70 million of average net assets of the Fund, and 1.5% of the average
net assets of the Fund in excess of $100 million. Other Expenses and Total
Fund Operating Expenses for the fiscal year ended December 31, 1997 without
such waiver and/or reimbursement would have been 0.65% and 2.15%,
respectively of the Fund's average net assets. Such voluntary waiver and/or
expense reimbursement is not required by the Investment Advisory Services
Agreement between the Fund and the Adviser and may be discontinued at any
time. See "Management--The Investment Adviser" below.
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming (1) a 5%
annual return and (2) redemption at the
end of each time period: $27 $73 $121 $255
You would pay the following expenses on
the same investment, assuming no
redemption: $22 $67 $115 $248
</TABLE>
The information included in the Fee Table is to assist you in understanding
the various costs and expenses that you will bear directly or indirectly.
"Other Expenses" includes operating expenses of the Fund, such as custodial,
shareholder servicing and administrative fees. For further information see
"Fees and Expenses."
The above example is based on data for the Fund's fiscal year ended December
31, 1997. This example should not be considered a representation of past or
future expenses, and actual expenses may be more or less than those shown. The
annual return assumed for the purpose of this example should not be considered
a representation of actual or expected returns.
6
<PAGE>
FINANCIAL HIGHLIGHTS
The financial information in the table below has been audited in conjunction
with the annual audits of the financial statements of the Fund by Lopez Edwards
Frank & Co., LLP, independent auditors. Financial statements for the fiscal
year ended December 31, 1997, the independent auditors' report thereon and
additional information about the performance of the Fund are included in the
Fund's most recent annual report, which has been incorporated by reference into
the Statement of Additional Information. Additional copies of the annual report
may be obtained without charge by calling or by writing to the Fund at the
telephone number or address appearing under "Additional Information--Inquiries"
below.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE FOR THE FOR THE FEBRUARY 28, 1994*
YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Income From Investment
Operations:
Per Share Operating Per-
formance:
Net asset value, begin-
ning of period......... $152.65 $125.94 $101.06 $100.00
------- ------- ------- -------
Net investment loss... (1.87) (1.81) (1.15) (0.48)
Net realized and
unrealized gain on
investments.......... 38.53 40.17 29.19 1.54
------- ------- ------- -------
Net increase from in-
vestment operations.... 36.66 38.36 28.04 1.06
Distributions to
shareholders from net
realized gain on
investments............ (20.60) (11.65) (3.16) 0.00
------- ------- ------- -------
Net asset value, end of
period................. $168.71 $152.65 $125.94 $101.06
======= ======= ======= =======
TOTAL INVESTMENT RETURN
(a).................... 24.69 % 30.64 % 27.73 % 1.06 %
RATIOS AND SUPPLEMENTAL
DATA:
Ratio of expenses to av-
erage net assets....... 2.13 % 2.50 % 2.50 % 2.50 %(b)
Ratio of fees and
expenses waived and
reimbursed by the
Adviser and
Administrator to
average net assets..... .02 % 0.28 % 1.32 % 10.20 %(b)(c)
Ratio of net investment
loss to average net as-
sets................... (1.35)% (1.51)% (1.36)% (1.25)%(b)
Portfolio turnover...... 79 % 76 % 76 % 9 %
Average commission rate
(d).................... $0.0800 $0.1000 N/A N/A
Net assets, end of pe-
riod (in thousands).... $36,201 $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 paid by Adviser.
(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.
7
<PAGE>
THE FUND
The Fund was organized as a corporation under Maryland law on September 23,
1993. Technically, the Fund is registered under the Act as an open-end, non-
diversified, management investment company (commonly known as a mutual fund).
The Fund's Adviser is W.P. Stewart & Co., Inc., a registered investment
adviser. Shares of the Fund, par value $0.001 per share, are available for
purchase by eligible investors. There are no sales charges.
INVESTMENT OBJECTIVE, METHODS AND POLICIES
INVESTMENT OBJECTIVE AND METHODS
The Fund's principal investment objective is to earn capital gains for
shareholders. The Fund's principal investment objective is a fundamental
policy of the Fund and may not be changed without the approval of shareholders
holding a majority of the total number of outstanding Shares. There can be no
assurance that the Fund will achieve its principal investment objective.
The Fund seeks to achieve its principal investment objective by investing
primarily in common stocks listed on the New York Stock Exchange. The Fund
also expects to invest, from time to time, in securities listed on other
United States stock exchanges, including the American, Pacific and Midwest
Stock Exchanges, and in securities traded through The NASDAQ Stock Market Inc.
("NASDAQ"). The Fund permits investors to participate in a professionally-
managed portfolio consisting primarily of shares in a number of companies
considered by the Adviser to be high-quality, growing, principally United
States-based companies. The securities of the companies in which the Fund
invests may experience price declines. Since such companies usually reinvest a
high portion of earnings in their own businesses, they may lack the dividend
yield associated with value stocks that can cushion total return in a
declining market. Also, since investors may buy growth stocks based on their
expected earnings growth, earnings disappointments often result in sharp price
declines.
The Fund invests in a relatively small number of individual stocks. To
enable it to do so, the Fund is classified as a non-diversified fund under the
Act and, therefore, is not subject to the diversification requirements of the
Act. This policy is fundamental and may not be changed without the approval of
shareholders holding a majority of the total number of outstanding Shares.
Accordingly, the Fund may invest more than 5% of the value of its assets in
the securities of a single issuer and may acquire more than 10% of the voting
securities of a single issuer. The Fund, however, remains subject to the
diversification requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), in order to qualify as a regulated investment
company for federal income tax purposes. To the extent that the Fund invests a
relatively high percentage of its assets in securities of a limited number of
companies, the Fund may be more susceptible than would a more widely
diversified fund to any single economic, political or regulatory occurrence or
to changes in a company's financial condition or in the market's assessment of
the company.
The Adviser employs an appraisal method which attempts to measure each
prospective company's quality and growth rate by numerous criteria. These
results are compared to the general stock and bond markets to determine the
relative attractiveness of each company at a given moment. The Adviser weighs
economic, political and market factors in making investment decisions; this
appraisal technique attempts to measure each investment candidate not only
against other stocks of the same group, but also against a broad spectrum of
investments.
No method of fundamental or technical analysis, including that employed by
the Adviser, has been proven to provide any risk adjusted excess rate of
return on an ongoing basis.
8
<PAGE>
OTHER INVESTMENT METHODS AND POLICIES
Money Market Instruments: For temporary defensive purposes or in order to
earn a return on available cash balances pending investment or reinvestment,
the Fund may invest up to 100% of its assets in interest-bearing accounts
maintained with financial institutions, in short-term debt securities of
United States companies or in debt securities of the U.S. government or its
agencies or instrumentalities, as well as in other money market instruments.
Such money market instruments include, among others, negotiable or non-
negotiable short-term deposits with U.S. banks, high quality commercial paper
and repurchase agreements maturing within seven days with domestic dealers,
banks and other financial institutions deemed to be creditworthy by the
Adviser. Short-term debt securities and commercial paper generally are of high
quality.
Repurchase Agreements: A repurchase agreement customarily requires the
seller to agree to repurchase the securities from the Fund at a mutually
agreed 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 or if the collateral declines
in value.
Foreign Investments: The Fund may also invest in stocks issued by non-U.S.
companies. Such investments will normally be made through the purchase of
American Depositary Receipts ("ADRs") which represent investments in shares of
non-U.S. companies but are denominated in U.S. dollars and usually are listed
on a U.S. stock exchange or traded on NASDAQ. Investments in non-U.S. stocks,
whether directly or through ADRs, involve more and different risks than
investments in U.S. stocks. When the underlying investments represented by
ADRs are denominated in foreign currencies or the Fund receives dividends
which are declared in foreign currencies, the value of the ADRs and the amount
of dividends received as measured in U.S. dollars will be affected favorably
or unfavorably by fluctuations in currency exchange rates. Dividends declared
on the underlying investment represented by ADRs generally will be subject to
withholding taxes at the source. See "Investment Objective, Policies and
Restrictions--Investment Objective and Methods--Foreign Investments" in the
Statement of Additional Information.
Borrowing: The Fund is authorized to borrow money in an amount up to 33 1/3%
of the Fund's total assets for investment purposes. The Fund also is
authorized to borrow an additional 5% of its total assets without regard to
the foregoing limitation for temporary or emergency purposes (such as
clearance of portfolio transactions, the payment of dividends and Share
redemptions). The Fund may pledge up to 33 1/3% of the Fund's total assets to
secure borrowings. If the Fund's asset coverage for borrowings falls below
300% as a result of market fluctuations or other reasons, the Fund may be
required to sell portfolio securities to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. The Fund will use borrowing only
when the Adviser believes it will benefit the Fund after taking related risks
into consideration. The Adviser presently does not intend to borrow on behalf
of the Fund more than 5% of the Fund's net assets.
Illiquid Securities: The Fund may hold up to 5% of the value of its total
assets in illiquid securities, including securities which cannot be readily
resold to the public because of legal or contractual restrictions, non-
negotiable deposits with banks, repurchase agreements which have a maturity of
longer than seven days and securities that are not readily marketable.
Illiquid securities do not include securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 that have been determined to be
liquid by the Fund's Board of Directors based upon the trading markets for
such securities.
9
<PAGE>
Fixed Income and Convertible Securities and Warrants: The Fund may invest in
debt or preferred equity securities, including securities convertible into or
exchangeable for equity securities, and warrants. Convertible securities
typically are corporate bonds or preferred stocks that may be converted at a
specified time and price into shares of common stock. Convertible securities
usually provide a fixed income stream and afford the investor the opportunity
to participate in the capital appreciation upon a market price advance in the
convertible security's underlying common stock. Warrants are options to buy a
stated number of shares of common stock at a specified price during the life
of the warrants.
FUNDAMENTAL INVESTMENT POLICIES
The Fund has adopted certain fundamental policies which cannot be changed
without approval by holders of a majority of its outstanding Shares. As
defined in the Act, this means the lesser of (a) 67% or more of the Shares of
the Fund at a meeting where more than 50% of the outstanding Shares is present
in person or by proxy or (b) more than 50% of the outstanding Shares. See
"Investment Objective, Policies and Restrictions--Fundamental Investment
Policies" in the Statement of Additional Information.
10
<PAGE>
MANAGEMENT
THE BOARD OF DIRECTORS
The ultimate responsibility for the management and operation of the Fund is
vested in its Board of Directors, a majority of whom are not "interested
persons" (as defined in the Act) of the Fund or the Adviser (the "Independent
Directors").
THE INVESTMENT ADVISER
The Fund's investments are managed by the Adviser, a Delaware corporation
incorporated in 1973, pursuant to an agreement between the Adviser and the
Fund (the "Investment Advisory Services Agreement"). The Adviser is registered
under the Investment Advisers Act of 1940 as an investment adviser. The
Adviser has been providing investment advisory services to individuals, trusts
and pension funds since 1973. Its business office is located at 527 Madison
Avenue, 21st Floor, New York, New York 10022-4212, its telephone number is
(212) 750-8585 and its facsimile number is (212) 980-8039. William P. Stewart,
Jr., who is in the business of providing financial services, may be deemed to
be a controlling person of the Adviser.
Pursuant to the Investment Advisory Services Agreement, the Adviser is
responsible for the management of the Fund's business affairs, including
providing investment research and analysis of investment opportunities and the
management of the Fund's trading and investment transactions, subject to the
investment policies and restrictions described in this Prospectus and the
supervision of the Board of Directors.
The portfolio manager of the Fund is Marilyn G. Breslow, President of the
Fund and a Director of the Adviser. Ms. Breslow is primarily responsible for
the day-to-day management of the Fund's portfolio. Ms. Breslow has served as a
portfolio manager of the Fund since July 1997 and of other accounts managed by
the Adviser since 1990. The arrangements with the Adviser require that all
investment decisions be made by committee, and no one person is primarily
responsible for making recommendations to such committee. The Fund's
investments are similar to the investments made by the Adviser for its managed
accounts. Although each account managed by the Adviser has individual
objectives and a unique portfolio, the Fund's investments generally
approximate investments made by the Adviser's managed accounts.
Pursuant to the Investment Advisory Services Agreement, the Adviser receives
quarterly advisory fees 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 calendar quarter
(after giving effect to subscriptions and redemptions effective on such date).
The Adviser has agreed to waive fees and/or reimburse 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. Voluntary fee waivers and/or expense
reimbursement is not required by the Investment Advisory Services Agreement
and may be discontinued at any time. Such fee waivers and reimbursement of
expenses will increase the Fund's total return. See "Fee Table" above.
The original Investment Advisory Services Agreement (the "Original Advisory
Agreement") between the Fund and the Adviser provides that it will continue in
effect after its initial two-year term (January 11, 1994 through January 11,
1996) only so long as its continuance has been specifically approved at least
annually in the manner required by the Act. There is some uncertainty as to
whether the continuation of the Original Advisory Agreement was properly
approved by the Board of Directors of the Fund on the expiration of the
Original
11
<PAGE>
Advisory Agreement in 1996. If the Original Advisory Agreement was not
continued by the Board in 1996, it would have lapsed as a technical matter.
If this in fact occurred, some part of the fees paid to the Adviser since
January 1996 might be recoverable by the Fund. In addition, the Fund would
not now have a valid investment advisory contract with the Adviser. Because of
the importance of removing any doubt about the status of the Original Advisory
Agreement, at an in-person meeting of the Board of Directors held on March 25,
1998, the Directors approved, subject to shareholder approval, a new
Investment Advisory Services Agreement between the Fund and the Adviser (the
"New Advisory Agreement"). The Board also ratified the payment of advisory
fees by the Fund to the Adviser for the period from January 12, 1996 through
the date of approval of the New Advisory Agreement by the Fund's shareholders.
The Directors voted to submit to the shareholders of the Fund for their
approval the New Advisory Agreement and ratification of the payment of
advisory fees. These matters are the subject of a proxy statement to be mailed
to shareholders in the near future.
Potential Conflicts of Interest: The Investment Advisory Services Agreement
requires that the Adviser act in a manner that it considers fair, reasonable
and equitable in allocating investment opportunities to the Fund, but does not
otherwise impose any specific obligations or requirements concerning the
allocation of time, effort or investment opportunities to the Fund or any
restrictions on the nature or timing of investments for the account of the
Fund and for the Adviser's own account or for other accounts which the Adviser
may manage. The Adviser is not obligated to devote any specific amount of time
to the affairs of the Fund and is not required to accord exclusivity or
priority to the Fund in the event of limited investment opportunities.
When the Adviser determines that it would be appropriate for the Fund and
one or more of its other investment accounts to participate in an investment
opportunity, the Adviser will seek to execute orders for all of the
participating investment accounts, including the Fund, on an equitable basis.
If the Adviser has determined to invest at the same time for more than one of
the investment accounts, the Adviser may place combined orders for all such
accounts simultaneously and if all such orders are not filled at the same
price, it may average the prices paid. Similarly, if an order on behalf of
more than one account cannot be fully executed under prevailing market
conditions, the Adviser may allocate the investments among the different
accounts on a basis that it considers equitable. Situations may occur where
the Fund could be disadvantaged because of the investment activities conducted
by the Adviser for other investment accounts.
The Adviser selects the brokers to be used for the Fund's transactions, and
the Adviser's affiliate is permitted to act as broker for the Fund. See
"Brokerage Arrangements" below. By reason of the brokerage fees the Adviser's
affiliate would earn by acting as broker to the Fund, the Adviser will have an
incentive to select its affiliate as broker for the Fund.
Brokerage Arrangements: The Adviser is responsible for selecting the broker
or dealer to effect portfolio transactions of the Fund. Brokerage transactions
normally will be effected through the Adviser's affiliate, W.P. Stewart
Securities Limited. Portfolio securities transactions generally will be
effected through brokers on securities exchanges or directly with the issuer
or an underwriter or market maker for the securities. Brokerage transactions
not executed by the Adviser's affiliate will be executed by other brokers and
dealers selected by the Adviser. Subject to seeking best execution, the
Adviser also may consider referrals of potential investors in the Fund as a
factor in the selection of brokers. Purchases and sales of portfolio
securities through brokers involve a commission to the broker. Purchases and
sales of portfolio securities with dealers serving as market makers include
the difference between the bid and the asked prices. In placing portfolio
transactions, the Adviser will seek to obtain the best execution for the Fund,
taking into account such factors as price (including the applicable dealer
spread or commission, if any), size of order, difficulty of execution,
operational facilities of the firm involved and the firm's risk in positioning
a block of securities.
12
<PAGE>
As broker, the Adviser's affiliate will charge the Fund commissions not
exceeding the rates charged to institutional customers for similar trades at
the time of execution.
THE CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
The Fund's securities and other assets will normally be held in the custody
of State Street Bank and Trust Company ("State Street"), which has its
principal place of business at 1776 Heritage Drive, North Quincy,
Massachusetts 02171. Some of the Fund's securities and other assets may also
be held in the custody of other qualified financial institutions. State Street
will also act as the Fund's shareholder servicing agent and provide certain
administrative services. These services include acting as transfer agent for
the Fund's Shares, communicating with the Fund's shareholders and maintaining
certain of the Fund's books and records.
State Street will receive approximate minimum annual fees as follows:
--For custodian services: $36,000
--For shareholder servicing agent: $30,000 and
--For administrator: $65,000.
FEES AND EXPENSES
The Fund bears all costs and expenses directly related to investment
transactions made and positions held for the Fund's account, including
advisory fees, brokerage commissions, custodial fees, interest on borrowings
and administrative fees. The Fund also is obligated to pay the fees and
expenses of any accountants or attorneys engaged on behalf of the Fund, the
costs of holding any meetings of shareholders of the Fund and such other types
of expenses as may be approved from time to time by the Board of Directors,
other than those required to be borne by the Adviser. If any such expenses are
incurred jointly for the Fund's account together with the Adviser's own
account or the account of any other persons in addition to the Fund, the
Adviser will allocate the total expense among the Fund and such other persons
and will determine the portion reimbursable by the Fund in a fair and
reasonable manner. Except for such expenses, the Adviser pays all of its own
operating and overhead costs and those of the Fund, including costs incurred
by the Adviser to provide office space to the Fund or which it may incur in
the course of providing bookkeeping and other services to the Fund. From time
to time the Adviser may elect to pay fees and expenses on behalf of the Fund,
although it is not legally obligated to do so.
13
<PAGE>
FUND PERFORMANCE
The following line graph provides a comparison of the return of a
hypothetical investment in the Fund with the return of the S&P 500 for the
period indicated.
W.P. STEWART & CO. GROWTH FUND, INC.
COMPARISON OF A HYPOTHETICAL $50,000 INVESTMENT
W.P. STEWART & CO. GROWTH FUND, INC. VS. S&P 500
[PASTE-UP]
* The S&P 500 is a market-weighted, unmanaged index of 500 common stocks in a
variety of industry sectors. It is a commonly used indicator of broad stock
price movements. The S&P 500 return assumes no advisory fees or
transactional costs.
The following table provides the returns for the Fund as compared with the
returns of the S&P 500 for the periods indicated.
<TABLE>
<CAPTION>
TOTAL NET AVERAGE ANNUAL
RETURN TOTAL RETURN TOTAL RETURN
------ ------------ --------------
<S> <C> <C> <C>
W.P. STEWART & CO. GROWTH FUND, INC.
January 1, 1997 through December 31, 1997.. 24.69% 24.07% 24.07%
February 28, 1994 (commencement of
investment operations) through December
31, 1997.................................. 110.27% 109.22% 21.19%
S&P 500
January 1, 1997 through December 31, 1997.. 33.59% N/A N/A
February 28, 1994 through December 31,
1997...................................... 127.25% N/A N/A
</TABLE>
"Total return" shows how much an investment in the Fund has changed in value
over a specified time period assuming that all distributions and dividends
were reinvested in additional shares. "Net total return" shows how much an
investment in the Fund has changed in value over a specified time period
assuming that all distributions and dividends were reinvested in additional
shares and takes into account deduction of the 0.5%
14
<PAGE>
redemption fee. "Average annual total return" is a hypothetical rate of return
that, if achieved annually, would have produced the same aggregate total
return if performance had been constant over a specified time period. Average
annual total return takes into account deduction of the 0.5% redemption fee.
Past performance is not predictive of future performance.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Management's Discussion of the Fund's performance during the fiscal year
ended December 31, 1997 is incorporated into this Prospectus from the Fund's
Annual Report to Shareholders, for the period ended December 31, 1997.
Additional copies of the Fund's Annual Report to Shareholders can be obtained
free of charge upon request in writing or by telephoning the Fund. Contact
information for the Fund is on page 18 of this Prospectus.
NET ASSET VALUE CALCULATION
The net asset value per Share is determined by or at the direction of the
Board of Directors as of the close of business on the New York Stock Exchange
(generally 4:00 p.m. New York City time) of each Business Day. The net asset
value is computed by dividing the sum of the market value of the securities
held by the Fund plus any cash or other assets (including interest and
dividends accrued but not yet received) minus all liabilities (including
accrued expenses) by the total number of Shares outstanding at such time,
rounded to the nearest cent.
In general, the Fund values its portfolio holdings as of their last
available public sale price on a Business Day in the case of securities listed
on any established securities exchange or included in NASDAQ 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. Securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith under
the direction of the Board of Directors of the Fund.
PURCHASE OF SHARES
You may purchase Shares each Business Day. The minimum initial investment in
the Fund is $50,000, although the Fund may in its discretion accept
subscriptions for a lesser amount. You may subscribe for Shares by completing
and returning the attached Subscription Application and by following the
instructions set forth in the Subscription Application. The Fund can reject
any subscription. All accepted subscriptions from new investors will be made
at the net asset value of the Fund's Shares next computed following receipt of
payment, the Subscriber Information Form and the Subscription Agreement (the
"Subscription Documents"). Your payment cannot be accepted until the
Subscription Documents have been received. If you are already a Fund
shareholder, you need not submit Subscription Documents when purchasing
additional Shares.
The Shares are offered directly by the Fund, and no selling commissions or
other fees are payable by the Fund out of the proceeds from the sale of
Shares.
15
<PAGE>
The Fund generally does not issue certificates for Shares. The Fund instead
credits your account with the number of Shares purchased. You should check
promptly the confirmation advice that is mailed after each purchase (or
redemption) in order to ensure that the purchase (or redemption) of Shares
reported has been recorded accurately in your account. Statements of account
will be mailed monthly, showing transactions during the month.
REDEMPTIONS AND DISTRIBUTIONS
REDEMPTIONS
You may redeem Shares on each Business Day. You will be charged a redemption
fee equal to 0.5% of the gross redemption proceeds, representing an allowance
for actual transaction costs and other expenses of processing the redemption.
If certificates have been issued for the Shares being redeemed, your
redemption request must be accompanied by such certificates endorsed for
transfer (or accompanied by an endorsed stock power). The Fund can refuse any
requests for redemption by telephone or facsimile if it thinks any such
request may not be properly authorized. The Fund will not honor redemption
requests that are not in proper form.
The redemption price will be the net asset value of the Shares next computed
following receipt of the redemption request in proper form by the Fund, less a
0.5% redemption fee. The settlement of redemptions, including any possible
delays, is described below.
The Fund reserves the right to require the redemption of your remaining
Shares if the net asset value of such Shares is reduced to less than $10,000
due to redemptions made by you. Should the Fund elect to exercise such right,
you will receive prior written notice and you will be permitted at least 10
calendar days to purchase additional Shares to increase your investment to at
least the minimum to avoid automatic redemption at the net asset value as of
the close of business on the proposed redemption date.
You will receive payment of the redemption price within seven days after
receipt of the redemption request in good order, but the Fund may suspend the
right of redemption or postpone payment during any period when (a) trading on
the New York Stock Exchange is restricted or such exchange is closed, other
than customary weekend and holiday closings; (b) the Securities and Exchange
Commission has by order permitted such suspension; or (c) an emergency, within
the meaning of the Act, exists, making sale of portfolio securities or
determination of the value of the Fund's net assets not reasonably
practicable.
You will receive notice of any suspension if you have submitted a redemption
request and you have not received your redemption payment. If you do not
withdraw your redemption request after notification of a suspension, the
redemption will be made as of the day on which the suspension is lifted, on
the basis of the net asset valuation on that day.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to pay annually a dividend representing its entire net
investment income and to distribute all its realized net capital gains.
Dividends and/or any capital gain distributions paid by the Fund on its Shares
will be reinvested automatically in whole or fractional Shares of the Fund at
net asset value as of the payment date unless you make a written request to
the Fund for payment in cash at least five days in advance of the payment
date.
16
<PAGE>
Checks issued upon your request for payment of dividends and capital gain
distributions in cash will be forwarded to you by first class mail. Uncashed
checks will not earn interest.
TAXATION
The Fund has elected to qualify and intends to remain qualified for the
special tax treatment relating to regulated investment companies under the
Code. If it qualifies, the Fund will pay no United States federal income tax
on net income and net capital gains distributed to shareholders of the Fund,
provided that the Fund timely distributes at least 90% of its taxable net
investment income each year. The Fund also intends to take all actions
necessary to avoid the imposition of any excise taxes on the Fund.
For federal income tax purposes, distributions from net ordinary income or
net short-term capital gains will be treated by you as ordinary income and
distributions from net capital gains from the sale of assets held by the Fund
for more than 12 months ("net capital gains") will be treated by you as
capital gains, regardless of whether such distributions are paid in cash or
reinvested in additional Shares of the Fund and regardless of how long you
have held shares of the Fund. Recent legislation created various categories of
capital gains. The maximum long-term capital gains rate for individuals is 28%
with respect to securities held by the Fund for more than 12 months but not
more than 18 months, and 20% with respect to securities held by the Fund for
more than 18 months. The maximum long-term capital gains rate for corporate
shareholders is the same as the maximum tax rate for ordinary income, which
currently is 39.6%. To the extent that the Fund's income is derived from
certain dividends received from domestic corporations, a portion of the
dividends paid to corporate shareholders of the Fund will be eligible for the
70% dividends received deduction. The Fund will inform you each year of the
amount and nature of any income or gain distributed to you. Your tax
liabilities for such distributions will depend on your particular tax
situation.
Distributions of net ordinary income or net short-term capital gains
received by a non-resident alien individual or foreign corporation which is
not engaged in a trade or business in the United States generally will be
subject to federal withholding tax at the rate of 30%, unless such rate is
reduced by an applicable income tax treaty to which the United States is a
party. However, gains from the sale by such shareholders of Shares of the Fund
and distributions to such shareholders from net capital gains generally will
not be subject to federal withholding tax.
Any gain or loss realized upon a sale or redemption of Shares by a
shareholder who is not a dealer in securities generally will be treated as
capital gain or loss. Any such capital gain derived by an individual will be
subject to tax at the reduced rates described above depending upon the
shareholder's holding period of the Shares sold. Any such loss will be treated
as a long-term capital loss if the Shares have been held for more than one
year and otherwise as a short-term capital loss. Any such loss, however, with
respect to Shares that are held for six months or less will be treated as a
long-term capital loss to the extent of any capital gain distributions
received by the shareholder.
The foregoing is a summary of some of the important federal income tax
considerations affecting the Fund and its shareholders and is not a complete
analysis of all relevant tax considerations, nor is it a complete listing of
all potential tax risks involved in purchasing or holding Shares. You are
urged to consult your own tax advisor regarding specific questions of federal,
state, local or foreign tax considerations.
17
<PAGE>
ADDITIONAL INFORMATION
ACCOUNTANTS AND LEGAL COUNSEL
The Fund has designated Lopez Edwards Frank & Co., LLP of New York City as
the independent auditors of the Fund.
Shereff, Friedman, Hoffman & Goodman, LLP of New York City is legal counsel
to the Adviser and the Fund in connection with the operation of the Fund,
including the preparation of this Prospectus and the Statement of Additional
Information and amendments thereto.
REPORTS TO SHAREHOLDERS
The fiscal year of the Fund ends on December 31. The Fund will furnish to
its shareholders as soon as practicable after the end of each taxable year
such information as is necessary for such shareholders to complete federal
income tax or information returns, along with any other tax information
required by law. The Fund will furnish to its shareholders annual and semi-
annual reports containing financial statements examined by the Fund's
independent auditors. You may request additional copies of such reports by
calling or writing the Fund at the phone number or address listed below under
"Inquiries."
CAPITAL STOCK
The authorized capital stock of the Fund consists of 100,000,000 Shares, all
of one class and of $0.001 par value per Share, and all having equal voting,
redemption, dividend and liquidation rights. Shares are fully paid and non-
assessable when issued and are redeemable and subject to redemption under
certain conditions described in this Prospectus. Shares have no preemptive,
conversion or cumulative voting rights.
Pursuant to the By-Laws of the Fund adopted under the provisions of the laws
of Maryland, the Fund's jurisdiction of incorporation, the Fund will not
generally hold annual meetings of Fund shareholders. Shareholder meetings,
however, will be held when required by the Act or Maryland laws, or when
called by the Board of Directors, the President or shareholders owning at
least 10% of outstanding Shares. The Fund is obligated to bear the cost of any
such notice and meeting.
INQUIRIES
Inquiries concerning the Fund and its Shares (including information
concerning subscription and redemption procedures) should be directed to:
W.P. Stewart & Co., Inc.
527 Madison Avenue
New York, New York 10022
Telephone: 212-750-8585
Facsimile: 212-308-0626
* * * * *
This Prospectus is not a complete description of the Fund's Statement of
Additional Information and Registration Statement on Form N-1A, copies of
which are available from the Fund upon your request. You are encouraged to
consult appropriate legal and tax counsel.
18
<PAGE>
SUBSCRIPTION APPLICATION
W.P. STEWART & CO. GROWTH FUND, INC.
Subscription Instructions
BASIC SUBSCRIPTION DOCUMENTS
You may subscribe for shares of the common stock, par value $0.001 per share
("Shares"), of W.P. Stewart & Co. Growth Fund, Inc. (the "Fund") only by
completing, signing and delivering the following basic subscription documents:
(a) Subscriber Information Form: Complete all requested information, date
and sign.
(b) Subscription Agreement: Date and sign two copies on page S-8. The
Subscription Agreement may be completed by a duly authorized officer or
agent on behalf of a Subscriber.
(c) Evidence of Authorization: Subscribers which are corporations should
submit certified corporate resolutions authorizing the subscription and
identifying the corporate officer(s) empowered to sign the basic
subscription documents. Partnerships should submit an extract of the
partnership agreement identifying the general partners. Trusts should
submit a copy of the trust agreement or relevant portions thereof showing
appointment and authority of trustee(s). Employee benefit plans (including
Individual Retirement Accounts) should submit a certificate of the trustee
or an appropriate officer certifying that the subscription has been
authorized and identifying the individual empowered to sign the basic
subscription documents. (Entities may be requested to furnish other or
additional documentation evidencing the authority to invest in the Fund.)
DELIVERY INSTRUCTIONS
Basic subscription documents should be delivered or mailed to the Fund at
the following address:
W.P. Stewart & Co., Inc.
527 Madison Avenue
New York, New York 10022
All basic subscription documents will be returned to the Subscriber if this
subscription is not accepted.
S-1
<PAGE>
SUBSCRIPTION PAYMENTS
Payments for the amount subscribed (not less than $50,000 unless otherwise
agreed in advance by the Fund) must be made by wire transfer as follows:
Receiving Bank State Street Bank and Trust Company
Information:
1776 Heritage Drive
North Quincy, Massachusetts 02171
ABA No.: 011000028
For Account of: BNF=AC-65590622
Mutual Funds F/B/O W.P. Stewart
For Subaccount of: OBI=Growth Fund
Shareholder Name/Account Number
ACCEPTANCE OF SUBSCRIPTIONS
The acceptance of subscriptions is within the absolute discretion of the
Fund, which may require additional information prior to making a
determination. The Fund will seek to notify the Subscriber of its acceptance
or rejection of the subscription prior to the date of the proposed investment.
If the subscription is rejected, the Fund will promptly refund (without
interest) to the Subscriber any subscription payments received by the Fund.
ADDITIONAL INFORMATION
For additional information concerning subscriptions, prospective investors
should contact W.P. Stewart & Co., Inc. at 212-750-8585.
S-2
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
Subscriber Information Form
Each Subscriber for shares of the common stock, par value $0.001 per share
("Shares"), of W.P. Stewart & Co. Growth Fund, Inc. (the "Fund") is requested
to furnish the following information (please print or type):
1.IDENTITY OF SUBSCRIBER
Name: _______________________________________________________________________
*Mailing
Address: ____________________________________________________________________
( )
Telephone: __________________________________________________________________
( )
Telecopier: _________________________________________________________________
* Please indicate above the address to which Fund communications and notices
should be sent. If the Subscriber is a natural person, please also furnish
below the Subscriber's residential address if different from the address
indicated above:
Residential
Address: ____________________________________________________________________
______________________________________________________________________
______________________________________________________________________
2.AMOUNT OF SUBSCRIPTION
$
3.REMITTING BANK OR FINANCIAL INSTITUTION
All subscriptions are payable in full by wire transfer to the account of
the Fund for value on or before the business day prior to the proposed date
of subscription. Please identify the bank or other financial institution
from which the Subscriber's funds will be wired.
Name of financial
institution: ________________________________________________________________
Address: ____________________________________________________________________
______________________________________________________________________
Account
Representative: _____________________________________________________________
( )
Telephone: __________________________________________________________________
S-3
<PAGE>
4.SUPPLEMENTAL DATA FOR ENTITIES
If the Subscriber is not a natural person, furnish the following
supplemental data (natural persons may skip to Question 5):
(a) Legal form of entity: ___________________________________________________
(b) Jurisdiction of organization: ___________________________________________
5. TAX INFORMATION
- -------------------------------------------------------------------------------
PART 1-PLEASE PROVIDE YOUR TIN Social Security
IN THE BOX AT RIGHT AND CER- Number OR Employer
TIFY BY SIGNING AND DATING BE- Identification
LOW. Number
SUBSTITUTE
Form W-9
Department of the
Treasury Internal
Revenue Service
--------------------------------------------------------
PART 2-CERTIFICATES--Under penalties of perjury, I
certify that:
Payer's Request for (1) The number shown on this form is my correct Tax-
Taxpayer payer Identification Number (or I am waiting for a
Identification ("TIN") number to be issued for me) and
(2) I am not subject to backup withholding either be-
cause: (a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup with-
holding as a result of a failure to report all inter-
est or dividends, or (c) the IRS has notified me that
I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item
(2) above if you have been notified by the IRS that
you are currently subject to backup withholding be-
cause of underreporting interest or dividends on your
tax return. However, if after being notified by the
IRS that you are subject to backup withholding, you
received another notification from the IRS that you
are no longer subject to backup withholding, do not
cross out such item (2).
--------------------------------------------------------
SIGNATURE ...................... PART-3
DATE ........................... Awaiting
TIN [_]
- -------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
S-4
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number by the
time of payment, 31% of all reportable payments made to me will be withheld,
but that such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within 60 days.
Signature _________________________________________ Date __________________
Dated: ________________________, 199 _____________________________________
Signature
_____________________________________
Name and title or
representative capacity,
if applicable
S-5
<PAGE>
W.P. STEWART & CO. GROWTH FUND, INC.
Subscription Agreement
W.P. Stewart & Co. Growth Fund, Inc.
c/o W.P. Stewart & Co., Inc.
527 Madison Avenue
New York, New York 10022-4212
Gentlemen:
The undersigned (the "Subscriber") hereby acknowledges having received the
current prospectus (the "Prospectus") dated [ ], 1998 and annual report as
of December 31, 1997 of W.P. Stewart & Co. Growth Fund, Inc., a corporation
organized under the laws of the State of Maryland (the "Fund").
Subscription Commitment
The Subscriber hereby subscribes for as many shares of the common stock of
the Fund, par value $0.001 (the "Shares"), as may be purchased including
fractional shares at the net asset value per Share (as set forth in the
Prospectus) next computed after receipt prior to the close of business at the
New York Stock Exchange (normally 4:00 PM) of this Subscription Agreement and
payment from the Subscriber for the amount set forth in the accompanying
Subscriber Information Form completed and signed by the Subscriber (which
shall be considered an integral part of this Subscription Agreement). This
Subscription Agreement and the Subscriber Information From need be submitted
only by new investors.
The Subscriber understands that this subscription is not binding on the Fund
until accepted by the Fund, and may be rejected by the Fund in its absolute
discretion. If so rejected, the Fund shall return to the Subscriber, without
interest or deduction, any payment tendered by the Subscriber, and the Fund
and the Subscriber shall have no further obligation to each other hereunder.
Unless and until rejected by the Fund this subscription shall be irrevocable
by the Subscriber.
Representations, Warranties and Covenants
To induce the Fund to accept this subscription, the Subscriber hereby makes
the following representations, warranties and covenants to the Fund:
(a) The information set forth in the accompanying Subscriber Information
Form is accurate and complete as of the date hereof, and the Subscriber
will promptly notify the Fund of any change in such information. The
Subscriber consents to the disclosure of any such information, and any
other information furnished to the Fund, to any governmental authority,
self-regulatory organization or, to the extent required by law, to any
other person.
(b) In deciding whether to invest in the Fund, the Subscriber has not
relied or acted on the basis of any representations or other information
purported to be given on behalf of the Fund or the investment adviser of
the Fund except as set forth in the Prospectus, the Fund's Statement of
Additional Information or the Fund's Registration Statement on Form N-1A
(it being understood that no person has been authorized by the Fund or the
Fund's investment adviser to furnish any such representations or other
information).
S-6
<PAGE>
(c) The Subscriber has the authority and legal capacity to execute,
deliver and perform this Subscription Agreement and to purchase and hold
Shares.
(d) If the Subscriber is, or is acting on behalf of, an employee benefit
plan (a "Plan") which is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"): (i) the Plan, and any fiduciaries
responsible for the Plan's investments, are aware of and understand the
Fund's investment objective, policies and methods and the decision to
invest the Plan's assets in the Fund was made with appropriate
consideration of relevant investment factors with regard to the Plan
including the diversification requirements of Section 404(a)(1)(c)(3) of
ERISA; (ii) the decision to invest the Plan's assets in the Fund is a
prudent one and is consistent with the responsibilities imposed upon the
Plan's fiduciaries with regard to their investment decisions under ERISA;
(iii) the fiduciary or other person signing this Subscription Agreement is
independent of the Fund and the investment adviser of the Fund; and (iv)
this subscription and the investment contemplated hereby are in accordance
with all requirements applicable to the Plan under its governing
instruments and under ERISA.
Indemnification
The Subscriber agrees that the subscription made hereby may be accepted in
reliance on the representations, warranties, agreements, covenants and
confirmations set out above. The Subscriber agrees to indemnify and hold
harmless the Fund and the Fund's investment adviser (including for this
purpose their respective shareholders, members, directors, managers, officers
and employees, and each person who controls any of them within the meaning of
Section 20 of the Securities Exchange Act of 1934, as amended) from and
against any and all loss, damage, liability or expense, including reasonable
costs and attorneys' fees and disbursements, which the Fund, such adviser or
such persons may incur by reason of, or in connection with, any representation
or warranty made herein (or in the accompanying Subscriber Information Form)
not having been true when made, any misrepresentation made by the Subscriber
or any failure by the Subscriber to fulfill any of the covenants or agreements
set forth herein, in the Subscriber Information Form or in any other document
provided by the Subscriber to the Fund.
Miscellaneous
(a) The Subscriber agrees that neither this Subscription Agreement, nor any
of the Subscriber's rights or interest herein or hereunder, is transferable or
assignable by the Subscriber, and further agrees that the transfer or
assignment of any Shares acquired pursuant hereto shall be made only in
accordance with the provisions hereof and all applicable laws.
(b) The Subscriber agrees that, except as permitted by applicable law, it
may not cancel, terminate or revoke this Subscription Agreement or any
agreement of the Subscriber made hereunder, and that this Subscription
Agreement shall survive the death or legal disability of the Subscriber and
shall be binding upon the Subscriber's heirs, executors, administrators,
successors and assigns.
(c) All of the representations, warranties, covenants, agreements and
confirmations set out above and in the Subscriber Information Form shall
survive the acceptance of the subscription made herein and the issuance of any
Shares.
(d) This Subscription Agreement together with the Subscriber Information
Form constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof and may be amended only by a writing executed by
both parties.
S-7
<PAGE>
(e) Within ten days after receipt of a written request therefor from the
Fund, the Subscriber agrees to provide such information and to execute and
deliver such documents as the Fund may deem reasonably necessary to comply
with any and all laws and ordinances to which the Fund is or may be subject.
Notices
Any notice required or permitted to be given to the Subscriber in relation
to the Fund shall be sent to the address specified in Item 1 of the Subscriber
Information Form accompanying this Subscription Agreement or to such other
address as the Subscriber designates by written notice received by the Fund.
Governing Law
This Subscription Agreement shall be governed by the laws of the State of
New York without regard to the conflicts of law provisions thereof.
Dated: ________________________, 199 Very truly yours,
_____________________________________
Name of Subscriber
_____________________________________
Signature
_____________________________________
Name and title or representative
capacity,
if applicable
* * * * *
The foregoing is hereby accepted, subject to the conditions set forth
herein.
Dated: ________________________, 199 W.P. Stewart & Co. Growth Fund, Inc.
By: _________________________________
S-8
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
--------------
W.P. STEWART & CO. GROWTH FUND, INC.
--------------
Investment Adviser
W.P. STEWART & CO., INC.
527 MADISON AVENUE
NEW YORK, NEW YORK 10022
--------------
This Statement of Additional Information provides information about W.P.
Stewart & Co. Growth Fund, Inc., a non-diversified mutual fund, in addition to
the information contained in the Prospectus of the Fund dated [ ], 1998.
Please retain this document for future reference.
This Statement of Additional Information is not a prospectus. It relates to
and should be read in conjunction with the Prospectus of the Fund. You may
obtain a copy of the Prospectus by writing or calling the Fund. Contact
information is located on page 14.
--------------
[ ], 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
STATEMENT OF CROSS-REFERENCED
ADDITIONAL TO CAPTIONS IN THE
INFORMATION PROSPECTUS
PAGE PAGE
------------ ------------------
<S> <C> <C>
ORGANIZATION OF THE FUND....................... 3 8
INVESTMENT OBJECTIVE, POLICIES AND
RESTRICTIONS.................................. 3 8
Investment Objective and Methods............. 3 8
Portfolio Turnover........................... 4 --
Fundamental Investment Policies.............. 5 10
Non-Fundamental Investment Policies.......... 6 --
MANAGEMENT OF THE FUND......................... 6 11
INVESTMENT ADVISORY AND OTHER SERVICES......... 7 11
Potential Conflicts of Interest.............. 8 12
Duty of Care................................. 9 --
BROKERAGE ALLOCATION........................... 9 12
CUSTODIAN, ADMINISTRATOR AND SHAREHOLDER
SERVICING AGENT............................... 10 13
INDEPENDENT AUDITORS........................... 11 18
DISTRIBUTION OF THE FUND'S SHARES.............. 11 --
COMPUTATION OF NET ASSET VALUE................. 11 15
PURCHASE OF SHARES............................. 11 15
REDEMPTIONS.................................... 12 16
TAX STATUS..................................... 12 17
ERISA CONSIDERATIONS........................... 13 --
FINANCIAL STATEMENTS........................... 14 --
CONTACT INFORMATION............................ 14 18
</TABLE>
2
<PAGE>
ORGANIZATION OF THE FUND
W.P. Stewart & Co. Growth Fund, Inc. (the "Fund") is a corporation which was
organized under Maryland law on September 23, 1993. Technically the Fund is a
registered open-end, non-diversified, management investment company (commonly
known as a mutual fund). The Fund commenced operations on February 28, 1994.
W.P. Stewart & Co., Inc., a registered investment adviser (the "Adviser"), is
the Fund's investment adviser. You may purchase shares of the Fund, par value
$0.001 per share ("Shares"), in the manner described in the Fund's prospectus
dated [ ], 1998 (the "Prospectus").
Pursuant to the laws of Maryland, the Fund's jurisdiction of incorporation,
the Board of Directors of the Fund has adopted By-Laws of the Fund that do not
require annual meetings of Fund shareholders. The absence of a requirement
that the Fund hold annual meetings of the Fund's shareholders reduces Fund
expenses. Meetings of shareholders will be held when required by the
Investment Company Act of 1940, as amended (the "Act") or Maryland law or when
called by the Chairman of the Board of Directors, the President or
shareholders owning 10% of outstanding Fund Shares.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVE AND METHODS
The Fund's principal investment objective is to earn capital gains for
shareholders. The Fund seeks to achieve its principal investment objective by
investing primarily in common stocks listed on the New York Stock Exchange,
Inc. (the "New York Stock Exchange"). There can be no assurance that the Fund
will achieve its principal investment objective. See "Investment Objective,
Methods and Policies" in the Prospectus.
The Fund may invest in the following:
Money Market Instruments. For temporary defensive purposes or in order to
earn a return on available cash balances pending investment or reinvestment,
the Fund may invest its assets in interest-bearing accounts maintained with
financial institutions, in short-term debt securities of United States
companies or in debt securities of the United States government or its
agencies or instrumentalities, as well as in other money market instruments.
Such money market instruments include, but are not limited to, negotiable or
non-negotiable short-term deposits with United States banks, high quality
commercial paper and repurchase agreements maturing within seven days with
domestic dealers, banks and other financial institutions deemed to be
creditworthy by the Adviser. Short-term debt securities and commercial paper
generally are of high quality.
Repurchase Agreements. A repurchase agreement customarily requires the
seller to agree to repurchase the securities from the Fund at a mutually
agreed 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 market rate of interest 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. However, if the proceeds from any sale upon default in the
obligation to repurchase is less than the repurchase price, the Fund would
suffer a loss. In the event of a default, the Fund might incur costs and
encounter delays in liquidating collateral.
Foreign Investments. The Fund may invest in stocks issued by non-U.S.
companies. Such investments may be made through the purchase of American
Depositary Receipts ("ADRs") or directly in such foreign securities.
3
<PAGE>
ADRs represent an investment in shares of non-U.S. companies but are
denominated in U.S. dollars and usually are listed on a U.S. stock exchange or
traded through NASDAQ. Investments in ADRs involve certain risks that
investments directly in U.S. stocks do not. Because the underlying security
represented by an ADR is normally denominated in a currency other than the
U.S. dollar, the value of the ADR as measured in U.S. dollars will be affected
favorably or unfavorably by movements in currency exchange rates. This may
occur even though the price of the underlying security in the foreign currency
in which the security trades directly does not vary. Dividends will normally
be declared in the currency in which the underlying security is denominated.
The amount of dividends received by the holder of an ADR as measured in U.S.
dollars will be affected favorably or unfavorably by movements in currency
exchange rates because the dividend will normally be converted into U.S.
dollars before payment. Also, dividends declared on the underlying investment
represented by an ADR generally will be subject to foreign withholding taxes.
Investments directly in the securities of foreign companies present special
risks and considerations not typically associated with investing in the United
States in U.S. securities and ADRs. In addition to the exchange rate risks and
withholding tax issues described above for ADRs, investments directly in
foreign securities may be subject to withholding taxes on capital gains. Other
risks and considerations can include political and economic instability,
different accounting and financial reporting standards, less available public
information regarding companies, exchange control and capital flow regulations
and different tax treatment. The securities markets on which such foreign
securities trade may be less liquid and settlement delays may be experienced,
resulting in losses to the Fund and periods when such assets are unavailable
to pay redemptions.
The Fund does not intend to enter into any type of transaction to hedge
currency fluctuations.
Lending Portfolio Securities. 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
may at any time demand 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 intends to limit its securities lending activities
so that no more than 5% of the value of the Fund's total assets will be
represented by securities loaned. The Fund does not currently intend to lend
securities.
PORTFOLIO TURNOVER
Although the Fund will not make a practice of short-term trading, purchases
and sales of securities will be made whenever appropriate, in the Adviser's
view, to achieve the principal objective of the Fund to provide capital gains.
The rate of portfolio turnover is calculated by dividing the lesser of the
cost of purchases or the proceeds from sales of portfolio securities
(excluding short-term United States government obligations and other short-
term investments) for the particular fiscal year by the monthly average of the
value of the portfolio securities (excluding short-term United States
government obligations and short-term investments) owned by the Fund during
the particular fiscal year. The Fund's rate of portfolio turnover for the
fiscal years ended December 31, 1997, 1996 and 1995 was 79.0%, 76.0% and
75.7%, respectively. The rate of portfolio turnover is not a limiting factor
when the Adviser deems portfolio changes appropriate to achieve the Fund's
stated objective.
4
<PAGE>
FUNDAMENTAL INVESTMENT POLICIES
The Fund has adopted certain fundamental investment policies which can be
changed only with the approval of shareholders holding a majority of the total
number of outstanding Shares. As defined in the Act, this means the lesser of
(a) 67% or more of the Shares of the Fund at a meeting where more than 50% of
the outstanding Shares is present in person or by proxy or (b) more than 50%
of the outstanding Shares of the Fund.
The following is a complete list of the Fund's fundamental investment
policies:
(1) The Fund will not make short sales of securities, invest in warrants
or put or call options (or combinations thereof) or purchase any securities
on margin, except for short-term credits necessary for clearance of
portfolio transactions.
(2) The Fund will not issue senior securities;
(3) The Fund may borrow money for investment purposes in amounts up to 33
1/3% of its total assets (including the amount borrowed) and the Fund may
also borrow up to 5% of its total assets (not including the amount
borrowed) for temporary or emergency purposes.
(4) The Fund will not underwrite securities issued by others except to
the extent the Fund may be deemed to be an underwriter, under Federal
securities laws, in connection with the sale of its portfolio securities.
(5) The Fund will not invest more than 5% of the value of its total
assets in securities which cannot be readily resold to the public because
of legal or contractual restrictions or because there are no market
quotations readily available or in other "illiquid" securities (including
non-negotiable deposits with banks and repurchase agreements of a duration
of more than seven days). For purposes of this policy, illiquid securities
do not include securities eligible for resale pursuant to Rule 144A under
the Securities Act of 1933 that have been determined to be liquid by the
Fund's Board of Directors based upon the trading markets for such
securities.
(6) The Fund will not invest more than 5% of the value of its total
assets in securities of companies which, including their predecessors, have
a record of less than three years' continuous operation.
(7) The Fund will not invest more than 25% of the value of its total
assets in any one industry or group of related industries.
(8) The Fund will not invest in real estate, real estate limited
partnerships or real estate mortgage loans, although the Fund may invest in
marketable securities which are secured by real estate and marketable
securities of companies which invest or deal in real estate or real estate
mortgage loans.
(9) The Fund will not engage in the purchase or sale of commodities or
commodity futures contracts or invest in oil, gas or other mineral
exploration or development programs, although the Fund may invest in
securities issued by companies that engage in such activities.
(10) The Fund will not make loans, except that this restriction shall not
prohibit (1) the purchase of publicly distributed debt securities in
accordance with the Fund's investment objectives and policies, (2) the
lending of portfolio securities and (3) entering into repurchase
agreements.
If a percentage restriction is satisfied at the time of investment, a
subsequent increase or decrease in the percentage beyond the specified limit
resulting from a change in value or net assets will not be considered a
violation of the foregoing restrictions. Whenever any investment policy or
investment restriction states a maximum percentage of the Fund's assets which
may be invested in any security or other property, it is intended
5
<PAGE>
that such maximum percentage limitation be determined immediately after and as
a result of the acquisition of such security or property.
NON-FUNDAMENTAL INVESTMENT POLICIES
The Fund does not intend to invest in the securities of other investment
companies.
MANAGEMENT OF THE FUND
The following table sets forth the principal occupation or employment of the
members of the Board of Directors and principal officers of the Fund.
<TABLE>
<CAPTION>
POSITION HELD WITH PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS+ THE FUND DURING PAST FIVE (5) YEARS
---------------------- ------------------ --------------------------
<C> <C> <S>
William P. Stewart, Jr. Director Director, Chief Executive
(60)*.................... Officer and Chairman of the
Board of the Adviser. Mr.
Stewart was the founder of
the Adviser and continues to
be a portfolio manager.
Marilyn G. Breslow (54)*. President Director and portfolio man-
ager with the Adviser since
1990. Ms. Breslow has served
as portfolio manager of the
Fund since mid-1997.
Robert L. Schwartz (64)*. Treasurer, Secretary Director and Vice Chairman of
and the Adviser. Mr. Schwartz has
Director been a portfolio manager with
the Adviser since 1981.
Antoine Bernheim (45)*... Director Mr. Bernheim is President of
405 Park Avenue, Suite Dome Capital Management, Inc.
500 and President of The U.S.
New York, New York 10022 Offshore Funds Directory Inc.
June Eichbaum (48)....... Director Ms. Eichbaum has since 1992
570 Lexington Avenue been a principal of Major,
New York, New York 10022 Hagan & Africa (New York)
Inc. (an executive search
firm).
William Talcott May (36). Director Mr. May has since 1988 held
575 Madison Avenue various officerships and di-
New York, New York 10022 rectorships in May family
controlled companies engaged
in the real estate brokerage
and residential property man-
agement business.
John C. Russell (63)*.... Vice President Director of the Adviser since
1996; General Counsel of the
Adviser 1996-1997; Chief Op-
erating Officer of the Ad-
viser since 1997; Partner of
Kroll & Tract (a law firm)
from 1994 through 1996; prior
thereto engaged in practice
of law in New York.
Lisa D. Levey (41)*...... Assistant Secretary General Counsel and Assistant
Secretary of the Adviser
since 1997. From 1991 through
1996, Ms. Levey served as
General Counsel and Secretary
of Danielson Holding Corpora-
tion (a publicly traded fi-
nancial services holding com-
pany).
</TABLE>
- --------
* An "interested person" of the Fund as defined in the Act.
+ Unless otherwise indicated, the address of each of the members of the Board
of Directors and principal officers of the Fund is 527 Madison Avenue, New
York, New York 10022.
6
<PAGE>
The Fund makes no payments to any of its officers and employees for services
and the Fund does not pay any retirement benefits. However, each of the Fund's
Independent Directors is to be paid by the Fund 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 (other than those attended by
telephone conference call). Each Director is reimbursed by the Fund for any
expenses he or she may incur by reason of attending such meetings or in
connection with services he or she may perform for the Fund. During the fiscal
year ended December 31, 1997, no fees were paid to the Independent Directors
by the Fund, although the Fund held three in-person meetings of the Board.
As of April 27, 1998, the Directors and officers of the Fund owned in the
aggregate 2,194.79 Shares (approximately 1% of the Shares outstanding). As of
the same date, no person owned of record or beneficially 5% or more of the
Shares outstanding.
INVESTMENT ADVISORY AND OTHER SERVICES
As described in the Fund's Prospectus, the Adviser is the Fund's investment
adviser pursuant to an agreement between the Adviser and the Fund (the
"Investment Advisory Services Agreement") and, as such, manages the Fund's
portfolio. The Adviser is a Delaware corporation which was incorporated in
1973. The Adviser is registered under the Investment Advisers Act of 1940 as
an investment adviser. Its business office is located at 527 Madison Avenue,
New York, New York 10022-4212, its telephone number is (212) 750-8585 and its
facsimile number is (212) 980-8039. William P. Stewart, Jr. may be deemed to
be a controlling person of the Adviser by virtue of his ownership interest in
the Adviser.
The persons named below are affiliated with the Fund and are also affiliated
persons of the Adviser. The capacity in which such persons are affiliated with
the Fund and the Adviser is also indicated.
<TABLE>
<CAPTION>
NAME OFFICE HELD WITH THE FUND OFFICE HELD WITH THE ADVISER
---- ------------------------- ----------------------------
<S> <C> <C>
William Director Director, Chief Executive Officer and
P. Chairman of the Board
Stewart,
Jr. .....
Marilyn
G.
Breslow.. President Director
John C.
Russell.. Vice President Director and Chief Operating Officer
Robert L.
Schwartz. Secretary, Treasurer and Director Director and Vice Chairman
Lisa D.
Levey.... Assistant Secretary General Counsel and Assistant Secretary
</TABLE>
Under the Investment Advisory Services Agreement, the Adviser is responsible
for the management of the Fund's portfolio and constantly reviews its holdings
in the light of its own research analyses and those of other relevant sources.
Reports of portfolio transactions are given regularly to the directors of the
Fund, who review the Fund's portfolio at meetings held at least four times a
year.
The Adviser receives quarterly advisory fees payable in advance as of the
first day of each calendar 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
calendar quarter (after giving effect to subscriptions and redemptions
effective on such date). The Adviser has voluntarily agreed to waive fees
and/or reimburse expenses of the Fund so that total Fund operating expenses do
not exceed 2.5% of the average net assets of the Fund up to $30 million, 2% of
the average net assets of the Fund of the next $70 million, and 1.5% of the
average net assets of the Fund in excess of $100 million. Such voluntary
waiver and/or expense reimbursement is not required by the Investment Advisory
Services Agreement and may be discontinued at any time.
7
<PAGE>
For the fiscal year ended December 31, 1997, 1996 and 1995, the Adviser
earned total advisory fees of $450,518, $253,000 and $121,866, respectively.
After voluntary fee waiver and/or expense reimbursement, for the fiscal year
ended December 31, 1997, 1996 and 1995, the Fund paid the Adviser $404,915,
$210,000 and $36,141.
In addition to the quarterly advisory fee, the Fund is obligated to pay all
costs and expenses directly related to investment transactions made and
positions held for the Fund's account, including brokerage commissions,
custodial fees and administrative fees. Also included are the fees and
expenses of any accountants or attorneys engaged on behalf of the Fund, the
costs and expenses of holding any meetings of shareholders of the Fund and
such other types of expenses as may be approved from time to time by the Board
of Directors, other than those required to be borne by the Adviser. Except for
the foregoing, the Adviser pays all of its own operating and overhead costs
and those of the Fund, including costs incurred by the Adviser to provide
office space to the Fund or which it may incur in the course of providing
bookkeeping and other services to the Fund. From time to time the Adviser may
elect to pay fees and expenses on behalf of the Fund, although it is not
legally obligated to do so.
The original Investment Advisory Services Agreement (the "Original Advisory
Agreement") between the Fund and the Adviser provides that it will continue in
effect after its initial two-year term (January 11, 1994 through January 11,
1996) only so long as its continuance has been specifically approved at least
annually in the manner required by the Act. There is some uncertainty as to
whether the continuation of the Original Advisory Agreement was properly
approved by the Board of Directors of the Fund on the expiration of the
Original Advisory Agreement in 1996. If the Original Advisory Agreement was
not continued by the Board in 1996, it would have lapsed as a technical
matter. If this in fact occurred, some part of the fees paid to the Adviser
since January 1996 might be recoverable by the Fund. In addition, the Fund
would not now have a valid investment advisory contract with the Adviser.
Because of the importance of removing any doubt about the status of the
Original Advisory Agreement, at an in-person meeting of the Board of Directors
held on March 25, 1998, the Directors approved, subject to shareholder
approval, a new Investment Advisory Services Agreement between the Fund and
the Adviser (the "New Advisory Agreement"). The Board also ratified the
payment of advisory fees by the Fund to the Adviser for the period from
January 12, 1996 through the date of approval of the New Advisory Agreement by
the Fund's shareholders. The Directors voted to submit to the shareholders of
the Fund for their approval the New Advisory Agreement and ratification of the
payment of advisory fees. These matters are the subject of a proxy statement
to be mailed to shareholders in the near future.
POTENTIAL CONFLICTS OF INTEREST
The Adviser manages and expects to continue to manage other investment and
trading accounts with objectives similar in whole or in part to those of the
Fund, including other collective investment vehicles which may be managed or
sponsored by the Adviser and in which the Adviser may have an equity interest.
The Investment Advisory Services Agreement requires that the Adviser act in
a manner that it considers fair, reasonable and equitable in allocating
investment opportunities to the Fund, but does not otherwise impose any
specific obligations or requirements concerning the allocation of time, effort
or investment opportunities to the Fund or any restrictions on the nature or
timing of investments for the account of the Fund and for the Adviser's own
account or for other accounts which the Adviser may manage. The Adviser is not
obligated to devote any specific amount of time to the affairs of the Fund and
is not required to give exclusivity or priority to the Fund in the event of
limited investment opportunities.
8
<PAGE>
When the Adviser determines that it would be appropriate for the Fund and
one or more of its other investment accounts to participate in an investment
opportunity, the Adviser will seek to execute orders for all of the
participating investment accounts, including the Fund, on an equitable basis.
If the Adviser has determined to invest at the same time for more than one of
the investment accounts, the Adviser may place combined orders for all such
accounts simultaneously and if all such orders are not filled at the same
price, it may average the prices paid. Similarly, if an order on behalf of
more than one account cannot be fully executed under prevailing market
conditions, the Adviser may allocate the investments among the different
accounts on a basis that it considers equitable. Situations may occur where
the Fund could be disadvantaged because of the investment activities conducted
by the Adviser for other investment accounts.
The Adviser selects the brokers to be used for the Fund's transactions, and
the Adviser's affiliate is permitted to act as broker for the Fund. By reason
of the brokerage fees the Adviser's affiliate earn by acting as broker to the
Fund, the Adviser has an incentive to select its affiliate as broker for the
Fund. See "Brokerage Allocation" below.
DUTY OF CARE
The Articles of Incorporation of the Fund provide that no director or
officer of the Fund shall have any liability to the Fund or its shareholders
for damages in the absence of malfeasance, bad faith, gross negligence or
recklessness or as otherwise required by the Maryland General Corporation Law.
The Articles of Incorporation and By-Laws of the Fund contain provisions for
the indemnification by the Fund of its directors and officers to the fullest
extent permitted by law.
The Investment Advisory Services Agreement provides that the Adviser shall
not be liable to the Fund or its shareholders for any loss or damage
occasioned by any acts or omissions in the performance of its services as
Adviser in the absence of misconduct, recklessness or gross negligence or as
otherwise required by law.
BROKERAGE ALLOCATION
The Adviser is responsible for the placement of the portfolio transactions
of the Fund and the negotiation of any commissions paid on such transactions.
Portfolio securities transactions generally will be effected through brokers
on securities exchanges or directly with the issuer or an underwriter or
market maker for the securities. Purchases and sales of portfolio securities
through brokers involve a commission to the broker. Purchases and sales of
portfolio securities with dealers serving as market makers include the spread
between the bid and the asked prices.
As described in "Investment Objective, Methods and Policies--Investment
Objective and Methods" in the Prospectus, the Fund is non-diversified, and
tends to take larger positions in fewer different portfolio companies than
most other mutual funds. In addition, as described in "Management--The
Investment Adviser--Potential Conflicts of Interest" in the Prospectus, the
Adviser may select the same investments for the Fund as for its other managed
accounts, resulting in a large volume of trades on the same day in any
particular security. In an effort to obtain best execution for its clients in
the aggregate, including the Fund, the Adviser will take into account such
factors as price (including the applicable dealer spread or commission, if
any), size of order, difficulty of execution, operational facilities of the
firm involved and the firm's risk in positioning a block of securities. In
light of these considerations, brokerage transactions normally will be
effected through the Adviser's affiliate, W.P. Stewart Securities Limited. The
Adviser believes that this practice results in a better overall price
9
<PAGE>
and execution to its clients as a whole, although the Fund may pay commissions
at a rate higher than those charged by other brokers. The Adviser's affiliate
will conduct any brokerage services it performs for the Fund in compliance
with the requirements of Section 17(e)(2) of the Act, and the Board of
Directors of the Fund has adopted procedures designed to ensure such
compliance.
As broker, the Adviser's affiliate will charge the Fund commissions not
exceeding the rates charged to the Adviser's institutional customers for
similar trades at the time of execution. The Fund has effected all of its
trades through the Adviser, which was registered as a broker-dealer until July
1997, or through W.P. Stewart Securities Limited, the Adviser's affiliate,
which was formed and registered as a broker-dealer at that time. For the
fiscal years ended December 31, 1997, 1996 and 1995, the Fund paid the Adviser
or its affiliate brokerage commissions of $83,484, $53,260 and $29,207,
respectively. The increase in commissions paid from fiscal year 1995 was due
to the fact that the Fund's net assets increased significantly in each of
fiscal years 1996 and 1997 in large part due to new subscription payments
which needed to be invested.
Any brokerage transactions not executed by the Adviser's affiliate (which
the Adviser believes will be on an exception only basis) will be executed by
other brokers and dealers selected by the Adviser on the basis of a variety of
factors, including the following: the ability to effect prompt and reliable
executions at favorable prices; the operational efficiency with which
transactions are effected; the financial strength, integrity and stability of
the broker; the quality, comprehensiveness and frequency of available research
and related services considered to be of value; and the competitiveness of
commission rates in comparison with other brokers satisfying the Adviser's
other selection criteria. Research and related services furnished by brokers
may include written information and analyses concerning specific securities,
companies or sectors; market, financial and economic studies and forecasts;
statistics and pricing or appraisal services, as well as discussions, with
research personnel, along with hardware, software, data bases and other news,
technical and telecommunications services and equipment utilized in the
investment management process. Subject to seeking best execution, the Adviser
also may consider referrals of potential investors in the Fund as a factor in
the selection of brokers. The Adviser is authorized to pay higher commissions
to brokerage firms that provide it with such investment and research
information if the Adviser determines such prices or commissions are
reasonable in relation to the overall services provided. Research and related
services provided by broker-dealers used by the Fund may be utilized by the
Adviser or its affiliates in connection with its investment services for other
accounts and, likewise, research and related services provided by broker-
dealers used for transactions of other accounts may be utilized by the Adviser
in performing its services for the Fund. The Adviser will make appropriate
allocations so that it bears the cost of any such services used for purposes
other than for investment management, for example, for administration.
CUSTODIAN, ADMINISTRATOR AND SHAREHOLDER SERVICING AGENT
The Fund's securities and other assets will normally be held in the custody
of State Street Bank and Trust Company, which has its principal place of
business at 1776 Heritage Drive, North Quincy, Massachusetts 02171 ("State
Street"). Under the Custodian Contract, State Street is reimbursed by the Fund
for its disbursements, expenses and charges incurred in connection with the
foregoing services and receives a fee from the Fund based on the average
assets of the Fund, subject to a minimum annual fee of $36,000.
State Street also provides certain administrative services to the Fund
pursuant to an Administration Agreement, including overseeing the
determination of the net asset value of the Fund, maintaining certain books
10
<PAGE>
and records of the Fund, and preparing and/or filing periodic reports,
advertising materials, supplements, proxy materials and other filings. In
consideration for these services, State Street is paid a fee based on a
percentage of the average assets of the Fund, subject to a minimum annual fee
of $65,000.
State Street also provides certain shareholder services to the Fund pursuant
to a Transfer Agency and Service Agreement, including disbursing dividends and
distributions, disbursing redemption proceeds, processing subscription
applications and serving as transfer agent and registrar. In consideration for
these services, State Street is paid a monthly fee of $2,500 ($30,000
annually).
INDEPENDENT AUDITORS
Lopez Edwards Frank & Co., LLP, 1 Penn Plaza, New York, New York 10119-0141,
serve as the independent auditors of the Fund. They audit the Fund's annual
financial statements and render reports thereon, which are included in the
Annual Report to Shareholders. In addition, the Fund's auditors review certain
filings of the Fund with the Securities and Exchange Commission and prepare
the Fund's federal and state corporation tax returns.
DISTRIBUTION OF THE FUND'S SHARES
The Fund is offering its Shares directly and has no underwriter, except that
the Adviser will act as placement agent where required by local law. The
Adviser may recommend an investment in the Fund but receives no fee
specifically for doing so.
COMPUTATION OF NET ASSET VALUE
Shares of the Fund are sold at net asset value. For a discussion of how net
asset value is determined, see "Net Asset Value Calculation" in the
Prospectus. The Fund computes its net asset value once daily on days the New
York Stock Exchange is open for trading. The Exchange is closed on the
following days: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Using the Fund's net asset value at December 31, 1997, the
maximum offering price of the Fund's shares was as follows:
<TABLE>
<S> <C>
Net Assets...................................................... $36,201,406
Number of Shares Outstanding.................................... 214,581
Offering Price per Share........................................ $168.71
</TABLE>
PURCHASE OF SHARES
The methods of buying Shares are described in the Prospectus. There are no
sales charges.
The Fund may accept securities in payment of Shares provided such
securities:
(a) meet the investment objective and policies of the Fund;
(b) are acquired by the Fund for investment and not for resale;
(c) are liquid securities which are not restricted as to transfer either by
law or liquidity of market; and
11
<PAGE>
(d) have a value which is readily ascertainable (and not established only by
valuation procedures) as evidenced by a listing on the American Stock
Exchange, the New York Stock Exchange or NASDAQ.
REDEMPTIONS
The Fund may require the redemption of your Shares in full (less a 0.5%
redemption fee) if (i) the net asset value of your Shares is reduced to less
than $10,000 due to redemptions made by you, or (ii) the Fund determines or
has reason to believe that ownership of such Shares by such shareholder will
cause the Fund to be in violation of, or require registration of any such
Shares or subject the Fund to additional registration or regulation under, the
securities laws of any relevant jurisdiction. Any such mandatory redemption
shall be effective as of the date designated by the Fund in a notice to the
shareholder (which shall be not less than 10 calendar days after delivery or
mailing of the notice of mandatory redemption).
TAX STATUS
The Prospectus of the Fund contains information about the federal income tax
status of the Fund and the federal income tax consequences of ownership of
Shares. Certain supplementary information is presented below.
The Fund has elected to qualify and intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code.
This relieves the Fund (but not its shareholders) from paying federal income
tax on income which is distributed to shareholders and permits net capital
gains of the Fund (i.e., the excess of net capital gains from the sale of
assets held for more than 12 months over net short-term capital losses) to be
treated as capital gains of the shareholders, regardless of how long
shareholders have held their Shares in the Fund.
Qualification as a regulated investment company requires, among other
things, that (a) at least 90% of the Fund's annual gross income (without
reduction for losses from the sale or other disposition of securities) be
derived from interest, dividends, payments with respect to securities loans,
and gains from the sale or other disposition of securities or options thereon
or foreign currencies, or other income derived with respect to its business of
investing in such securities or currencies; (b) the Fund diversify its
holdings so that, at the end of each quarter of the taxable year (i) at least
50% of the market value of the Fund's assets is represented by cash, U.S.
Government securities and other securities limited in respect of any one
issuer to an amount not greater than 5% of the market value of the Fund's
assets and 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its assets is invested in the securities of
any one issuer (other than U.S. government securities); and (c) the Fund
distribute to its shareholders at least 90% of its net taxable investment
income (including short-term capital gains) other than long-term capital gains
and 90% of its net tax exempt interest income in each year.
Any gain realized by a shareholder on the redemption or other disposition of
Shares by a shareholder who is not a dealer in securities generally will be
treated as capital gain. Any such capital gain derived by an individual will
be subject to tax at the maximum rate of 28% with respect to Shares held for
more than 12 months but not more than 18 months, and 20% with respect to
Shares held for more than 18 months. The maximum long-term capital gains rate
for corporate shareholders is the same as the maximum tax rate for ordinary
income, which currently is 39.6%.
12
<PAGE>
Any capital loss realized by a shareholder on the redemption or other
disposition of Shares will be treated as long-term capital loss if such Shares
were held for more than one year. Any loss realized by a shareholder on the
redemption or other disposition of Shares which he has held for six months or
less will be treated for federal income tax purposes as a long-term capital
loss to the extent of any capital gains distributions received by the
shareholder with respect to such Shares; any capital loss in excess of such
distribution will be treated as short-term capital loss. Any loss realized on
a sale or exchange of Shares will be disallowed to the extent that the Shares
disposed of are replaced (including, for example, by receipt of dividends paid
in Shares) within a 61-day period beginning 30 days before and ending 30 days
after the date the Shares are disposed of. In such a case, a shareholder will
adjust the basis of the Shares acquired to reflect the disallowed loss.
Since, at the time of an investor's purchase of Shares, a portion of the per
share net asset value by which the purchase price is determined may be
represented by realized or unrealized appreciation in the Fund's portfolio or
undistributed income of the Fund, subsequent distributions (or a portion
thereof) on such Shares may in reality represent a return of his capital.
However, such a subsequent distribution would be taxable to such investor even
if the net asset value of his Shares is, as a result of the distributions,
reduced below his cost for such Shares. Prior to purchasing Shares of the
Fund, an investor should carefully consider such tax liability which he might
incur by reason of any subsequent distributions of net investment income and
capital gains.
The Fund would be subject to a 4% non-deductible excise tax on certain
amounts if they are not distributed (or not treated as having been
distributed) on a timely basis in accordance with a calendar year distribution
requirement. The Fund intends to distribute to shareholders each year an
amount sufficient to avoid the imposition of such excise tax.
Dividends and distributions generally are taxable to shareholders in the
year in which they are received or accrued. Dividends declared in October,
November and December payable to shareholders of record on a specified date in
October, November and December and paid in the following January will be
treated as having been paid by the Fund and received by shareholders in such
prior year. Under this rule, a shareholder may be taxed in one year on
dividends or distributions actually received in January of the following year.
In addition to federal income taxes, shareholders of the Fund may be subject
to state, local or foreign taxes on distributions from the Fund and on
repurchases or redemptions of Shares. Shareholders should consult their tax
advisors as to the application of such taxes and as to the tax status of
distributions from the Fund and repurchases or redemptions of Shares in their
own states and localities. Non-United States shareholders, present in the
United States for substantial periods of time during a taxable year,
maintaining an office or "tax home" in the United States, or conducting
business in the United States with which their Shares may be "effectively
connected," should consult their tax advisors as to whether such presence or
such activities may subject them to United States tax as a United States
person or otherwise. Each shareholder who is not a United States person should
also consult his tax advisor regarding the federal, state, local and foreign
tax consequences of ownership of Shares of the Fund.
ERISA CONSIDERATIONS
Persons who are fiduciaries with respect to an employee benefit plan subject
to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including a qualified retirement plan, Keogh plan or other arrangement ("ERISA
Plan") should consider, among other things, the matters described below before
determining whether to invest in the Fund.
13
<PAGE>
ERISA imposes certain general and specific responsibilities on persons who
are fiduciaries with respect to an ERISA Plan, including prudence,
diversification, prohibited transaction and other standards. In determining
whether a particular investment is appropriate for an ERISA Plan, Department
of Labor regulations provide that a fiduciary of an ERISA Plan must give
appropriate consideration to, among other things, the role that the investment
plays in the ERISA Plan's portfolio, taking into consideration whether the
investment is designed reasonably to further the ERISA Plan's purposes, the
diversification of the portfolio, an examination of the risk and return
factors, the portfolio relative to the anticipated cash flow needs of the
ERISA Plan and the projected return of the total portfolio relative to the
ERISA Plan's funding objectives. Before investing the assets of an ERISA Plan
in the Fund, a fiduciary should determine whether such an investment is
consistent with its fiduciary responsibilities and the foregoing regulations.
As described in Department of Labor regulations, a fiduciary may need to take
other factors into consideration if the ERISA Plan permits participants to
direct the investment of their accounts and the Fund is offered as an
investment alternative under the ERISA Plan. If a fiduciary with respect to
any such ERISA Plan breaches his responsibilities with regard to selecting an
investment or an investment course of action for such ERISA Plan, the
fiduciary may be held personally liable for losses incurred by the ERISA Plan
as a result of such breach.
The provisions of ERISA are subject to extensive and continuing
administrative and judicial interpretation and review. The discussion of ERISA
contained in this Statement of Additional Information is, of necessity,
general and may be affected by future publication of regulations and rulings.
Potential investors should consult with their legal advisors regarding the
consequences under ERISA of the acquisition and ownership of Shares.
FINANCIAL STATEMENTS
The Fund will furnish to its shareholders annual reports containing
financial statements examined by the Fund's independent auditors as soon as
practicable after the end of the fiscal year of the Fund. The Fund will also
furnish quarterly reports reviewing the Fund's results for such quarter. The
Fund will furnish, without charge, a copy of its latest Annual Report to
Shareholders upon request.
The financial statements and the Report of the Fund's Independent
Accountants for the Fund's fiscal year ended December 31, 1997 is incorporated
into this Statement of Additional Information from the Fund's Annual Report to
Stockholders for the year ended December 31, 1997. The Fund's Annual Report to
Shareholders can be obtained free of charge upon request in writing or by
telephoning the Fund. See "Contact Information" below.
The financial statements of the Fund are included in the Annual Report to
Shareholders for the year ended December 31, 1997 and have been incorporated
herein by reference in reliance with respect to the Financial Statements, on
the report of Lopez Edwards Frank & Co., LLP, independent auditors, given on
the authority of that firm as experts in auditing and accounting.
CONTACT INFORMATION
For further information regarding the Fund or to request copies of the
Fund's Prospectus or Registration Statement free of charge, telephone or write
to W.P. Stewart & Co., Inc., 527 Madison Avenue, New York, New York 10022,
Telephone: 212-750-8585, Facsimile: 212-308-0626.
14
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Incorporated by reference to the Fund's Annual Report to Shareholders
for the period ended December 31, 1997, filed on February 27, 1998.
(b)Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
1 Amended Articles of Incorporation of the Fund*
2 Amended By-Laws of the Fund*
3 Not Applicable
4 Portions of Articles of Incorporation and By-Laws of the Fund defining
the rights of holders of shares in the Fund*
5 Investment Advisory Services Agreement between the Fund and the
Adviser*
6 Not Applicable
7 Not Applicable
8 Custodian Contract between the Fund and State Street Bank and Trust
Company*
9 Administration Agreement and Transfer Agency and Service Agreement,
each between the Fund and State Street Bank and Trust Company*
10 Opinion of Sutherland, Asbill & Brennan, former counsel for the Fund*
11 Consent of Lopez Edwards Frank & Co., LLP, independent auditors for
the Fund*
12 Not applicable
13 Subscription Agreement between the Fund and WPS&Co., N.V.*
14 Not Applicable
15 Not Applicable
16 Not Applicable
17 Financial Data Schedules*
18 Not Applicable
24 Power of Attorney*
</TABLE>
- --------
* Filed herewith.
C-1
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
As of the date hereof, the Fund is not controlled by any person other than
the directors of the Fund and the Adviser, as members of its Board of
Directors and investment adviser to the Fund, in their respective capacities
as such.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
(1)
TITLE OF (2)
CLASS NUMBER OF RECORD HOLDERS*
-------- -------------------------
<S> <C>
Common Stock 267
</TABLE>
--------
* As of April 27, 1998
ITEM 27. INDEMNIFICATION
Every person who is or was a director, officer or employee of the Fund has
the right to be indemnified to the fullest extent permitted by law for any
liabilities incurred and reasonable expenses of defending against claims or
threatened claims in connection with his office, except in cases of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
in the conduct of his office. See Article Ninth of the Articles of
Incorporation and Article 9 of the Amended By-Laws for a more complete
description of matters related to indemnification.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The Adviser has been engaged since 1973 in the business of providing
discretionary and non-discretionary investment advisory services and brokerage
services to various clients.
William P. Stewart, in addition to his activities with the Fund and the
Adviser, during the period since at least November 1991, has acted as
investment adviser and a member of the Supervisory Board of Directors of W.P.
Stewart Holdings N.V., an investment company organized and existing under the
laws of the Netherlands Antilles the address of which is Plaza Roi Katochi, 3
Kaya Flamboyan, Willemstad, Curacao, Netherlands Antilles.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not applicable
(b) Not applicable
C-2
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
<TABLE>
<CAPTION>
NAME OF
ACCOUNT, BOOK OR OTHER DOCUMENT PERSON MAINTAINING
------------------------------- ------------------
(NUMBERS REFER TO SUBPARAGRAPHS UNDER RULE 31A-1(B)
OF THE ACT)
<C> <S> <C>
(1) Journals (or other records or original entry) State Street Bank
containing an itemized daily record in detail and Trust Company
of all purchases and sales of securities, all
receipts and deliveries of securities, all
receipts and disbursements of cash and all
other debits and credits.
(2) General and auxiliary ledgers (or other State Street Bank
records) reflecting all asset, liability, and Trust Company
reserve, capital, income and expense accounts.
(3) Not applicable
(4) Corporate Charters, By-Laws and Minute Books The Adviser
(5) Record of each brokerage order given by or on State Street Bank
behalf of the Fund and Trust Company
(6) Record of all other portfolio purchases or State Street Bank
sales and Trust Company
(7) Record of Options (if any) and commitments State Street Bank
and Trust Company
(8) Trial balances State Street Bank
and Trust Company
(9) Brokerage Records The Adviser
and/or W.P.
Stewart
Securities
Limited
(10) Records of authorizations The Fund
(11) Advisory Material The Fund
All other records (if any) required to be The Fund
maintained by paragraph (a) of Rule 31a-1
</TABLE>
All records maintained by the Adviser or the Fund will be maintained at 527
Madison Avenue, New York, New York 10022.
All records maintained by W.P. Stewart Securities Limited will be maintained
at 129 Front Street, Fifth Floor, P.O. Box HM2905, Hamilton HM LX, Bermuda.
All records maintained by State Street Bank and Trust Company will be
maintained at 1776 Heritage Drive, North Quincy, Massachusetts 02171.
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
The Fund hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Fund's latest annual report to shareholders, upon
request and without charge.
C-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940 THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT
TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THERETO DULY AUTHORIZED, IN THE CITY OF NEW YORK, AND STATE OF NEW YORK ON THE
7TH DAY OF MAY, 1998.
W.P. Stewart & Co. Growth Fund, Inc.
*
By: _________________________________
Name: Marilyn G. Breslow
Title: President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE
* Director May 7, 1998
_________________________________
WILLIAM P. STEWART, JR.
* Director and
_____________________________________ President May 7, 1998
MARILYN G. BRESLOW
* Director, Treasurer
_____________________________________ and Secretary May 7, 1998
ROBERT L. SCHWARTZ
Director
* May 7, 1998
_____________________________________
ANTOINE BERNHEIM
Director
* May 7, 1998
_____________________________________
JUNE EICHBAUM
* Director
_____________________________________ May 7, 1998
WILLIAM TALCOTT MAY
/s/ Lisa D. Levey May 7, 1998
*By: ____________________________
Lisa D. Levey
Attorney-in-Fact
C-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1 Amended Articles of Incorporation of the Fund
2 Amended By-Laws of the Fund
4 Portions of Articles of Incorporation and By-Laws of the Fund
defining the rights of holders of shares in the Fund
5 Investment Advisory Services Agreement between the Fund and the
Adviser
8 Custodian Contract between the Fund and State Street Bank and
Trust Company
9 Administration Agreement and Transfer Agency and Service
Agreement, each between the Fund and State Street Bank and Trust
Company
10 Opinion of Sutherland, Asbill & Brennan, former counsel for the
Fund
11 Consent of Lopez Edwards Frank & Co., LLP, independent auditors
for the Fund
13 Subscription Agreement between the Fund and WPS & Co., N.V.
17 Financial Data Schedules
24 Power of Attorney
</TABLE>
C-5
<PAGE>
EXHIBIT 99.1
AMENDED ARTICLES OF INCORPORATION
OF
W.P. STEWART & CO. GROWTH FUND, INC.
FIRST: The undersigned, whose address is Sutherland, Asbill & Brennan,
1270 Avenue of the Americas, New York, NY 10020, being eighteen years of age or
older, does hereby form a corporation under the general laws of the State of
Maryland.
SECOND: The name of the corporation (hereinafter called the
"corporation") is W.P. Stewart & Co. Growth Fund, Inc.
THIRD: The purposes for which the corporation is formed are as follows:
(1) To conduct, operate and carry on the business of an open-end
investment company registered under the Investment Company Act of 1940, as
amended and the rules and regulations promulgated pursuant thereto (the "1940
Act") and to exercise all powers necessary and appropriate to the conduct of
such business.
(2) To subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute or otherwise
dispose of goods and commodities of every type and description, including
securities of every type and description,
<PAGE>
whether now in existence or hereafter created, and to exercise any and all
rights, powers and privileges of ownership or interest in respect thereof.
(3) To issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer and otherwise deal in shares of stock of
the corporation, to the full extent now or hereafter permitted by the laws of
the State of Maryland and by these Articles of Incorporation.
(4) To do all and everything necessary, suitable, convenient or proper
for the conduct, promotion and attainment of any of the business and purposes
herein specified, or which at any time may be incidental thereto or may appear
conducive to or expedient for the accomplishment of any of such business and
purposes, and which might be engaged in or carried on by a corporation
incorporated or organized under the Maryland General Corporation Law, and to
engage in any other activity permitted under the laws of the State of Maryland
and to have and exercise all of the powers conferred by the laws of the State of
Maryland upon corporations incorporated or organized under the Maryland General
Corporation Law.
The foregoing enumeration of specific purposes and powers shall not be
held to limit or restrict in any manner the purposes and powers of the
corporation, and the purposes and powers herein specified shall, except when
otherwise provided in this Article THIRD, be in no wise limited or restricted by
reference to, or inference from, the terms of any provision of this or any
other Article of these Articles of Incorporation.
-2-
<PAGE>
FOURTH: (1) The post office address of the principal office of the
corporation in the State of Maryland is c/o The Corporation Trust Incorporated,
32 South Street, Baltimore, Maryland 21202.
(2) The name of the resident agent of the corporation within the State
of Maryland is The Corporation Trust Incorporated, a corporation of the State of
Maryland, and the post office address of the resident agent is 32 South Street,
Baltimore, Maryland 21202.
FIFTH: (1) The total number of shares of stock which the corporation
has authority to issue is One Hundred Million, all of which are of a par value
of One-Thousandth of One Dollar ($0.001) each, and are designated as Common
Stock.
(2) The aggregate par value of all the authorized shares of Common
Stock is One Hundred Thousand Dollars ($100,000).
(3) The stock of the corporation and the holders thereof shall be
subject to the following provisions:
(a) The corporation may issue shares of its stock in fractional
denominations to the same extent as its whole shares, and shares in fractional
denominations shall be shares of stock having proportionately to the respective
fractions represented thereby all the rights of whole shares, including, without
limitation, the right to vote, the right to receive dividends and
-3-
<PAGE>
distributions, and the right to participate upon liquidation of the corporation,
but excluding the right to receive a stock certificate representing fractional
shares.
(b) The corporation, either directly or through an agent, may
purchase its shares out of funds legally available therefor, upon such terms and
conditions and for such consideration as the Board of Directors shall deem
advisable.
(c) In the absence of any specification as to the purpose for which
shares of stock of the corporation are redeemed or purchased by it, all shares
so redeemed or purchased shall be deemed to be "purchased for retirement" in the
sense contemplated by the laws of the State of Maryland, and the number of the
authorized shares of stock of the corporation shall not be reduced by the number
of any shares redeemed or purchased by it.
(d) Each holder of stock of the corporation, upon request to the
corporation (accompanied by surrender of the appropriate stock certificate or
certificates in proper form for transfer. if any certificates have been issued
for such shares), shall be entitled to require the corporation to redeem, to the
extent that the corporation may lawfully effect such redemption under the laws
of the State of Maryland, all or any part of the shares of stock standing in the
name of such holder on the books of the corporation, at a price per share equal
to the net asset value per share, determined in accordance with Article SIXTH
hereof, less any sales or redemption charge in such amounts, consistent with
disclosures made by the corporation as required by the 1940 Act, as may be fixed
from time to time by resolution of the Board of Directors of the corporation.
Payment of such price may be made in cash or, at the option of
-4-
<PAGE>
the corporation, wholly or partly in such portfolio securities of the
corporation as the corporation shall select.
(e)(i) If (A) after giving effect to a request for redemption by a
stockholder, the aggregate net asset value of such shareholder's remaining
shares will be less than Ten Thousand Dollars ($10,000), or such other amount as
the Board of Directors may specify from time to time; (B) ownership of shares by
a shareholder will cause the corporation to be in violation of, or require
registration of any such shares, or subject the corporation to additional
registration or regulation under, the securities laws of the United States or
any other relevant jurisdiction or the rules of any self-regulatory organization
applicable to any investment adviser engaged by the corporation; (C) any of the
representations and warranties made by a shareholder in connection with the
acquisition of any of its shares was not true when made or has ceased to be
true; or (D) it would not be in the best interest of the corporation, as
determined by the Board of Directors in its absolute discretion, for a
shareholder to continue ownership of shares, then the corporation shall be
entitled to redeem the shares of such stockholder, upon notice given in
accordance with subparagraph (iii) of this subparagraph (e), to the extent that
the corporation may lawfully effect such redemption under the laws of the State
of Maryland.
(ii) The price for shares acquired by the corporation pursuant to
subparagraph (i) of this subparagraph (e) shall be paid in cash in an amount as
set forth in subparagraph (d) of this paragraph (3).
-5-
<PAGE>
(iii) For any redemption under subparagraph (i) of this
subparagraph (e), notice shall be in writing personally delivered or deposited
in the mail at least ten (10) days (or such other number of days as may be
specified from time to time by the Board of Directors) prior to such redemption.
If mailed the notice shall be addressed to the stockholder at his post office
address as shown on the books of the corporation.
(f) Payment by the corporation for shares of stock of the corporation
surrendered to it for redemption or purchase shall be made by the corporation
out of the funds legally available therefor within seven days of surrender of
appropriate stock certificates in proper form for transfer, if any certificates
have been issued to represent such shares, or within seven days of the time the
redemption price of such shares is determined, provided that the corporation may
suspend the right of the holders of stock of the corporation to redeem shares of
stock and may postpone the right of such holders to receive payment for any
shares (i) for any period during which the New York Stock Exchange, Inc. is
closed other than customary weekend and holiday closings or during which trading
on the New York Stock Exchange, Inc is restricted, as determined by the rules
and regulations of the Securities and Exchange Commission or any successor
thereto; (ii) for any period during which any emergency, as determined by the
rules and regulations of the Securities and Exchange Commission or any successor
thereto, exists as a result of which disposal by the corporation of securities
owned by it is not reasonably practicable or as a result of which it is not
reasonably practicable for the corporation to determine fairly the value of its
net assets; or (iii) for such other periods as the Securities and Exchange
Commission or any successor thereto by order may permit for the protection of
security holders of the corporation.
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<PAGE>
(g) The right of any holder of stock of the corporation redeemed or
purchased by the corporation as provided in subparagraphs (d) and (e) of this
Article FIFTH to receive dividends thereon and all other rights of such holder
with respect to such shares shall terminate at the time as of which the
redemption or purchase price of such shares is determined, and after such time
the holder shall only have the right to receive (i) the redemption or purchase
price of such shares from the corporation or its designated agent and (ii) any
dividend or distribution to which such holder has previously become entitled as
the record holder of such shares on the record date for such dividend or
distribution.
(h) The Board of Directors of the corporation is authorized to classify
or to reclassify, from time to time, any unissued shares of stock of the
corporation, whether now or hereafter authorized, by setting, changing or
eliminating the preference, conversion or other rights, voting powers,
restrictions, limitations as to dividends, and qualifications or terms and
conditions of, or rights to require redemption of, the stock and, pursuant to
such classification or reclassification, to increase or decrease the number of
authorized shares of any class, but the number of shares of any class shall not
be reduced by the Board of Directors below the number of shares thereof then
outstanding.
Without limiting the generality of the foregoing, the dividends and
distributions of investment income and capital gains with respect to the stock
of the corporation, and with respect to each class that hereafter may be
created, shall be in such amount as may be declared from time to time by the
Board of Directors, and such dividends and distributions may vary from class to
class to such extent and for such purposes as the Board of Directors may deem
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<PAGE>
appropriate, including, but not limited to, the purpose of complying with
requirements of regulatory or legislative authorities.
(i) All persons who shall acquire stock or other securities of the
corporation shall acquire the same subject to the provisions of these Articles
of Incorporation, as amended from time to time.
SIXTH: For the purposes of the computation of net asset value referred
to in these Articles of Incorporation, the following rules shall apply:
(1) The net asset value of each share of stock of the corporation
issued or sold at its net asset value shall be the net asset value per share of
the corporation's stock when next determined as provided in paragraph (4) of
this Article SIXTH following acceptance by the corporation of the application or
other agreement with respect to the issue or sale of such share.
(2) The net asset value of each share of stock of the corporation
redeemed by the corporation at the request of its holder shall be the net asset
value per share of the corporation's stock when next determined as provided in
paragraph (4) of this Article SIXTH following the time the corporation receives
a request for redemption of such share, in good order with all appropriate
documentation, including stock certificates, if any, duly endorsed for transfer.
(3) The net asset value of each share of stock of the corporation
purchased or redeemed by it otherwise than upon request for redemption by its
holder shall be the net asset
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<PAGE>
value per share of the corporation's stock when next determined as provided in
paragraph (4) of this Article SIXTH following the corporation's determination or
agreement to purchase or redeem such share and the expiration of any notice
period and fulfillment of any other conditions precedent to such purchase or
redemption, or such other price per share as may be specified in the agreement,
if any, with the stockholder for the purchase or redemption of his shares.
(4) The net asset value of a share of stock of the corporation as at
the time of a particular determination shall be the quotient obtained by
dividing the value at such time of the net assets of the corporation (i.e., the
value of the assets of the corporation less its liabilities exclusive of capital
stock and surplus) by the total number of shares of stock outstanding at such
time, all determined and computed as provided in the corporation's by-laws or
otherwise established from time to time by the Board of Directors.
(5) The corporation shall determine the net asset value per share of
its stock on such days and at such times as may be prescribed by the rules and
regulations of the Securities and Exchange Commission or any successor thereto.
The corporation also may determine such net asset value at other times.
(6) The corporation may suspend the determination of net asset value
during any period when it may suspend the right of its stockholders to require
the corporation to redeem their shares.
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<PAGE>
(7) Without limiting any other powers it may have, the Board of
Directors is specifically empowered, in its absolute discretion, to establish or
alter the methods for determining net asset value whenever deemed by it to be
necessary in order to enable the corporation to comply with, or deemed by it to
be desirable and consistent with, any provision of the 1940 Act or any successor
Act or any rule or regulation thereunder, including, without limitation, any
rule or regulation made or adopted pursuant to Section 22 of the 1940 Act by the
Securities and Exchange Commission or any securities association registered
under the Securities Exchange Act of 1934 or any successor Act.
SEVENTH: (1) The number of directors of the corporation, until such
number shall be increased or decreased pursuant to the by-laws of the
corporation, is five (5). The number of directors shall never be less than the
number prescribed by the Maryland General Corporation Law.
(2) The names of the persons who currently are directors of the
corporation and who will act as such until the first annual meeting or until
their successors are duly chosen and qualify are as follows:
William P. Stewart
Robert L. Schwartz
Antoine Bernheim
Curtis L. Lowell, Jr.
William Talcott May.
EIGHTH: The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the corporation and of the
directors and stockholders:
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<PAGE>
(1) The initial by-laws of the corporation shall be adopted by the
Board of Directors at their organization meeting or by their informal written
action, as the case may be. Thereafter, the power to make, alter and repeal the
by-laws of the corporation shall be vested in the Board of Directors of the
corporation.
(2) The corporation reserves the right to make from time to time any
amendments to its charter which may now or hereafter be authorized by law,
including any amendments which alter contract rights of any class of outstanding
stock as expressly set forth in the charter.
(3) Notwithstanding any provision of the Maryland General Corporation
Law requiring a greater proportion than a majority of the votes entitled to be
cast in order to take or authorize any action, any such action may be taken or
authorized upon the concurrence of at least a majority of the aggregate number
of votes entitled to be cast thereon, except as otherwise provided in this
charter.
(4) The Board of Directors of the corporation is hereby empowered to
authorize the issuance from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities convertible into shares of
its stock of any class or classes, whether now or hereafter authorized, in such
amounts and on such terms and conditions, and for such consideration, as the
Board of Directors deems advisable.
(5) Unless otherwise specifically provided by the Board of Directors,
no holder of any stock or securities convertible into or exchangeable, with or
without consideration, for
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<PAGE>
stock of the corporation of any class shall be entitled to preemptive rights to
subscribe for or purchase or receive any part of any new or additional issue of
stock of the corporation of any class or securities convertible into stock of
the corporation of any class.
(6) Any determination made in good faith by or pursuant to the
direction of the Board of Directors as to the amount of the assets, debts,
obligations or liabilities of the corporation, as to the amount of any reserves
or charges set up and the propriety thereof, as to the time or purpose for
creating such reserves or charges, as to the use, alteration or cancellation of
any reserves or charges (whether or not any debt, obligation or liability for
which such reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or discharged), as
to the price or closing bid or asked price of any investment owned or held by
the corporation, as to the value of or the method of valuing any investment
owned or held by the corporation, as to the market value of any investment or
fair value of any other asset of the corporation, as to the number of shares of
the corporation outstanding, as to the estimated expense to the corporation in
connection with purchases of its shares, as to the ability to liquidate
investments in an orderly fashion, as to the extent to which it is practicable
to deliver a cross-section or any part of the portfolio of the corporation in
payment for any such shares, as to any other matters relating to the issue,
sale, purchase and/or other acquisition or disposition of investments or shares
of the corporation, or as to the determination of the net asset value of the
corporation's stock or the declaration and payment of dividends or
distributions, shall be final and conclusive, and shall be binding upon the
corporation and all holders of its shares, past, present and future, and shares
of the corporation
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<PAGE>
are issued and sold on the condition and understanding that any and all such
determinations shall be binding as aforesaid.
(7) No contract or other transaction between the corporation and any
other corporation, partnership, limited liability company, individual or other
entity and no act of this corporation shall in any way be affected or
invalidated by the fact that any of the directors of this corporation are
directors, managers, principals, partners, members or officers of such other
entity, or are pecuniarily or otherwise interested in such contract, transaction
or act, provided that (i) the existence of such relationship or such interest
shall be disclosed to the Board of Directors, or to a committee of the Board of
Directors if the matter involves a committee decision, and the contract,
transaction or act shall be authorized, approved or ratified by a majority of
the disinterested directors on the Board or on such committee, as the case may
be, even if the number of disinterested directors constitutes less than a
quorum, (ii) the contract, transaction or act shall be authorized, ratified or
approved in any other manner permitted by the Maryland General Corporation Law
or (iii) the contract, transaction or act is fair and reasonable to the
corporation.
(8) Assets of the corporation may be held by or deposited with a
custodian as prescribed from time to time by the Board of Directors or by the
corporation's by-laws.
NINTH: (1) To the fullest extent that limitations on the liability of
directors and officers are permitted by the Maryland General Corporation Law, no
director or officer of the corporation shall have any liability to the
corporation or its stockholders for damages. This
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<PAGE>
limitation on liability applies to events occurring at the time a person serves
as a director or officer of the corporation whether or not such person is a
director or officer at the time of any proceeding in which liability is
asserted.
(2) The corporation shall indemnify and advance expenses to its
currently acting and its former directors to the fullest extent that
indemnification of directors is permitted by the Maryland General Corporation
Law. The corporation shall indemnify and advance expenses to its officers to the
same extent as its directors and to such further extent as is consistent with
law. The Board of Directors may by By-Law, resolution or agreement make further
provisions for indemnification of directors, officers, employees and agents to
the fullest extent permitted by the Maryland General Corporation Law.
(3) No provision of this Article shall be effective to protect or
purport to protect any director or officer of the corporation against any
liability to the corporation or its security holders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
(4) References to the Maryland General Corporation Law in this Article
are to the law as from time to time amended. No further amendment to the
Articles of Incorporation of the corporation shall affect any right of any
person under this Article based on any event, omission or proceeding prior to
such amendment.
TENTH: The duration of the corporation shall be perpetual.
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<PAGE>
ELEVENTH: The holders of one-third of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by law.
IN WITNESS WHEREOF, I have signed these Amended Articles of
Incorporation and acknowledge the same to be my act on October 25, 1993.
/s/ David A. Vaughan
---------------------------------
David A. Vaughan
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<PAGE>
EXHIBIT 99.2
As of
25 July 1994
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BY-LAWS
OF
W.P. STEWART & CO. GROWTH FUND, INC.
- --------------------------------------------------------------------------------
ARTICLE 1
SHAREHOLDERS' MEETINGS
1.01 Place of Meetings. All meetings of the shareholders of W.P.
-----------------
Stewart & Co. Growth Fund, Inc. (hereinafter called the "Corporation") shall be
held at such place, within or without the State of Maryland, as is stated in the
notice of meeting.
1.02 Annual Meeting. The Corporation shall not be required to hold an
--------------
annual meeting in any year in which the election of directors is not required to
be acted upon under the Investment Company Act of 1940, as amended. If the
Corporation holds a meeting of shareholders to elect directors, the meeting
shall be designated as the annual meeting of the shareholders for that year and
shall be held at such time as the directors may determine. Any other business
that may come within the Corporation's powers, in addition to the election of
directors, also may be transacted at such a meeting.
1.03 Special Meetings. Special meetings of the shareholders shall be
----------------
held whenever called by the Chairman of the Board, the President or at least 10%
of the Board of Directors and shall be held at such time as the directors may
determine. Special meetings also shall be called by the President at the request
of the holders of a majority of the outstanding shares entitled to vote at such
meeting.
1.04 Notice of Shareholders' Meeting. Notice of each shareholders'
-------------------------------
meeting stating the place, date and hour of the meeting and, in the case of
special meetings, the purpose or purposes for which the meeting is called,
shall be given by mailing such notice to each shareholder of record at his
address as it appears on the records of the Corporation not less than ten nor
more than ninety days prior to the date of the meeting. Any meeting at which all
shareholders entitled to vote are present either in person or by proxy or notice
of which has been waived in writing by those not present shall be a legal
meeting for the transaction of business notwithstanding that notice, as herein
provided, has not been given.
1.05 Quorum. Except as otherwise expressly required by law or these By-
------
Laws or the Articles of Incorporation, at any meeting of the shareholders, the
holders of a majority of the outstanding shares entitled to vote, present either
in person or by proxy, shall constitute a quorum, but a lesser number may
adjourn any meeting from time to time and the meeting may
<PAGE>
be held as adjourned without further notice. When a quorum is present at any
meeting, a majority of the shares represented thereat shall decide any question
brought before such meeting unless the question is one upon which, by express
provision of law or of these By-Laws or the Articles of Incorporation, a larger
or different vote is required, in which case such express provision shall
govern.
1.06 Proxies. Shareholders of record may vote at any meeting either in
-------
person or by proxy in writing dated not more than eleven months before the date
of exercise (unless the proxy itself provides for a longer period of validity)
which shall be filed with the Secretary of the meeting before being voted.
1.07 Voting. Each shareholder shall be entitled to one vote for each
------
share which it holds, and to a fraction of a vote equal to any fractional share
which it holds, provided that such shareholder is the holder of such shares on
the record date determined for such meeting in accordance with Article 5.05.
Shares of all classes shall vote as a single class except where the separate
vote of a particular class is required by the Investment Company Act of 1940, as
amended (the "1940 Act"), the law of Maryland or the Articles of Incorporation.
ARTICLE 2
BOARD OF DIRECTORS
2.01 Number. The Corporation shall have a Board of Directors consisting
------
of not less than three and not more than 10 members. The initial Board of
Directors shall consist of five directors. At the initial shareholders' meeting,
five directors shall be elected. Thereafter the number of directors to
constitute the whole Board, within the limits above stated, shall be that as
fixed by resolution of the Board of Directors prior to each meeting of
shareholders for the election of directors and shall be as stated in the notice
of such meeting.
2.02 Term of Office. Each director shall serve for three years or, if
--------------
later, until his successor is elected and qualified except that the Board of
Directors may determine a shorter tenure of office for any of its members so
long as such shorter period is stated in the notice for the meeting of
shareholders at which such election takes place. Successor directors shall be
elected at any meeting of shareholders called for the purpose of electing
directors. No director need be a resident of the State of Maryland or a
shareholder.
2.03 Powers. The business and affairs of the Corporation shall be
------
managed under the direction of the Board of Directors. All powers of the
Corporation are hereby vested in, and may be exercised by or under the authority
of, the Board of Directors except as conferred on or reserved to the
shareholders by the laws of the State of Maryland, the Articles of Incorporation
or the By-Laws of the Corporation.
2.04 Executive Committee and Other Committees. The Board of Directors
----------------------------------------
may elect from its members an executive committee of not less than three which
may exercise all the
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<PAGE>
powers of the Board of Directors, consistent with these By-Laws and the 1940
Act, when the Board is not in session. The executive committee may make rules
for the holding and conduct of its meetings and keeping the records thereof and
shall report its action to the Board of Directors.
The Board of Directors may elect from its members such other committees
from time to time as it may desire. The number composing such committees and the
powers conferred upon them shall be determined by the Board of Directors at its
own discretion.
2.05 Meetings. Regular meetings of the Board of Directors may be held
--------
in such places within or without the State of Maryland, and at such times as the
Board may from time to time determine, and if so determined, notices thereof
need not be given. Special meetings of the Board of Directors may be held at any
time or place whenever called by the Chairman of the Board, the President or a
majority of the directors, notice thereof being given by the Secretary, the
Chairman of the Board or the President, or the directors calling the meeting, to
each director. Special meetings of the Board of Directors may be held upon three
days notice or without formal notice provided all directors are present or those
not present have waived notice thereof.
Any member or members of the Board of Directors or of any committee
designated by the Board may participate in a meeting of the Board, or any such
committee, as the case may be, by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means
constitutes presence in person at the meeting. To the extent required by the
1940 Act, this paragraph shall not be applicable to meetings held for the
purpose of voting in respect of approval of contracts or agreements whereby a
person or entity undertakes to serve or act or continue serving or acting as
investment adviser of, or principal underwriter for, the Corporation.
2.06 Quorum. A majority of the members of the Board of Directors shall
------
constitute a quorum for the transaction of business, provided, however, that
where the 1940 Act or any other applicable law requires a different quorum,
including a number of directors who are not interested persons as defined in the
1940 Act, to transact business of a specific nature, the number or
classification of directors so required shall constitute a quorum for the
transaction of such business. A lesser number may adjourn a meeting from time to
time and such meeting may be held without further notice. When a quorum is
present at any meeting a majority of the members of the Board shall decide any
question brought before such meeting except as otherwise expressly required by
law, the Articles of Incorporation or these By-Laws.
2.07 Informal Action. Except as otherwise required by applicable law,
---------------
any action to be taken by the Board of Directors may be taken without a meeting
if written consent to such action is signed by all members of the Board and such
written consent is filed with the minutes of the Board's proceedings.
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<PAGE>
2.08 Compensation. Directors may receive compensation for services to
------------
the Corporation in their capacities as directors or otherwise in such manner and
in such amounts as may be fixed from time to time by the Board.
ARTICLE 3
OFFICERS
3.01 Selection. The officers of the Corporation shall be a President, a
---------
Secretary and a Treasurer. The Board of Directors may, if it so determines,
elect a Chairman of the Board. All officers shall be elected by the Board of
Directors and shall serve at the pleasure of the Board. The same person may hold
more than one office.
3.02 Eligibility. The Chairman of the Board, if any, and the President
-----------
shall be directors of the Corporation. Other officers need not be directors.
3.03 Additional Officers and Agents. The Board of Directors may appoint
------------------------------
one or more Vice Presidents, one or more Assistant Treasurers, one or more
Assistant Secretaries and such other officers or agents as it may deem
advisable, and may prescribe their respective duties.
3.04 Chairman of the Board of Directors. The Chairman of the Board, if
----------------------------------
any, shall preside at all meetings of the Board of Directors at which he is
present. He shall have such other authority and duties as the Board of Directors
shall from time to time determine.
3.05 The President. The President shall be the chief executive officer
-------------
of the Corporation. Subject to the control of the Board of Directors, he shall
have general and active management of the business, affairs and property of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall preside at the meetings of
shareholders and of the Board of Directors unless a Chairman of the Board has
been elected and is present.
3.06 The Secretary. The Secretary shall keep accurate minutes of all
-------------
meetings of the shareholders and directors; shall give notice of all meetings;
shall have custody of all books, records and papers of the Corporation, except
such as shall be in the charge of the Treasurer; shall perform all duties
commonly incident to his office and as provided by law; and shall perform such
other duties and have such other powers as the Board of Directors shall from
time to time designate. In his absence an Assistant Secretary or secretary pro
tempore shall perform his duties.
3.07 The Treasurer. The Treasurer shall, subject to the order of the
-------------
Board of Directors and Article 7.07, and in accordance with any arrangements for
performance of services by a custodian, transfer agent or disbursing agent
approved by the Board, have the care and custody of the money, funds,
securities, valuable papers and documents of the Corporation, and shall have and
exercise under the supervision of the Board of Directors all powers and duties
commonly incident to his office and as provided by law. He shall keep or cause
to be kept
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<PAGE>
accurate books of account of the Corporation's transactions which shall be
subject at all times to the inspection and control of the Board of Directors. He
shall deposit all funds of the Corporation in such bank or banks, trust company
or trust companies or such firm or firms doing a banking business, or such
member or members of a national securities exchange, as the Board of Directors
shall designate. In his absence, an Assistant Treasurer, if any, shall perform
his duties.
3.08 The Vice Presidents. The Vice Presidents, if one or more have been
-------------------
appointed, shall respectively have such powers and perform such duties as may be
assigned to them by the Board of Directors or the President. In the absence or
disability of the President, a Vice President, if one has been appointed, shall
perform the duties and exercise the powers of the President.
3.09 Salaries. The salaries, if any, of all officers shall be fixed
--------
from time to time by the Board of Directors.
ARTICLE 4
VACANCIES
4.01 Removals. The shareholders may at any meeting called for the
--------
purpose, by vote of the holders of a majority of the outstanding shares entitled
to vote, remove from office any director and, unless the number of directors
constituting the whole Board is accordingly decreased, elect a successor. To the
extent consistent with the 1940 Act, the Board of Directors may, by vote of not
less than a majority of the directors then in office, remove from office any
director, officer or agent elected or appointed by them and may for misconduct
remove any of them elected by the shareholders.
4.02 Vacancies. If the office of any director becomes or is vacant by
---------
reason of death, resignation, removal, disqualification, increase in the number
of directors or otherwise, the remaining directors may by vote of a majority of
said remaining directors choose a successor or successors who shall hold office
until the next shareholder meeting held for the purpose of electing directors;
provided that vacancies on the Board of Directors may be so filled only if,
after the filling of the same, at least two-thirds of the directors then holding
office would be directors elected to such office by the shareholders. In the
event that at any time less than a majority of the directors so were elected by
the shareholders, a special meeting of the shareholders shall be called
forthwith and held as promptly as possible and in any event within sixty days
for the purpose of electing the necessary new members to the Board of Directors,
unless the Securities and Exchange Commission extends that period.
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<PAGE>
ARTICLE 5
CERTIFICATES FOR SHARES
5.01 Certificates. Each shareholder shall be entitled to a certificate
------------
or certificates representing shares of the Corporation of the class of shares
owned by such shareholder, in such form as shall, in conformity to law, be
prescribed from time to time by the Board of Directors. Such certificates shall
be signed by the President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary. If such
certificates are counter-signed by a transfer agent or registrar other than the
Corporation or an employee of the Corporation, the signatures of the
aforementioned officers upon such certificates may be facsimile. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the Corporation, such certificates may be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the Corporation. All
certificates for shares of a class shall be consecutively numbered or otherwise
identified.
5.02 Replacement of Certificates. The Board of Directors may direct a
---------------------------
new certificate or certificates to be issued in place of any certificate or
certificates, heretofore issued by the Corporation, alleged to have been lost or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may as a condition precedent to the issuance thereof require
the owner of such lost or destroyed certificate or certificates, or its legal
representative, either to advertise the same in such manner as it shall require
or to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed, or both.
5.03 Shareholder Open Accounts. The Corporation may maintain or cause
-------------------------
to be maintained for each shareholder a shareholder open account in which shall
be recorded such shareholder's ownership of shares and all changes therein. Any
certificates need not be issued for shares so recorded in a shareholder open
account unless requested by such shareholder.
5.04 Transfers. Transfers of shares for which certificates have been
---------
issued will be made only upon surrender to the Corporation or its transfer agent
of a certificate for shares of the same class duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, whereupon
the Corporation will issue a new certificate to the person or other entity
entitled thereto, cancel the old certificate and record the transaction on its
books. Transfers of stock evidenced by open account authorized by Article 5.03
will be made upon delivery to the Corporation or its transfer agent of
instructions for transfer or evidence of assignment or succession of the shares
of a particular class, in each case executed in such manner and with such
supporting evidence as the Corporation or transfer agent may reasonably require.
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<PAGE>
5.05 Record Dates. The Board of Directors may fix in advance a date,
------------
not exceeding ninety days preceding the date of any meeting of shareholders, or
the date for the payment of any dividend, or the date for the allotment of
rights, or the date when any change, conversion or exchange of capital stock
shall go into effect, or a date in connection with obtaining any consent or for
any other lawful purpose, as a record date for the determination of the
shareholders entitled to notice of and, subject to Article 1.07, to vote at any
such meeting, and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital, or to give such
consent, and in such case such shareholders and only such shareholders as shall
be shareholders of record on the date as fixed shall be entitled to such notice
of and, subject to Article 1.07, to vote at such meeting, and any adjournment
thereof, or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
any such record date fixed as aforesaid, except as to the right to vote at a
meeting as limited in Article 1.07.
5.06 Registered Ownership. The Corporation shall be entitled to
--------------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner and shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Maryland.
5.07 Ledger of Shares. The Secretary shall maintain a ledger of the
----------------
names and addresses of all holders of outstanding shares, and the number of
shares of each class held by each shareholder, at any place within or without
the State of Maryland as determined from time to time by the Board of Directors.
ARTICLE 6
NOTICES
6.01 Manner of Giving. Whenever, under any provisions of law, the
----------------
Articles of Incorporation or these By-Laws, notice is required to be given to
any director, committee member, officer or shareholder, it shall not be
construed to mean personal notice, but such notice may be given, in the case of
shareholders, in writing, by depositing the same in the United States mail, in a
postpaid sealed wrapper, addressed to such shareholder, at such address as
appears on the books of the Corporation, and, in the case of directors,
committee members and officers, by telephone, mail, facsimile transmission or
telegram to the last business address known to the Secretary of the Corporation,
and such notice shall be deemed to be given at the time when the same shall be
thus telephoned, mailed, transmitted or telegraphed.
6.02 Waiver. Whenever any notice is required to be given under any
------
provision of law, the Articles of Incorporation or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall
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<PAGE>
be deemed equivalent thereto. Attendance at any meeting where notice is required
shall be deemed waiver of the requirement for such notice.
ARTICLE 7
GENERAL PROVISIONS
7.01 Disbursement of Funds. All checks, drafts, orders or instructions
---------------------
for the payment of money and all notes of the Corporation shall be signed by
such officer or officers or such other person or persons as the Board of
Directors may from time to time designate.
7.02 Voting Shares of Other Corporations. Unless otherwise ordered by
-----------------------------------
the Board of Directors, the President or any Vice President or the Treasurer or
any Assistant Treasurer shall have full power and authority to attend and act
and vote at any meeting of shareholders of any other corporation in which this
Corporation may own shares and at any such meeting may exercise any and all the
rights and powers incident to the ownership of such shares. The President or any
Vice President or the Treasurer or any Assistant Treasurer of the Corporation
may execute proxies to vote shares of other corporations standing in the name of
this Corporation.
7.03 Execution of Instruments. Except as otherwise provided in these
------------------------
By-Laws, all deeds, mortgages, bonds, contracts, stock powers, reports and other
instruments may be executed on behalf of the Corporation by the President or any
Vice President or by any other officer or agent authorized to act with respect
to such matters, whether by law, the Articles of Incorporation, these By-Laws or
any general or special authorization of the Board of Directors. If the corporate
seal is required, it shall be affixed by the Secretary or an Assistant
Secretary.
7.04 Seal. The seal of the Corporation shall be in such form as the
----
Board of Directors may from time to time determine. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise. In the event it is inconvenient to use such seal at any time, the
signature of the Corporation following the word "Seal" shall be deemed the seal
of the Corporation.
7.05 Fiscal Year. Except as otherwise from time to time provided by the
-----------
Board of Directors, the fiscal year of the Corporation shall begin January 1 and
end December 31.
7.06 Expenses. Each class of shares of the Corporation shall be charged
--------
with all the expenses, costs, charges, reserves or other liabilities directly
attributable to that class and with that proportion of the other expenses of the
Corporation, including general administrative expenses and fees of accountants
and attorneys, which the total net assets of each class of shares bears to the
total net assets of all classes of shares. The foregoing charges when determined
in the manner prescribed by the Board of Directors shall be conclusive and
binding for all purposes.
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<PAGE>
7.07 Custodians. All funds, securities and other investments of the
----------
Corporation shall be deposited in the safe keeping of such banks or other
companies as the Board of Directors of the Corporation may from time to time
determine. Every arrangement entered into with any bank or other company for the
safe keeping of the securities and investments of the Corporation shall contain
provisions complying with the 1940 Act and the general rules and regulations
thereunder.
ARTICLE 8
PURCHASES AND REDEMPTION OF SHARES
8.01 Purchase by Agreement. The Corporation may purchase its own shares
---------------------
by agreement with the owner at a price equal to the net asset value next
computed following the time when the purchase or contract to purchase is made.
8.02 Redemption. The Corporation shall redeem such shares of a class as
----------
are offered by any shareholder for redemption upon the presentation of a request
therefor, in acceptable form by the record owner, to the office or agency
designated by the Corporation. If the shareholder has received certificates for
shares of a class, the request must be accompanied by such certificates of that
class, duly endorsed for transfer, in acceptable form; and the Corporation will
pay therefor the net asset value of the shares next determined following the
time at which the request, in acceptable form, is so presented, less any sales
or redemption charge in such amounts, consistent with disclosures made by the
Corporation as required by the 1940 Act, as may be fixed from time to time by
resolution of the Board of Directors.
8.03 Suspension of Redemption. The obligations set out in Article 8.02
------------------------
may be suspended for (a) any period during which the New York Stock Exchange,
Inc. shall be closed (other than for customary weekend and holiday closings) or
during which trading on said exchange is restricted; (b) any period during which
an emergency exists, as determined by or under the authority of the Securities
and Exchange Commission or any successor governmental authority, as a result of
which the disposal by the Corporation of securities owned by it is not
reasonably practicable, or it is not reasonably practicable for the Corporation
fairly to determine the value of its net assets; or (c) such other periods as
the Securities and Exchange Commission may by order permit for the protection of
shareholders.
8.04 Sales Load. The Corporation shall sell and distribute its shares
----------
at net asset value without any sales load except for any sales charge in such
amounts, consistent with disclosures made by the Corporation as required by the
1940 Act, as may be fixed from time to time by resolution of the Board of
Directors.
8.05 Restrictions on Purchase Orders. The Corporation reserves the
-------------------------------
right to reject purchases under circumstances where an eligible purchaser or
amount involved would be considered disadvantageous to the Corporation.
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<PAGE>
8.06 Fractional Shares. Shares of the Corporation may be issued and
-----------------
redeemed in fractional denominations, provided that the transactions in which
and the terms upon which shares in fractional denominations may be issued may
from time to time be determined and limited by or under authority of the Board
of Directors.
ARTICLE 9
INDEMNIFICATION
9.01 Right to Indemnification. Every person who is or was a director,
------------------------
officer or employee of the Corporation (or of any other corporation which he
served at the request of the Corporation and in which the Corporation owns or
owned shares of capital stock or of which the Corporation is or was a creditor)
shall have a right to be indemnified by the Corporation to the full extent
permitted by applicable law against all liability, judgments, fines, penalties,
settlements and reasonable expenses incurred by him in connection with or
resulting from any threatened or actual claim, action, suit or proceeding,
whether criminal, civil or administrative, in which he may become involved as a
party or otherwise by reason of his being or having been a director, officer or
employee, except as provided in Articles 9.02 and 9.03 of these By-Laws.
9.02 Disabling Conduct. No such director, officer or employee shall be
-----------------
indemnified for any liabilities or expenses arising by reason of "disabling
conduct," whether or not there is an adjudication of liability. "Disabling
conduct" means willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of office.
Whether any such liability arose out of disabling conduct shall be
determined: (a) by a final decision on the merits (including, but not limited
to, a dismissal for insufficient evidence of any disabling conduct) by a court
or other body before whom the proceeding was brought that the person to be
indemnified was not liable by reason of disabling conduct; or (b) in the absence
of such a decision, by a reasonable determination, based upon a review of the
facts, that such person was not liable by reason of disabling conduct, (i) by
the vote of a majority of a quorum of directors who are neither interested
persons of the Corporation nor parties to the action, suit or proceeding in
question ("disinterested, non-party directors"), (ii) by independent legal
counsel in a written opinion if a quorum of disinterested, non-party directors
so directs or if such quorum is not obtainable, (iii) by majority vote of the
shareholders, or (iv) by any other reasonable and fair means not inconsistent
with any of the above.
The termination of any action, suit or proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that any liability or expense arose
by reason of disabling conduct.
9.03 Directors' Standards of Conduct. No person who is or was a
-------------------------------
director shall be indemnified under this Article 9 for any liabilities or
expenses incurred by reason of service in that capacity unless such person (a)
acted in good faith; (b) reasonably believed, in the case of conduct in the
director's official capacity with the Corporation, that the conduct was in the
best
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<PAGE>
interests of the Corporation and, in all other cases, that the conduct was at
least not opposed to the best interests of the Corporation; and (c) in the case
of any criminal proceeding, had no reasonable cause to believe that the conduct
was unlawful; provided that a court of appropriate jurisdiction may order
indemnification in accordance with Section 2-418 of the Maryland General
Corporation Law, whether or not the director has met these standards of conduct.
Whether a director met the standards of conduct set forth above shall
be determined in the manner specified in Section 2-418 of the Maryland General
Corporation Law.
9.04 Expenses Prior to Determination. Any liabilities or expenses of
-------------------------------
the type described in Article 9.01 may be paid by the Corporation in advance of
the final disposition of the claim, action, suit or proceeding, as authorized by
the Board of Directors in the specific case, (a) upon receipt of a written
undertaking by or on behalf of the indemnitee to repay the advance, unless it
shall be ultimately determined that such person is entitled to indemnification;
(b) in the case of liabilities or expenses incurred by a director of the
Corporation upon (i) a determination that the facts then known would not
preclude indemnification and (ii) receipt of a written affirmation by the
director of the director's good faith belief that the standards of conduct set
forth in Article 9.03 have been met; and (c) provided that (i) the indemnitee
shall provide security for that undertaking, (ii) the Corporation shall be
insured against losses arising by reason of any lawful advances or (iii) a
majority of a quorum of disinterested, non-party directors, or independent legal
counsel in a written opinion, shall determine, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is reason
to believe that the indemnitee ultimately will be found entitled to
indemnification.
A determination pursuant to subparagraph (c)(iii) of this Article 9.04
shall not prevent the recovery from any indemnitee of any amount advanced to
such person as indemnification if such person is subsequently determined not to
be entitled to indemnification; nor shall any determination or lack thereof
pursuant to Article 9.04 prevent the payment of indemnification if such person
is subsequently found to be entitled to indemnification.
9.05 Provisions Not Exclusive. The indemnification provided by this
------------------------
Article 9 shall not be deemed exclusive of any rights to which those seeking
indemnification may be entitled under any law, agreement, vote of shareholders
or otherwise.
9.06 General. No indemnification provided by this Article shall be
-------
inconsistent with applicable provisions of the 1940 Act, the Securities Act of
1933 or the Maryland General Corporation Law.
Any indemnification provided by this Article shall continue as to a
person who has ceased to be a director, officer, or employee and shall inure to
the benefit of the heirs, executors and administrators of such person.
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<PAGE>
ARTICLE 10
AMENDMENTS
10.01 By Board of Directors. Except as otherwise provided by law, the
---------------------
Board of Directors shall have the power, by a majority vote of the entire Board
of Directors at any meeting thereof, to make, amend, alter or repeal the By-Laws
of the Corporation.
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<PAGE>
EXHIBIT 99.4
AMENDED ARTICLES OF INCORPORATION
OF
W.P. STEWART & CO. GROWTH FUND, INC.
[selected provisions defining rights of holders of shares]
<PAGE>
FIFTH: (1) The total number of shares of stock which the corporation has
authority to issue is One Hundred Million, all of which are of a par value of
One-Thousandth of One Dollar ($0.001) each, and are designated as Common Stock.
(2) The aggregate par value of all the authorized shares of Common Stock is
Hundred Thousand Dollars ($100,000).
(3) The stock of the corporation and the holders thereof shall be subject
to the following provisions:
(a) The corporation may issue shares of its stock in fractional
denominations to the same extent as its whole shares, and shares in fractional
denominations shall be shares of stock having proportionally to the respective
fractions represented thereby all the rights of whole shares, including, without
limitation, the right to vote, the right to receive dividends and
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<PAGE>
distributions, and the right to participate upon liquidation of the corporation,
but excluding the right to receive a stock certificate representing fractional
shares.
(b) The corporation, either directly or through an agent, may purchase its
shares out of funds legally available therefor, upon such terms and conditions
and for such consideration as the Board of Directors shall deem advisable.
(c) In the absence of any specification as to the purpose for which shares
of stock of the corporation are redeemed or purchased by it, all shares so
redeemed or purchased shall be deemed to be "purchased for retirement" in the
sense contemplated by the laws of the State of Maryland, and the number of the
authorized shares of stock of the corporation shall not be reduced by the number
of any shares redeemed or purchased by it.
(d) Each holder of stock of the corporation, upon request to the
corporation (accompanied by surrender of the appropriate stock certificate or
certificates in proper form for transfer, if any certificates have been issued
for such shares), shall be entitled to require the corporation to redeem, to the
extent that the corporation may lawfully effect such redemption under the laws
of the State of Maryland, all or any part of the shares of stock standing in the
name of such holder on the books of the corporation, at a price per share equal
to the net asset value per share, determined in accordance with Article SIXTH
hereof, less any sales or redemption charge in such amounts, consistent with
disclosures made by the corporation as required by the 1940 Act, as may be fixed
from time to time by resolution of the Board of Directors of the corporation.
Payment of such price may be made in cash or, at the option of
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<PAGE>
the corporation, wholly or partly in such portfolio securities of the
corporation as the corporation shall select.
(e)(i) If (A) after giving effect to a request for redemption by a
stockholder, the aggregate net asset value of such shareholder's remaining
shares will be less than Ten Thousand Dollars ($10,000), or such other amount as
the Board of Directors may specify from time to time; (B) ownership of shares by
a shareholder will cause the corporation to be in violation of, or require
registration of any such shares, or subject the corporation to additional
registration or regulation under, the securities laws of the United States or
any other relevant jurisdiction or the rules of any self-regulatory organization
applicable to any investment adviser engaged by the corporation;(C)any of the
representations and warranties made by a shareholder in connection with the
acquisition of any of its shares was not true when made or has ceased to be
true; or (D) it would not be in the best interest of the corporation, as
determined by the Board of Directors in its absolute discretion, for a
shareholder to continue ownership of shares, then the corporation shall be
entitled to redeem the shares of such stockholder, upon notice given in
accordance with subparagaph (iii) of this subparagraph (e), to the extent that
the corporation may lawfully effect such redemption under the laws of the State
of Maryland.
(ii) The price for shares acquired by the corporation pursuant to
subparagraph (i) of this subparagraph (e) shall be paid in cash in an amount as
set forth in subparagraph (d) of this paragraph (3).
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<PAGE>
(iii) For any redemption under subparagraph (i) of this subparagraph (e),
notice shall be in writing personally delivered or deposited in the mail at
least ten (10) days (or such other number of days as may be specified from time
to time by the Board of Directors) prior to such redemption. If mailed the
notice shall be addressed to the stockholder at his post office address as shown
on the books of the corporation.
(f) Payment by the corporation for shares of stock of the corporation
surrendered to it for redemption or purchase shall be made by the corporation
out of the funds legally available therefor within seven days of surrender of
appropriate stock certificates in proper form for transfer, if any certificates
have been issued to represent such shares, or within seven days of the time the
redemption price of such shares is determined, provided that the corporation may
suspend the right of the holders of stock of the corporation to redeem shares of
stock and may postpone the right of such holders to receive payment for any
shares (i) for any period during which the New York Stock Exchange, Inc. is
closed other than customary weekend and holiday closings or during which trading
on the New York Stock Exchange, Inc., is restricted, as determined by the rules
and regulations of the Securities and Exchange Commission or any successor
thereto; (ii) for any period during which any emergency, as determined by the
rules and regulations of the Securities and Exchange Commission or any successor
thereto, exists as a result of which disposal by the corporation of securities
owned by it is not reasonably practicable or as a result of which it is not
reasonably practicable for the corporation to determine fairly the value of its
net assets; or (iii) for such other periods as the Securities and Exchange
Commission or any successor thereto by order may permit for the protection of
security holders of the corporation.
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<PAGE>
(g) The right of any holder of stock of the corporation redeemed or
purchased by the corporation as provided in subparagraphs (d) and (e) of this
Article FIFTH to receive dividends thereon and all other rights of such holder
with respect to such shares shall terminate at the time as of which the
redemption or purchase price of such shares is determined, and after such time
the holder shall only have the right to receive (i) the redemption or purchase
price of such shares from the corporation or its designated agent and (ii) any
dividend or distribution to which such holder has previously become entitled as
the record holder of such shares on the record date for such dividend or
distribution.
(h) The Board of Directors of the corporation is authorized to classify or
to reclassify, from time to time, any unissued shares of stock of the
corporation, whether now or hereafter authorized, by setting, changing or
eliminating the preference, conversion or other rights, voting powers,
restrictions, limitations as to dividends, and qualifications or terms and
conditions of, or rights to require redemption of, the stock and, pursuant to
such classification or reclassification, to increase or decrease the number of
authorized shares of any class, but the number of shares of any class shall not
be reduced by the Board of Directors below the number of shares thereof then
outstanding.
Without limiting the generality of the foregoing, the dividends and
distributions of investment income and capital gains with respect to the stock
of the corporation, and with respect to each class that hereafter may be
created, shall be in such amount as may be declared from time to time by the
Board of Directors, and such dividends and distributions may vary from class to
class to such extent and for such purposes as the Board of Directors may deem
-7-
<PAGE>
appropriate, including, but not limited to, the purpose of complying with
requirements of regulatory or legislative authorities.
(i) All persons who shall acquire stock or other securities of the
corporation shall acquire the same subject to the provisions of these Articles
of Incorporation, as amended from time to time.
SIXTH: For the purposes of the computation of net asset value referred to
in these Articles of Incorporation, the followig rules shall apply:
(1) The net asset value of each share of stock of the corporation issued
or sold at its net asset value shall be the net asset value per share of the
corporation's stock when next determined as provided in paragraph (4) of this
Article SIXTH following acceptance by the corporation of the application or
other agreement with respect to the issue or sale of such share.
(2) The net asset value of each share of stock of the corporation redeemed
by the corporation at the request of its holder shall be the net asset value per
share of the corporation's stock when next determined as provided in paragraph
(4) of this Article SIXTH following the time the corporation receives a request
for redemption of such share, in good order with all appropriate documentation,
including stock certificates, if any, duly endorsed for transfer.
(3) The net asset value of each share of stock of the corporation purchased
or redeemed by it otherwise than upon request for redemption by its holder shall
be the net asset
-8-
<PAGE>
value per share of the corporation's stock when next determined as provided in
paragraph (4) of this Article SIXTH following the corporation's determination or
agreement to purchase or redeem such share and the expiration of any notice
period and fullfillment of any other conditions precedent to such purchase or
redemption, or such other price per share as may be specified in the agreement,
if any, with the stockholder for the purchase or redemption of his shares.
(4) The net asset value of a share of stock of the corporation as at the
time of a particular determination shall be the quotient obtained by dividing
the value at such time of the net assets of the coproration (i.e., the value of
the assets of the corporation less its liabilities exclusive of capital stock
and surplus) by the total number of shares of stock outstanding at such time,
all determined and computed as provided in the corporation's by-laws or
otherwise established from time to time by the Board of Directors.
(5) The corporation shall determine the net asset value per share of its
stock on such days and at such times as may be prescribed by the rules and
regulations of the Securities and Exchange Commission or any successor thereto.
The corporation also may determine such net asset value at other times.
(6) The corporation may suspend the determination of net asset value during
any period when it may suspend the right of its stockholders to require the
corporation to redeem their shares.
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<PAGE>
(7) Without limiting any other powers it may have, the Board of Directors
is specifically empowered, in its absolute discretion, to establish or alter the
methods for determining net asset value whenever deemed by it to be necessary in
order to enable the corporation to comply with, or deemed by it to be desirable
and consistent with, any provision of the 1940 Act or any successor Act or any
rule or regulation thereunder, including, without limitation, any rule or
regulation made or adopted pursuant to Section 22 of the 1940 Act by the
Securities and Exchange Commission or any securities association registered
under the Securities Exchange Act of 1934 or any successor Act.
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<PAGE>
As of
10 January 1994
- --------------------------------------------------------------------------------
BY-LAWS
OF
W.P. STEWART & CO. GROWTH FUND, INC.
- --------------------------------------------------------------------------------
[selected provisions defining rights of holders of shares]
<PAGE>
ARTICLE 5
CERTIFICATES FOR SHARES
5.01 CERTIFICATES. Each shareholder shall be entitled to a certificate or
certificates representing shares of the Corporation of the class of shares owned
by such shareholder, in such form as shall, in conformity to law, be prescribed
from time to time by the Board of Directors. Such certificates shall be signed
by the President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary. If such certificates are
counter-signed by a transfer agent or registrar other than the Corporation or an
employee of the Corporation, the signatures of the aforementioned officers upon
such certificates may be facsimile. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, such certificates may be issued and delivered as though the person
or persons who signed such certificate or certificates or whose facsimile
signature or signatures have been used thereon had not ceased to be such officer
or officers of the Corporation. All certificates for shares of a class shall be
consecutively numbered or otherwise identified.
5.02 REPLACEMENT OF CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates, heretofore issued by the Corporation, alleged to have been lost or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may as a condition precedent to the issuance thereof require
the owner of such lost or destroyed certificate or certificates, or its legal
representative, either to advertise the same in such manner as it shall require
or to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed, or both.
5.03 SHAREHOLDER OPEN ACCOUNTS. The Corporation may maintain or cause to be
maintained for each shareholder a shareholder open account in which shall be
recorded such shareholder's ownership of shares and all changes therein. Any
certificates need not be issued for shares so recorded in a shareholder open
account unless requested by such shareholder.
5.04 TRANSFERS. Transfers of shares for which certificates have been issued
will be made only upon surrender to the Corporation or its tranfer agent of a
certificate for shares of the same class duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, whereupon the
Corporation will issue a new certificate to the person or other entity entitled
thereto, cancel the old certificate and record the transaction on its books.
Tranfers of stock evidenced by open account authorized by Article 5.03 will be
made upon delivery to the Corporation or its transfer agent of instructions for
tranfer or evidence of assignmgnet or succession of the shares of a particluar
class, in each case executed in such manner and with such supporting evidence as
the Corporation or transfer agent may reasonably require.
-6-
<PAGE>
5.05 RECORD DATES. The Board of Directors may fix in advance a date, not
exceeding ninety days preceding the date of any meeting of shareholders, or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change, conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining any consent or for any other
lawful purpose, as a record date for the determination of the sharholders
entitled to notice of and, subject to Article 1.07, to vote at any such meeting,
and any adjournment thereof, or entitled to receive payment of any such
dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital, or to give sucn
consent, and in such case such sharheolders and only such shareholders as shall
be shareholders of record on the date as fixed shall be entitled to such notice
of and, subject to Article 1.07, to vote at such meeting, and any adjournment
therof, or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any shares on the books of the Corporation after
any such record date fixed as aforesaid, except as to the right to vote at a
meeting as limited in Article 1.07
5.06 REGISTERED OWNERSHIP. The Corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the owner of shares
to receive dividends and to vote as such owner and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Maryland.
5.07 LEDGER OF SHARES. The Secretary shall maintain a ledger of the names
and addresses of all holders of outstanding shares, and the number of shares of
each class held by each shareholder, at any place within or without the State of
Maryland as determined from time to time by the Board of Directors.
-7-
<PAGE>
ARTICLE 8
PURCHASES AND REDEMPTION OF SHARES
8.01 PURCHASE BY AGREEMENT. The Corporation may purchase its own shares by
agreement with the owner at a price equal to the net asset value next computed
following the time when the purchase or contract to purchase is made.
8.02 REDEMPTION. The Corporation shall redeem such shares of a class as are
offered by any shareholder for redemtption upon the presentation of a request
therefor, in acceptable form by the record owner, to the office or agency
designated by the Corporation. If the shareholder has received certificates for
shares of a class, the request must be accompanied by such certificates of that
class, duly enorsed for tranfer, in acceptable form; and the Corporation will
pay therefor the net asset value of the shares next determined following the
time at which the request, in acceptable form, is so presented, less any sales
or redemption charge in such amounts, consistent with disclosures made by the
Corporation as required by the 1940 Act, as may be fixed from time to time by
resolution of the Board of Directors.
8.03 SUSPENSION OF REDEMPTION. The obligations set out in Article 8.02 may
be suspended for (a) any period during which the New York Stock Exchange, Inc.,
shall be closed (other than for customary weekend and holiday closings) or
during which trading on said exchange is restricted; (b) any period during
which an emergency exists, as determined by or under the authority of the
Securities and Exchange Commission or any successor governmental authority, as a
result of which the disposal by the Corporation of securities owned by it is not
reasonably praticable, or it is not reasonably practicable for the Corporation
fairly to determine the value of its net assets; or (c) such other periods as
the Securites and Exchange Commission may by order permit for the protection of
shareholders.
8.04 SALES LOAD. The Corporation shall sell and distribute its shares at
net asset value without any sales load except for any sales charge in such
amounts, consistent with disclosures made by the Corporation as required by the
1940 Act, as may be fixed from time to time by resolution of the Board of
Directors.
8.05 RESTRICTIONS ON PURCHASE ORDERS. The Corporation reserves the right to
reject purchases under circumstances where an eligilbe purchase or amount
involved would be considered disadvantageous to the Corporation.
-9-
<PAGE>
8.06 FRACTIONAL SHARES. Shares of the Corporation may be issued and
redeemed in fractional denominations, provided that the transactions in which
and the terms upon which shares in fractional denominations may be issued from
time to time be determined and limited by or under authority of the Board of
Directors.
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<PAGE>
EXHIBIT 99.5
INVESTMENT ADVISORY SERVICES AGREEMENT
--------------------------------------
This Agreement is made as of the 11th day of January, 1994 between W.P.
Stewart & Co. Growth Fund, Inc., a Maryland corporation (the "Fund"), and W.P.
Stewart & Co., Inc., a Delaware corporation (the "Adviser").
WITNESSETH:
WHEREAS, the Fund desires to avail itself of the experience, sources of
information, advice, assistance and facilities available to the Adviser and to
have the Adviser manage the Fund and perform for the Fund various other services
appropriate to the operations of the Fund pertaining to assets of the Fund; and
WHEREAS, the Adviser is willing to furnish such management and other
services in accordance with the terms hereof;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereby agree as follows:
1. The Fund hereby engages the Adviser to manage the investment and
reinvestment of the assets of the Fund and to perform the other services
provided herein, subject to the supervision and control of the Board of
Directors of the Fund. The Adviser hereby accepts such engagement and agrees, at
its own expense, to render the services and to assume the obligations set forth
herein, for the compensation set forth herein.
2. As part of its obligations to manage the investment and reinvestment
of the assets of the Fund, the Adviser shall:
(a) obtain and evaluate such economic, statistical and financial data
and information and undertake such additional investment research as it
shall deem necessary or advisable in connection with the management of the
investment and reinvestment of the assets of the Fund in accordance with
the Fund's investment objectives and policies as adopted from time to time
and provided in writing to the Adviser;
(b) take such steps as are necessary to implement the investment
policies of the Fund by the purchase and sale of securities, consistently,
in its opinion, with the investment policies and objectives of the Fund
including the placing of orders for such purchase and sale;
(c) report regularly to the Board of Directors with respect to the
implementation of the investment policies of the Fund; and
<PAGE>
(d) determine the net asset value of the shares of the Fund as
required by applicable law.
3. All activities in connection with the management of the affairs of the
Fund undertaken by the Adviser pursuant to this Agreement shall at all times be
subject to the supervision and control of the Board of Directors, any duly
constituted committee thereof or any officer of the Fund acting pursuant to like
authority; and the Fund shall have ultimate responsibility and authority for
direction and control of the services provided hereunder. In particular, the
Fund shall at all times retain the ultimate responsibility for and control of
all investments made hereunder, and the Fund reserves the right to direct,
approve or disapprove any action taken on its behalf by the Adviser.
4. The Adviser agrees to make its principal executive officers available
as principal executive officers of the Fund at no expense to the Fund. The
Adviser shall furnish to the Fund at the Adviser's own expense or pay the
expenses of the Fund, subject to Section 5 and subject to possible reimbursement
by an entity other than the Fund, for the following:
(a) office space in such place or places as may be agreed upon from
time to time, and appropriate office supplies, facilities, and equipment;
(b) executive and other personnel appropriate for managing the
affairs of the Fund, including personnel to perform clerical, bookkeeping,
accounting, stenographic and other office functions (exclusive of those
related to, and to be performed under, contracts for custodial, transfer
agency, dividend disbursing, shareholder servicing agency and accounting
services by any financial institution selected to perform such services);
(c) compensation, if any, of directors of the Fund who are directors,
officers or employees of the Adviser or any affiliated person (other than a
registered investment company) of the Adviser; and
(d) all services, other than services of counsel, required in
connection with (i) the preparation of registration statements,
prospectuses and other disclosure documents, including amendments and
revisions thereto, (ii) all annual, semi-annual and periodic reports and
(iii) notices and proxy solicitation material furnished to shareholders of
the Fund or regulatory authorities.
5. Nothing in Section 4 hereof shall require the Adviser to bear, or to
reimburse the Fund for:
(a) any of the costs of printing and mailing the items referred to in
Subsection (d) of Section 4;
(b) any of the costs of preparing, printing and distributing sales
literature;
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<PAGE>
(c) compensation of directors of the Fund who are not directors,
officers or employees of the Adviser or any affiliated person (other than a
registered investment company) of the Adviser;
(d) registration, filing and other fees in connection with
requirements of regulatory authorities;
(e) charges and expenses of independent accountants retained by the
Fund;
(f) charges and expenses of any transfer agents and registrars
(including the Adviser and any of its affiliates) appointed by the Fund;
(g) brokers' commissions (including those payable to the Adviser) and
other costs and issue and transfer taxes chargeable to the Fund in
connection with securities transactions to which the Fund is a party;
(h) taxes and fees payable by the Fund to Federal, state or other
governmental agencies;
(i) the cost of printing and mailing dividend notices, dividend
payments and stock certificates representing shares of the Fund;
(j) legal fees and expenses in connection with the affairs of the
Fund including registering and qualifying the Fund or its shares with
Federal and state regulatory authorities;
(k) expenses of meetings of shareholders and directors of the Fund;
(l) insurance premiums for fidelity and other coverage of the Fund's
operations;
(m) fees and dues of the Investment Company Institute;
(n) such non-recurring expenses as may arise, including those
relating to actions, suits or proceedings affecting the Fund and the legal
obligations which the Fund may have to indemnify its employees, officers
and directors with respect thereto; and
(o) interest, including interest on borrowings by the Fund, if any.
Notwithstanding the other provisions of this Section 5 and Section 4,
the Adviser shall pay or reimburse the Fund for all expenses of the organization
of the Fund and the initial registration of the Fund and its shares, including,
but not limited to, fees and disbursements of legal counsel and the accountants
of the Fund, all filing and other governmental fees and printing costs,
including the printing of the Fund's preliminary prospectus and up to 5,000
copies of the Fund's final initial prospectus (and an equal number of copies of
the Statement of Additional Information).
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<PAGE>
6. The services of the Adviser to the Fund hereunder shall not be deemed
exclusive, and the Adviser shall be free to render similar services, so long as
its services hereunder are not impaired thereby. When the Adviser determines
that it would be appropriate for the Fund and any other account managed by the
Adviser to participate in an investment opportunity, the Adviser will seek to
execute orders on a basis which is fair, reasonable and equitable to all such
accounts. In such situations, the Adviser may place orders for each account
simultaneously and if all such orders are not filled at the same price, the
Adviser may cause each account to pay or receive the average of the prices at
which the orders were filled for all accounts. If all such orders cannot be
fully executed under prevailing market conditions, the Adviser may allocate the
securities traded among the accounts on a basis which it considers equitable,
taking into account the size of the order placed for each such account as well
as any other factors which it deems relevant.
7. (a) As full compensation for all services rendered, facilities
furnished and expenses borne by the Adviser hereunder, the Fund shall pay the
Adviser compensation quarterly in advance at an annual rate of one and one half
percent (1.5%) of the net asset value of the Fund (the "Advisory Fee"). With
respect to each quarterly advance payment of the Advisory Fee, such payment
shall be computed based on the net asset value of the Fund as of the last day of
the preceding fiscal quarter (after giving effect to subscriptions and
redemptions effective on such date). Each payment of the Advisory Fee shall be
due and payable promptly after the commencement of the fiscal quarter in respect
of which such payment is payable. The net asset value of the Fund shall be
computed in accordance with applicable provisions of the Fund's articles of
incorporation and disclosure document for investors, as each may be amended from
time to time. For purposes of this Agreement, the fiscal year of the Fund shall
be deemed to end on December 31 of each year.
(b) In the event of the expiration or termination of this Agreement
in accordance with the terms hereof other than on the last day of any fiscal
quarter, the Advisory Fee for the fiscal quarter which includes such expiration
or termination shall be prorated to the effective date thereof, and the Adviser
shall refund promptly to the Fund the paid but unearned portion of such Advisory
Fee.
8. If the total of all ordinary business expenses of the Fund (including
investment advisory fees but excluding taxes, portfolio brokerage commissions,
interest and, where permitted, extraordinary expenses) for any fiscal year
exceeds the lowest applicable percentage of average net assets or income
limitations prescribed by any state, to the extent the Adviser would be required
to pay such excess if the Fund's securities were qualified for sale in such
state, the Adviser shall pay such excess annually before publication of the
Fund's Annual Report.
9. The Adviser shall place the portfolio transactions of the Fund with
brokers and negotiate any commissions paid on such transactions when not
effected by the Adviser or an affiliate of the Adviser acting as broker. In
placing portfolio transactions, the Adviser shall seek to obtain the best
execution for the Fund, taking into account such factors as price (including the
applicable dealer spread or commission, if any), size of order, difficulty of
execution,
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<PAGE>
operational facilities of the brokers involved and the broker's risk in
positioning a block of securities. When selecting brokers or effecting
transactions directly on behalf of the Fund, the Adviser shall comply with all
applicable provisions of the Fund's disclosure document for investors and the
Investment Company Act of 1940 (the "1940 Act"), including without limitation
Section 17 thereof and the rules thereunder, as may be amended from time to
time.
10. It is understood that any of the shareholders, directors, officers,
employees and agents of the Fund may be a shareholder, director, officer,
employee or agent of, or be otherwise interested in, the Adviser, any affiliated
person of the Adviser, any organization in which the Adviser may have an
interest or any organization which may have an interest in the Adviser; that the
Adviser, any such affiliated person or any such organization may have an
interest in the Fund; and that the existence of any such dual interest shall not
affect the validity hereof or of any transactions hereunder except as otherwise
provided in the articles of incorporation of the Fund and the Adviser,
respectively, or by specific provisions of applicable law.
11. This Agreement shall become effective as of the date of its execution
and delivery, and
(a) shall be in effect for two years after its date of execution and
shall continue in force from year to year thereafter, subject to prior
termination as provided herein, but only so long as its continuance shall
be approved specifically at least annually by (i) the Board of Directors of
the Fund, including specific approval by a majority of the Directors who
are not interested persons of any party to this Agreement (other than as
Directors of the Fund) by votes cast in person at a meeting specifically
called for such purpose ("Disinterested Director Vote") or (ii) the issued
and outstanding voting securities of the Fund by a majority vote and a
Disinterested Director Vote;
(b) may at any time be terminated either by vote of the Board of
Directors of the Fund or by vote of a majority of the outstanding voting
securities of the Fund (i) on sixty days' written notice to the Adviser or
(ii) if the Adviser fails to perform in a satisfactory manner;
(c) shall terminate automatically in the event of its assignment; and
(d) may be terminated by the Adviser on sixty days' written notice to
the Fund.
Termination of this Agreement pursuant to this Section 11 shall be without the
payment of any penalty.
12. The Adviser hereby acknowledges that all records necessary to the
operation of the Fund, including records pertaining to the Fund's shareholders
and investments, are the sole and exclusive property of the Fund, and in the
event that a transfer of management or investment advisory services to someone
other than the Adviser should ever occur, the Adviser will promptly, and at its
own cost, take all steps necessary to segregate such records and deliver
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<PAGE>
them to the Fund, free from any claim or retention of rights by the Adviser. The
Adviser agrees to maintain and preserve, for the periods described by Rule 31a-2
pursuant to the 1940 Act, any books and records with respect to the Fund's
securities transactions and any other records required to be maintained by said
Rule which are not being maintained by a custodian or any other party pursuant
to an agreement with the Fund. The Adviser will provide materials relating to
its services as may be requested by the Fund or as may be required by any
governmental agency with proper jurisdiction. The Adviser also agrees to
maintain all such records and accounts in a confidential manner and agrees not
to disclose or use any records or information obtained hereunder in any manner
except as expressly authorized herein. The Adviser will keep confidential any
information obtained pursuant hereto and disclose such information only if the
Fund has authorized such disclosure, or if such disclosure is expressly required
by appropriate state or Federal regulatory authorities.
13. The Fund and the Adviser are not partners or joint venturers with each
other and nothing herein shall be construed so as to make them partners or joint
venturers or impose any liability as such on either of them. The Adviser shall
be deemed to be an independent contractor and, except as expressly provided or
authorized in this Agreement, shall have no authority to act for or represent
the Fund.
14. This Agreement shall be subject to all applicable provisions of law,
including without limitation the applicable provisions of the 1940 Act. To the
extent that any provisions herein contained conflict with any applicable
provisions of law, the latter shall control.
15. This Agreement is executed and delivered in the State of New York and
shall be construed in accordance with its laws, without regard to its rules
regarding conflict of laws.
16. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same instrument.
17. This Agreement may be amended only by mutual consent of the parties by
an instrument in writing signed by the parties, provided that such consent on
the part of the Fund shall be approved (i) by an affirmative vote of a majority
of the outstanding voting securities of the Fund and (ii) by a Disinterested
Director Vote.
18. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities," "interested person," "affiliated person" and
"assignment" shall have the meanings set forth in the 1940 Act, subject to such
exemptions as may be granted by the Securities and Exchange Commission pursuant
to the 1940 Act.
19. Neither the Adviser nor any of its affiliates, officers, directors,
managers, members or employees shall have any liability to the Fund or any
shareholder of the Fund for any error of judgment, mistake of law or any loss
arising out of any investment, or for any other act or omission in the
performance by the Adviser of its duties hereunder, except for liability
resulting from (i) willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard of its obligations and duties
hereunder and (ii) a breach of fiduciary
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<PAGE>
duty with respect to the receipt of compensation for services, but only to the
extent specified in Section 36(b) of the 1940 Act.
IN WITNESS WHEREOF, the Fund and the Adviser have executed this Agreement
as of the day and year first above written.
W.P. STEWART & CO., INC. W.P. STEWART & CO. GROWTH FUND, INC.
By: /s/ Robert L. Schwartz By: /s/ Kevin S. Aarons
------------------------------- --------------------------------
Name: Robert L. Schwartz Name: Kevin S. Aarons
Title: President Title: Attorney-In-Fact
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<PAGE>
EXHIBIT 99.8
CUSTODIAN CONTRACT
Between
W.P. STEWART & CO. GROWTH FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1. Employment of Custodian and Property to Be Held By It.....................1
2. Duties of the Custodian with Respect to Property
of the Fund held by the Custodian.........................................2
2.1 Holding Securities...............................................2
2.2 Delivery of Securities...........................................2
2.3 Registration of Securities.......................................7
2.4 Bank Accounts....................................................8
2.5 Payments of Shares...............................................9
2.6 Availability of Federal Funds....................................9
2.7 Collection of Income.............................................9
2.8 Payment of Fund Monies..........................................10
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased.................................13
2.10 Payments for Repurchases or Redemptions
of Shares of the Fund ..........................................13
2.11 Appointment of Agents ..........................................14
2.12 Deposit of Fund Assets in Securities System.....................15
2.12A Fund Assets Held in the Custodian's Direct
Paper System....................................................18
2.13 Segregated Account..............................................19
2.14 Ownership Certificates for Tax Purposes.........................20
2.15 Proxies.........................................................20
2.16 Communications Relating to Fund
Portfolio Securities ...........................................21
2.17 Proper Instructions.............................................21
2.18 Actions Permitted Without Express Authority.....................22
2.19 Evidence of Authority...........................................23
3. Duties of Custodian With Respect to the Book of Account
and Calculation of Net Asset Value and Net Income........................24
4. Records ................................................................24
5. Opinion of Fund's Independent Accountant.................................25
6. Reports to Fund by Independent Public Accountants........................25
7. Compensation of Custodian................................................26
8. Responsibility of Custodian..............................................26
9. Effective Period, Termination and Amendment..............................27
10. Successor Custodian......................................................29
11. Interpretive and Additional Provisions...................................30
12. Massachusetts Law to Apply...............................................31
13. Prior Contracts..........................................................31
14. Shareholder Communications Election......................................31
<PAGE>
CUSTODIAN CONTRACT
This contract between W.P. Stewart & Co. Growth Fund, Inc., a corporation
organized and existing under the laws of Maryland, having its principal place of
business at 527 Madison Avenue, 21st Floor, New York, New York, 10022-4212
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH, that in consideration of the mutual conventants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets
pursuant to the provisions of the Articles of Incorporation. The Fund agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock
("Shares") of the Fund as may be issued or sold from time to time. The Custodian
shall not be responsible for any property of the Fund held or received by the
Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section 2.17),
the Custodian shall from time to time employ one or more sub-custodians, but
only in accordance with an
<PAGE>
applicable vote by the Board of Directors of the Fund, and provided that the
Custodian shall have no more or less responsibility or liability to the Fund on
account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, including all securities
owned by the Fund, other than (a) securities which are maintained pursuant
to Section 2.12 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as a "Securities System" and (b)
commercial paper of an issuer for which State Street Bank and Trust Company
acts as issuing and paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian pursuant to Section
2.12A.
2.2 Delivery of Securities. The Custodian shall release and deliver securities
owned by the Fund held by the Custodian or in a Securities System account
of the Custodian or in the Custodian's Direct Paper book entry system
account ("Direct Paper Account") only upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
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<PAGE>
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange
for a different number of bonds, certificates or other evidence
representing the same aggregate face amount
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<PAGE>
or number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "sreet delivery" custom; provided
that in any such case, the Custodian shall have no responsibility
or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except
as may arise from the Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalizaton, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the
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<PAGE>
exercise of such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
10) For delivery in connection with any loans of securities made by
the Fund, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund,
which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is
to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the delivery
of securities owned by the Fund prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund,
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<PAGE>
the Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange,
or of any similar organization or organizations, regarding escrow
or other arrangements in connection with transactions by the
Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind,
as may be described from time to time in the Fund's currently
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<PAGE>
effective prospectus and statement of additional information
("prospectus"), in satisfaction of requests by holders of Shares
for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board of Directors or of the Executive
Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, specifying the securities to
be delivered, setting forth the purpose for which such delivery
is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment
adviser as the Fund, or in the name or nominee name of any agent appointed
pursuant to Section 2.11 or in the name or
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<PAGE>
nominee name of any sub-custodian appointed pursuant to Article 1. All
securities accepted by the Custodian on behalf of the Fund under the terms
of this Contract shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in "street
name" the Custodian shall utilize its best efforts only to timely collect
income due the Fund on such securities and to notify the Fund on a best
efforts basis only of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange offers.
2.4 Bank Accounts - The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or order
by the Custodian acting pursuant to the terms of this Contract, and shall
hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for the Fund may be deposited by it to its credit as Custodian in
the Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be qualified
to act as a custodian under the Investment Company Act of 1940 and
-8-
<PAGE>
that each such bank or trust company and the funds to be deposited with
each such bank or trust company shall be approved by vote of a majority of
the Board of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor for
the Fund's Shares or from the Transfer Agent of the Fund and deposit into
the Fund's account such payments as are received for Shares of the Fund
issued or sold from time to time by the Fund. The Custodian will provide
timely notification to the Fund and the Transfer Agent of any receipt by it
of payments for Shares of the Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the Fund and
the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.7 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered securities held hereunder to which the Fund
shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely
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<PAGE>
basis all income and other payments with respect to bearer securities if,
on the date of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income, as collected,
to the Fund's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring representation as and when they become due
and shall collect interest when due on securities held hereunder. Income
due the Fund on securities loaned pursuant to the provisions of Section 2.2
(10) shall be the responsibility of the Fund. The Custodian will have no
duty or responsibility in connection therewith, other than to provide the
Fund with such information or data as may be necessary to assist the Fund
in arranging for the timely delivery to the Custodian of the income to
which the Fund is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of securities, options, futures contracts or options
on futures contracts for the account of the Fund but only (a) against
the delivery of such securities or evidence of title to such options,
futures contracts or options on
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<PAGE>
futures contracts, to the Custodian (or any bank, banking firm or
trust company doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as amended, to act
as a custodian and has been designated by the Custodian as its agent
for this purpose) registered in the name of the Fund or in the name of
a nominee of the Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a purchase effected
through a Securities System, in accordance with the conditions set
forth in Section 2.12 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the conditions set forth
in Section 2.12A; (d) in the case of repurchase agreements entered
into between the Fund and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of the
securities either in certificate from or through an entry crediting
the Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing purchase
by the Fund of securities owned by the Custodian along with written
evidence of the agreement by the
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<PAGE>
Custodian to repurchase such securities from the Fund or (e) for
transfer to a time deposit account of the Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions from the Fund as defined in Section 2.17;
2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Fund as set
forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of
the Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends declared pursuant to the governing
documents of the Fund;
-12-
<PAGE>
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of
Directors or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose
to be a proper purpose, and naming the person or persons to whom such
payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of securities for the account of the Fund is
made by the Custodian in advance of receipt of the securities purchased in
the absence of specific written instructions from the Fund to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by the
custodian and not credited to the account of the Fund.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose but subject to the limitations of
the Articles of
-13-
<PAGE>
Incorporation and any applicable votes of the Board of Directors of the
Fund pursuant thereto, the Custodian shall, upon receipt of instructions
from the Transfer Agent, make funds available for payment to holders of
Shares who have delivered to the Transfer Agent a request for redemption or
repurchase of their Shares or who have received a notice of mandatory
redemption. In connection with the redemption or repurchase of Shares of
the Fund, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by
the redeeming shareholders. In connection with the redemption or repurchase
of Shares of the Fund, the Custodian shall honor checks drawn on the
Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance
with such procedures and controls as are mutually agreed upon from time to
time between the Fund and the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940,
as amended, to act as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time to time direct;
provided, however, that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.
-14-
<PAGE>
2.12 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of the Fund in a Securities System
provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall not
include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for the account of
the Fund upon
-15-
<PAGE>
(i) receipt of advice from the Securities System that such securities
have been transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such payment and transfer
for the account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon (i) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for the
account of the Fund. Copies of all advices from the Securities System
of transfers of securities for the account of the Fund shall identify
the Fund, be maintained for the Fund by the Custodian and be provided
to the Fund at its request. Upon request, the Custodian shall furnish
the Fund confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall furnish to
the Fund copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the Fund.
-16-
<PAGE>
4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received the initial certificate required by
Article 9 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such loss
or damage if and to the extent that the Fund has not been made whole
for any such loss or damage.
-17-
<PAGE>
2.12A Fund Assets Held in the Custodian's Direct Paper System.
The Custodian may deposit and/or maintain securities owned by the Fund in
the Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the account of
the Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of
the Fund. The Custodian shall transfer securities sold for the account
of the Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for the
account of the Fund;
-18-
<PAGE>
5) The Custodian shall furnish the Fund confirmation of each transfer to
or from the account of the Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transaction in the Securities System for
the account of the Fund;
6) The Custodian shall provide the Fund with any report on its system of
internal accounting control as the Fund may reasonably request from
time to time.
2.13 Segregated Account. The Custodian shall upon receipt of Proper Instructions
establish and maintain a segregated account or accounts for and on behalf
of the Fund, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.12 hereof, (i) in accordance with the provisions of
any agreement among the Fund, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding
-19-
<PAGE>
escrow or other arrangements in connection with transactions by the Fund,
(ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund, (iii)
for the purpose of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or
releases of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only, in the case of clause
(iv), upon receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Board of Directors or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper corporate
purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection with
transfers of securities.
2.15 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed
-20-
<PAGE>
by the registered holder of such securities, if the securities are
registered otherwise than in the name of the Fund or a nominee of the Fund,
all proxies, without indication of the manner in which such proxies are to
be voted, and shall promptly deliver to the Fund such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.16 Communications Relating to Fund Portfolios Securities. Subject to the
provisions of section 2.3, Custodian shall transmit promptly to the Fund
all written information (including, without limitation, pendency of calls
and maturities of securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by the
Fund and the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the securities being held for the
Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Fund all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought
and from the party (or his agents) making the tender or exchange offer. If
the Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Fund shall notify the Custodian
at least three business days prior to the date on which the Custodian is to
take such action.
2.17 Proper Instructions. Proper Instructions as used throughout this Article 2
means a writing signed or
-21-
<PAGE>
initialled by one or more person or persons as the Board of Directors
shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved, including
a specific statement of the purpose for which such action is requested.
Oral instructions will be considered Proper Instructions if the Custodian
reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund
shall cause all oral instructions to be confirmed in writing. Upon
receipt of a certificate of the Secretary or an Assistant Secretary as to
the authorization by the Board of Directors of the Fund accompanied by a
detailed description of procedures approved by the Board of Directors,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford
adequate safeguards for the Fund's assets. For purposes of this Section,
Proper Instructions shall include instructions received by the Custodian
pursuant to any three-party agreement which requires a segregated asset
account in accordance with Section 2.13.
2.18 Actions Permitted Without Express Authority. The Custodian may in its
discretion, without express authority from the Fund:
-22-
<PAGE>
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as
otherwise directed by the Board of Directors of the Fund.
2.19 Evidence of Authority. The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or
paper reasonably believed by it to be genuine and to have been properly
executed by or on behalf of the Fund. The Custodian may receive and accept
a certified copy of a vote of the Board of Directors of the Fund as
conclusive evidence (a) of the authority of any person to act in accordance
with such vote or (b) of any determination or of any action by the Board of
Directors pursuant to the
-23-
<PAGE>
Articles of Incorporation as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of
written notice of the contrary.
3. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund, or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective prospectus and shall
advise the Fund and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such net income among
its various components. The calculations of the net asset value per share and
the daily income of the fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.
4. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company At of 1940, with particular
attention to
-24-
<PAGE>
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall
be the property of the Fund and shall at times during the regular business hours
of the Custodian be open for inspection by duly authorized officers, employees
or agents of the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by the Fund and held by the Custodian and shall,
when requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in such
tabulations.
5. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such
-25-
<PAGE>
reports shall be of sufficient scope and in sufficient detail, as may reasonably
be required by the Fund to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no such
inadequacies, the reports shall so state.
7. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
8. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
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<PAGE>
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund shall be security
therefor and should the Fund fail to repay the Custodian promptly, the Custodian
shall be entitled to utilize available cash and to dispose of Fund assets to the
extent necessary to obtain reimbursement.
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either
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<PAGE>
party by an instrument in writing delivered or mailed, postage prepaid to the
other party, such termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; provided, however that the Custodian
shall not act under Section 2.12 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Directors of the Fund has approved the initial use of a particular Securities
System, as required in each case by Rule 17f-4 under the Investment Company Act
of 1940, as amended and that the Custodian shall not act under Section 2.12A
hereof in the absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Directors has approved the initial use
of the Direct Paper system; provided further, however, that the Fund shall not
amend or terminate this Contract in contravention of any applicable federal or
state regulations, or any provision of the Articles of Incorporation, and
further provided, that the Fund may at any time by action of its Board of
Directors (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver for
the Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
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<PAGE>
10. Successor Custodian
If a successor custodian shall be appointed by the Board of Directors of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.
If so such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter,
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<PAGE>
such bank or trust company shall be the successor of the Custodian under this
Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Articles of Incorporation of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
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<PAGE>
12. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the Commonwealth of Massachusetts.
13. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
14. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. for the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate
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<PAGE>
below whether the Fund consents or objects by checking one of the alternatives
below.
YES [_] The Custodian is authorized to release the
Fund's name, address, and share positions.
NO [_] The Custodian is not authorized to release
the Fund's name, address, and share positions.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 11th day of January, 1994.
ATTEST W.P. STEWARD & CO. GROWTH FUND, INC.
/S/ SANDRA VICENTE By: /S/ KEVIN S. AARONS
---------------------- -----------------------
Kevin S. Aarons
Attorney-in-Fact
ATTEST STATE STREET BANK AND TRUST COMPANY
/S/ ELIZABETH SOLOMON By: /S/ RONALD E. LOGUE
--------------------- -----------------------
Executive Vice President
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<PAGE>
STATE STREET BANK AND TRUST COMPANY
CUSTODY AND ACCOUNTING FEE SCHEDULE
- --------------------------------------------------------------------------------
I. CUSTODY, PORTFOLIO AND FUND ACCOUNTING
- --------------------------------------------------------------------------------
CUSTODY: Maintain custody of fund assets. Settle portfolio purchases and
sales. Report buy and sell fails. Determine and collect portfolio income.
Make cash disbursements and report cash transactions. Monitor corporation
actions. Report portfolio positions.
PORTFOLIO AND FUND ACCOUNT: Maintain investment ledgers, provide selected
portfolio transactions, position and income reports. Maintain general
ledger and capital stock accounts. Prepare daily trial balance. Calculate
net asset value daily. Provide selected general ledger reports. Securities
yield or market value quotations will be provided to State Street via State
Street's Automated Pricing System (see Section V) or by the fund.
The fee shown below is an annual charge, billed and payable monthly, based
on average monthly net assets.
ANNUAL FEES PER PORTFOLIO
-------------------------
CUSTODY PORTFOLIO
FUND NET ASSETS CUSTODY ONLY AND FUND ACCOUNTING
--------------- ------------ -------------------
First $20 Million 1/30 of 1% 1/15 of 1%
Next $80 Million 1/60 of 1% 1/30th of 1%
Excess 1/100 of 1% 1/60th of 1%
Minimum Monthly Charges $2,000 $3,000
- --------------------------------------------------------------------------------
II. PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $12.00
New York Physical Settlements $25.00
Maturity collections $ 8.00
PTC Purchase, Sale, Deposit or Withdrawal $20.00
All Other Trades $25.00
<PAGE>
- --------------------------------------------------------------------------------
III. FUTURES AND OPTIONS
- --------------------------------------------------------------------------------
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration or exercised charge, per issue, per broker $15.00
Future transactions - no security movement $ 8.00
- --------------------------------------------------------------------------------
IV. HOLDINGS CHARGE
- --------------------------------------------------------------------------------
For each issue maintained - monthly charge $ 5.00
- --------------------------------------------------------------------------------
V. NAVIGATOR AUTOMATED PRICING
- --------------------------------------------------------------------------------
Monthly Base Charge $375.00
Monthly Quote Charge:
Municipal Bonds via Kenny/S&P or Muller Data $ 16.00
Corporate, Municipal, Convertible, Government Bonds
and Adjustable Rate Preferred Stocks via IDSI $ 13.00
Government, Corporate Bonds via Kenny/S&P or Muller $ 11.00
Government, Corporate and Convertible Bonds via
Merrill Lynch $ 11.00
Foreign Bonds via Extel $ 10.00
Options, Futures and Private Placements $ 6.00
Listed Equities (including International) and OTC Equities $ 6.00
For billing purposes, the monthly quote charge will be based on the average
number of positions in the portfolio at month end.
- --------------------------------------------------------------------------------
VI. SPECIAL SERVICES
- --------------------------------------------------------------------------------
Fees for activities of a non-recurring nature such as fund
consolidations or reorganizations, extraordinary security shipments and the
preparation of special reports will be subject to negotiation. Fees for SEC
yield calculation, self directed securities lending transactions, SaFiRe
financial reporting, multiple class and core/feeder accounting, and other
special items will be negotiated separately.
<PAGE>
- --------------------------------------------------------------------------------
VII. OUT-OF-POCKET EXPENSES
- --------------------------------------------------------------------------------
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but are
not limited to the following:
<TABLE>
<S> <C>
- Telephone - Transfer Fees
- Wire Charges ($5.25 in and $5 out) - Sub-custodian Charges
- Postage and Insurance - Price Waterhouse Audit Letter
- Courier Service - Federal Reserve Fee for Return
- Duplicating Check items over $2,500 ($4.25)
- Legal Fees - GNMA Transfer ($15 each)
- Supplies Related to Fund Records - PTC Deposit/Withdrawal for same
- Rush Transfer ($8 each) day turnaround ($50)
- Items held in Street name over record date
at the request of traders ($50 each)
</TABLE>
- --------------------------------------------------------------------------------
VIII. PAYMENT
- --------------------------------------------------------------------------------
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's offices.
- --------------------------------------------------------------------------------
W.P. STEWART & CO. GROWTH FUND INC. STATE STREET BANK & TRUST COMPANY
By: _________________________ By: _____________________________
Title: _________________________ Title: _____________________________
Date: _________________________ Date: _____________________________
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.9
ADMINISTRATION AGREEMENT
Agreement dated as of January 11, 1994 between State Street Bank and Trust
Company, a Massachusetts trust company (the "Bank") and W.P. Stewart & Co.
Growth Fund, Inc., a Maryland corporation (the "Fund").
WHEREAS, the Bank provides certain administrative and other services to
investment companies and others; and
WHEREAS, the Fund desires to retain the Bank to render certain
administrative and other services with respect to the Fund and the Bank is
willing to render such services on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment of Bank
The Fund hereby appoints the Bank to act as administrator with respect to
the Fund for purposes of providing certain administrative services for the
period and on the terms set forth in this Agreement. The Bank accepts such
appointment and agrees to render the services stated herein and to provide the
office facilities and the personnel required by it to perform such services. In
connection with such appointment, the Fund will deliver to the Bank copies of
each of the following documents and will deliver to it all future amendments and
supplements, if any:
A. Certified copies of the Articles of Incorporation and By-Laws of the
Fund as presently in effect and as amended from time to time;
B. The Fund's most recent registration statement on Form N-1A as filed
with, and declared effective by, the U.S. Securities and Exchange Commission,
and all amendments thereto;
C. Each resolution of the Board of Directors of the Fund authorizing the
original issue of its shares;
D. Certified copies of the resolutions of the Fund's Board of Directors
authorizing: (1) this Agreement, (2) certain officers of the Fund to give
instructions to the Bank pursuant to this Agreement and (3) certain officers and
employees of the Fund to sign checks and pay expenses on behalf of the Fund,
respectively;
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E. A copy of the Investment Advisor Agreement between the Fund and the
Advisor;
F. A copy of the Custodian Contract between the Fund and its custodian;
G. A copy of the Transfer Agency and Service Agreement between the Fund and
its transfer agent; and
H. Such other certificates, documents or opinions which the Bank may, in
its reasonable discretion, deem necessary or appropriate in the proper
performance of its duties.
2. Representation and Warranties of the Bank
The Bank represents and warrants to the Fund that:
A. It is a Massachusetts trust company, duly organized and existing in good
standing under the laws of the Commonwealth of Massachusetts;
B. It is duly qualified to carry on its business in the Commonwealth of
Massachusetts;
C. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement; and
D. It has and will continue to have and maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3. Authorized Shares
The Fund certifies to the Bank that, as of the close of business on the
date of this Agreement, the Fund is authorized to issue shares of common stock,
and that it would initially offer shares in the authorized amounts as set forth
in Schedule A attached hereto.
4. Administration Services
The Bank shall discharge the responsibilities set forth in Schedule B and
Schedule B-2 hereof subject to the control of the Fund in accordance with
procedures established from time to time between the Fund and the Bank.
It is the responsibility of the Fund and/or its legal counsel and
accountants to notify the Bank in a timely manner of any change to any rule,
regulation, law or statute that will affect
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the services to be provided hereunder. The Bank and the Fund agree that all
services provided hereunder are subject to review and correction by the Fund's
accountants and/or legal counsel and the services provided by Bank shall not
constitute the practice of public accountancy or law.
5. Services to be Obtained by the Fund
The Fund shall provide for any of its own:
A. Organizational expenses;
B. Services of an independent accountant;
C. Services of outside legal and tax counsel (including such counsel's
review of the Fund's registration statement, proxy materials, federal and state
tax qualification as a regulated investment company, and other reports and
materials prepared by the Bank under this Agreement);
D. Any services contracted for by the Fund directly from parties other than
the Bank;
E. Trading operations and brokerage fees, commissions and transfer taxes in
connection with the purchase and sale of securities for the Fund;
F. Investment advisory services;
G. Taxes, insurance premiums and other fees and expenses applicable to its
operation;
H. Costs incidental to any meetings of shareholders including, but not
limited to, legal and accounting fees, proxy filing fees and the preparation,
printing and mailing of any proxy materials;
I. Administration of and costs incidental to Directors' meetings, including
fees and expenses of Directors;
J. The salary and expenses of any officer or employee of the Fund;
K. Costs incidental to the preparation, printing and distribution of the
Fund's registration statements and any amendments thereto, and shareholder
reports;
L. All applicable registration fees and filing fees required under the
securities laws of the United States and state regulatory authorities;
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M. Preparation and filing of the Fund's tax returns, Form N-1A, Annual
Report and Semi-Annual Report on Form N-SAR, and all notices, registrations and
amendments associated with applicable tax and securities laws of the United
States and state regulatory authorities; and
N. Fidelity bond and directors' and officers' liability insurance.
6. Fees
The Bank shall receive from the Fund such compensation for the Bank's
services provided pursuant to this Agreement as may be agreed to from time to
time in a written fee schedule approved by the parties hereto and initially set
forth herein in Schedule C attached hereto. In addition, the Bank shall be
reimbursed by the Fund for the out-of-pocket costs incurred in connection with
this Agreement.
7. Instructions
At any time the Bank may apply to any officer of the Fund for instructions
and my consult with legal counsel for the Fund, or the outside counsel for the
Fund or the auditors for the Fund at the expense of the Fund, with respect to
any matter arising in connection with the services to be performed by the Bank
under this Agreement. The Bank shall not be liable and shall be indemnified by
the Fund for any action taken or omitted by it in good faith in reliance upon
such instructions or upon any paper or document reasonably believed by it to be
genuine and to have been signed by the proper person or persons. The Bank shall
not be held to have notice of any change of authority of any person until
receipt of written notice thereof from the Fund.
8. Limitation of Liability and Indemnification
a. The Bank shall be responsible for the performance of only such duties as
are set forth herein and shall have no responsibility for the actions or
activities of any other party including other service providers. The Bank shall
have no liability for any loss or damage resulting from the performance or
nonperformance of its duties hereunder unless caused by or resulting from the
negligence or willful misconduct of the Bank, its officers or employees. In any
event, the Bank's liability shall be limited to its total annual compensation to
be earned or earned and fees paid hereunder during the preceding twelve months
or, in the absence of a twelve months history under this Agreement, the Bank's
scheduled compensation to be earned in a twelve month period for any liability
or loss suffered by Fund including,
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but not limited to, any liability relating to qualification of the Fund as a
regulated investment company or any liability relating to the Fund's compliance
with any federal or state tax or securities statute, regulation or ruling.
b. The Fund shall indemnify and hold the Bank harmless from all loss, cost,
damage and expense, including reasonable expenses for counsel, incurred by the
Bank resulting from any claim, demand, action or suit in connection with the
Bank's acceptance of this Agreement, any action or omission by it in the
performance of its duties hereunder, or as a result of acting upon any
instructions reasonably believed by it to have been executed by a duly
authorized officer of the Manager or of the Fund, provided that this
indemnification shall not apply to actions or omissions of the Bank, its
officers or employees in cases of its or their own negligence or willful
misconduct.
c. The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event the Fund elects to assume the defense of any such suit and retain such
counsel, the Bank or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless the Fund shall have specifically authorized
the retaining of such counsel.
d. The indemnification contained herein shall survive the termination of
this Agreement.
e. This Section 8 shall not apply with respect to services covered by the
Custodian Contract or the Transfer Agency and Service Agreement.
9. Confidentiality
The Bank agrees that, except as otherwise required by law, it will keep
confidential the terms of this Agreement, all records and information in its
possession relating to the Fund or its shareholders or shareholder accounts and
will not disclose the same to any person except at the request or with the
written consent of the Fund.
10. Compliance with Governmental Rules and Regulations
The Fund assumes full responsibility for complying with all applicable
requirements of the Investment Company Act, the Securities Act of 1933, the
Securities Exchange Act of 1934, and the Internal Revenue Code of 1986, all as
amended, and any laws, rules and regulations issued thereunder.
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The Bank shall maintain and preserve for the periods prescribed such
records relating to the services to be performed by the Bank under this
Agreement as are required pursuant to the Investment Company Act. All such
records shall at all times remain the property of the Fund, shall be readily
accessible during normal business hours, and shall be promptly surrendered upon
the termination of the agreement or otherwise on written request. Records shall
be surrendered in usable machine-readable form.
11. Status of the Bank
The services of the Bank to the Fund are not to be deemed exclusive, and
the Bank shall be free to render similar services to others. The Bank shall be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Fund from time to time, have no authority
to act or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
12. Printed Matter
Neither party shall publish or circulate any printed matter which contains
any reference to the other party without such party's prior written approval.
The Fund may circulate such printed matter as refers in accurate terms to the
Bank's appointment hereunder provided that the Bank is given a copy of such
material prior to its first use.
13. Term, Amendment and Termination
This Agreement may be modified or amended from time to time by mutual
agreement between the parties hereto. The Agreement shall remain in effect for a
period of one year from the date the Fund first accepts money for investment,
and shall automatically continue in effect thereafter with respect to the Fund
unless terminated by a party at the end of such period or otherwise on thirty
(30) days' prior written notice. Upon termination of this Agreement, the Fund
shall pay to the Bank such compensation as may be due under the terms hereof as
of the date of such termination including reasonable out-of-pocket expenses
associated with such termination.
14. Notices
Any notice or other communication authorized or required by this Agreement
to be given to any party mentioned herein shall be sufficiently given if
addressed to such party and mailed postage prepaid or delivered to its principal
office.
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15. Non-Assignability
This Agreement shall not be assigned by any of the parties hereto without
the prior consent in writing of the other parties.
16. Successors
This Agreement shall be binding on and shall inure to the benefit of the
Fund and the Bank and their respective successors.
17. Entire Agreement
This Agreement (and any Compliance Manual and Fund Profile as may be
prepared by the Bank and approved in writing by the Fund) contains the entire
understanding between the parties hereto and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing. This Agreement cannot be
modified or terminated except in accordance with its terms or by a writing
signed by all parties.
18. Governing Law
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
W.P. STEWART & CO. GROWTH FUND, INC.
By: /s/ KEVIN S. AARONS
Name: Kevin S. Aarons
Title: Attorney-in-Fact
STATE STREET BANK AND TRUST COMPANY
By: /s/ RONALD E. LOGUE
Name: Ronald E. Logue
Title: Executive Vice President
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SCHEDULE A
TO
ADMINSTRATION AGREEMENT
Fund Authorized Shares
---- -----------------
W.P. Stewart & Co. Growth Fund, Inc. 100,000,000
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SCHEDULE B
TO
ADMINISTRATION AGREEMENT
Services Provided by the Bank:
(a) Oversee the determination and publication of the Fund's net asset
value in accordance with the Fund's policy as adopted from time to
time by the Board of Directors;
(b) Oversee the maintenance of certain books and records of the Fund as
required under Rule 31a-I(b) (4) of the Investment Company Act of
1940;
(c) Prepare the Fund's federal, state and local income tax returns for
review by the Fund's independent accountants and filing by the Fund
treasurer;
(d) Review the appropriateness of and arrange for payment of the Fund's
expenses;
(e) Prepare for review and approval by officers of the Fund financial
information for the Fund's semi-annual and annual reports, proxy
statements and other communications with shareholders required or
otherwise to be sent to Fund shareholders, and arrange for the
printing and dissemination of such reports and communications to
shareholders;
(f) Prepare for review by an officer of and counsel for the Fund the
Fund's periodic financial report required to be filed with the
Securities and Exchange Commission ("SEC") on Form N-SAR and Form N-1A
and such other reports, forms or filings, as may be mutually agreed
upon;
(g) Prepare reports relating to the business and affairs of the Fund as
may be mutually agreed upon and not otherwise appropriately prepared
by the Fund's investment adviser, custodian, counsel or auditors;
(h) Make such reports and recommendations to the Board concerning the
performance of the independent accountants as the Board may reasonably
request or deems appropriate;
(i) Make such reports and recommendations to the Board concerning the
performance and fees of the Fund's custodian and transfer and dividend
disbursing agent as the Board may reasonably request or deems
appropriate;
(j) Oversee and review calculations of fees paid to the
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Manager, the investment adviser, the custodian, and the transfer
agent;
(k) Consult with the Fund's officers, independent accountants, legal
counsel, custodian and transfer and dividend disbursing agent in
establishing the accounting policies of the Fund;
(l) Review implementation of any dividend reinvestment programs authorized
by the Board of Directors;
(m) Respond to or refer to the Fund's officers or transfer agent,
shareholder inquiries relating to the Fund.
(n) Provide periodic testing of portfolios to assist the Fund's advisor in
complying with Internal Revenue Code mandatory qualification
requirements, the requirements of the Investment Company Act and Fund
prospectus limitations as may be mutually agreed upon.
Certain details of the scope of the Bank services hereunder may be
documented in the Compliance Manual and Fund Profile as amended from time to
time.
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SCHEDULE B-2
REGISTRATION OF FUND SHARES
WITH STATE SECURITIES ADMINISTRATORS
If requested by the Fund, the Bank will prepare required documentation and
register Fund shares in accordance with the securities laws of each state or
jurisdiction in which Fund shares are offered or sold as determined by the Fund.
The registration services shall consist of the following:
1. Filing of Fund initial registration statements and amendments thereto
(N-1A);
2. Amending state registration statements as required;
3. Filing on behalf of the Fund, Fund sales reports and advertising
literature where applicable;
4. Payment at the expense of the Fund of all Fund state registration and
filing fees;
5. Filing post effective amendments to the prospectuses and statements of
additional information (SAI);
6. Filing of annual reports, supplements and stickers, and proxy
statements; and
7. The performance of additional services which the Bank and the Manager
may agree upon in writing.
Unless otherwise noted in writing by the Bank, registration services by the Bank
shall not include determining the availability of institutional exemptions under
a state's blue sky law. Any such determination shall be made by the Manager or
its legal counsel. In connection with the services describe herein, the Manager
shall cause the Fund to issue in favor of the Bank a power of attorney to
register Fund shares on behalf of the Fund, which power of attorney shall be
substantially in the form of Exhibit I attached hereto.
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EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of _________________________ , 1994 that W.P.
Stewart & Co. Growth Fund, Inc. (the "Fund") makes, constitutes, and appoints
STATE STREET BANK AND TRUST COMPANY (the "Bank") with principal offices at 225
Franklin Street, Boston, Massachusetts its lawful attorney-in-fact for it to do
as if it were itself acting, the following:
1. REGISTRATION OF FUND SHARES. The power to register shares of the Fund in
each jurisdiction in which Fund shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Fund applications, including without limitation, applications
to register shares, to register agents, consents, including consents to
service of process, reports, including without limitation, all periodic
reports, claims for exemption, or other documents and instruments now or
hereafter required or appropriate in the judgement of the Bank in
connection with the registration of Fund shares.
2. CHECKS. The power to draw, endorse, and deposit checks in the name of the
Fund in connection with the registration of Fund shares with state
Securities administrators.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by Bank of such termination of
authority. Nothing herein shall be construed to constitute the appointment of
the Bank as or otherwise authorize the Bank to act as an officer, director, or
employee of the Fund.
IN WITNESS WHEREOF, the Fund has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
W.P. Stewart & Co. Growth Fund, Inc.
By:__________________________________
Name:________________________________
Title:_______________________________
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STATE STREET BANK AND TRUST COMPANY
FUND ADMINISTRATION
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I. Fund Administration Services
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Annual Fee
Average Assets Expressed in Basis Points: 1/100 of 1%
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Sub-Administration
First $125 Million/Fund 8
Next $125 Million/Fund 6
Thereafter 4
Minimum/Fund $65,000
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II. Multiple Classes of Shares
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An additional $10,000 annual fee will be applied for each class of shares,
excluding the initial class of shares, if more than one class of share is
operational in a fund.
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III. Blue Sky Administration Services
- --------------------------------------------------------------------------------
A fee of $5,000 for each portfolio of a series and $4,000 for each class of
shares, excluding the initial class of shares, if more than one class of
shares is operational in a fund plus $50 per state per portfolio
registered.
- --------------------------------------------------------------------------------
IV. Out-Of-Pocket Expenses - Include, But May Not Be Limited To:
- --------------------------------------------------------------------------------
- Printing for shareholder reports and SEC filings
- Legal fees, audit fees and other professional fees
- Portage, telephone, fax, and photocopying
- Supplies related to Fund records
- Travel and lodging for Board and Operations meetings
- Advertised Yields and Total Returns $300 per Fund, per month
- Preparation of financials other than Annual, Semi-Annual and Quarterly
Board Report - $3,000 per financial report.
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V. Special Arrangements
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Fees for activities of non-recurring nature such as fund consolidation or
reorganizations, and/or preparation of special reports will be subject to
negotiation.
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W.P. STEWART & CO. GROWTH FUND, INC. STATE STREET BANK & TRUST COMPANY
By:__________________________________ By:__________________________________
Title:_______________________________ Title:_______________________________
Date:_______________________________ Date:________________________________
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TRANSFER AGENCY AND SERVICE AGREEMENT
between
W.P. STEWART & CO. GROWTH FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
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TABLE OF CONTENTS
Page
----
Article 1 Terms of Appointment; Duties of the Bank ..................... 1
Article 2 Fees and Expenses ............................................ 5
Article 3 Representations and Warranties of the Bank ................... 6
Article 4 Representations and Warranties of the Fund ................... 6
Article 5 Data Access and Proprietary Information ...................... 7
Article 6 Indemnification .............................................. 9
Article 7 Standard of Care .............................................12
Article 8 Covenants of the Fund and the Bank ...........................12
Article 9 Termination of Agreement .....................................14
Article 10 Assignment ...................................................14
Article 11 Amendment ....................................................15
Article 12 Massachusetts Law to Apply ...................................15
Article 13 Force Majeure ................................................15
Article 14 Consequential Damages ........................................15
Article 15 Merger of Agreement ..........................................15
Article 16 Counterparts .................................................16
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TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 11th day of January, 1994, by and between W.P.
STEWART & CO. GROWTH FUND, INC., a Maryland corporation, having its principal
office and place of business at 527 Madison Avenue, 21st Floor, New York, New
York, 10022-4212 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal office and place of business at
225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and the Bank desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of the Bank
1.01 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints the Bank to act as, and the Bank agrees to act
as its transfer agent for the Fund's authorized and issued shares of its common
stock, $0.001 par value, ("Shares"), dividend disbursing agent, custodian of
certain retirement plans and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of the Fund
("Shareholders") and set out in the currently effective prospectus and statement
of additional information ("prospectus") of the Fund, including without
limitation any periodic investment plan or periodic withdrawal program.
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1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof to
the Custodian of the Fund authorized pursuant to the Articles of
Incorporation of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to
the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii) above,
the Bank shall execute transactions directly with broker-dealers
authorized by the Fund who shall thereby be deemed to be acting on
behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to it
by the Custodian with respect to any redemption, pay over or cause
to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
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(vi) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund;
(viii) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and protecting the Bank
and the Fund, and the Bank, at its option, may issue replacement
certificates in place of mutilated stock certificates upon
presentation thereof and without such indemnity;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain pursuant to
SEC Rule 17Ad-10(e) a record of the total number of shares of the
Fund which are authorized, based upon data provided to it by the
Fund, and issued and outstanding. The Bank shall also provide the
Fund on a regular basis with the total number of shares which are
authorized and issued and outstanding and shall have no
obligation, when recording the issuance of shares, to monitor the
issuance of such shares or to take cognizance of any laws relating
to the issue or sale of such shares, which functions shall be the
sole responsibility of the Fund.
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(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i) perform the
customary services of a transfer agent, dividend disbursing agent, custodian of
certain retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky reporting for each
State and (ii) verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily activity for each
State. The responsibility of the Bank for the Fund's blue sky
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State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services in Article
I may be established from time to time by agreement between the Fund and the
Bank per the attached service responsibility schedule. The Bank may at times
perform only a portion of these services and the Fund or its agent may perform
these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund (i.e.,
escheatment services) which may be agreed upon in writing between the Fund and
the Bank.
Article 2 Fees and Expenses
2.01 For the performance by the Bank pursuant to this Agreement, the Fund
agrees to pay the Bank a monthly maintenance fee as set out in the initial fee
schedule attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.02 below may be changed from time to time subject to
mutual written agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees
to reimburse the Bank for out-of-pocket expenses, including but not limited to
confirmation production, postage, forms, telephone, microfilm, microfiche,
tabulating proxies, records storage, or advances incurred by the Bank for the
items set out in the fee schedule attached hereto. In addition, any other
expenses incurred by the Bank at the request or with the consent of the Fund,
will be reimbursed by the Fund.
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2.03 The Fund agrees to pay all fees and reimburseable expenses within five
days following the receipt of the respective billing notice. Postage for mailing
of dividends, proxies, Fund reports and other mailings to all shareholder
accounts shall be advanced to the Bank by the Fund at least seven (7) days prior
to the mailing date of such materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.01 It is a corporation duly organized and existing and in good standing
under the laws of Maryland.
4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
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4.03 All corporate proceedings required by said Articles of Incorporation
and By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end management investment company registered under the
Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as amended
is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with respect
to all Shares of the Fund being offered for sale.
Article 5 Data Access and Proprietary Information
5.01 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank on
data bases under the control and ownership of the Bank or other third party
("Data Access Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of substantial
value to the Bank or other third party. In no event shall Proprietary
Information be deemed Customer Data. The Fund agrees to treat all Proprietary
Information as proprietary to the Bank and further agrees that it shall not
divulge any Proprietary Information to any person or organization except as may
be provided hereunder. Without limiting the foregoing, the Fund agrees for
itself and its employees and agents:
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(a) to access Customer Data solely from locations as may be designated
in writing by the Bank and solely in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of
the Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose of
such information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility
or other location, except with the prior written consent of the
Bank;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law, under federal copyright law
and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article shall
survive any earlier termination of this Agreement.
-8-
<PAGE>
5.02 If the Fund notifies the Bank that any of the Data Access Services do
not operate in material compliance with the most recently issued user
documentation for such services, the Bank Shall endeavor in a timely manner to
correct such failure. Organizations from which the Bank may obtain certain data
included in the Data Access Services are solely responsible for the contents of
such data and the Fund agrees to make no claim against the Bank arising out of
the contents of such third-party data, including, but not limited to, the
accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AVAILABLE
BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED
HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.
5.03 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information, then in such event the Bank shall be entitled to rely on
the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Bank from time to time.
Article 6 Indemnification
6.01 The Bank shall not be responsible for, and the Fund shall indemnify
and hold the Bank harmless from and against,
-9-
<PAGE>
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records, documents or services which (i) are received by the Bank
or its agents or subcontractors, and (ii) have been prepared, maintained or
performed by the Fund or any other person or firm on behalf of the Fund
including but not limited to any previous transfer agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
-10-
<PAGE>
6.02 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal consul with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Fund, reasonably believed
to be genuine and to have been signed by the proper person or persons, or upon
any instruction, information, data, records or documents provided the Bank or
its agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers of
the Fund, and the proper manual or facsimile signatures of the officers of the
Fund, and the proper countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
6.03 In order that the indemnification provisions contained in this Article
6 shall apply, upon the assertion of a claim for which the Fund may be required
to indemnify the Bank, the Bank shall promptly notify the fund of such
assertion, and
-11-
<PAGE>
shall keep the Fund advised with respect to all developments concerning such
claim. The fund shall have the option to participate with the Bank in the
defense of such claim or to defend against said claim in its own name or in the
name of the Bank. The Bank shall in no case confess any claim or make any
compromise in any case in which the Fund may be required to indemnify the Bank
except with the Fund's proper written consent.
Article 7 Standard of Care
7.01 The Bank shall at all times act in good faith and agrees to use its
best efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not be
liable for loss or damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct of that of its employees.
Article 8 Convenants of the Fund and the Bank
8.01 The Fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution to the Board of Directors of the
Fund authorizing the appointment of the Bank and the execution and delivery of
this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Fund and all
amendments thereto.
8.02. The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or
-12-
<PAGE>
use, and for keeping account of, such certificates, forms and devices.
8.03 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
8.04 The Bank and the Fund agree that all books, records, information, and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
-13-
<PAGE>
Article 9 Termination of Agreement
9.01 This Agreement may be terminated by either party upon thirty (30) days
written notice to the other.
9.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, the Bank reserves the right to charge for any other
reasonable expenses associated with such termination.
Article 10 Assignment.
10.01 Except as provided in Section 10.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
10.02 This Agreement shall Inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
10.03 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate;
provided, however, that the Bank shall be as fully responsible to the Fund for
the acts and omissions of any subcontractor as it is for its own acts and
omissions.
-14-
<PAGE>
Article 11 Amendment
11.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
Article 12 Massachusetts Law to Apply
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 13 Force Majeure.
13.01 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, requirement or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable to the other for
any damages resulting from such failure to perform or otherwise from such
causes.
Article 14 Consequential Damages
14.01 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
Article 15 Merger of Agreement
15.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
-15-
<PAGE>
Article 16 Counterparts
16.01 This Agreement may be executed by the parties hereto in any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
W.P. STEWART & CO. GROWTH FUND, INC.
BY: /s/ Kevin S. Aarons
-----------------------------
Kevin S. Aarons
Attorney-in-Fact
ATTEST:
/s/ Sandra Vicente
- ------------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
-----------------------------
Executive Vice President
ATTEST:
/s/ Elizabeth Solomon
- -------------------------------
-16-
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Responsibility
--------------------
Service Performed Bank Fund
- ----------------- ---- ----
1. Receives orders for the purchase of
Shares.
2. Issues Shares and hold Shares in
Shareholders accounts.
3. Receive redemption requests.
4. Effect transactions 1-3 above
directly with broker-dealers.
5. Pay over monies to redeeming
Shareholders.
6. Effect transfers of Shares.
7. Prepare and transmit dividends and
distributions.
8. Issue Replacement Certificates.
9. Reporting of abandoned property.
10. Maintain records of account.
11. Maintain and keep a current and
accurate control book for each
issue of securities.
12. Mail proxies.
13. Mail Shareholder reports.
14. Mail prospectuses to current
Shareholders.
15. Withhold taxes on U.S. resident and
non-resident alien accounts.
16. Prepare and file U.S. Treasury
Department forms.
17. Prepare and mail account and
confirmation statements for
Shareholders.
-17-
<PAGE>
Responsibility
--------------------
Service Performed Bank Fund
- ----------------- ---- ----
18. Provide Shareholder account
information.
19. Blue sky reporting.
* Such services are more fully described in Article 1.02 (a), (b) and (c) of
the Agreement.
W.P STEWART & CO. GROWTH FUND, INC.
BY:
----------------------------------
ATTEST:
- ------------------------------
STATE STREET BANK AND TRUST COMPANY
BY:
----------------------------------
Executive Vice President
ATTEST:
- ------------------------------
-18-
<PAGE>
- --------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
GLOBAL CLIENT SUPPORT - TRANSFER AGENT OPERATIONS
STANDARD FEE SCHEDULE
- --------------------------------------------------------------------------------
ITEM DESCRIPTION: PRICE:
Trade Processing - Manual $4.80
(Per Trade) - Automated $2.00
Monthly Maintenance Fee $2,500.00
(Per Fund)
Wires - Incoming $6.25
(Per Wire) - Outgoing $6.00
Out of Pocket Expenses billed to client which include but is not limited to:
custom system enhancements, communication, and mailing costs.
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.10
<TABLE>
<CAPTION>
SUTHERLAND, ASBILL & BRENNAN
<S> 1270 AVENUE OF THE AMERICAS <C>
999 PEACHTREE STREET N.E. NEW YORK, NEW YORK 10020-1700 1275 PENNSYLVANIA AVENUE N.W.
ATLANTA, GEORGIA 30309-3996 TEL: (212) 332-3000 WASHINGTON D.C 20004-3404
(404) 853-8000 FAX: (212) 757-3247 (202) 383-0100
</TABLE>
January 21, 1994
W.P. Stewart & Co. Growth Fund, Inc.
527 Madison Avenue
New York, New York 10022
Dear Sirs:
This opinion is furnished in connection with the registration by W.P.
Stewart & Co. Growth Fund, Inc., a Maryland corporation (the "Company"), of
shares of common stock, par value $0.001 per share (the "Shares"), under the
Securities Act of 1933 pursuant to a registration statement on Form N-1A (File
No. 33-71142), as amended (the "Registration Statement").
As counsel for the Company, we are familiar with the proceedings taken by
it in connection with the authorization, issuance and sale of the Shares. In
addition, we have examined and are familiar with the Amended Articles of
Incorporation of the Company, the By-Laws of the Company and such other
documents as we have deemed relevant to the matters referred to in this opinion.
Based upon the foregoing, we are of the opinion that the Shares, upon
issuance and sale in the manner referred to in the Registration Statement for
consideration not less than the par value thereof, will be legally issued, fully
paid and non-assessable (except as otherwise provided in the Registration
Statement) shares of common stock of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the prospectus and
statement of additional information constituting parts thereof.
Very truly yours,
/S/ SUTHERLAND, ASBILL & BRENNAN
<PAGE>
EXHIBIT 99.11
[LOGO] LOPEZ
EDWARDS
FRANK
& CO., LLP
- --------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
MEMBER MACINTYRE STRATER INTERNATIONAL
April 30, 1998
Ms. Lisa D. Levey
W.P. Stewart & Co., Growth Fund Inc.
527 Madison Ave.
New York, NY 10022
Re: W.P. Stewart & Co. Growth Fund, Inc.
Dear Ms. Levey:
As independent public accountants of W.P. Stewart & Co. Growth Fund,
Inc., we hereby consent to the incorporation by reference of the annual report
to shareholders in the annual registration statement, as well as to all
references to our firm included or made part of this registration statement.
Very truly yours,
/s/ LOPEZ EDWARDS FRANK & CO., LLP
LOPEZ EDWARDS FRANK & CO., LLP
:cm
cc: Gregory N. Bressler, Esq.
<TABLE>
<S> <C>
[ ] 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 11582-0547 (516) 872-3400 FAX: (516) 872-2357
</TABLE>
<PAGE>
EXHIBIT 99.13
SUBSCRIPTION AGREEMENT
----------------------
This Agreement is made as of the 26th day of October 1993, by and between
WPS&Co., N.V., an international business company organized and existing under
the laws of the Netherlands Antilles ("WPS"), and W.P. Stewart & Co. Growth
Fund, Inc., a corporation organized and existing under the laws of the State of
Maryland (the "Fund").
WHEREAS, the Fund intends to register as an open-end investment company
under the Investment Company Act of 1940 and to register the shares of its
common stock, par value $.001 per share (the "Shares"), pursuant to the
Securities Act of 1933; and
WHEREAS, in order to effect such proposed registrations the Fund is
required to have minimum capital of $100,000; and
WHEREAS, WPS desires to subscribe for Shares in order to provide such
required capital;
NOW, THEREFORE, the parties hereto agree as follows:
1. WPS hereby subscribes for 1,000 Shares at a price of $100 per Share, for
a total purchase price of $100,000 (the "Purchase Price"), and the Fund agrees
to issue 1,000 fully paid and nonassessable Shares to WPS upon payment of the
Purchase Price in the manner set forth below.
2. WPS agrees to pay the Purchase Price to the Fund on the date hereof in
immediately available funds.
3. Such purchase by WPS of Shares shall be reflected promptly on the books
of the Company, and upon the request of WPS, the Fund shall issue a certificate
representing 1,000 fully paid and nonassessable Shares in the name of WPS.
4. WPS agrees not to redeem or transfer any of the Shares for which WPS is
subscribing pursuant to this Agreement until ten (10) calendar days following
the day upon which the Fund has at least $1,000,000 in net assets (as defined in
the Fund's prospectus) or ceases to be registered as an investment company under
the Investment Company Act of 1940.
5. WPS hereby represents and warrants to the Fund that it is not acquiring
the Shares with a view to the distribution thereof.
<PAGE>
6. The Fund hereby represents and warrants to WPS that, when issued to WPS,
the Shares for which WPS is subscribing pursuant to this Agreement will be
validly issued, fully paid and nonassessable.
7. This Agreement represents the entire agreement between the parties
hereto with respect to its subject matter and may be modified only with the
written agreement of both parties. Neither this Agreement nor any rights
hereunder may be assigned by either party. This Agreement shall be governed and
construed according to the law of the State of New York without regard to its
rules relating to choice of law.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.
W.P. STEWART & CO., N.V.
NORO-MANAGEMENT SERVICES N.V. NORO (CURACAO) N.V.
Managing Director Managing Director
By: /s/ [illegible] By: /s/ [illegible]
------------------ ------------------
Authorized Signatory Authorized Signatory
W.P. STEWART & CO.
GROWTH FUND, INC.
By: /S/ KEVIN S. AARONS
-------------------
Name: Kevin S. Aarons
Title: Attorney-in-fact
<PAGE>
EXHIBIT 99.24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each of the persons whose name appears
below hereby nominates, constitutes and appoints John C. Russell, Robert L.
Schwartz and Lisa D. Levey (with full power to each of them to act alone) his or
her true and lawful attorney-in-fact and agent, for him or her and on his or her
behalf and in his or her place and stead in any and all capacities, to make,
execute and sign the Registration Statement filed on Form N-1A under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and all amendments and supplements thereto of W.P. Stewart & Co. Growth
Fund, Inc. (the "Fund"), and to file the same with the Securities and Exchange
Commission, and any other regulatory authority having jurisdiction over the
offer and sale of shares of common stock of the fund, and any and all exhibits
and other documents requisite in connection therewith, granting unto said
attorneys and each of them full power and authority to perform each and every
act and thing requisite and necessary to be done in and about the premises as
fully to all intents and purposes as each of the undersigned officers or
Directors himself or herself might or could do.
IN WITNESS WHEREOF, the undersigned officers and Directors have hereunto
set their hands this 25th day of March, 1998.
/s/ Antoine Bernheim /s/ William Talcott May
- -------------------------------------- ------------------------------------
Antoine Bernheim William Talcott May
Director Director
/s/ Marilyn G. Breslow /s/ John C. Russell
- ------------------------------------- ------------------------------------
Marilyn G. Breslow John C. Russell
President and Director Vice President
/s/ June Eichbaum /s/ Robert L. Schwartz
- ------------------------------------- ------------------------------------
June Eichbaum Robert L. Schwartz
Director Treasurer, Secretary and Director
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 25th day of March 1998, before me personally came Antoine
Bernheim, Marilyn G. Breslow, June Eichbaum, William Talcott May, John C.
Russell and Robert L. Schwartz, to me know, who, each being by me duly sworn,
did depose and say that he or she is the person named above and who executed the
foregoing instrument; and he or she acknowledged to me that he or she executed
the same.
/s/ Lisa D. Levey
---------------------------------
Notary Public
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000914389
<NAME> W.P. STEWART & CO. GROWTH FUND, INC.
<SERIES>
<NUMBER> 1
<NAME> W.P. STEWART & CO. GROWTH FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 29,498,870
<INVESTMENTS-AT-VALUE> 35,935,513
<RECEIVABLES> 433,332
<ASSETS-OTHER> 139
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 36,368,984
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 167,578
<TOTAL-LIABILITIES> 167,578
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,579,697
<SHARES-COMMON-STOCK> 214,581
<SHARES-COMMON-PRIOR> 129,896
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 185,065
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,436,644
<NET-ASSETS> 36,201,406
<DIVIDEND-INCOME> 208,073
<INTEREST-INCOME> 25,240
<OTHER-INCOME> 0
<EXPENSES-NET> (635,110)
<NET-INVESTMENT-INCOME> (401,797)
<REALIZED-GAINS-CURRENT> 4,077,134
<APPREC-INCREASE-CURRENT> 2,831,731
<NET-CHANGE-FROM-OPS> 6,507,068
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 3,973,159
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 70,106
<NUMBER-OF-SHARES-REDEEMED> 15,677
<SHARES-REINVESTED> 30,257
<NET-CHANGE-IN-ASSETS> 16,372,574
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 482,887
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 450,518
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 639,746
<AVERAGE-NET-ASSETS> 29,774,563
<PER-SHARE-NAV-BEGIN> 152.65
<PER-SHARE-NII> (1.87)
<PER-SHARE-GAIN-APPREC> 38.53
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (20.60)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 168.71
<EXPENSE-RATIO> 2.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
