<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 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
----------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [_]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. 6 [X]
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [_]
AMENDMENT NO. 7 [X]
----------------
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. JOEL H. GOLDBERG, ESQ.
527 MADISON AVENUE
NEW YORK, NEW YORK 10022 SWIDLER BERLIN SHEREFF FRIEDMAN, LLP
919 THIRD AVENUE
ATTN: LISA D. LEVEY NEW YORK, NEW YORK 10022-9998
(NAME AND ADDRESS OF AGENT FOR
SERVICE)
----------------
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
-------------------------- ----------------------
<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 19 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........................................................... 14
FUND PERFORMANCE............................................................ 15
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE................................. 16
NET ASSET VALUE CALCULATION................................................. 16
PURCHASE OF SHARES.......................................................... 16
REDEMPTIONS AND DISTRIBUTIONS............................................... 17
Redemptions............................................................... 17
Dividends and Distributions............................................... 18
TAXATION.................................................................... 18
ADDITIONAL INFORMATION...................................................... 19
Accountants and Legal Counsel............................................. 19
Reports to Shareholders................................................... 19
Capital Stock............................................................. 19
Inquiries................................................................. 19
</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, together with its affiliates, as
of August 31, 1998, provided investment advice
with respect to nearly $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--Other Investment
Methods and Policies--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."
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 for the six-month period ended
June 30, 1998 is unaudited. The financial information for the periods ended
December 31, 1997, 1996, 1995 and for the period from February 28, 1994 through
December 31, 1994, have 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 six months ended June 30,
1998 and 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 semi-annual and
annual reports, which have been incorporated by reference into the Statement of
Additional Information. Additional copies of the semi-annual and annual reports
may be obtained without charge by calling or by writing to the Fund at the
telephone number or address appearing under "Additional Information--
Inquiries."
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
SIX MONTHS FOR THE FOR THE FOR THE FEBRUARY 28,
ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1994* THROUGH
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998(A) 1997 1996 1995 1994
---------- ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Income From Investment
Operations:
Per Share Operating Per-
formance:
Net asset value, begin-
ning of period......... $168.71 $152.65 $125.94 $101.06 $100.00
------- ------- ------- ------- -------
Net investment loss.... (1.38) (1.87) (1.81) (1.15) (0.48)
Net realized and
unrealized gain on
investments........... 37.28 38.53 40.17 29.19 1.54
------- ------- ------- ------- -------
Net increase from in-
vestment operations.... 35.90 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................. $204.61 $168.71 $152.65 $125.94 $101.06
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN
(b).................... 21.28 % 24.69 % 30.64 % 27.73 % 1.06 %
RATIOS AND SUPPLEMENTAL
DATA:
Ratio of expenses to av-
erage net assets....... 2.12 %(c) 2.13 % 2.50 % 2.50 % 2.50 %(c)
Ratio of fees and
expenses waived and
reimbursed by the
Adviser and
Administrator to
average net assets..... -- %(c) .02 % 0.28 % 1.32 % 10.20 %(c)(d)
Ratio of net investment
loss to average net as-
sets................... (1.46)%(c) (1.35)% (1.51)% (1.36)% (1.25)%(c)
Portfolio turnover...... 23 % 79 % 76 % 76 % 9 %
Net assets, end of pe-
riod (in thousands).... $43,670 $36,201 $19,829 $10,789 $ 3,109
</TABLE>
- --------
* Commencement of investment operations.
(a) Unaudited.
(b) Total investment return is calculated assuming a purchase of common stock
at net asset value at the beginning of the period, a sale at net asset
value at the end of the period, reinvestment of all dividends and
distributions at net asset value during the period and no redemption fee.
Total investment return would be reduced if the redemption fee of 0.5% 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 will vary and net asset value of shares, when redeemed, may be worth
more or less than their original cost.
(c) Annualized.
(d) Includes organization expenses paid by Adviser.
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
investment grade 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 1998, 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 and its predecessor have 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.
The Adviser is a wholly owned subsidiary of W.P. Stewart & Co., Ltd., a
Bermuda corporation ("W.P. Stewart-Bermuda"). William P. Stewart may be deemed
to be a controlling person of W.P. Stewart-Bermuda.
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 President and a Director of the Adviser. Ms. Breslow has served as a
portfolio manager of the Fund since July 1997 and of other accounts managed by
the Adviser since 1990. Ms. Breslow and the other portfolio managers of the
Adviser are members of an investment research group which selects the group of
securities in which each account, including the Fund, may invest. Ms. Breslow,
who is primarily responsible for the day-to-day management of the Fund's
portfolio, selects securities from this group for investment by the Fund.
Although each account managed by the Adviser has individual objectives and a
unique portfolio, the Fund's investments generally are similar to investments
made by the Adviser's managed accounts.
The Investment Advisory Services Agreement provides that the Adviser will
receive advisory fees, payable quarterly in advance, 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. Fee waivers and reimbursement of expenses will increase the
Fund's total return. Such voluntary fee waivers and/or expense reimbursement
are not required by the Investment Advisory Services Agreement and may be
discontinued at any time. See "Fee Table" and "Fund Performance."
As required by the Act, 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.
Each of the Directors of the Fund recalls having considered, and approved, the
continuation of the Original Advisory Agreement for an additional one-year
period at a
11
<PAGE>
meeting of the Board of Directors held in early 1996. Further, the minutes of
the Board of Directors' February 20, 1997 meeting reflect that the Board
considered and approved the further continuation of the Original Advisory
Agreement at that time. Thus, the Directors of the Fund believe that the
Original Advisory Agreement was continued on an annual basis. However, there
is some uncertainty concerning this matter, because the Fund's written records
of its Board's meetings from 1996 are missing or otherwise deficient. This is
significant because if the Original Advisory Agreement was not effectively
continued by the Board in 1996, then it would have lapsed as a technical
matter and could not have been revived by the 1997 Board action (because
approval of a new advisory agreement, as opposed to continuation of the
Original Advisory Agreement, would have required shareholder action, as well
as Board action). In addition, it appears that the 1997 approval may not have
complied in all respects with the Act's technical requirements, as one of the
Independent Directors attended the meeting by telephone conference.
Under the Act, if the Original Advisory Agreement lapsed, the Fund would not
now have a valid investment advisory contract with the Adviser and some part
of the fees paid to the Adviser since the occurrence of the lapse might be
recoverable by the Fund. In addition, in reviewing the issues relating to
approval of the Original Advisory Agreement, the Adviser found that from
February 28, 1994 (commencement of investment operations) through June 30,
1998, advisory fees were calculated quarterly in arrears rather than quarterly
in advance as provided for in the Original Advisory Agreement. As the Fund's
assets tended to rise over the period, this resulted in an overpayment of fees
to the Adviser. This overpayment did not actually commence until 1997 however,
because before that time the Adviser waived its fees and/or reimbursed
expenses under a voluntary expense cap. The amount of the overpayment has been
repaid in full to the Fund by the Adviser. Neither the overpayment nor the
repayment had a material effect on the Fund's net asset value per share. In
view of the foregoing and certain other deficiencies in the Fund's records and
operations, the Fund and the Adviser have reviewed all of the Fund's
procedures and taken steps designed to ensure that the Fund's operations
comply with the provisions of all governing agreements and applicable laws,
including the Act.
Because of the importance of removing any doubt about the status of the
advisory agreement between the Adviser and the Fund, the Fund's Directors have
approved a new investment advisory services agreement (the "New Advisory
Agreement"), having substantially identical terms as the Original Advisory
Agreement. The only material difference between the two agreements is that
under the New Advisory Agreement, the fee will be calculated based on the
Fund's average daily net assets and paid in arrears. As stated above, the
Original Advisory Agreement provides that the fee is paid quarterly, in
advance, based on the net asset value of the Fund as of the last day of the
preceding quarter (after giving effect to subscriptions and redemptions on
that date). This change will ensure that the Fund's fee payments more closely
track the Funds's actual size, and that the fee will be charged against those
shares actually receiving services during the period for which the fee is
paid. The Board has 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. Approval of the New
Advisory Agreement and ratification of the interim fees will be considered by
Fund shareholders of record on August 31, 1998 at a meeting to be held on
October 28, 1998.
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.
12
<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. 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. 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.
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.
13
<PAGE>
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.
14
<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 VS. S&P 500*
[Line Graph shows hypothetical $50,000 investment in each of the S&P 500 and the
Fund on February 28, 1994 grew to $113,625 if invested in the S&P 500 and
$105,135 and $104,610 if invested in the Fund, before and after redemption fee,
respectively, as of December 31, 1996.]
Total Investment Return*
February 28, 1994 - December 31, 1997
-----------------------------------
<TABLE>
<S> <C>
W.P. Stewart & Co. Growth
Fund 110.27%
W.P. Stewart & Co. Growth
Fund, Net 109.22%
S&P 500 127.25%
</TABLE>
* Total investment return is calculated
assuming reinvestment of all dividends and
distributions at net asset value during the
period. The W.P. Stewart & Co. Growth Fund,
Net, reflects the effect of a redemption fee on
the total return. S&P 500 return assumes no
transaction costs.
15
<PAGE>
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>
AVERAGE ANNUAL NET TOTAL
TOTAL RETURN TOTAL RETURN RETURN
-------------- ------------ ------
<S> <C> <C> <C>
W.P. STEWART & CO. GROWTH FUND, INC.
January 1, 1997 through December 31, 1997.. 24.07% 24.07% 24.69%
February 28, 1994 (commencement of
investment operations) through December
31, 1997.................................. 21.19% 109.22% 110.27%
S&P 500
January 1, 1997 through December 31, 1997.. N/A N/A 33.59%
February 28, 1994 through December 31,
1997...................................... N/A N/A 127.25%
</TABLE>
"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. "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% redemption fee. "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. 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
16
<PAGE>
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.
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.
17
<PAGE>
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.
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 long-
term 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. The maximum long-term capital gains rate for
individuals is 20%. The maximum long-term capital gains rate for corporate
shareholders is the same as the maximum tax rate for ordinary income, which
currently is 35%. 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 and will be long-term capital gain or loss if such shares
have been held for more than 12 months. Any such long-term capital gain
derived by an individual will be subject to tax at the maximum rate of 20%.
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.
18
<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.
Swidler Berlin Shereff Friedman, 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.
19
<PAGE>
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
<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................................. 8 --
BROKERAGE ALLOCATION........................... 8 13
CUSTODIAN, ADMINISTRATOR AND SHAREHOLDER
SERVICING AGENT............................... 10 13
INDEPENDENT AUDITORS........................... 10 19
DISTRIBUTION OF THE FUND'S SHARES.............. 10 --
COMPUTATION OF NET ASSET VALUE................. 10 16
PURCHASE OF SHARES............................. 11 16
REDEMPTIONS.................................... 11 17
TAX STATUS..................................... 11 18
ERISA CONSIDERATIONS........................... 13 --
FINANCIAL STATEMENTS........................... 13 --
CONTACT INFORMATION............................ 14 19
</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 (42)*...... 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, the Fund held three in-person meetings of the
Board for which aggregate fees of $3,750 are payable to each Disinterested
Director.
As of August 31, 1998, the Directors and officers of the Fund owned in the
aggregate 2,412.05 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
1998. The Adviser is registered under the Investment Advisers Act of 1940 as
an investment adviser. Prior to July 1, 1998, and since inception, the Fund's
investment adviser was the predecessor of the Adviser's parent company. The
Adviser's 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. The Adviser is a wholly owned subsidiary of W.P. Stewart &
Co., Ltd., a Bermuda corporation ("W.P. Stewart-Bermuda"). William P. Stewart
may be deemed to be a controlling person of W.P. Stewart-Bermuda.
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 and President
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 reviewed by the directors of the Fund on
a regular basis.
For the fiscal years ended December 31, 1997, 1996 and 1995, fees payable to
the predecessor adviser in accordance with the terms of the Investment
Advisory Services Agreement totaled $406,906, $218,540, and $93,986,
respectively. After voluntary fee waiver and/or expense reimbursement, the
Fund paid the predecessor adviser $406,906, $210,050 and $25,773,
respectively.
7
<PAGE>
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.
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."
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
8
<PAGE>
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 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. Prior to July 1997, the Fund effected
the majority of its trades through the Adviser's predecessor, which was then
registered as a broker-dealer, and thereafter effected the majority of its
trades 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's
predecessor 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. 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.
9
<PAGE>
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
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>
10
<PAGE>
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
(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.
11
<PAGE>
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 20% with respect to Shares held for
more than 12 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 35%.
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 on such shares 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 interest received by the Fund may give rise to withholding and
other taxes imposed by foreign countries. Such taxes will reduce shareholders'
return.
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.
12
<PAGE>
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.
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, copies of its latest Semi-Annual and Annual Reports to
Shareholders upon request.
The unaudited financial statements for the six months ended June 30, 1998 and
audited financial statements and Report of the Fund's Independent Accountants
for the Fund's fiscal year ended December 31, 1997 are incorporated by
reference into this Statement of Additional Information from the Fund's Semi-
Annual Report to Shareholders for the six months ended June 30, 1998 and Annual
Report to Shareholders for the year ended December 31, 1997, respectively. The
Fund's Semi-Annual and Annual Reports to Shareholders can be obtained free of
charge upon request in writing or by telephoning the Fund. See "Contact
Information."
The financial statements of the Fund included in the Annual Report to
Shareholders for the year ended December 31, 1997 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.
13
<PAGE>
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 from the Fund's Semi-Annual Report to
Shareholders for the period ended June 30, 1998, filed on August 26,
1998 and 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. Incorporated by
reference from Exhibit 1 to Post-Effective Amendment No. 5 to the
Registration Statement filed on Form N-1A on May 7, 1998 (File No. 33-
71142).
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. Incorporated by reference
from Exhibit 4 to Post-Effective Amendment No. 5 to the Registration
Statement filed on Form N-1A on May 7, 1998 (File No. 33-71142).
5 Investment Advisory Services Agreement between the Fund and the
Adviser. Incorporated by reference from Exhibit 5 to Post-Effective
Amendment No. 5 to the Registration Statement filed on Form N-1A on
May 7, 1998 (File No. 33-71142).
6 Not Applicable
7 Not Applicable
8 Custodian Contract between the Fund and State Street Bank and Trust
Company. Incorporated by reference from Exhibit 8 to Post-Effective
Amendment No. 5 to the Registration Statement filed on Form N-1A on
May 7, 1998 (File No. 33-71142).
9 Administration Agreement and Transfer Agency and Service Agreement,
each between the Fund and State Street Bank and Trust Company.
Incorporated by reference from Exhibit 9 to Post-Effective Amendment
No. 5 to the Registration Statement filed on Form N-1A on May 7, 1998
(File No. 33-71142).
10 Opinion of Sutherland, Asbill & Brennan, former counsel for the Fund.
Incorporated by reference from Exhibit 10 to Post-Effective Amendment
No. 5 to the Registration Statement filed on Form N-1A on May 7, 1998
(File No. 33-71142).
11 Consent of Lopez Edwards Frank & Co., LLP, independent auditors for
the Fund. Incorporated by reference from Exhibit 11 to Post-Effective
Amendment No. 5 to the Registration Statement filed on Form N-1A on
May 7, 1998 (File No. 33-71142).
12 Not applicable
13 Subscription Agreement between the Fund and WPS&Co., N.V. Incorporated
by reference from Exhibit 13 to Post-Effective Amendment No. 5 to the
Registration Statement filed on Form N-1A on May 7, 1998 (File No. 33-
71142).
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
14 Not Applicable
15 Not Applicable
16 Not Applicable
17 Financial Data Schedules*
18 Not Applicable
24 Power of Attorney. Incorporated by reference from Exhibit 24 to Post-
Effective Amendment No. 5 to the Registration Statement filed on Form
N-1A on May 7, 1998 (File No. 33-71142).
</TABLE>
- --------
* Filed herewith.
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 272
</TABLE>
--------
* As of August 31, 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, including the Fund's predecessor adviser, have 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, including the Fund's predecessor adviser and affiliates, 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 25TH DAY
OF SEPTEMBER, 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
_____________________________________ September 25,
WILLIAM P. STEWART, JR. 1998
* Director and
_____________________________________ President September 25,
MARILYN G. BRESLOW 1998
* Director, Treasurer
_____________________________________ and Secretary September 25,
ROBERT L. SCHWARTZ 1998
* Director
_____________________________________ September 25,
ANTOINE BERNHEIM 1998
* Director
_____________________________________ September 25,
JUNE EICHBAUM 1998
* Director
_____________________________________ September 25,
WILLIAM TALCOTT MAY 1998
/s/ Lisa D. Levey
*By: ____________________________ September 25,
Lisa D. Levey 1998
Attorney-in-Fact
C-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
2 Amended By-Laws of the Fund
17 Financial Data Schedules
</TABLE>
C-5
<PAGE>
EXHIBIT 99.2
As of
June 16, 1998
- --------------------------------------------------------------------------------
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 one-third of the shares issued and outstanding and entitled to
vote theareat, present in person or represented by proxy, shall constitute a
quorum for the transaction of business, but a lesser number may adjourn any
meeting from time to time and the meeting may 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.
<PAGE>
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
-2-
<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.
-3-
<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
-4-
<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.
-5-
<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.
-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
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
-7-
<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.
-8-
<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.
-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 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
-10-
<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.
-11-
<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.
-12-
<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
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<TOTAL-ASSETS> 36,368,984
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<TOTAL-LIABILITIES> 167,578
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,579,697
<SHARES-COMMON-STOCK> 214,581
<SHARES-COMMON-PRIOR> 129,896
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<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
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<GROSS-EXPENSE> 639,746
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